BMO Q3 Profit Crushes Estimates; Shares Up 2%

Bank of Montreal (BMO), Canada’s fourth-largest bank, reported a solid performance in the third quarter of 2021. The bank beat profit estimates thanks to improved loan-loss provisions.

Net income for the quarter ended July 31 rose to C$2.28 billion, up 85% from C$1.23 billion a year earlier. (See Bank of Montreal stock charts on TipRanks)

BMO’s adjusted earnings climbed to C$2.29 billion (C$3.44 per share) in Q3 2021, compared with adjusted earnings of C$1.26 billion (C$1.85 per share) in the prior-year quarter.

Capital Markets profits rose to C$558 million, an increase of 31% from the same quarter last year, thanks to continued strong revenue performance.

Analysts on average expected BMO to report adjusted earnings of C$2.93 per share in Q3 2021.

Revenue increased 5.6% to C$7.6 billion, from C$7.2 billion a year earlier.

BMO Financial Group CEO Darryl White said, “We are executing strategies and investing in our businesses to deliver strong returns and efficiency improvements, which this quarter, delivered positive operating leverage of 2.1%, an efficiency ratio of 55.7%, a 110 basis point improvement from last year, and return on equity of 17.6%.

“Our leadership in risk and balance sheet management remains a key differentiator and contributed to continued strong credit metrics and a robust capital position with a CET1 ratio of 13.4%.”

On August 24, Canaccord Genuity analyst Scott Chan maintained a Buy rating on BMO with a price target of C$143. This implies 8.7% upside potential.

The rest of the Street is cautiously optimistic about BMO, with a Moderate Buy consensus rating based on seven Buys, two Holds, and one Sell. The average Bank of Montreal price target of C$137.81 implies 5.4% upside potential to current levels.

TipRanks’ Smart Score

BMO scores a “Perfect 10” on TipRanks’ Smart Score rating system, indicating that the stock is very likely to outperform the overall market.