BMO:CC - Bank of Montreal fiscal Q2 earnings miss as provision for credit losses jumps

2023-05-24 08:28:16 ET

Bank of Montreal ( NYSE: BMO ) stock slipped 2.2% in Wednesday premarket trading after the Canadian bank's fiscal Q2 earnings fell short of the average analyst estimate as an uncertain economic outlook increased the company's provision for potential bad debt.

At the same time, the company increased its quarterly dividend to C$1.47 per share, up from C$1.43 in the prior quarter.

The results also reflected BMO's acquisition of Bank of the West from BNP Paribas , which was completed on Feb. 1, 2023.

Adjusted EPS of C$2.93 (US$2.16) for the quarter ended April 31, 2023 trailed the C$3.23 consensus, and declined from from C$3.22 in the prior quarter and C$3.23 in the year-ago period.

Adjusted revenue, net of CCPB, was C$7.86B (US$5.80B), up from C$7.29B in Q1 and C$6.56B in Q2 2022.

"Against the backdrop of an uncertain economic environment, our Canadian and U.S. personal and commercial banking businesses continued to deliver good pre-provision, pre-tax earnings, while our wealth and capital markets businesses were impacted by lower customer activity," said CEO Darryl White.

Total net loans and acceptances of C$645B rose from C$559.9B in Q1; customer deposits climbed to C$628.5B from C$545.1B at Jan. 31, 2023.

Q2 provision for credit losses of C$1.02B, including C$517M on the purchased Bank of the West performing loan portfolio, jumpd from  C$217M in Q1 and C$40M in Q2 2022.

Q2 net interest income of C$4.81B climbed from C$4.02B in the prior quarter and from $3.90B in the year-ago quarter.

Noninterest expense of C$5.57B vs. C$4.42B in Q1 and C$3.71B in Q2 2022.

Adjusted return on equity was 12.6% vs. 13.4% in the prior quarter and 15.7% a year ago.

Canadian Personal & Commercial Banking adjusted net income of C$864M fell from C$980M in Q1 and from C$941M in Q2 2022.

U.S. P&C adjusted net income was C$866M increased from C$699M in the prior quarter and from C$589M in the year-ago period.

BMO Wealth Management adjusted net income of C$285M vs. C$278M in the prior quarter and $315M a year ago.

BMO Capital Markets adjusted net income of C$388M dropped from C$510M in Q1 and from C$453M in Q2 2022.

Conference call at 8:15 AM.

Earlier, Bank of Montreal ( BMO ) non-GAAP EPS of C$2.93 misses by C$0.30, revenue of C$8.44B beats by C$180M

More on Bank of Montreal:

• BMO Financial appoints Darrel Hackett as U.S. CEO
• Bank of Montreal: The New U.S. Super Regional
• BMO agrees to acquire LoyaltyOne Air Miles

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