(Corrects paragraphs 11 and 12 to refer to BMO results, not RBC)
* Q4 EPS C$2.10 vs forecast C$1.85
* Capital markets, U.S. P&C strong performers
* Shares up 2.4 percent
TORONTO, Dec 6 (Reuters) - Bank of Montreal on Tuesday reported fourth-quarter earnings well ahead of market expectations, benefiting from strong performances at its capital markets and U.S. personal and commercial businesses.
Canada's fourth-biggest lender said its earnings per share, excluding one-off items, rose to C$2.10 in the three months ended Oct. 31 from C$1.90 in the same period last year. Analysts on average had expected earnings of C$1.85, according to Thomson Reuters I/B/E/S Estimates.
Shares in Bank of Montreal were up 2.4 percent in early trading.
"We view this quarter positively as EPS was well ahead of our estimate and consensus, as revenue, cost control, and credit all came in better than expected," said RBC analyst Darko Mihelic.
CIBC analyst Robert Sedran described the performance as a "big beat" with several units exceeding expectations.
"This was a strong result that should be greeted favorably by the market," he said.
BMO said net income, excluding one-off items, rose to C$1.4 billion, up 10 percent on a year ago.
Net income at the bank's capital markets business rose by 64 percent to C$396 million, excluding one-off items, benefiting from increased revenue from its mergers and acquisitions advisory business and higher trading revenue.
Underlying net income at the bank's U.S. personal and commercial business rose by 35 percent to C$299 million, boosted by the contribution of its newly acquired BMO Transportation Finance business.
Funds set aside to cover loans that have turned bad totaled C$174 million, which RBC's analyst Mihelic said was well below the C$227 million he had forecast.
Like other Canadian and U.S. lenders, BMO had seen an increase in delinquent loans to oil and gas companies due to declining energy prices. However, it has benefited from a partial recovery in the price of oil which had hit a 13-year low of $26 a barrel in February.
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, BMO 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 the lowest of Canada's biggest five banks and analysts warned it could impact future dividend payouts and hold back the bank's expansion plans. (Reporting by Matt Scuffham; Editing by Greg Mahlich and Nick Zieminski)