Bank of Montreal reported stronger second-quarter earnings on Wednesday, beating analysts’ expectations as gains in its capital markets business and U.S. division helped drive results. The bank earned $2.6 billion, or $3.53 per share, for the three months ended April 30, up 34% from the same period a year earlier. On an adjusted basis, excluding certain items, profit came to $3.67 per share, above the $3.41 per share forecast by analysts, according to Bloomberg data.
The results come as BMO continues to focus on improving profitability, especially in its U.S. business, which accounts for about 40% of its earnings. In March, the bank announced a new strategy aimed at strengthening its American operations and lifting return on equity, a key measure of how efficiently a bank generates profit. BMO has previously set a target of reaching a 15% return on equity by the end of 2027. For its U.S. division specifically, the bank is aiming to increase return on equity from 8% to 12% by 2028.
In the second quarter, BMO’s overall return on equity edged up to 13%, while the return on equity in its U.S. business improved to 8.6%. Chief executive Darryl White said the bank’s latest performance showed “meaningful progress and momentum” toward those goals.
BMO also raised its quarterly dividend by 4 cents to $1.71 per share, reflecting confidence in its financial position. The bank set aside $739 million in provisions for credit losses during the quarter, which was lower than expected. These provisions include $734 million related to loans the bank believes may not be repaid, based on forecasting models that estimate future losses.
Revenue rose 10% year over year to $9.6 billion, while expenses increased 6% to $5.3 billion. Profit in Canadian personal and commercial banking came in at $884 million, up 15% from a year earlier, supported by higher revenue and lower provisions, though partly offset by increased expenses.
The U.S. division posted profit of $790 million, up 32% from a year ago, helped by stronger revenue and lower provisions. Capital markets was a standout performer, with profit rising 47% to $638 million, driven by higher revenue in global markets and investment and corporate banking, along with lower provisions. Wealth management profit climbed 34% to $428 million, supported by the bank’s integration of its acquisition of Toronto-based Burgundy Asset Management.
BMO was the second major Canadian bank to release second-quarter results on Wednesday, following Bank of Nova Scotia, which also beat expectations. National Bank of Canada is scheduled to report later the same day, while Royal Bank of Canada, Toronto-Dominion Bank and Canadian Imperial Bank of Commerce are due to post earnings on Thursday.
