Bank of Montreal (BMO - Free Report) reported third-quarter fiscal 2018 (ended Jul 31, 2018) adjusted net income of C$1.6 billion ($1.2 billion), which increased 14% year over year.
Results were primarily driven by rise in revenues and lower provisions. Moreover, balance-sheet position remained strong. However, higher expenses were an undermining factor.
After considering non-recurring items, net income was C$1.5 billion ($1.2 billion), up 11% from the prior-year quarter.
Revenues Improve, Provisions Decline, Expenses Up
Total revenues (on an adjusted basis), net of insurance claims, commissions and changes in policy benefit liabilities (CCPB), amounted to C$5.6 billion ($4.3 billion), up 7.7% year over year.
Net interest income rose 4% year over year to C$2.6 billion ($2.0 billion). Non-interest income came in at C$3.2 billion ($2.5 billion), up 10.3% year over year.
Adjusted non-interest expenses flared up 3.7% year over year to C$3.4 billion ($2.6 billion). Efficiency ratio, net of CCPB, was 61% at the quarter end compared with 63.1% as of Jul 31, 2017. Fall in efficiency ratio indicates improved profitability.
Adjusted provision for credit losses decreased 7.9% year over year to C$186 million ($142.6 million).
Balance Sheet Position
Total assets increased 8% from the prior-year quarter to C$765.3 billion ($587.8 billion) as of Jul 31, 2018. Further, net loans and acceptances were up nearly 5.9% year rover year to C$393.6 billion ($302.3 billion), while deposits rose 7.9% year rover year to C$506.9 billion ($389.3 billion).
Profitability & Capital Ratios Improve
Return on equity, as adjusted, came in at 15% in the reported quarter, up from 13.3% as of Jul 31, 2017.
As of Jul 31, 2018, common equity Tier I ratio came in at 11.4% compared with 11.2% witnessed in the year-ago quarter. Tier I capital ratio was 12.9%, in line with the prior-year quarter.
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. Nevertheless, mounting expenses continue to strain the company’s profitability.
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.
UBS Group AG (UBS - Free Report) reported second-quarter 2018 net profit attributable to shareholders of CHF 1.28 billion ($1.30 billion), up around 9% from the prior-year quarter. Results displayed rise in net fee and commission income (up 2% year over year) and strong capital position. However, the quarter reflected elevated expenses and lower net interest income (down 30%).
Deutsche Bank AG (DB - Free Report) reported net income of €401 million ($467 million) in second-quarter 2018, which tanked 13.7% from year-ago quarter. Income before income taxes plunged 13.5% year over year to €711 million ($828.1 million). Lower revenues and higher expenses were the key undermining factors. Moreover, provisions for credit losses increased. Notably, net asset outflows were recorded during the quarter. Nevertheless, strong capital position was a positive.
Itau Unibanco Holding S.A. (ITUB - Free Report) posted recurring earnings of R$6.4 billion ($1.78 billion) in second-quarter 2018, up 3.2% year over year. Including non-recurring items, net income came in at R$6.2 billion ($1.72 billion), up 3.3% year over year. Results display higher revenues, lower provisions and a solid balance-sheet position. Nonetheless, elevated expenses and reduced managerial financial margin were headwinds.
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