Bank sees stable outlook despite trade policy risks
Bank of Montreal is leaning into investor confidence, announcing a significant expansion of its share repurchase program after a strong earnings report. The move comes amid waning concerns over U.S. trade tensions and a more stable North American economic outlook, according to CEO Darryl White.
“The economy is proceeding as expected, neither robust nor recessionary,” White said, noting that uncertainty around U.S. President Donald Trump’s tariffs has subsided in recent months. Attention now turns to the 2026 renegotiation of the North American trade pact, a potential source of volatility for Canadian lenders.
Profits beat estimates, losses decline
BMO reported net income of $2.22 billion for the quarter ending July 31, a 25% increase from the previous year. Earnings per share rose to $3.14, up from $2.48. Adjusted profit, the key figure for investors, hit $2.4 billion or $3.23 per share, exceeding analyst forecasts of $2.97 per share.
The positive surprise was largely driven by lower-than-expected loan loss provisions, which dropped to $797 million from $906 million the year before. Analysts flagged this reduction as a primary reason for the earnings beat, though some expressed concerns about the quality of growth across business lines.
Buyback program and strategic investments
In a show of financial strength, BMO expanded its share repurchase program from 20 million to 30 million shares, pending regulatory approval. The bank has already bought back 15.7 million shares this fiscal year. Its Tier 1 capital ratio rose to 13.5%, up from 13% last year.
“We’re leveraging our strong balance sheet to support client growth while returning excess capital to our shareholders,” said White. The bank is also investing for future growth, including the $625 million acquisition of Burgundy Asset Management, a firm managing $27 billion in high-net-worth assets.
Return on equity rebounds post acquisition
Following its $16.3 billion acquisition of Bank of the West in 2023, BMO has been focused on improving its return on equity. This quarter, adjusted ROE climbed to 12%, compared to 10.6% a year ago. While some U.S. segments underperformed, analysts believe the overall results will be well received by markets.
BMO shares have risen 13% so far in 2025, outpacing rivals like Royal Bank of Canada, which reports its latest earnings next. The performance highlights a rebound in investor sentiment after a cautious 2024 driven by interest rate hikes and geopolitical headwinds.
