IPT: Bank of Montreal ebenchmark 6NC5 UKT+110 area

IPT: Bank of Montreal ebenchmark 6NC5 UKT+110 area

Bank of Montreal (BMO) reported its third-quarter earnings, surpassing analyst expectations and prompting a positive market reaction. The bank's adjusted earnings per share (EPS) for the quarter ended July 31, 2025, were C$3.23, exceeding the average analyst estimate of C$2.96 and representing a year-over-year increase from C$2.64 [1]. The bank's 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].

Key drivers of BMO's performance were robust growth in its personal and commercial banking, wealth management, and global markets and investment banking segments. 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 [1].

Notably, 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. 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 [1]. 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].

Analysts from RBC Capital and Scotiabank maintained an Outperform and Sector Perform rating, respectively, and raised their price targets for BMO shares [2]. The bank's performance in the U.S. division was particularly strong, with net income at the U.S. personal and commercial banking operation totaling C$709 million, up 51% from a year earlier and exceeding the C$648 million average forecast [2].

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://seekingalpha.com/news/4489104-bank-of-montreal-q3-earnings-beat-as-wealth-and-us-businesses-shine
[2] https://www.bloomberg.com/news/articles/2025-08-26/bmo-tops-estimates-on-us-results-lower-than-expected-provisions