(Reuters) -Bank of Montreal kicked off Canadian lenders’ second-quarter results reporting by strongly beating analysts’ estimates on Wednesday, as it set aside fewer provisions than expected and its capital markets unit swung to a profit.
Net income excluding one-off items rose to C$2.1 billion ($1.74 billion), or C$3.13 per share, in the three months ended April 30, compared with C$715 million, or C$1.04, a year earlier. Analysts had expected C$2.77 a share, according to IBES data from Refinitiv.
Canadian banks have come through the coronavirus pandemic largely unscathed, as government stimulus measures and their own loan deferral programs last year held loan losses at bay. Strong trading activity and deal-making have also been a boon in recent quarters.
Investors have bet that the banks will beat recently raised analyst estimates. Bank of Montreal shares hit an all-time intraday high on Tuesday, before closing below Friday’s record of C$123.92. The Canadian bank benchmark closed at a record on Tuesday.
Canada’s fourth-biggest lender released C$95 million of reserves that had been set aside for performing loans, compared with a year ago when it took provisions of C$705 million. The total provision of C$60 million was nearly a quarter of what analysts had expected.
The lower provisions for credit losses reflects an optimistic outlook for recovery, especially as COVID-19 vaccinations in the country have picked up pace following a rocky start.
Global mergers and acquisitions (M&A) activity surged to a year-to-date record in the three months ended March 31, helping BMO’s capital markets unit post adjusted profit of C$547 million, from a C$68 million loss a year earlier.
Profit at the lender’s wealth management arm more than doubled to of C$346 million.
BMO reported an overall net profit of C$1.30 billion, or C$1.91 a share, up from C$689 million, or C$1 a share, a year ago.
($1 = 1.2072 Canadian dollars)
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