$745M BMO profit beats expectations

The Bank of Montreal kicked off bank earnings season Wednesday by surprising analysts with a strong $745-million profit.

The bank had $1.26 per share of net earnings, or $1.28 per share of cash earnings — 18 cents per share ahead of analyst estimates in both cases.

The gains were broad-based, with the bank's core personal banking unit posting $396 million in profit, up $56 million or 16 per cent from a year ago.

"With a clear strategy and a focus on helping our customers succeed, BMO has achieved its fifth consecutive quarter of higher revenue and net income," CEO Bill Downe said.

Revenue was $2.26 billion, down from $2.67 billion in the second quarter of fiscal 2009.

The bank also managed to reduce its provisions for credit losses (the money the bank sets aside for bad loans) during the quarter.

The provisions were reduced by $123 million from a year ago, to $249 million for the three months ended April 30.

In the comparable quarter last year, BMO had $358 million of net income, 61 cents per share in net earnings or 63 cent cents per share of cash earnings.

The bank says it will keep its quarterly dividend unchanged at 70 cents per common share.

U.S. acquisition

BMO also expanded its U.S. foothold in the quarter, as on April 23 it purchased the assets of an unnamed Illinois-based bank from the Federal Deposit Insurance Corporation.

The 52 branches of the bank reopened as Harris branches the following day. The acquisition adds approximately $2.2 billion US in deposits and $2.5 billion US in assets to BMO's Harris bank banner.

"The acquisition provides an excellent fit with our strategy of growing … in the Midwest," Downe said.