Bank of Montreal Raises Dividend After Strong Quarterly Earnings

Bank of Montreal Raises Dividend

Bank of Montreal (BMO) announced a 2.4% increase in its dividend payout after reporting stronger fiscal second-quarter earnings driven by robust fee revenue across capital markets, wealth management, and treasury and payments operations. Net income rose to C$2.63 billion (US$1.95 billion) from C$1.96 billion a year earlier.

Financial Performance Details

On an adjusted basis, earnings per share were C$3.67, surpassing the consensus forecast of C$3.45. Total revenue increased 10% to C$9.57 billion. Net interest income rose 3.4%, while noninterest revenue jumped 20%.

Credit Provisions and Impaired Loans

The bank recorded a total provision for credit losses of C$739 million, down from C$746 million in the prior quarter and C$1.05 billion a year earlier. Total gross impaired loans increased to C$6.94 billion, mainly due to higher impaired loans in Canadian personal and commercial banking, particularly residential mortgages.

Economic Outlook and Risks

BMO identified the Iran war and its impact on oil supply as the most significant risk to the North American economy. It expects Canada's economy to grow 1% this year and the U.S. economy to expand 2.1%. The Bank of Canada has kept its benchmark interest rate unchanged for four consecutive meetings but stands ready to respond if inflationary pressures broaden.

Capital Adequacy and Dividend

BMO's common equity Tier 1 ratio edged down to 13%. The bank increased its quarterly dividend by C$0.04 to C$1.71 per share. It also expects to book a roughly C$900 million charge related to the sale of its transportation and vendor-financing businesses to Stonepeak.