Bank of Montreal (BMO) reports net income of C$2.21bn ($1.63bn) on an adjusted basis for the second quarter to end April. This compares with C$2.19bn from the year ago quarter.

While BMO Q2 2023 underlying net profit rises on improved margins, the earnings miss analyst forecasts.

Specifically, provisions rise sharply. Provision for credit losses (PCL) of C$1.02bn and adjusted PCL of C$318m compares with C$50m in the year-ago quarter. The rise in provisions includes C$527m from the purchased Bank of the West loan portfolio.

Improved margins boost net interest income, up by 23.3% from the year-ago quarter to C$4.81bn.

Canadian Personal & Commercial Banking adjusted net income is down by 8.2% y-o-to C$864m.

BMO raises quarterly dividend

Results reflect a 7% increase in revenue due to higher net interest income. This is driven by balance growth and higher margins, and lower non-interest revenue. This is more than offset by higher expenses and a higher provision for credit losses compared with the prior year.

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BMO raises its quarterly dividend from C$1.43 in the prior quarter to C$1.47 per share.

The BMO Q2 2023 results reflects the bank’s acquisition of Bank of the West from BNP Paribas. The deal was completed in February.

BMO Wealth Management adjusted net income of C$285m declines by 9.5% y-o-y. This is primarily due to the impact of weaker global markets and lower online brokerage volumes, and higher expenses. Insurance net income is down by 5% from the prior year

BMO Capital Markets adjusted net income of C$388m is down by 14.3% y-o-y. This reflects revenue growth of 1%, with higher revenue in both Global Markets and Investment and Corporate Banking, higher expenses and a lower provision for credit losses.

BMO Canada and US personal and commercial: strong pre-tax earnings

“Our performance this quarter reflects our highly diversified business mix and the strength, size and stability of our balance sheet. This has been further enhanced by the successful acquisition of Bank of the West. Against the backdrop of an uncertain economic environment, our Canadian and US personal and commercial banking businesses continued to deliver good pre-provision, pre-tax earnings. Our wealth and capital markets businesses are impacted by lower customer activity. These results are underpinned by continued strong asset quality and capital said Darryl White, CEO, BMO.