Bank of Montreal quarterly profit misses analyst expectation, hit by U.S. retail weakness

Bank of Montreal reported quarterly profit below analysts’ estimates on Tuesday, its sixth miss in a row, hurt by weakness in its U.S. retail segment and as the lender made bigger than expected provisions for potential bad loans.

 

A higher-for-longer interest rate environment has increased the risk of consumers and businesses falling behind on their loan repayments, nudging lenders to set aside more rainy-day funds.

 

Provision for credit losses jumped to $906-million in the third quarter, from $492-million a year earlier. Analysts were expecting $734-million, according to LSEG data.

BMO purchased U.S. regional lender Bank of the West for US$16.3-billion last year, giving it exposure to nearly two million customers, about 500 retail branches and commercial and wealth offices across the midwest and Western United States.

 

But BMO and other Canadian banks that have sought growth opportunities south of the border have faced many challenges in a competitive U.S. banking market, forcing them to spend more to retain deposits and boost loan growth.

 

BMO, Canada’s third-largest lender, said adjusted net income at its U.S. personal and commercial banking segment fell 7 per cent, while earnings from its business at home rose 3 per cent, helped by higher margins.

 

The bank’s adjusted net income fell to $1.98-billion, a 7.8-per-cent decline from a year earlier.

 

BMO earned $2.64 per share, compared with analysts’ expectation of $2.76.

 

 

 

 

This article was first reported by The Globe and Mail