Bank of Montreal (BMO.TO) delivered a mixed bag to investors Wednesday as quarterly profit fell short of estimates while announcing a richer dividend.

BMO's net income in the fiscal second quarter rose 20 per cent year-over-year to $1.5 billion. On an adjusted basis, profit rose five per cent to $2.30 per share. On average, analysts were expecting $2.33 per share.

"This growth is supported by our strong capital position, a stable credit environment, and the continued resiliency of the Canadian and U.S. economies," said CEO Darryl White in a release. "We are taking disciplined actions to grow each of our businesses, including optimizing our teams and developing innovative solutions that enhance customer experience."

Similar to Toronto-Dominion Bank, BMO reaped the benefit of its stateside footprint as adjusted profit from U.S. banking surged 16 per cent to $417 million compared to the previous year.

Growth at home was more muted, as Canadian banking profit rose five per cent to $615 million. In a release, BMO said its domestic operations faced higher expenses and provisions for credit losses in the three-month period ending Apr. 30.

Capital Markets was a profit drag in the latest quarter, as adjusted earnings fell to $253 million from $286 million a year earlier. BMO blamed the weakness on severance costs and higher provisions.

Overall, BMO set aside $176 million in the quarter for potential loan losses, compared to $137 million in the previous quarter.

The bank separately announced it will raise its quarterly dividend by three cents to $1.03 per share.