BMO Q1 Profit Rises 45%, Beats Estimates

Bank of Montreal (TSE: BMO)(NYSE: BMO) reports strong increases in earnings in the first quarter of 2022 compared to the same period last year.

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Earnings & Revenue

Net income for the quarter ended December 31 rose to C$2.93 billion (C$4.43 per diluted share), up 45% from C$2.02 billion (C$3.03 per diluted share) a year earlier.

BMO’s adjusted earnings climbed to C$2.58 billion (C$3.89 per diluted share) in Q1 2022, compared with adjusted earnings of C$2.04 billion (C$3.06 per diluted share) in the prior-year quarter.

Analysts on average expected BMO to report adjusted earnings of C$3.28 per share in Q1 2022.

BMO’s Canadian personal and commercial banking business earned C$1,004 million in the first quarter, up 34% from a year earlier, while its U.S. personal and commercial banking operations earned C$681 million, up 18%.

The bank’s wealth management business grew C$315 million, compared with C$336 million in the same quarter last year.

Capital markets profits rose to C$705 million, an increase of 47% from the same quarter last year, thanks to continued strong revenue performance.

Revenue increased 10.7% to C$7.72 billion from C$6.98 billion a year earlier and beat estimates of C$6.64 billion.

In Q1, BMO recorded a reversal of C$99 million in its allowance for credit losses, compared to the C$156 million it set aside for bad loans in the same quarter last year.

The bank’s Common Equity Tier 1 ratio increased to 14.1% from 12.4%.

CEO Commentary

BMO CEO Darryl White said, “We continue to build on our operating momentum and delivered another quarter of very strong earnings, driven by our Canadian and U.S. Personal and Commercial businesses, including accelerating commercial loan growth, and ongoing strength in BMO Capital Markets. Our performance is underpinned by strong risk management and excellent credit quality. The targeted investments we are making in talent, technology and marketing are delivering stronger revenue growth, improved efficiency and return on equity.”

Wall Street’s Take

Following the results, Canaccord Genuity analyst Scott Chan kept a Buy rating on BMO with a price target of C$171. This implies 15.4% upside potential.

The rest of the Street is bullish on BMO with a Strong Buy consensus rating based on 10 Buys and one Hold. The average Bank of Montreal price target of C$164.66 implies 11.2% upside potential to current levels.

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