BMO Q4 Profit Rises 36%, Dividend Raised

Bank of Montreal (BMO), Canada’s fourth-largest bank, reported a solid performance in the fourth quarter of 2021. The bank raised its quarterly dividend by 25%.

Earnings & Revenue

Net income for the quarter ended October 31 rose to C$2.16 billion, up 36% from C$1.58 billion a year earlier. (See Analysts’ Top Stocks on TipRanks)

BMO’s adjusted earnings climbed to C$2.23 billion (C$3.23 per diluted share) in Q4 2021, compared with adjusted earnings of C$1.61 billion (C$2.37 per diluted share) in the prior-year quarter.

Analysts on average expected BMO to report adjusted earnings of C$3.21 per share in Q4 2021.

BMO’s Canadian Personal and Commercial banking business earned C$921 million in the fourth quarter, up 42.3% from a year earlier, while its U.S. Personal and Commercial banking operations earned C$512 million, up 58%.

The bank’s Wealth Management business grew C$369 million, up 15.3% from the same quarter last year.

Capital Markets profits rose to C$536 million, an increase of 41% from the same quarter last year, thanks to continued strong revenue performance.

Revenue increased 9.67% to C$6.57 billion from C$5.99 billion a year earlier, but missed estimates of C$6.59 billion.

In its fourth quarter, BMO recorded a reversal of C$126 million in its allowance for credit losses, compared to the C$432 million it set aside for bad loans in the same quarter last year.

CEO Commentary

BMO Financial Group CEO Darryl White said, “Looking ahead to 2022, we will continue to position BMO for growth with the ensuing economic recovery. We are making targeted investments in technology and talent to drive enhanced customer experiences and deliver market-leading advice to help them make real financial progress.

“Today we announced a 25% dividend increase and our intention to repurchase up to 22.5 million shares, reflecting the strength of our capital position and confidence in delivering sustained, long-term performance for our shareholders.”

Wall Street’s Take

Following the results, Canaccord Genuity analyst Scott Chan maintained a Buy rating on BMO with a price target of C$152. This implies 12.8% upside potential.

The rest of the Street is cautiously optimistic about BMO with a Moderate Buy consensus rating based on four Buys and two Holds. The average Bank of Montreal price target of C$137.76 suggests no upside or downside potential.