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Bank of Montreal (BMO) Q4 Earnings Decline, Provisions Up
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Bank of Montreal (BMO - Free Report) reported fourth-quarter fiscal 2017 (ended Oct 31, 2017) adjusted earnings per share (EPS) of $1.94, decreasing 7.6% year over year.
Results were primarily hurt by a decline in revenues. Also, higher provisions were on the negative side. However, expenses declined marginally. Moreover, balance sheet position remained strong.
After considering non-recurring items, net income was C$1.2 billion ($1 billion), declining 8.8% from the prior-year quarter.
Revenues & Expenses Decline, Provisions Rise
Total revenues (on an adjusted basis), net of insurance claims, commissions and changes in policy benefit liabilities (CCPB), amounted to C$5.1 billion ($4.1 billion), down 2.3% year over year.
Net interest income rose 1.5% year over year to C$2.5 billion ($2.0 billion). Non-interest income came in at C$3.1 billion ($2.5 billion), up 12.2% year over year.
Adjusted non-interest expenses decreased marginally year over year to C$3.3 billion ($2.6 billion). Efficiency ratio, net of CCPB, was 66.3% at the quarter-end compared with 63.9% as of Oct 31, 2016. Rise in efficiency ratio indicates lower profitability.
Total provision for credit losses increased 19.5% year over year to C$208 million ($166.4 million).
Balance Sheet Position
Total assets increased marginally from the prior quarter to C$709.6 billion ($551.5 billion) as of Oct 31, 2017. Further, net loans and acceptances increased nearly 1% sequentially to C$378.2 billion ($293.9 billion), while deposits increased 2.2% sequentially to C$483.5 billion ($375.8 billion).
Profitability Declines While Capital Ratios Improve
Return on equity, as adjusted, came in at 12.9% in the reported quarter, down from 14.4% as of Oct 31, 2016.
As of Oct 31, 2017, common equity Tier I ratio came in at 11.4% compared with 10.1% in the year-ago quarter. Tier I capital ratio was 13.0%, up from 11.6% as of Oct 31, 2016.
Dividend Hike
Concurrently, the company announced quarterly dividend per share of 93 cents, increasing 3% from the prior payout. The dividend will be paid on Feb 27, 2018 to shareholders on record as of Feb 1, 2018.
Our Viewpoint
Bank of Montreal’s focus and efforts remain aligned with its organic and inorganic growth strategies, and are expected to boost revenues, going forward. Also, the stock’s steady capital deployment activities supported by strong capital position will help it gain investors’ confidence. However, mounting expenses continue to strain the company’s profitability.
Bank Of Montreal Price, Consensus and EPS Surprise
Barclays PLC’s (BCS - Free Report) third-quarter 2017 net income attributable to ordinary equity holders was £583 million ($763.1 million), reflecting a significant improvement from £190 million in the prior-year quarter.
HSBC Holdings plc (HSBC - Free Report) reported third-quarter 2017 results, wherein it registered net profit attributable to shareholders of $3 billion, which improved from a loss of $617 million in the year-ago quarter.
Deutsche Bank AG (DB - Free Report) reported net income of €649 million ($762.6 million) in third-quarter 2017, increasing significantly on a year-over-year basis. Income before income taxes grew 50.7% year over year to €933 million ($1.1 billion).
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Bank of Montreal (BMO) Q4 Earnings Decline, Provisions Up
Bank of Montreal (BMO - Free Report) reported fourth-quarter fiscal 2017 (ended Oct 31, 2017) adjusted earnings per share (EPS) of $1.94, decreasing 7.6% year over year.
Results were primarily hurt by a decline in revenues. Also, higher provisions were on the negative side. However, expenses declined marginally. Moreover, balance sheet position remained strong.
After considering non-recurring items, net income was C$1.2 billion ($1 billion), declining 8.8% from the prior-year quarter.
Revenues & Expenses Decline, Provisions Rise
Total revenues (on an adjusted basis), net of insurance claims, commissions and changes in policy benefit liabilities (CCPB), amounted to C$5.1 billion ($4.1 billion), down 2.3% year over year.
Net interest income rose 1.5% year over year to C$2.5 billion ($2.0 billion). Non-interest income came in at C$3.1 billion ($2.5 billion), up 12.2% year over year.
Adjusted non-interest expenses decreased marginally year over year to C$3.3 billion ($2.6 billion). Efficiency ratio, net of CCPB, was 66.3% at the quarter-end compared with 63.9% as of Oct 31, 2016. Rise in efficiency ratio indicates lower profitability.
Total provision for credit losses increased 19.5% year over year to C$208 million ($166.4 million).
Balance Sheet Position
Total assets increased marginally from the prior quarter to C$709.6 billion ($551.5 billion) as of Oct 31, 2017. Further, net loans and acceptances increased nearly 1% sequentially to C$378.2 billion ($293.9 billion), while deposits increased 2.2% sequentially to C$483.5 billion ($375.8 billion).
Profitability Declines While Capital Ratios Improve
Return on equity, as adjusted, came in at 12.9% in the reported quarter, down from 14.4% as of Oct 31, 2016.
As of Oct 31, 2017, common equity Tier I ratio came in at 11.4% compared with 10.1% in the year-ago quarter. Tier I capital ratio was 13.0%, up from 11.6% as of Oct 31, 2016.
Dividend Hike
Concurrently, the company announced quarterly dividend per share of 93 cents, increasing 3% from the prior payout. The dividend will be paid on Feb 27, 2018 to shareholders on record as of Feb 1, 2018.
Our Viewpoint
Bank of Montreal’s focus and efforts remain aligned with its organic and inorganic growth strategies, and are expected to boost revenues, going forward. Also, the stock’s steady capital deployment activities supported by strong capital position will help it gain investors’ confidence. However, mounting expenses continue to strain the company’s profitability.
Bank Of Montreal Price, Consensus and EPS Surprise
Bank Of Montreal Price, Consensus and EPS Surprise | Bank Of Montreal Quote
Bank of Montreal currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance of Other Foreign Banks
Barclays PLC’s (BCS - Free Report) third-quarter 2017 net income attributable to ordinary equity holders was £583 million ($763.1 million), reflecting a significant improvement from £190 million in the prior-year quarter.
HSBC Holdings plc (HSBC - Free Report) reported third-quarter 2017 results, wherein it registered net profit attributable to shareholders of $3 billion, which improved from a loss of $617 million in the year-ago quarter.
Deutsche Bank AG (DB - Free Report) reported net income of €649 million ($762.6 million) in third-quarter 2017, increasing significantly on a year-over-year basis. Income before income taxes grew 50.7% year over year to €933 million ($1.1 billion).
Wall Street’s Next Amazon
Zacks EVP Kevin Matras believes this familiar stock has only just begun its climb to become one of the greatest investments of all time. It’s a once-in-a-generation opportunity to invest in pure genius.
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