BMO misses estimates as volatile markets weigh on wealth management, capital markets business

Net income fell to $1.37 billion in the third quarter, slipping from the $2.28 billion reported at the same time last year

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The Bank of Montreal’s net income fell to $1.37 billion in the third quarter, slipping from the $2.28 billion reported at the same time last year, as volatile markets weighed on the company’s wealth management and capital markets segments.

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Earnings fell to an adjusted $3.09 per share from last year in the three months ending July 31. Analysts had been expecting earnings of $3.15 per share on average.

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“Our performance this quarter continued to demonstrate the strength and quality of our diversified business mix, credit excellence and the resilience of our earnings power,” BMO Financial Group chief executive Darryl White said in a press release accompanying the results. “We delivered robust loan growth and margin expansion that drove record revenue in our North American personal and commercial businesses, buffering the impact of challenging market conditions on our capital markets businesses.”

BMO’s personal and commercial banking segment grew 17 per cent year over year to $965 million, driven by a 13-per-cent increase in revenue from higher net interest income due to higher margins and lower credit loss provisions.

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Net income in the bank’s U.S. segment grew three per cent from the prior year to $568 million amid a boost from a stronger U.S. dollar.

However, BMO’s wealth management segment took a $55-million hit on choppy trading this year, bringing net income to $324 million. Its traditional wealth business was weighed down by higher expenses, and net income fell 12 per cent year over year to $263 million.

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BMO Capital Markets’ net income slumped 53 per cent year over year to $262 million amid market volatility, lower expenses around compensation partly offset by higher severance costs, as well as lower credit loss recovery.

Adjusted results in the third quarter did not include the impact of the US$16.3-billion Bank of the West deal announced in Dec. 2021, which brought an after-tax loss of $694 million stemming from interest rate changes between the deal’s announcement to its closing.

The bank set aside $136 million in credit loss provisions, compared to $70 million last year.

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