BMO profit tops estimates on wealth management, domestic loans

Tue Feb 25, 2014 3:58pm EST
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By Cameron French

TORONTO (Reuters) - Bank of Montreal (BMO.TO: Quote) reported higher-than-expected quarterly earnings on Tuesday on strong wealth management and domestic banking profits, and executives said they expect the uneven performance of BMO's U.S. unit to eventually improve.

Profit from BMO's Canadian retail banking operation rose 8 percent to C$484 million ($436.90 million) in the first quarter ended January 31, with loan growth of 10 percent more than offsetting narrower interest margins.

"Growth in the domestic bank was better than my expectations," said Edward Jones analyst Tom Lewandowski.

Canada's No. 4 bank has fought to increase its share of the domestic mortgage market over the past few years, offering low-rate loans that have sometimes spurred price wars with the other banks.

All told, quarterly net profit was C$1.06 billion or C$1.58 a share, up from C$1.04 billion, or C$1.51 a share, a year earlier.

Excluding a charge for the amortization of acquisition-related intangible assets, the bank earned C$1.61 a share, topping analyst' estimates of a profit of C$1.53, according to Thomson Reuters I/B/E/S.

Holding back profit gains was BMO's U.S. Harris Bank unit, which saw income slide 15 percent to US$153 million, although that result was up from a very weak fourth quarter.

BMO roughly doubled the size of its U.S. bank when it bought Wisconsin lender Marshall & Ilsley in 2011, but the business has so far shown uneven results.   Continued...

The logo for the Bank of Montreal is seen at its branch Toronto in this file photo from March 5, 2013. Bank of Montreal said on Tuesday its quarterly profit rose 2 percent, topping estimates, as strength in its Canadian branch-banking business and lower loan loss provisions more than made up for a weak performance at its U.S. Operation. REUTERS/Mark Blinch/Files