BMO profit misses analyst estimates in 2nd quarter

BMO Financial Group’s profit came in short of analyst estimates in the second quarter, although adjusted earnings were up four per cent from last year.

The group that owns Bank of Montreal said its adjusted income was $997 million or $1.46 per share — three cents short of analyst estimates.

BMO’s net income before adjustments actually fell, dropping by five per cent to $975 million or $1.42 per share — five cents short of the consensus estimate.

Its main Canadian personal and commercial banking division contributed $430 million to the total net income, down $3 million from a year earlier, while net income from the private client group was down $6 million to $141 million.

The biggest year-to-year decline in net income, however, was in corporate services that had a strong profit last year due to unusual circumstances.

In the quarter ended April 30, corporate services recorded a $26 million net loss — compared with net income of $73 million in the second quarter of 2012. On an adjusted basis, the year-earlier net income would have been only $3 million.

On the positive side, BMO’s main U.S. personal and commercial banking division, operating mainly in Chicago and the U.S. Midwest, increased net income by six per cent to US$152 million.

And BMO Capital Markets saw a big increase from a year earlier, rising $42 million or 18 per cent to $275 million.

“BMO’s second quarter reflects solid operating performance,” said Bill Downe, the group’s president and chief executive officer.

“Looking forward, we have an advantaged business mix and are well-positioned for the current environment given our footprint in an improving U.S. Midwest economy, combined with our strength in commercial banking, capital markets and wealth.”

Downe also said BMO’s main Canadian banking division is winning market share, particularly among its commercial clients.

“We continue to have strong performance in commercial banking,” Downe said.

“The core U.S. commercial and industrial portfolio is up 17 per cent year over year, marking the sixth quarter of sequential growth. In Canada, where we have the No. 2 market share in small and medium-sized commercial loans, both commercial loan and deposit balances increased 12 per cent year over year.”