By Christine Dobby
(Bloomberg) — Bank of Montreal topped estimates on stronger-than-expected performance at its U.S. division as the lender works to improve the business’s prospects and loan-loss provisions came in lower than forecast.
The bank earned $3.23 a share on an adjusted basis in its fiscal third quarter, according to a statement Tuesday, higher than the $2.96 average estimate of analysts in a Bloomberg survey. Net income at the U.S. personal and commercial banking operation totalled $709 million for the three months through July, up 51% from a year earlier and more than the $648 million average forecast of three analysts.
“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,” Chief Executive Officer Darryl White said in the statement.
Bank of Montreal’s adjusted return on equity for the third quarter was 12%, more than the average analyst estimate of 10.9%. Provisions for credit losses totaled $797 million, less than the $931 million analysts had forecast.
“We anticipate that BMO’s strong beat should receive an initial warm reception by the market,” Jefferies Financial Group Inc. analyst John Aiken wrote in a note to clients. But most of the outperformance, he said, was due to lower-than-forecast loan-loss provisions, with the US division seeing the greatest benefit, which could temper investor enthusiasm.
The company’s shares climbed 3% to $162.50 at 9:34 a.m. in Toronto.
Bank of Montreal has been focused on turning around performance at the U.S. division, which it bulked up in 2023 with the acquisition of San Francisco’s Bank of the West. The unit has struggled with provisions for credit losses and stagnant commercial loan growth and Bank of Montreal has pledged to improve return on equity in the business with the aim of boosting all-bank returns.
The firm is also in the midst of a balance-sheet optimization effort as it looks to sell non-core, lower-return loan portfolios. It sold a U.S. credit-card portfolio in the second quarter, and Bloomberg News reported earlier this month that it’s said to be exploring a sale of its transportation-finance business, which could fetch about $1 billion.
Bank of Montreal, which is more exposed than its peers to commercial lending, is the first of the country’s big banks to report quarterly results. While its credit performance was worse than expected for most of 2024, that trend has begun to stabilize in recent quarters.
The bank also announced a larger share-buyback program Tuesday, saying it will seek regulator approval to repurchase as many as 30 million shares. That will replace a buyback program for 20 million shares announced in January, under which Bank of Montreal has bought 15.7 million shares.
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Last modified: August 26, 2025