* Fourth-quarter profits top estimates
* BMO helped by private client results, capital markets
* BMO stock rises 3.1 pct, CWB up 4 pct (Adds details, comments, updates shares)
By Cameron French
TORONTO, Dec 7 (Reuters) - Bank of Montreal (BMO.TO) reported a bigger than expected 14 percent rise in quarterly profit on Tuesday, while smaller Canadian Western Bank (CWB.TO) topped profit estimates and raised its quarterly dividend, sending shares of both lenders sharply higher.
BMO, the final big Canadian bank to report fourth-quarter results, earned a cash profit of C$1.26 a share, beating analysts' estimates of C$1.21 a share.
The result looked particularly good in comparison with the earnings of the most of the other big Canadian lenders this quarter, analysts said.
"If this were BMO reporting in isolation it would just be OK, but based on the disappointments we've seen from the other banks, this is actually a very strong result," said John Aiken of Barclays Capital.
As with the other banks, expenses rose, but BMO had a strong 25 percent year-over-year rise in income from its private client banking division, and revenue rose at its capital markets unit, contrasting with weaker revenues at its rivals.
"The big surprise was the strength of BMO's advisory fees," Aiken said.
The bank's shares rose 3.1 percent to C$61.87 on the Toronto Stock Exchange.
BMO, which also operates in China and has a Chicago-based U.S. retail franchise, raised its medium-term financial performance objective to 12 percent annual growth in earnings per share, from the previous objective of 10 percent.
"As we look forward over three years or so, what I think we're going to see is a gradual pickup in economic growth," BMO Chief Executive William Downe said on a conference call.
"We think realistically in this time frame a slightly higher EPS growth rate is achievable."
BMO also said that its Tier 1 capital ratio was 13.45 percent, and that, if tighter Basel III standards due to be fully implemented were in place today, the ratio would be 10.4 percent, exceeding Basel requirements.
This means BMO does not have to worry about setting aside extra capital to make sure it complies with the standards.
Provisions for bad loans fell 34.4 percent to C$253 million ($250 million).
On a net basis, profit rose to C$739 million, or C$1.24 a diluted share, from C$647 million, or C$1.11.
Cash per-share earnings at Canadian Western Bank were 49 Canadian cents, beating analysts' estimates of 47 Canadian cents.
Canadian Western also became the second bank this quarter to raise its quarterly dividend, after National Bank of Canada (NA.TO) did so last week, which helped push CWB's shares up by 4 percent to C$28.19.
CWB, which focuses on business lending and has lots of clients in the Western Canadian oil sands industry, raised its per-share payout to 13 Canadian cents from 11 Canadian cents.
Investors have been looking forward to a resumption in dividend increases from the banks after the nation's financial services regulator signaled in September that they were free to do so, now that the financial crisis had eased.
In 2008, the regulator had advised the banks to hold off on such moves due to uncertainty about the crisis and the regulatory response that was to follow.
Canadian Western's net profit rose to C$39.1 million, or 48 Canadian cents a share, up from a year-before profit of C$30.4 million, or 39 Canadian cents a share.
Revenue climbed 24 percent to C$111.6 million as loans rose by 14 percent, while net interest margins widened by 0.5 percentage points, the Edmonton, Alberta-based bank said.
$1=$1.01 Canadian Additional reporting by John McCrank; editing by Rob Wilson