Bank of Montreal’s heavy focus on commercial lending is paying off as businesses in the U.S. and Canada ramp up borrowing.
Profit in the U.S. personal and commercial banking business rose 66% to $408 million in the fiscal fourth quarter, the Toronto-based bank said in a statement Friday. In Canada, net income in the business rose 42% to C$921 million ($718 million). Overall profit topped analysts’ estimates.
Bank of Montreal generates a larger portion of its earnings from commercial lending than its peers, and that proved to be an advantage last quarter as business loans advanced 2.2% in Canada from the previous three months, while in the U.S. they climbed 1.8%. The bank also saw continued gains in Canadian mortgages as well as a 5.1% increase in Canadian credit card balances.
The bank also raised its dividend 25% to C$1.33 a share and announced a plan to buy back as many as 22.5 million shares. The repurchase would cost about C$3 billion at the company’s current share price. Canada’s banking regulator last month
Net income rose 36% to C$2.16 billion, or C$3.23 a share, in the three months through October. Excluding some items, profit was C$3.33 a share. Analysts estimated C$3.21, on average.
Bank of Montreal released C$126 million of provisions for credit losses. Analysts had projected C$177.8 million in set-asides.
