BANK OF MONTREAL $60 (Toronto symbol BMO; Conservative Growth Portfolio, Finance sector; Shares outstanding: 648.1 million; Market cap: $38.9 billion; Price-to-sales ratio: 1.9; Dividend yield: 4.9%; TSINetwork Rating: Above Average; www.bmo.com) is Canada’s fourth-largest bank, with $555.3 billion of assets.
In the three months ended April 30, 2013, the bank’s revenue fell 0.4%, to $3.94 billion from $3.96 billion a year earlier.
Revenue was flat at the Canadian retail banking operations, which account for 39% of Bank of Montreal’s overall revenue. The value of this division’s business loans rose 12%, and personal loans increased 10%. However, lower interest rates on new loans offset these gains.
Lower interest rates also offset higher loan volumes at the U.S. division (19% of total revenue). As a result, this business’s revenue fell 1.1%.
Revenue from securities trading (22%) rose 7.3%, mainly due to gains on the division’s trading portfolio. New clients and higher asset values pushed up wealth management revenue (20%) by 2.8%.
Earnings in the quarter rose 1.6%, to $979 million, or $1.46 a share, from $964 million, or $1.44 a share. These figures exclude costs related to ongoing efficiency improvements and the writedown of loans the bank acquired as part of its July 2011 purchase of U.S. banking firm Marshall & Ilsley.
Bank of Montreal’s loan-loss provisions fell 25.6%, to $145 million from $195 million. That’s mainly because its Canadian borrowers continue to repay their loans on time. Bad loans now account for 1.08% of the bank’s total loans, down from 1.16% a year ago.
The bank should earn $6.09 a share in fiscal 2013, and the stock trades at 9.9 times that forecast. The $2.96 dividend yields 4.9%.
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