BMO Capital Markets Sets New Price Target of $168 for Bank of Montreal, Maintains Outperform Rating

RBC has raised Bank of Montreal's price target to $168, maintaining an Outperform rating, after the bank beat Q3 expectations. The North American bank provides a range of banking, wealth management, and investment services to 13 million customers across North America and select global markets. Its three operating groups include Personal and Commercial Banking, BMO Wealth Management, and BMO Capital Markets.

Bank of Montreal (BMO) has reported strong third-quarter (Q3) earnings, exceeding market expectations and prompting RBC to raise its price target to $168 while maintaining an "Outperform" rating. The North American bank's performance was driven by robust growth across its personal and commercial banking, wealth management, and global markets and investment banking segments. BMO serves approximately 13 million customers across North America and select global markets [1].

The bank's adjusted earnings per share (EPS) for the quarter ended July 31, 2025, were C$3.23, surpassing the average analyst estimate of C$2.96 and representing a year-over-year increase from C$2.64. Adjusted revenue for the quarter was C$8.99 billion, up from C$8.68 billion in the previous quarter and C$8.21 billion a year ago, exceeding the consensus estimate of C$8.89 billion [1].

Notably, the bank's net interest income climbed to C$5.50 billion, a significant improvement from C$5.10 billion in the previous quarter and C$4.81 billion a year ago. The adjusted net interest margin, excluding trading and insurance, rose to 1.99% from 1.97% in the prior quarter and 1.83% in the same quarter of 2024. The bank's noninterest revenue was C$3.49 billion, down from C$3.58 billion in the previous quarter but up from C$3.40 billion a year ago [1].

Credit losses provisions totaled C$797 million, lower than the C$917.8 million consensus estimate and down from C$1.05 billion in the previous quarter. The adjusted return on equity (ROE) climbed to 12.0% from 9.8% in the prior quarter and 10.6% in the same quarter of 2024 [1].

The Canadian Personal & Commercial Banking unit saw adjusted net income of C$870 million, an 11% quarter-over-quarter increase and a 5% year-over-year decline. The U.S. Personal & Commercial Banking unit reported adjusted net income of US$560 million, a 29% quarter-over-quarter increase and a 42% year-over-year increase. BMO Wealth Management's adjusted net income grew 21% quarter-over-quarter and year-over-year to C$441 million, while BMO Capital Markets' adjusted net income rose 1% quarter-over-quarter and 12% year-over-year to C$442 million [1].

The bank's stock price rose 0.6% in premarket trading on Tuesday following the announcement. BMO's CEO Darryl White noted that "disciplined execution against each of our ROE rebuild strategies is driving tangible results through consistent positive operating leverage, improving credit performance, and strengthening profitability, especially across our U.S. businesses." The bank is leveraging its strong balance sheet to support client growth and returning excess capital to shareholders [1].

In conclusion, Bank of Montreal's Q3 earnings report demonstrates robust performance across various segments, driven by strong growth in personal and commercial banking, wealth management, and global markets. The bank's ability to manage credit losses and improve profitability positions it well for future growth. The positive market reaction reflects investor confidence in the bank's strategic positioning and execution.

References:
[1] https://www.ainvest.com/news/bmo-q3-earnings-beat-price-target-raised-173-outperform-maintained-2508/
[2] https://www.marketscreener.com/news/rbc-raises-bank-of-montreal-price-target-to-168-keeps-outperform-after-q3-beat-ce7c50ded189fe22