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Bank of Montreal reports Q1 profit up two per cent to $1.06 billion

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TORONTO - Bank of Montreal (TSX:BMO) saw its profits grow to $1.06 billion in its latest quarter, boosted by improved results across its business and lower provisions for bad loans.

BMO chief executive Bill Downe said Tuesday the quarter saw growth in its Canadian banking operations as well as in wealth management and capital markets business.

"We gained market share in domestic personal banking, complemented by double-digit growth in both commercial loans and deposits," Downe told a conference call with financial analysts.

"Our U.S. banking team also continued to deliver excellent balance sheet momentum ... margins were stable on both sides of the border and wealth management and capital markets posted robust revenue growth."

The bank's profit amounted to $1.58 per share for the quarter ended Jan. 31, compared with a profit of $1.04 billion or $1.51 per share a year ago.

Revenue increased to $4.12 billion, up from $4.043 billion in the first quarter of 2013.

BMO reported an adjusted profit was $1.08 billion or $1.61 per share compared with $1.03 billion or $1.50 per share in the first quarter last year.

Analysts on average had expected a profit of $1.53 per share.

The improved results came as BMO said its provisions for credit losses dropped to $99 million compared with $178 million a year earlier, largely as a result from improved recoveries from its impaired loan portfolio.

Its return on equity was 14.2 per cent before adjustments, down from 14.9 per cent a year earlier. Adjusted ROE was 14.5 per cent, compared with 14.8 per cent in the first quarter of fiscal 2013.

Desjardins analyst Michael Goldberg called the results positive.

"No negative surprises; favourable credit quality and investment gains result in an earnings beat," Goldberg wrote in a note to clients.

BMO shares were up 23 cents at $72.80 in trading on the Toronto Stock Exchange.

BMO, the second of Canada's big banks to report first-quarter performance after National (TSX:NA) issued its results late Monday, had improved results from most of its major divisions.

The bank's main Canadian banking arm for consumers and businesses contributed $484 million of net income, up $37 million or eight per cent from a year earlier.

Meanwhile, its U.S. personal and commercial banking arm saw net income fall by 15 per cent to US$153 million, although the bank says the division's adjusted net income showed an improvement.

Combined, the BMO's personal and commercial banking operations generated about $2.35 billion of revenue.

BMO Capital Markets but saw its revenue rise to $974 million from $895 million but its net income fell seven per cent from a year earlier to $277 million, as the company was affected by higher expenses, lower loan recoveries and a higher tax rate.

The bank's wealth management arm increased net income by eight per cent from a year earlier to $175 million, with the division's revenue rising to $867 million from $778 million a year earlier.

Last month, BMO signed an agreement to buy U.K.-based F&C Asset Management PLC in a deal valued at $1.3 billion.

The deal, once completed, will see BMO Global Asset Management will roughly double its assets under management to US$269 billion with the addition of F&C and its 250 investment professionals in eight countries.

"They bring scale, investment track record and a well established brand network," Downe said Tuesday.

The F&C agreement follows a deal last year by BMO's acquisition of a Hong Kong and Singapore-based wealth management firm.

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