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Bank of Montreal - Stock Quote BMO

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Morningstar's Bank of Montreal Stock Analysis

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Solid Start to 2022 for Bank of Montreal, With Revenue Growth Handily Outpacing Expense Growth

Eric Compton, CFA Senior Equity Analyst

Analyst Note

| Eric Compton, CFA |

Narrow-moat rated Bank of Montreal reported excellent fiscal first-quarter earnings. Adjusted earnings per share were CAD 3.89, representing year-over-year growth of 27%. The bank was able to record another provisioning benefit, meaning credit costs were a net benefit during the quarter. Adjusted net revenue was up 12%, a strong result, driven by decent loan growth, some positive margin movement within the loan book, and continued strong fee income from investment banking. While revenue was coming in relatively strong, so were expenses. Adjusted expenses were up 7% year over year. This still led to 18% adjusted pre-provision pretax earnings growth. While these initial results are generally ahead of where we expected the bank to be, we do not plan to make any material adjustments to our current fair value estimates of CAD 148/USD 115 just yet, as we wait for at least one more quarter of results in this uncertain environment. We will note that Canadian bank names are generally reacting much less to the current situation than U.S. bank stocks. We’ve highlighted in the past that Canadian banks tend to be more stable names overall, and we believe they have much less rate risk exposure.

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Bank of Montreal's Company Profile

Business Description

Bank of Montreal is a diversified financial-services provider based in North America, operating four business segments: Canadian personal and commercial banking, U.S. P&C banking, wealth management, and capital markets. The bank's operations are primarily in Canada, with a material portion also in the U.S.

129 rue Saint-Jacques
Montreal, QC, H2Y 1L6, Canada
T +1 416 867-7366
Sector Financial Services
Industry Banks - Diversified
Most Recent Earnings Jan 31, 2022
Fiscal Year End Oct 31, 2022
Stock Type
Employees 43,863

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