(February 29) – Bank of Montreal has crushed skeptical analyst expectations in reporting its best quarter ever.
The bank came out with earnings per share of $1.66 fully diluted for the quarter ended January 31, trumping consensus estimates of $1.33 per share, according to First Call. Earnings are up 33.9% year over year. Return on equity hit 19% in the quarter, up from 15.1% in the quarter a year ago and 9.8% in Q4 1999. BMO was the one bank that had seen analysts cutting estimates in recent weeks. However, net income was boosted by BMO’s sale of Partners First, backing out the bank’s gain from the sale of its U.S. credit card issuing business. EPS was $1.42 in the quarter, still well ahead of expectations.
“Bank of Montreal’s record quarter performance reflects the aggressive pursuit and execution of our six-point strategy,” said Tony Comper, chairman and CEO of the bank. “In particular, our goals to capitalize on our strong Canadian position in personal and commercial banking and rapidly grow the wealth management business were borne out with net income growth of 20.2% and 112.2% respectively.” The institutional and corporate businesses were flat.
Comper also highlighted strong performance at its U.S. subsidiary Harris Bank, noting that in the quarter the bank garnered 52.7% of its earnings from outside Canada. Lower taxes on those foreign earnings helped boost bottom-line results.
The wealth management business had earnings of $33 million in the quarter, up from $15 million last year. Revenues were up 28.7% due to increased volume in both full-service and direct investing. Expenses declined 20.8% due to higher variable compensation. The bank’s strategy of deploying financial advisors in bank branches began with 62 Investment Advisors and 94 Investment Funds Specialists now located in-branch. The bank has launched its online initiative at BMO Nesbitt Burns with research going online this month and trading due by summer.
– IE Staff