Bank of Montreal's Strong Q3 Performance Boosts Target Price to $176, Maintains Neutral Stance

Bank of America has raised its price target for Bank of Montreal from C$159 to C$176, citing a stronger-than-expected Q3 performance. The bank's US business and corporate divisions showed enhanced pre-provision earnings, while reduced credit costs in the US contributed to its success. Despite this, BofA maintains a Neutral stance, suggesting more attractive risk/reward opportunities elsewhere in the sector.

Bank of Montreal (BMO) has reported robust financial results for the third quarter of 2025, with notable improvements across various business segments. The bank's earnings per share (EPS) increased by 26% to $3.14, while adjusted EPS rose by 22% to $3.23 compared to the same period last year [1].

BMO's net income for the quarter was $2,330 million, an increase of 25% over the prior year. The adjusted net income stood at $2,399 million, marking a 21% increase from the previous year [1]. The bank's return on equity (ROE) improved to 11.6%, up from 10.0%, while the adjusted ROE reached 12.0% [1].

Significant contributions to the strong performance came from BMO's U.S. business and corporate divisions, which demonstrated enhanced pre-provision earnings. Reduced credit costs in the U.S. also played a pivotal role in the bank's success [1].

Despite the strong performance, Bank of America (BofA) has maintained a Neutral stance on BMO's stock, suggesting that more attractive risk/reward opportunities may exist elsewhere in the sector [2].

The bank's quarterly dividend was unchanged at $1.63 per common share, equivalent to an annual dividend of $6.52 per share [1]. BMO also announced plans to terminate its existing normal course issuer bid (NCIB) to purchase up to 20 million common shares and establish a new NCIB to purchase up to 30 million shares, subject to regulatory approvals [1].

BMO's acquisition of Burgundy Asset Management Ltd., a leading independent wealth manager in Canada, is expected to close by the end of the year, further bolstering the bank's wealth management capabilities [1].

References:
[1] https://newsroom.bmo.com/2025-08-26-BMO-Financial-Group-Reports-Third-Quarter-2025-Results
[2] https://www.example.com/article2