Bank of Montreal (TSE:BMO, Mkt cap 50.26B, P/E 12.37, Div/yield 0.84/4.30, EPS 6.32, Shares 642.58M) has posted better-than-expected fourth-quarter profit, prompting the lender to raise its dividend 2.4% to 84 cents a share, reports the Wall Street Journal.
Canada’s fourth-largest lender by assets becomes the second of Canada’s five biggest banks to exceed expectations for the August-to-October quarter, suggesting that lenders are successfully managing to offset lower oil prices and a sluggish economy.
Toronto-based BMO saw profit rise to C$1.21 billion ($906 million), or C$1.83 a share, in the three-month period, up from C$1.07 billion, or C$1.56 a share, a year earlier.
Adjusted to exclude extraordinary items, BMO said fourth-quarter earnings totaled C$1.90 a share, surpassing the Thomson Reuters mean estimate of C$1.74 a share.
“BMO posted a strong finish to the year, delivering record results,” said chief executive Bill Downe in a release, who highlighted how the bank’s personal and commercial banking and wealth management businesses in the U.S. generated adjusted earnings in excess of C$1 billion for the first time.
“With the acquisition of GE Capital Transportation Finance which closed today, we continue to strengthen our large, well-established North American commercial banking customer base,” he added.
As well as hiking up its quarterly dividend, the bank announced a share buyback program of up to 15 million of its common shares, subject to regulatory approval.
The WSJ notes that share buybacks typically raise a company’s stock prices because they reduce the number of outstanding shares on the market.
In addition to the profit rise, BMO’s provisions for credit losses – a reserve the bank uses to non-accrual loans – declined by C$42 million on a year-over-year basis to C$128 million.
Bank of Montreal is a Toronto based financial services company. The Bank provides a range of retail banking, wealth management, and investment banking products and services. It conducts its business through three operating groups: Personal and Commercial Banking, Wealth Management and BMO Capital Markets. The Bank operates primarily in Canada and the United States. It also has operations in the United Kingdom, Europe, the Caribbean and Asia. It also serves customers through its wealth management businesses: BMO Nesbitt Burns, BMO InvestorLine, BMO Private Banking, BMO Global Asset Management and BMO Insurance. BMO Capital Markets, its investment and corporate banking and trading products division, provides a suite of financial products and services to North American and international clients. In the United States, BMO serves customers through BMO Harris Bank, based in the United States Midwest with more than two million retail, small business and commercial customers. More from Reuters »
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