Bank of Montreal (BMO) experienced a decline in its third-quarter fiscal 2024 earnings, ending July 31, with adjusted earnings per share dropping 10.2% year-over-year to C$2.64. This decrease was primarily attributed to a significant increase in provisions for credit losses and a decline in net interest income (NII). However, the bank saw positive contributions from higher non-interest income, an increase in loans and deposit balances, and lower expenses. After accounting for non-recurring items, net income reached C$1.87 billion ($1.37 billion), representing a 19.2% increase compared to the same period last year.
Total revenues (adjusted), net of insurance claims, commissions, and changes in policy benefit liabilities (CCPB), came in at C$8.21 billion ($5.99 billion), marking a slight year-over-year increase. NII, however, declined by 2% year-over-year to C$4.81 billion ($3.51 billion). Conversely, non-interest income rose by 3.4% to C$3.4 billion ($2.48 billion). Adjusted non-interest expenses decreased by 5% to C$4.7 billion ($3.43 billion). The adjusted efficiency ratio (net of CCPB) was 57.3%, down from 60.3% as of July 31, 2023.
Provision for credit losses (adjusted) for the quarter reached C$906 million ($515.5 million), a significant surge of 84.1% compared to the same period in the previous year.
As of July 31, 2024, total assets for Bank of Montreal amounted to C$1.4 trillion ($1 trillion), reflecting a 1.9% increase from the previous quarter. Total net loans grew by 2.5% sequentially to C$673.2 billion ($486.9 billion). Total deposits saw a 3% increase to C$965.2 billion ($698.1 billion).
Bank of Montreal’s return on common equity (adjusted) stood at 10.6% in the third quarter, compared to 12.5% as of July 31, 2023. Adjusted return on tangible common equity was 14.2%, down from 17.1% in the previous year. As of July 31, 2024, the Common Equity Tier-I ratio was 13%, up from 12.3% a year ago. The Tier-I capital ratio reached 14.8%, compared to 14% in the previous year.
Bank of Montreal’s focus and efforts in line with its organic and business restructuring strategies are expected to support revenue growth in the coming period. However, the bank faces headwinds from elevated expenses and an uncertain macroeconomic environment.
Toronto-Dominion Bank (TD) reported a GAAP-basis loss in the third quarter of fiscal 2024 (ended July 31), primarily due to provisions related to investigations concerning its anti-money laundering practices by U.S. regulators. The net loss (GAAP basis) amounted to C$181 million ($132.2 million), a stark contrast to the net income of $2.88 billion in the same period last year. This decline was influenced by significant increases in provisions for credit losses and higher expenses. Conversely, growth in NII and non-interest income, coupled with a higher loan balance, provided support to TD’s quarterly performance.
Canadian Imperial Bank of Commerce (CM) is scheduled to announce its quarterly results on August 29. The Zacks Consensus Estimate for CM’s quarterly earnings has been revised slightly lower over the past seven days.
