BANK OF MONTREAL $58 (Toronto symbol BMO; Conservative Growth Portfolio, Finance sector; Shares outstanding: 640.4 million; Market cap: $37.1 billion; Price-to-sales ratio: 2.0; Dividend yield: 4.8%; TSINetwork Rating: Above Average; www.bmo.com) is Canada’s fourth-largest bank, with assets of $538.3 billion.
Bank of Montreal continues to profit from last year’s purchase of U.S. banking firm Marshall & Ilsley Corp. for $4.0 billion in stock. That more than doubled the number of branches Bank of Montreal operates in the U.S. It also added 2 million customers. The bank now gets 20% of its revenue and earnings from its U.S. retail banking operations.
Meanwhile, the bank’s earnings rose 19.3% in the quarter ended January 31, 2012, to $953 million from $799 million a year ago. Earnings per share rose 7.6%, to $1.42 from $1.32, on more shares outstanding. These figures exclude unusual items, such as costs to integrate the new U.S. operations.
The higher earnings were entirely due to Marshall & Ilsley’s contribution (earnings at the U.S. banking division soared 161.0%). That offset weaker contributions from its Canadian banking, wealth management and capital markets divisions.
Even with the new operations, the bank set aside just $141 million to cover bad loans in the latest quarter. That’s down 56.3% from $323 million a year ago. Revenue rose 18.7%, to $4.1 billion from $3.5 billion.
Bank of Montreal will probably earn $5.68 a share in 2012. The stock trades at 10.2 times that forecast. The $2.80 dividend yields 4.8%.
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