BMO first-quarter earnings smash estimates, Scotiabank in line

Tue Feb 28, 2017 3:06pm EST
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By Matt Scuffham

TORONTO (Reuters) - Bank of Montreal (BMO.TO: Quote), Canada's fourth biggest lender, reported first-quarter results on Tuesday that smashed market expectations, but rival Bank of Nova Scotia (BNS.TO: Quote) disappointed analysts with numbers that were broadly in line with estimates.

BMO shares rose 2.2 percent, on track for their strongest daily gain in nearly three months, after the bank reported net income of C$1.5 billion ($1.1 billion) in the quarter ended Jan. 31. That was up from C$1.1 billion the year before.

Earnings per share, excluding one-time items, came in at C$2.28 per share, beating the average analyst estimate of C$1.88, according to Thomson Reuters I/B/E/S data.

At Scotiabank, Canada's third largest, net income was C$2 billion ($1.5 billion) in the first quarter to Jan. 31, compared with C$1.8 billion the year before. Earnings per share rose to C$1.58 from C$1.44 the year before.

The average estimate was C$1.57 per share, according to Thomson Reuters I/B/E/S data. Its stock fell 2.2 percent.

BMO said it plans to buy back 15 million of common shares, the equivalent of 2.3 percent of its publicly traded stock, due to its stronger capital position.

"We put the buyback program back into place recognizing that the (core tier 1) ratio is in a good place, and we think it's a good part of our capital management strategy," BMO Chief Financial Officer Tom Flynn said in an interview.

The bank said its core tier 1 capital ratio, a key measure of its financial strength, increased by 100 basis points to 11.1 percent during the quarter, marking a recovery after the bank revealed last November it had mistakenly overstated the ratio in the first three quarters of 2016.   Continued...

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