Bank of Montreal is reporting reduced profits for the fourth quarter ended October 31.

The bank said a massive rise in loan loss provisions and write-downs combined to knock fourth-quarter profit sharply lower.

Fourth-quarter net income was $4 million, or nil per share, for the quarter, compared with $485 million, or 86¢ a share, a year earlier. Cash earnings per share were 6¢, down from 90¢ in the year-before quarter.

For the year ended October 31, BMO reported net income of $1.5 billion and cash earnings per share of $2.86, down from $1.9 billion and $3.39, respectively, in the prior year.

“The challenging economic environment of the past year has had an impact on our results,” said Tony Comper, chairman and CEO. “Nonetheless, our return on equity of 13.8%, or 14.8% on a cash basis, is a testament to our consistent performance. Bank of Montreal is the only major bank in North America that can claim a return on equity of more than 13% for each of the last 12 years.”

BMO said the weakening of the economy, accelerated by the events of September 11, prompted it to raise provisions for credit losses and write-downs to $682 million, or $414 million after-tax in the fourth quarter of 2001.

These charges caused net income to decline year-over-year and resulted in earnings, excluding non-recurring items, falling to $109 million in the quarter.

Excluding the higher provisions and write-downs referred to above, cash earnings per share increased by 7% from fiscal 2000 and cash return on equity was 16.9%, excluding non-recurring items.

Excluding non-recurring items, Personal and Commercial Client Group net income for 2001 was slightly lower than in 2000, reflecting low revenue growth in the first half of the year, which was affected by implementing initiatives related to the bank’s longer-term growth strategies. Sales momentum improved in the second half of the year, but results were affected by lower net interest margins in the declining interest rate environment. Net income of the Personal and Commercial Client Group declined $86 million to $804 million for 2001.

Investment Banking Group was most affected by the higher provisions and write-downs announced in the fourth quarter and its results fell year-over-year as a result. Net income of the Investment Banking Group declined by $201 million to $402 million

Private Client Group continued to execute its strategy of expanding its distribution capabilities. Results fell year-over-year due to challenging market conditions, but the group is well positioned to benefit from a return to more active equity markets. Private Client Group net income declined $69 million to $121 million.