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Bank Of Montreal (BMO)
NYSE:BMO
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Bank Of Montreal
(NYSE:BMO)
Rating:77Outperform
Price Target:―
Positive Factors
Earnings
BMO reported an EPS beat driven by lower-than-expected Corporate losses.
Financial performance
The stock outperformed peers after reporting stronger growth due to a narrower loss in the corporate segment and lower credit costs.
Net interest margins
Balance sheet optimization actions, such as selling a non-relationship credit card portfolio and focusing on core checking deposits, are boosting net interest margins and return on equity.
Negative Factors
Capital Markets performance
Capital Markets performance was below estimates despite a 14% increase in Global Markets revenue.
Credit risks
Risks from tariffs could impact credit improvements, with potential rises in impaired provisions for credit losses.
Impaired provisions
BMO noted that impaired PCLs could trend up slightly in the back half of the year, which was worse than expected but reasonable given the current climate.
Bank Of Montreal (BMO) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$78.18B
Dividend Yield4.16%
Average Volume (3M)592.31K
Price to Earnings (P/E)14.0
Beta (1Y)0.80
Revenue Growth15.63%
EPS Growth66.95%
CountryUS
Employees53,597
SectorFinancial
Sector Strength82
IndustryBanks - Diversified
Share Statistics
EPS (TTM)1.91
Shares Outstanding722,070,740
10 Day Avg. Volume527,028
30 Day Avg. Volume592,306
Financial Highlights & Ratios
PEG Ratio1.06
Price to Book (P/B)1.16
Price to Sales (P/S)0.00
P/FCF Ratio6.31
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$116.88Price Target Upside7.93% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering10
Bank Of Montreal Business Overview & Revenue Model
Company DescriptionThe Bank of Montreal (BMO) is a multinational financial services provider headquartered in Canada. It operates in several sectors including personal and commercial banking, wealth management, and capital markets. BMO offers a wide range of products and services, such as personal and business banking, investment solutions, mortgage loans, credit cards, and financial advisory services. With a strong presence in North America, BMO serves millions of customers through its extensive network of branches and ATMs, as well as digital banking platforms.
How the Company Makes MoneyBMO makes money primarily through interest income and non-interest income. Interest income is generated from loans and mortgages offered to personal and commercial banking customers. The bank earns interest on the funds it lends, which is a major component of its revenue. Non-interest income comes from fees and commissions associated with various financial services, including wealth management, investment banking, and trading activities. BMO also benefits from its capital markets operations, which provide services such as underwriting, advisory, and trading solutions. Additionally, strategic partnerships and collaborations with financial technology firms and other institutions enhance its service offerings and contribute to its revenue growth.
Bank Of Montreal Earnings Call Summary
Earnings Call Date:May 29, 2025
(Q2-2025)
| % Change Since: 1.88%|
Next Earnings Date:Aug 26, 2025
Earnings Call Sentiment Neutral
The earnings call reflects a positive outlook with strong financial metrics and strategic initiatives driving growth. However, economic uncertainties and trade challenges pose risks, leading to increased provisions for credit losses and muted commercial loan growth. Overall, the bank is well-positioned for future growth but remains cautious about external economic conditions.Q2-2025 Updates
Positive Updates
Strong PPPT Growth
Pre-provision pretax earnings (PPPT) grew 12%, reflecting robust performance across diversified businesses.
CET1 Ratio and Capital Position
CET1 ratio remains strong at 13.5%, allowing for continued investment in growth and shareholder returns.
Dividend Increase
Announced an increase in the dividend by four cents, representing a 5% increase from last year.
Positive Operating Leverage
Achieved positive operating leverage of 2.7% with disciplined expense management and revenue growth.
Wealth Management and Capital Markets Performance
Wealth management net income increased by 13% and Capital Markets PPPT exceeded guidance with strong trading revenue, particularly in commodities.
Digital and Product Innovations
Successful launch of VIP Porter loyalty cards and savings amplifier account surpassing $10 billion in deposits, contributing to customer growth.
Negative Updates
Higher Provisions for Credit Losses
Total PCLs increased by $349 million year-over-year, reflecting economic uncertainty and trade policy impacts.
Challenges in US Commercial Loan Growth
Muted loan growth in the US commercial sector with a sequential decline, attributed to trade uncertainties.
Lower Non-Interest Revenue
Non-interest revenue experienced a decline, influenced by loss on the US credit card portfolio sale and fewer days in the quarter.
Impact of Trade Uncertainties
Economic uncertainties related to trade policies affecting customer and market activities, with GDP growth expected to slow in Canada and the US.
Company Guidance
In the Bank of Montreal's Q2 2025 earnings call, several key metrics were highlighted. The bank reported adjusted net income and EPS of $2.62, with PPPT growth of 12%. The CET1 ratio stood at 13.5%, reflecting a robust capital position. Year-to-date EPS grew by 10% due to a 13% increase in revenue. Pre-provision pretax earnings reached $7.8 billion, marking a 22% increase, while ROE improved to 10.6%. The bank announced a 5% dividend increase and completed 50% of its NCIB program. In commercial banking, 90% of borrowers utilized additional services, showcasing diversified revenue streams. Their TPS revenue grew by 20%, contributing substantially to overall revenue. Wealth management's ROE rose to 29%, with net new asset growth being the second highest on record. In capital markets, PPPT exceeded guidance at $684 million, driven by strong trading revenue, particularly in commodities. Despite macroeconomic uncertainties, the bank focuses on maintaining positive operating leverage and enhancing shareholder returns.Bank Of Montreal Financial Statement Overview
Summary
Bank of Montreal demonstrates a strong overall financial position with stable revenue growth and profitability. The company's effective cash conversion is notable, though high leverage and moderate EBIT margin indicate areas for improvement. Continued focus on operational efficiency and cash flow management will be crucial for sustaining growth.Income Statement
The income statement shows a solid performance with a significant increase in total revenue from the previous year by 38.24% (TTM). The gross profit margin is robust, indicating efficient cost management. However, the EBIT margin is moderate at 6.96%, suggesting room for improvement in operational efficiency. The net profit margin is healthy at 18.42%, highlighting profitability.75
Positive
Balance Sheet
The balance sheet reflects a stable financial position with a debt-to-equity ratio of 3.13, which is typical for the banking industry but indicates high leverage. The equity ratio is 5.96%, suggesting a conservative level of equity financing. Return on Equity is a strong 9.32%, affirming effective use of shareholders' funds.70
Positive
Cash Flow
The cash flow statement shows a decline in free cash flow growth rate compared to previous periods, indicating potential challenges in generating cash. The operating cash flow to net income ratio is 2.15, suggesting effective conversion of income to cash. However, the free cash flow to net income ratio of 1.96 indicates less cash available after capital expenditures.68
Positive
| Breakdown | |||||
| TTM | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|---|
| Income Statement | Total Revenue | ||||
| 44.31B | 32.04B | 29.02B | 26.26B | 26.91B | 25.02B | Gross Profit |
| 45.22B | 32.04B | 33.05B | 26.26B | 26.91B | 25.02B | EBIT |
| 6.33B | 11.18B | 10.30B | 28.90B | 10.26B | 6.35B | EBITDA |
| 6.17B | 11.18B | 7.71B | 19.00B | 11.44B | 7.61B | Net Income Common Stockholders |
| 8.16B | 7.32B | 4.37B | 13.54B | 7.75B | 5.10B |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | ||||
| 180.06B | 113.53B | 114.31B | 118.21B | 121.97B | 95.24B | Total Assets |
| 1.47T | 1.41T | 1.29T | 1.14T | 988.17B | 949.26B | Total Debt |
| 274.34B | 262.44B | 248.74B | 222.64B | 189.81B | 187.01B | Net Debt |
| 194.54B | 193.70B | 166.69B | 129.44B | 88.24B | 120.57B | Total Liabilities |
| 1.38T | 1.33T | 1.22T | 1.07T | 930.65B | 892.67B | Stockholders Equity |
| 87.56B | 84.25B | 77.01B | 71.04B | 57.52B | 56.59B |
| Cash Flow | Free Cash Flow | ||||
| 16.02B | 27.47B | 7.91B | 3.51B | 43.07B | 49.80B | Operating Cash Flow |
| 17.57B | 29.03B | 9.59B | 4.96B | 44.05B | 50.84B | Investing Cash Flow |
| -31.52B | -24.53B | -21.16B | -29.47B | -299.00M | -31.97B | Financing Cash Flow |
| 7.31B | -17.41B | 268.00M | 15.98B | -5.12B | -10.30B |
Bank Of Montreal Technical Analysis
Positive
108.29
Price Trends
98.01
Positive
97.96
Positive
93.82
Positive
Market Momentum
2.91
Negative
85.54
Negative
90.04
Negative
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For BMO, the sentiment is Positive. The current price of 108.29 is above the 20-day moving average (MA) of 104.74, above the 50-day MA of 98.01, and above the 200-day MA of 93.82, indicating a bullish trend. The MACD of 2.91 indicates Negative momentum. The RSI at 85.54 is Negative, neither overbought nor oversold. The STOCH value of 90.04 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for BMO.
Bank Of Montreal Peers Comparison
Overall Rating
UnderperformOutperform
Sector (64)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
81 Outperform | $246.19B | 13.87 | 14.17% | 3.26% | 6.03% | 15.60% | |
79 Outperform | $168.78B | 9.98 | 14.27% | 4.22% | 13.12% | 61.99% | |
78 Outperform | $52.36B | 12.62 | 13.42% | 3.28% | 17.13% | 14.73% | |
77 Outperform | $78.18B | 14.00 | 9.88% | 4.16% | 15.63% | 66.95% | |
77 Outperform | $88.04B | 11.80 | 13.19% | 3.90% | 5.38% | 21.68% | |
71 Outperform | $91.96B | 14.90 | 8.00% | 5.64% | 3.72% | -17.99% | |
64 Neutral | $12.87B | 9.81 | 7.76% | 16985.65% | 12.28% | -7.83% |
* Financial Sector Average
Performance Comparison
BMO
Bank Of Montreal
108.29
27.80
34.54%
TSE:NA
National Bank of Canada
133.80
20.44
18.03%
TSE:TD
Toronto Dominion Bank
96.35
24.24
33.61%
TSE:RY
Royal Bank Of Canada
174.57
33.41
23.67%
TSE:CM
Canadian Bank of Commerce
94.24
30.20
47.16%
TSE:BNS
Bank Of Nova Scotia
73.83
13.75
22.88%
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.