Bank of Montreal announces 2,000 job cuts

Bank of Montreal (TSE:BMO, Mkt cap 53.47B, P/E 12.53, Div/yield 0.86/4.12, EPS 6.66, Shares 643.56M) said it is “to position the bank for what lies ahead” by cutting 4% of its 46,000 workforce, with more and more customers choosing to bank online over visiting a branch, Reuters reports.

The moves follows a decline in quarterly profit, with net income for the second quarter down 3% to $973 million, or $1.45 per share.

The bank’s balance sheet was impacted by a $132 million restructuring charge. Excluding that charge, its earnings were $1.73 a share. Analysts on average had expected $1.75 a share, according to Thomson Reuters I/B/E/S.

At the same time as announcing itssecond-quarter results, staff were told in a memo that around 1,850 jobs will go – a result of changing customer behaviour and the advent of new digital technologies, according to the bank’s Chief Executive Bill Downe.

“We have taken this step to position the bank for what lies ahead – and to account for the structural changes underway in the financial services industry,” Downe said in the memo seen by Reuters.

Canada’s fourth biggest bank highlighted how the number of transactions done by customers online and via mobile banking apps had risen by five million in the past two years while branch transactions declined.

As well as having to adjust to changing customer behaviour, BMO is having to set aside more funds to cover bad loans to the energy second.

The bank said gross impaired loans to the oil and gas sector rose to $410 million from $162 million during the second quarter ended on April 30.

Provisions for credit losses increased to $201 million from $161 million, with loan loss provisions expected to rise further over the course of the year.

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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