Bank of Montreal (BMO) has announced a decrease in both profit and revenue for its fiscal fourth quarter. This decline can be attributed to costs, provisions for credit losses, and the inclusion of Bank of the West's results in the current period.
Financial Results
For the three months ending October 31, BMO recorded a net income of 1.62 billion Canadian dollars ($1.19 billion), or C$2.06 per share. This is a significant drop from the previous year's comparable quarter, which saw a net income of C$4.48 billion, or C$6.51 per share.
Charges and Adjusted Earnings
BMO incurred several charges during the period, including C$433 million in acquisition and integration costs for Bank of the West, amortization of acquisition-related intangible assets, and costs associated with a lawsuit with a predecessor bank, M&I Marshall and Ilsley Bank. Adjusted earnings, which exclude these one-off costs and items, came in at C$2.81 per share, falling short of analyst forecasts of C$2.87 per share.
Revenue Decline
BMO's revenue also saw a decline, decreasing to C$8.36 billion from C$10.57 billion. Analysts had anticipated a larger drop in revenue, estimating the figure to be C$8.26 billion.
Segment Performance
In its Canadian personal and commercial segment, BMO reported a 5% decrease in net income to C$962 million. On the other hand, its U.S. personal and commercial segment saw a net income increase of C$1 million to C$661 million, primarily due to the stronger U.S. dollar. BMO Capital Markets witnessed a notable increase in net income, rising by 37% to C$489 million.
Provision for Credit Losses
The provision for credit losses, which represents funds set aside by the bank to cover bad or uncollected debt, nearly doubled. BMO's total provision for the period rose to C$446 million from C$226 million.
Common Equity Tier 1 Ratio
BMO's common equity tier 1 ratio, a measure of a bank's core capital compared with its riskier assets, stood at 12.5%, down from 16.7%.
