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TORONTO: Bank of Montreal, Canada's fourth-largest lender, on Wednesday reported quarterly earnings which were slightly below expectations, hit by a decline in profit in the United States.

The bank said earnings per share, excluding one-off items, rose to C$1.92 ($1.42) in the second quarter ended on April 30 from C$1.73 a year earlier. Analysts on average expected C$1.93, according to Thomson Reuters I/B/E/S.

Bank of Montreal said, however, that US loan and deposit growth had moderated, reflecting slower-than-anticipated business activity in the first quarter of the calendar year.

Net income, before one-off items, at the bank's US personal & commercial business fell by 7 percent to C$260 million as the bank set aside more funds to cover bad loans.

"While far from a disastrous quarter, we do not believe that BMO's results will receive a warm reception," said Barclays analyst John Aiken. "Credit incurred some erosion in the US commercial and energy portfolios and US retail banking saw average loan declines."

Funds set aside by the bank to cover bad loans totaled C$259 million, compared with C$201 million in the previous year.

The bank said its net income rose by 28 percent to C$1.25 billion, benefiting from a strong performance by its wealth management and capital markets businesses.

Earnings before special items jumped 72 percent to C$272 million at the wealth management unit, and increased 12 percent to C$322 million in the capital markets business.

Bank of Montreal said its wealth management business had benefited from the improved performance of global equity markets during the period while the previous year had been impacted by an investment write-down.

The bank's return on equity (RoE), a key measure of profitability, rose to 12.6 percent from 10.1 percent a year ago. Its core tier 1 capital ratio, a key measure of its financial strength, improved by 20 basis points during the quarter to 11.3 percent.

Bank of Montreal announced a quarterly dividend of C$0.90, up 5 percent on the previous year.

 

 

Copyright Reuters, 2017
 

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