Bank Of Montreal (BMO) Down 3.3% Despite Higher Q2 Earnings
Zacks Investment Research | May 31, 2019 08:19AM ET
Bank of Montreal (TSX:BMO) released second-quarter fiscal 2019 (ended Apr 30) results earlier this week. Adjusted net income was C$1.52 billion ($1.14 billion), up 4% year over year.
Results were primarily driven by rise in net interest income and non-interest income. Moreover, increase in loans and deposits supported the results.
However, higher expenses and weak trading performance were the undermining factors.Also, provisions increased during the quarter. Perhaps these concerns weighed on investors’ sentiments and the stock declined 3.3% on the NYSE since the release of the results.
After considering non-recurring items, net income was C$1.50 billion ($1.13 billion), up 20% from the prior-year quarter.
Revenues & Expenses Up
Total revenues (on an adjusted basis), net of insurance claims, commissions and changes in policy benefit liabilities (CCPB), amounted to C$5.65 billion ($4.24 billion), up 8% year over year.
Net interest income grew 18% year over year to C$3.13 billion ($2.35 billion). Non-interest income came in at C$3.08 billion ($2.31 billion), increasing 6%.
Adjusted non-interest expenses increased 10% year over year to C$3.56 billion ($2.67 billion).
Efficiency ratio, net of CCPB, was 63.0% at the end of the reported quarter compared with 61.3% as of Apr 30, 2018. Rise in efficiency ratio indicates deterioration in profitability.
Adjusted provision for credit losses increased 10% year over year to C$176 million ($132.1 million).
Loans & Deposits Rise
Total assets increased 3% from the prior quarter to C$830.5 billion ($620.2 billion) as of Apr 30, 2019. Further, total net loans were up 4% sequentially to C$413.2 ($308.6 billion) while total deposits rose 3% to C$548.8 billion ($409.9 billion).
Strong Profitability & Capital Ratios
Return on equity, as adjusted, came in at 13.9% in the reported quarter, down from 14.9% as of Apr 30, 2018 level.
As of Jan 31, 2019, common equity Tier I ratio was 11.3%, on par with Apr 30, 2018 level. Tier I capital ratio was 12.7%compared with 129% in the prior-year quarter.
Our Viewpoint
Bank of Montreal’s focus and efforts remain aligned with its organic and inorganic growth strategies, and are expected to boost revenues, going forward. Nevertheless, mounting expenses continue to strain the company’s profitability.
Bank Of Montreal Price, Consensus and EPS Surprise
Zacks Investment Research
Get The News You Want
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.