BMO comfortable with capital after earnings beat view

Tue Dec 6, 2016 2:05pm EST
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By Matt Scuffham

TORONTO (Reuters) - Bank of Montreal's Chief Financial Officer said he was comfortable with the bank's capital strength, despite it being weaker than rivals', after the lender reported better-than-expected earnings.

Canada's fourth-biggest lender said earnings per share increased by 11 percent to C$2.10 in the fourth quarter to Oct. 31, benefiting from a strong performance at its capital markets and U.S. personal and commercial businesses.

Analysts on average had expected earnings of C$1.85, according to Thomson Reuters I/B/E/S.

Shares in Bank of Montreal were up 2.5 percent in afternoon trading.

BMO said its core tier 1 ratio, a key measure of its financial strength, rose by 10 basis points from three months earlier to 10.1 percent at the end of October.

Last month, the bank said it had overstated its capital strength in the first three quarters of 2016 and revised down its core tier 1 capital ratio to 10 percent from the 10.5 percent initially reported.

The revision meant its core capital is currently the lowest of Canada's biggest five banks, although that could change when rivals complete acquisitions.

In an interview, BMO's Chief Financial Officer Tom Flynn said he was "very comfortable" with where the bank's core capital ratio currently stands.   Continued...

A Bank of Montreal (BMO) sign is seen outside of a branch in Ottawa, Ontario, Canada, August 23, 2016. REUTERS/Chris Wattie