Winnipeg Free Press - PRINT EDITION

BMO Q4 'well below' analysts' expectations

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TORONTO -- There's a divide between how Bank of Montreal is characterizing its fourth-quarter results and the underwhelming reception they received from analysts and investors.

The Toronto-based bank said Tuesday growth in Canadian loans and its wealth-management division helped deliver a strong quarterly net income of $1.09 billion, which was about one per cent higher than a year earlier.

But several analysts say there is a different story beneath the headline.

"When you start digging into the numbers, it looked pretty disappointing to me," said Tom Lewandowski, an analyst with Edward Jones in St. Louis, who said BMO's results fell "well below" his expectations.

He pointed to weakness in the U.S. operations as one area that fell short.

Adjusted net income for the quarter fell two per cent from a year ago to $1.102 billion. That was well ahead of estimates but included a one-time $121-million gain one analyst said would put off investors.

BMO's overall adjusted earnings, including the one-time gain, amounted to $1.64 per share, down one cent from a year earlier but ahead of analyst estimates of $1.58 per share.

But Barclay's analyst John Aiken wrote the one-time gain was worth "roughly 19 cents per share and would take BMO's core number to $1.45, well below consensus."

Bank of Montreal shares were down $3.28 to close at $70.25 on the Toronto Stock Exchange. However, that's still up significantly from a year ago when BMO closed on Dec. 3, 2012, at $59.29.

The entire banking sector on the TSX, including BMO, is up about 20 per cent so far this year -- providing investors with an incentive to sell at least some of their shares to lock in profits.

Breaking down the results issued Tuesday, BMO's U.S. personal and commercial banking arm posted a 28 per cent decline in net income to US$103 million, while net income at its capital markets segment dropped 27 per cent to $229 million.

Net income from wealth-management services in the fourth quarter nearly doubled to $312 million, the bank said.

BMO quietly cut its staff count in the fourth quarter, cutting its workforce by the equivalent of nearly 1,000 positions.

-- The Canadian Press

Republished from the Winnipeg Free Press print edition December 4, 2013 B7

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