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Loans, Higher Rates to Aid Bank of Montreal (BMO) Q2 Earnings
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Bank of Montreal (BMO - Free Report) is slated to announce second-quarter fiscal 2022 (ended Apr 30) results on May 25, before the opening bell. The company’s earnings are expected to have witnessed a year-over-year decline, while revenues are likely to have improved.
In the last reported quarter, the company’s earnings beat the Zacks Consensus Estimate and increased from the prior-year quarter figure. An improvement in revenues and higher loan demand supported results.
Bank of Montreal has an impressive earnings surprise history. Its earnings surpassed the Zacks Consensus Estimate in each of the trailing four quarters, with the average surprise being 14.54%.
The Zacks Consensus Estimate for fiscal second quarter earnings has moved 1.2% lower over the past seven days to $2.46 per share, which indicates a fall of 1.2% from the prior-year reported number. The consensus number for sales of $5.20 billion reflects 7.7% growth.
Before we take a look at what our quantitative model predicts, let’s check out the factors that are expected to have impacted Bank of Montreal’s fiscal second-quarter performance.
Factors to Influence Results
Net Interest Income (NII): Overall demand for loans improved in the February-April quarter, mainly on the back of an improving economy. Further, Bank of Canada raised the interest rates twice during the quarter. Thus, higher interest rates and gradually increasing loan demand are expected to have supported Bank of Montreal’s NII.
Investment Banking (IB) Fees: Unlike the past several quarters, deal-making came to a grinding halt in the fiscal second quarter as the ongoing Russia-Ukraine conflict and raging inflation numbers weighed on business sentiments globally. Similarly, the IPOs and follow-up equity issuances dried up as equity market performance turned disappointing.
On the other hand, bond issuances are likely to have been decent. Thus, Bank of Montreal’s IB business performance is expected to have been subdued in the to-be-reported quarter.
Trading Revenues: Due to persistent macroeconomic and geopolitical issues, equity markets witnessed a significant rise in volatility and higher client activity in the fiscal second quarter. Also, fixed income markets’ performance remained decent amid concerns related to inflation. Hence, Bank of Montreal's equity and fixed income markets revenues are expected to have improved in the to-be-reported quarter.
Provisions: With the rise in loan balance and expectations of economic slowdown due to geopolitical and inflation concerns, Bank of Montreal is expected to have built reserves in the fiscal second quarter.
What Our Model Predicts
Our model does not predict an earnings beat for Bank of Montreal this time around. This is because it doesn’t have the right combination of the two key ingredients — a positive Earnings ESP and a Zacks Rank #3 (Hold) or better.
You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Earnings ESP: Earnings ESP for Bank of Montreal is -1.60%.
Zacks Rank: The company currently has a Zacks Rank #3.
Some of the other Canadian banks that are slated to announce quarterly numbers are Canadian Imperial Bank of Commerce (CM - Free Report) and The Toronto-Dominion Bank (TD - Free Report)
Both CM and TD are scheduled to announce quarterly results on May 26.
Image: Bigstock
Loans, Higher Rates to Aid Bank of Montreal (BMO) Q2 Earnings
Bank of Montreal (BMO - Free Report) is slated to announce second-quarter fiscal 2022 (ended Apr 30) results on May 25, before the opening bell. The company’s earnings are expected to have witnessed a year-over-year decline, while revenues are likely to have improved.
In the last reported quarter, the company’s earnings beat the Zacks Consensus Estimate and increased from the prior-year quarter figure. An improvement in revenues and higher loan demand supported results.
Bank of Montreal has an impressive earnings surprise history. Its earnings surpassed the Zacks Consensus Estimate in each of the trailing four quarters, with the average surprise being 14.54%.
Bank Of Montreal Price and EPS Surprise
Bank Of Montreal price-eps-surprise | Bank Of Montreal Quote
The Zacks Consensus Estimate for fiscal second quarter earnings has moved 1.2% lower over the past seven days to $2.46 per share, which indicates a fall of 1.2% from the prior-year reported number. The consensus number for sales of $5.20 billion reflects 7.7% growth.
Before we take a look at what our quantitative model predicts, let’s check out the factors that are expected to have impacted Bank of Montreal’s fiscal second-quarter performance.
Factors to Influence Results
Net Interest Income (NII): Overall demand for loans improved in the February-April quarter, mainly on the back of an improving economy. Further, Bank of Canada raised the interest rates twice during the quarter. Thus, higher interest rates and gradually increasing loan demand are expected to have supported Bank of Montreal’s NII.
Investment Banking (IB) Fees: Unlike the past several quarters, deal-making came to a grinding halt in the fiscal second quarter as the ongoing Russia-Ukraine conflict and raging inflation numbers weighed on business sentiments globally. Similarly, the IPOs and follow-up equity issuances dried up as equity market performance turned disappointing.
On the other hand, bond issuances are likely to have been decent. Thus, Bank of Montreal’s IB business performance is expected to have been subdued in the to-be-reported quarter.
Trading Revenues: Due to persistent macroeconomic and geopolitical issues, equity markets witnessed a significant rise in volatility and higher client activity in the fiscal second quarter. Also, fixed income markets’ performance remained decent amid concerns related to inflation. Hence, Bank of Montreal's equity and fixed income markets revenues are expected to have improved in the to-be-reported quarter.
Provisions: With the rise in loan balance and expectations of economic slowdown due to geopolitical and inflation concerns, Bank of Montreal is expected to have built reserves in the fiscal second quarter.
What Our Model Predicts
Our model does not predict an earnings beat for Bank of Montreal this time around. This is because it doesn’t have the right combination of the two key ingredients — a positive Earnings ESP and a Zacks Rank #3 (Hold) or better.
You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Earnings ESP: Earnings ESP for Bank of Montreal is -1.60%.
Zacks Rank: The company currently has a Zacks Rank #3.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Earnings Release Dates of Other Canadian Banks
Some of the other Canadian banks that are slated to announce quarterly numbers are Canadian Imperial Bank of Commerce (CM - Free Report) and The Toronto-Dominion Bank (TD - Free Report)
Both CM and TD are scheduled to announce quarterly results on May 26.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.