Bank of Montreal shares fall on disappointing U.S. profit

Tue Dec 3, 2013 12:20pm EST
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By Cameron French

TORONTO (Reuters) - Quarterly earnings at Bank of Montreal (BMO.TO: Quote) rose 1 percent due to stronger wealth management profit, and Canada's No. 4 bank raised its dividend, but its shares fell on Tuesday on the back of a sluggish performance at its U.S. Harris Bank unit.

Shares of BMO, the first Canadian bank to report fiscal fourth-quarter results, were down 3.7 percent at mid-morning, making BMO the weakest performer among financial stocks on the Toronto Stock Exchange's benchmark index.

Excluding items such as C$37 million ($34.73 million) in integration costs from the 2011 purchase of Wisconsin lender Marshall & Illsley, adjusted profit was C$1.1 billion, or C$1.64 a share.

That result topped analysts' estimates of a profit of C$1.58 a share, but analysts said the beat was helped by an accounting-related securities gain on the wealth management side.

"You could say it pretty much met on a headline basis, (but) if you peel through the operating numbers they don't look as good," said Peter Routledge, an analyst at National Bank Financial.

Earnings at BMO Harris Bank fell 28 percent to $102 million, which its parent attributed to weaker revenue and higher-than-normal commercial loan-loss provisions.

"The personal and commercial business in the U.S. has been stretched and strained since rates have jumped up," said Routledge. He said that weakness could weigh on Toronto-Dominion Bank's (TD.TO: Quote) results, due on Thursday, as TD has a larger U.S. retail bank division than BMO.

Wealth management profit nearly doubled to C$312 million from C$164 million, helped by the C$121 million securities gain. Analysts said the division's results were strong even excluding the gain as assets under management rose by 14 percent.   Continued...

A man walks by a Bank of Montreal sign in Toronto, March 5, 2013. REUTERS/Mark Blinch