Bank of Montreal is making progress in its five-year effort to double earnings from wealth management.

The Toronto-based lender has been accelerating growth in the U.S., building out services for wealthy clients and expanding its global asset manager, with the aim of getting $2 billion in annual profit from wealth management by 2023. The bank is making progress, with a 22 per cent increase in earnings from the business in its fiscal first quarter. That helped the company beat analysts’ estimates.

Key Insights

-Bank of Montreal has built on its wealth business in the past year, including hiring Wells Fargo & Co.’s Kristi Mitchem to lead the bank’s asset-management division. Wealth-management earnings, which include insurance, climbed to $291 million.

-Bank of Montreal’s U.S. banking division, which includes Chicago-based BMO Harris Bank, has increased profits at a faster pace than its Canadian division for most of the past two years. That effort faltered in the first quarter, with earnings from the U.S. personal-and-commercial division falling 21 per cent to $351 million, hurt by a surge in loan-loss provisions and tighter margins.

-Interest-rate reductions by the Federal Reserve last year had driven down the net interest margin at Bank of Montreal’s U.S. banking division to its lowest level in a decade. That trend continued in the fiscal first quarter, with margins of 3.34 per cent, the lowest since 2010.

-Canadian banking remains the company’s largest division, even amid a push to get more earnings from its U.S. operations. Bank of Montreal’s domestic retail bank posted $700 million of profit in the quarter, up eight per cent from a year earlier.

-Bank of Montreal sees scaling up in the U.S. as key to its aspirations of being a top-10 North American investment bank at a time when foreign firms have been retreating. Earnings from the company’s BMO Capital Markets unit climbed 39 per cent to $356 million in the first quarter as markets and dealmaking improved.

Market Reaction

-Bank of Montreal shares have fallen 1.2 per cent this year through Monday, underperforming the 2.2 per cent gain for Canada’s eight-company S&P/TSX Commercial Banks Index.

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-First-quarter net income rose 5.4 per cent to $1.59 billion, or $2.37 a share. Adjusted per-share earnings totaled $2.41 a share, beating the $2.37 average estimate of 14 analysts in a Bloomberg survey.