BMO Financial Group's 45 per cent surge in first quarter earnings to $2.93 billion were boosted by loan growth as businesses invest for the future and by heightened trading as markets became volatile with near-term uncertainty.

"Results were driven by strong performance in Canadian and U.S. [personal and commercial], including double-digit commercial loan growth on both sides of the border, continued strength in BMO Capital Markets as well as good underlying performance in Wealth Management," said BMO chief executive Darryl White on an earnings call Tuesday.

The bank's results for the quarter ending Jan. 31 follows on better-than-expected trading revenue so far across Canadian bank results.

The loan growth comes as StatCan reported the Canadian economy grew by an annualized rate of 6.7 per cent in the fourth quarter, and it estimates that it grew 0.2 per cent in January despite the pullback from Omicron-related shutdowns. 

BMO is also seeing strong growth in the U.S., where in December it struck a deal to buy Bank of the West for US$16.3 billion. 

White said the bank continues to expand its existing operations in the country, with fast-growing markets in the U.S. now contributing about 25 per cent of new client growth.

"In the U.S., we continue to grow our national presence, including recently expanded operations in the high-growth Florida market."

Other Canadian banks are also looking to expand in the U.S., including TD Bank which on Monday said it was buying First Horizon Corp. for US$13.4 billion to give it greater exposure to high-growth markets in the U.S. southeast.

BMO's growth strategy has led to increased expenses, up an adjusted seven per cent in the quarter from last year, but the bank reported an operating leverage of 4.8 per cent and its efficiency ratio improved by 250 basis points to 53.8 per cent.

The bank plans to continue to invest for growth despite the rising expenses that are expected to increase full-year expenses by about one to to 1.5 per cent, said chief financial officer Tayfun Tuzun on the call.

"With the constructive economic background and building on our recent success, we plan to continue to reinvest for growth."

Economic growth could see some tempering by expected rate hikes by central banks in Canada and the U.S., with the Bank of Canada announcing its latest rate decision Wednesday, but banks are also poised to benefit from rising interest rate margins. 

Tuzun said that a 25 basis point rate increase would add $124 million to the bank's revenue over 12 months.

For the last quarter, BMO's earnings amounted to $4.43 per diluted share, up from $3.03 per diluted share or $2.02 billion last year, while revenue totalled $7.72 billion, up from $6.98 billion.

On an adjusted basis, BMO says it earned $3.89 per diluted share in its most recent quarter, up from an adjusted profit of $3.06 per diluted share in the same quarter a year earlier.

Analysts on average had expected an adjusted profit of $3.28 per share, according to financial markets data firm Refinitiv.

Scotiabank analyst Meny Grauman said that the bank's 17 per cent year-over-year growth in pre-tax, pre-provision earnings was a clear positive, as was the 19 per cent beat to analyst expectations.

"As we saw across the group this earnings season, the trading line certainly helped drive the PTPP beat, but we highlight impressive results across the bank’s P&C businesses as well, including peer-leading margin expansion."

In detailing its results, BMO said its Canadian personal and commercial business earned $1 billion, up from $750 million a year ago, while its U.S. personal and commercial business earned $681 million, compared with $579 million in the same quarter last year.

BMO's wealth management business earned $315 million, down from $336 million a year ago, and its capital markets operations earned $705 million, up from $478 million. 

The bank's corporate services group earned $228 million in its most recent quarter, compared with a loss of $126 million in the same quarter last year.