Bank of Montreal's Q1 adjusted profit falls but beats analyst estimates

The Bank of Montreal in Toronto's Financial District on Tuesday, April 4, 2017. THE CANADIAN PRESS/Aaron Vincent Elkaim

Republished February 27, 2018 - 8:17 AM

Original Publication Date February 27, 2018 - 4:26 AM

TORONTO - Bank of Montreal's adjusted net income for the first quarter dropped by seven per cent to $1.422 billion in the first quarter, but still came in ahead of analyst estimates.

The bank's adjusted net income amounted to $2.12 per share — above the estimate of $2.06 per share from Thomson Reuters.

Without adjustments, Bank of Montreal's net income for the quarter ended Jan. 31 was $973 million or $1.43 per share, down 35 per cent from a year earlier — mostly because of a $425 million one-time item related to U.S. tax reform.

BMO's main Canadian banking operation reported $647 million of adjusted net income, down $98 million from a year earlier when the lender saw a gain on the sale of Moneris' U.S. operations. Its main U.S. banking operation had $321 million of adjusted net income, up $60 million from a year earlier.

BMO Wealth Management had $276 million of adjusted net income, down $8 million from a year earlier.

Chief executive Darryl White said a constructive economic environment in the United States played to the bank's strengths.

"Looking ahead, we see attractive opportunities to deliver organic growth and achieve our financial objectives," White said.

The lender left its dividend unchanged at 93 cents per common share, after hiking the dividend three cents in the previous quarter.

BMO's common equity tier 1 ratio, a key measure of the bank's financial health, was 11.1 per cent as of Jan. 31, down from 11.4 in the previous quarter but flat compared with a year ago.

The lender's total provisions for credit losses, or money set aside for bad loans, was $141 million in the latest quarter, down from $167 million a year earlier. However, this quarter marks the first for the banks to report this measure using a new accounting standard that puts a greater emphasis on the banks' expected losses over the life of the loan. Therefore, this metric is expected to see more fluctuation than in previous quarters.

Companies in this story: (TSX:BMO)

Note to readers: An earlier version had an incorrect headline.