BMO's White: Will look at M&A, but boosting US ROE is priority

BMO's White: Will look at M&A, but boosting US ROE is priority

Bank of Montreal (BMO) has announced an expansion of its 2025 Normal Course Issuer Bid (NCIB), authorizing the repurchase of up to 30 million common shares. This move represents a 50% increase from its previous program, aiming to boost earnings per share (EPS) by 8-10% annually. The strategy leverages a robust 13.5% CET1 capital buffer, supporting return on equity (ROE) growth from 9.3% in 2024 to 12% in Q3 2025 while maintaining regulatory compliance.

The expanded NCIB is a strategic move to maximize shareholder value and align with BMO’s broader goal of rebuilding ROE. As of August 22, 2025, BMO had spent $2.29 billion to buy back 15.95 million shares under its prior program, averaging $143.39 per share. The new bid, subject to regulatory approvals, will allow BMO to continue this momentum with a daily purchase limit of 719,814 shares, ensuring flexibility without market disruption.

Market reactions have been largely positive, with BMO’s stock surging 3.53% intraday after the announcement and hitting a 52-week high of $118.34. The move is seen as a strategic complement to BMO’s recent acquisition of Burgundy Asset Management, enhancing its wealth management capabilities for high-net-worth clients. Together, these initiatives reflect a dual focus on organic growth and capital efficiency, a combination that has historically driven outperformance in the banking sector.

Critically, BMO’s 13.5% CET1 capital buffer provides a safety net for this aggressive buyback program, ensuring regulatory compliance while allowing the bank to deploy excess capital effectively. This buffer, combined with a 21% year-over-year increase in adjusted net income and a 5% dividend hike, underscores the bank’s ability to balance shareholder returns with long-term resilience.

For investors, BMO’s expanded NCIB is a strategic lever to optimize capital structure and reward shareholders. In a market where capital allocation often determines long-term value, BMO’s move positions it as a leader in prudent and impactful resource deployment.

References:
[1] https://www.stocktitan.net/news/BMO/bank-of-montreal-receives-regulatory-approvals-for-normal-course-q59fcplschct.html
[2] https://www.ainvest.com/news/bank-montreal-path-rebuilding-roe-implications-long-term-shareholder-2508/
[3] https://www.ainvest.com/news/bank-montreal-surges-3-5-record-buyback-earnings-beat-bullish-catalyst-2508/
[4] https://www.panabee.com/news/bmo-boosts-share-buyback-by-50-to-30-million-shares