Bank of Montreal beats earnings estimates driven by business lending, financial markets rose

Band Nichola Saminather and Manya Saini

TORONTO, March 1 (Reuters)Bank of Montreal (BMO) BMO.TO beat analysts’ estimates for quarterly earnings on Tuesday, with profits up 27% year-on-year as strength in financial markets, growth in commercial loans and a recovery in loan loss provisions offsetting the increase in expenses.

Canada’s fourth-largest lender said net income excluding special items rose to C$3.89 per share in the three months ended Jan. 31, from C$3.06 a year earlier. Analysts had expected C$3.28 per share, according to IBES data from Refinitiv.

The lender became the fourth Canadian bank to report better-than-expected quarterly results, with capital markets and an improving non-mortgage lending environment the main drivers, although continued releases of reserves set up to cover claims questionable also helped.

BMO’s capital markets earnings jumped 47%, boosted by both higher investment and corporate banking revenue and increased client activity in the business unit. negotiation.

Average commercial loans were up 10% from a year ago, outpacing an 8% increase in residential mortgages, which have been the main driver of loan growth for Canadian banks during the pandemic.

The only decline came from wealth management, where adjusted earnings fell 8% from a year earlier as expense growth outpaced revenue growth.

Adjusted expenses increased by 7% compared to the previous year.

The bank recovered loan loss reserves of C$99 million, while analysts predicted it would take C$625,000.

But even before the adjusted provision, pre-tax profit was up 18% year-on-year.

(Reporting by Nichola Saminather in Toronto and Manya Saini in Bengaluru; Editing by Krishna Chandra Eluri and Louise Heavens)

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Shawanda H. Saldana