Noah Zivitz

Managing Editor, BNN Bloomberg

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Bank of Montreal soared past analyst expectations in its fiscal fourth quarter amid a sharp improvement in credit quality and double-digit profit growth in its capital markets unit.

BMO said Tuesday it earned $1.6 billion in net income during the three months that ended Oct. 31, compared to $1.2 billion a year earlier. On an adjusted basis, the bank logged $2.41 in profit per share. Analysts, on average, were expecting $1.91.

The bank set aside $432 million during the latest quarter for loans that could eventually go bad. That was down sharply from $1.05 billion in the previous quarter.

Compared to the fourth quarter a year earlier, BMO's capital markets business was the star performer as adjusted profit surged 38 per cent to $387 million.

Wealth management operations also delivered year-over-year growth, as adjusted profit in that unit rose nine per cent to $328 million.

In absolute terms, profit from BMO's Canadian personal and commercial (P&C) business dwarfed those units at $647 million in the fourth quarter. While that was down nine per cent from the same quarter in 2019, it was more than double profit from the fiscal third quarter.

It was a similar theme in BMO's U.S. P&C division, where adjusted profit fell 17 per cent year-over-year to US$253 million -- but that also represents a 27-per-cent jump from the previous quarter.

"We entered the year in a strong position with good momentum across our businesses,” said BMO CEO Darryl White in a release. “Throughout the challenges brought on by the pandemic, we have been on the front line of the economic recovery, supporting our customers, communities and employees through uncertainty and hardship.”

“Our results for the year are a testament to the resilience and diversification of our businesses and our ability to quickly adapt to the evolving environment.”