BMO's Q3 profit climbs to $1.25B; more money set aside for bad loans

The Bank of Montreal saw its third-quarter profit grow four per cent to $1.25 billion even as it set aside more money for bad loans.

Last year, BMO reported net income of $1.19 billion during the comparable three-month period ended July 31.

On a per share basis, BMO's earnings amounted to $1.86, compared with $1.80 per share during the same period last year.

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"We had good performance across our operating groups, particularly in personal and commercial banking and BMO Capital Markets," CEO Bill Downe said in a statement.

"Our performance year to date reflects our focus on the customer and strong operating discipline."

The bank raked in $5.63 billion in revenue during the quarter, up from $4.83 billion a year ago.

After adjustments, BMO had a quarterly profit of $1.30 billion, or $1.94 per share, compared with $1.23 billion, or $1.86 per share, a year ago.

Provisions for credit losses climbed to $257 million during the quarter, up from $160 million during the same quarter last year.

Colin Cieszynski, chief market strategist at CMC Markets, said BMO's U.S. personal and commercial banking business was up 24 per cent year over year, while its Canadian business was up by one per cent.

"You'd expect their earnings to be in line with the economy," he told CBC News. "They did really really well in the States. They did just fine in Canada."

Cieszynski said that suggests to him that some Canadian banks with U.S. exposure might do well, especially if the U.S. economy is doing well.

'A solid quarter'

Barclays analyst John Aiken says the results were better than he had expected.

"Generally, BMO reported a solid quarter with few areas that we can poke holes in," Aiken said in a note to clients.

"While energy related provisions were up sequentially (from the second quarter), BMO is simply playing a bit of catch-up and there did not appear to be any significant deterioration in the domestic consumer portfolio."

BMO was the first of Canada's biggest banks to report its third-quarter earnings, and if other banks report similar results, Aiken says that will "take some of the wind out of the sails" of those with concerns about oilpatch-related loan losses.

"While credit was expected to be a significant theme in the quarter, we no longer believe that energy exposures are driving valuations and consumer credit remained benign," Aiken said.

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Royal Bank will report on Wednesday, followed by CIBC and TD Bank on Thursday.

Scotiabank is slated to report on Aug. 30, and National Bank wraps up the earnings parade on Aug. 31.