Bank of Montreal Profit Rises, but U.S. Results Disappoint -- 2nd Update

By Vipal Monga and Austen Hufford Features Dow Jones Newswires

Bank of Montreal's stock tumbled Tuesday after the Canadian bank reported results in its U.S. operations that disappointed investors.

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Bank of Montreal's stock had fallen almost 3% despite reporting higher profits for its fiscal third quarter. The bank lowered its provision for bad loans and benefited from growth in its Canadian personal- and commercial-banking unit and wealth-management segment.

But the bank also reported that average net loans and acceptances in the U.S. fell 2% from the prior quarter and were down 1.6% from last year.

"The lack of growth in loans is the issue," said John Aiken, an analyst with Barclays in Toronto.

Bank executives cited uncertainty about the ability of the Republican-led U.S. Congress to pass a tax revamp as a reason for companies borrowing less.

"That's somewhat offset by a lessening in regulations," said David Casper, head of the bank's commercial-banking business, during a conference call with analysts.

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Bank of Montreal has moved to expand its U.S. business through acquisitions. It bought investment-banking firm Greene Holcomb Fisher last year. In 2015, it acquired General Electric Capital Corp.'s transportation-finance business in a multibillion-dollar deal.

The bank, which also operates as BMO Financial Group, reported on Tuesday that third-quarter revenue, net of certain insurance claims and changes in liabilities, rose 5.5% from a year ago to 5.21 billion Canadian dollars ($4.16 billion). Expenses rose 6% to C$3.28 billion.

The total provision for credit losses was C$134 million, down from C$257 million in the same quarter last year.

Bank of Montreal posted net income of C$1.39 billion, or C$2.05 a share, up from a profit of C$1.25 billion, or C$1.86 a share, the year before. Adjusted to exclude certain items, the bank said it earned C$2.03 a share, compared with the C$2.00 a share that analysts had expected.

The bank's chief executive, Bill Downe, will retire this fall after a decade of leading the company. He will be replaced by the bank's operating chief, Darryl White. Mr. Downe closed the earnings call with a farewell to analysts, investors and the bank's employees.

Write to Vipal Monga at vipal.monga@wsj.com and Austen Hufford at austen.hufford@wsj.com

(END) Dow Jones Newswires

August 29, 2017 16:36 ET (20:36 GMT)