Bank of Montreal 3Q ROE 11.6% vs 10% y/y

Bank of Montreal 3Q ROE 11.6% vs 10% y/y

Bank of Montreal (BMO) has reported a significant increase in its Return on Equity (ROE) for the third quarter of 2025, rising to 11.6% from 10% in the previous year. This improvement reflects the bank's robust financial performance and strategic initiatives [1].

The earnings report, released on August 26, 2025, highlighted several key highlights. BMO's adjusted net income and earnings per share (EPS) increased by 1% year-over-year to $2 billion and $2.62, respectively. Pre-provision pre-tax (PPPT) earnings grew by 12%, while the Common Equity Tier 1 (CET1) ratio remained strong at 13.5%. The bank also completed 50% of its Non-Core Investment in Business (NCIB) program and announced a 5% dividend increase [1].

The bank's strong capital position and positive operating leverage contributed to the ROE increase. For the first half of the year, EPS grew by 10%, driven by year-to-date revenue growth of 13%. Pre-provision pre-tax earnings of $7.8 billion were up by 22%, with all bank operating leverage of 5.7%. BMO's US Personal and Commercial (P&C) segment showed 7% year-over-year growth in checking account acquisition in West markets, while BMO Wealth Management continued to perform well with a return on equity of 29% year-to-date [1].

However, the report also noted challenges such as higher provisions and macroeconomic uncertainties. BMO is focused on risk management and strategic priorities to enhance returns in a challenging macroeconomic environment [1].

Institutional investors have taken notice of BMO's performance. Newport Trust Company LLC decreased its holdings in BMO by 2.1% in the first quarter, while Cary Street Partners Investment Advisory LLC boosted its stake by 228.9% during the same period. Other investors such as Bayforest Capital Ltd and CX Institutional also increased their positions in BMO [2].

The stock price of BMO has shown mixed reactions to the earnings reports. Following the Q2 2025 earnings announcement, the stock price increased by 0.48%, but it fell by 6.45% after the Q3 2024 report [1].

Analysts have provided varying ratings for BMO. CIBC reaffirmed a "neutral" rating, while National Bankshares reaffirmed an "outperform" rating. Wall Street Zen upgraded BMO from a "sell" rating to a "hold" rating, and Scotiabank started coverage with a "sector perform" rating [2].

In conclusion, Bank of Montreal's 3Q ROE increase to 11.6% demonstrates the bank's strong financial performance and strategic initiatives. However, challenges such as higher provisions and macroeconomic uncertainties remain. Investors should closely monitor BMO's future earnings and strategic developments.

References:
[1] https://www.tipranks.com/stocks/tse:bmo/earnings
[2] https://www.marketbeat.com/instant-alerts/filing-bank-of-montreal-bmo-stake-reduced-by-newport-trust-company-llc-2025-08-22/