Bank of Montreal beat analysts’ expectations as profits climb across the company

Bank of Montreal reported third-quarter earnings Tuesday. Photo by Ben Nelms/Bloomberg

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The Bank of Montreal topped analysts’ third-quarter earnings expectations after the lender posted higher profits in each of its major business segments.

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BMO’s net income for the three months ending July 31 was $1.75 billion, compared to $2.33 billion during the same quarter last year, resulting in net earnings per share of $2.38.

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Its adjusted net income — which removes the impact of non-recurring items — was $2.85 billion, up 19 per cent year-over-year, resulting in adjusted earnings per share of $3.96, which topped analysts’ expectations of about $3.76.

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The decrease in reported results was primarily due to a $962-million charge related to the bank’s decision to sell its transportation business. The announcement was made in May, when the lender said that it would record an after-tax charge related to a reduction in goodwill. 

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“BMO delivered another strong quarter,” the lender’s chief executive Darryl White said in a statement on Tuesday. “Every business segment delivered record pre-provision, pre-tax earnings, with sustained momentum in capital markets and wealth management, and continued commercial loan growth in both Canada and the United States.” 

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BMO also announced a fourth-quarter dividend of $1.71 per common share — unchanged from the previous quarter — payable on Nov. 26. In addition, the lender announced its intention to repurchase 25 million of its shares.

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The Big Six banks‘ earnings tend to provide insights into the Canadian economy, which has been under more strain since the Iran conflict pushed up energy prices. U.S. President Donald Trump‘s newest tariffs, which kicked in this week, along with his threats to impose more levies, have created further economic uncertainty.

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The bank’s adjusted net income in its Canadian personal and commercial banking and U.S. banking segments increased by 15 per cent to $983 million and 11 per cent to $925 million, respectively. Similarly, the lender’s profit in its wealth management and capital markets segments increased by 22 per cent to $480 million and 45 per cent to $649 million, respectively.

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The lender’s provision for credit losses, or the amount of money that banks keep aside to tackle loans that may potentially go bad, was $722 million, compared to $797 million during the same quarter last year.

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Earlier this month, BMO, along with the Royal Bank of Canada, announced the sale of Moneris Solutions Corp., one of Canada’s largest payment processors, to San Francisco-based investment firm Francisco Partners for $2 billion. Once the sale is completed early next year, BMO will record a gain of approximately $600 million after tax.

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On BMO’s Investor Day in March, management said it expected to hit its 15 per cent ROE target as the bank exits fiscal 2027, in part because it is trying to bolster its business in the United States, which accounts for 40 per cent of its overall earnings.

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BMO has been looking to reposition its U.S. business since buying San Francisco-based Bank of the West in 2023. Chief executive Darryl White in May said BMO had gone through “six quarters of optimization” that had come to an end and that he expected the U.S. business to accelerate the lender’s overall profit growth.

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