Bank of Montreal Tops Estimates With Wealth Management Growth

This post was originally published on this site
https://i-invdn-com.akamaized.net/content/pic9f1fffbd4749f8cd0e0c751a7ab6e019.jpg

(Bloomberg) — Bank of Montreal is making progress in its five-year effort to double earnings from wealth management.

  • The Toronto-based lender has been accelerating growth in the U.S., building out services for wealthy clients and expanding its global asset manager, with the aim of getting C$2 billion ($1.5 billion) in annual profit from wealth management by 2023. The bank is making progress, with a 22% increase in earnings from the business in its fiscal first quarter. That helped the company beat analysts’ estimates.

Key Insights

  • Bank of Montreal has built on its wealth business in the past year, including hiring Wells Fargo (NYSE:) & Co.’s Kristi Mitchem to lead the bank’s asset-management division. Wealth-management earnings, which include insurance, climbed to C$291 million.
  • Bank of Montreal’s U.S. banking division, which includes Chicago-based BMO Harris Bank, has increased profits at a faster pace than its Canadian division for most of the past two years. That effort faltered in the first quarter, with earnings from the U.S. personal-and-commercial division falling 21% to C$351 million, hurt by a surge in loan-loss provisions and tighter margins.
  • Interest-rate reductions by the Federal Reserve last year had driven down the net interest margin at Bank of Montreal’s U.S. banking division to its lowest level in a decade. That trend continued in the fiscal first quarter, with margins of 3.34%, the lowest since 2010.
  • Canadian banking remains the company’s largest division, even amid a push to get more earnings from its U.S. operations. Bank of Montreal’s domestic retail bank posted C$700 million of profit in the quarter, up 8% from a year earlier.
  • Bank of Montreal sees scaling up in the U.S. as key to its aspirations of being a top-10 North American investment bank at a time when foreign firms have been retreating. Earnings from the company’s BMO Capital Markets unit climbed 39% to C$356 million in the first quarter as markets and dealmaking improved.

Market Reaction

  • Bank of Montreal shares have fallen 1.2% this year through Monday, underperforming the 2.2% gain for Canada’s eight-company S&P/TSX Commercial Banks Index.

Get More

  • First-quarter net income rose 5.4% to C$1.59 billion, or C$2.37 a share. Adjusted per-share earnings totaled C$2.41 a share, beating the C$2.37 average estimate of 14 analysts in a Bloomberg survey.
  • Read more about Bank of Montreal’s quarterly results here.
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.

Add Comment