BMO Beats Estimates with Lower Profit, Announces Share Buyback

BMO's quarterly profit decreased by 25% compared to last year, but still managed to beat analysts' estimates. The bank reported a net income of $1.75 billion, or $2.38 per share, in the three months ending July 31. However, when adjusted for certain items such as a charge related to the sale of BMO's transportation and vendor finance business, net income rose by 19% to $2.86 billion.

BMO also announced a plan to buy back 25 million of its common shares. The bank maintained its quarterly dividend at $1.71 per share. In March, BMO revealed its new strategy to revamp its U.S. business and improve its return on equity (ROE) to 15% by the end of 2027.

The U.S. division makes up 40% of BMO's earnings, but has weighed heavily on profitability in recent years. The bank set a target to improve the unit's ROE from eight percent to 12 percent by 2028. In the third quarter, ROE in its U.S. business rose to 9.8%.

Total revenue rose 10% to $9.9 billion, while expenses climbed 31% to $6.68 billion, driven by higher performance-based compensation and a stronger U.S. dollar. The bank set aside $722 million in provisions for credit losses, lower than analysts anticipated and the same quarter last year.