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BMO Financial Group topped analyst expectations in the third quarter as it reported strong declines in impaired loans among other indications of a recovering economy.

“The economy and our customers have shown remarkable resilience to an evolving landscape of pandemic-related restrictions,” BMO chief executive Darryl White told an investor conference call Tuesday.

“With those now lifting and vaccination rates continuing to climb, the Canadian and U.S. economies remain poised for the strongest growth in decades.”

The bank set provisions for credit losses on impaired loans at $71 million in the quarter that ended July 30, a decrease of $375 million from $446 million in the prior year.

It also reported a $141-million recovery of credit losses on performing loans in the current quarter, for a net total recovery of credit losses of $70 million, compared with credit loss provisions of $1.05 billion in the same quarter last year.

The bank said the recovery of credit losses reflected “an improving economic outlook and positive credit migration.”

The shift helped the company report a third-quarter profit of nearly $2.28 billion, or $3.41 per diluted share, up from a profit of $1.23 billion, or $1.81 per diluted share a year ago.

On an adjusted basis, BMO says it earned $3.44 per diluted share in its latest quarter, up from an adjusted profit of $1.85 per diluted share in the same quarter last year.

Revenue totalled $7.56 billion, up from $7.19 billion.

Analysts on average had expected an adjusted profit of $2.94 per share, according to financial market data firm Refinitiv.

Close to 25 cents per share of the bank’s higher-than-expected earnings could be attributed to credit from the well performing loan portfolio, said John Aiken, head of research (Canada) at Barclays, in a research note.

“Impaired loan balances were down strongly, with retail formations down,” Aiken said.

While the bank reported strong earnings, it and other Canadian banks have been unable to increase dividends or share buybacks because of restrictions imposed by the federal regulator.

White said the bank would likely try to increase dividends soon after the restrictions are lifted.

“The priority really for us in terms of the excess capital is we will look to getting our payout ratio back to where it was probably fairly quickly, if I had to guess. Then we’ll look at other means of returning capital through dividend increases over the course of the ensuing quarters.”

BMO said its Canadian personal and commercial banking operations earned $815 million in the quarter, up from $319 million in the same quarter last year.

The bank’s U.S. personal and commercial banking business saw its profit more than double to $533 million compared with $263 million a year ago.

BMO’s wealth management business earned $401 million in the quarter, up from $341 million a year ago, while its capital markets arm earned $558 million, up from $426 million.