Bank of Montreal (BMO) Q2 2025 Earnings Call Highlights: Strong Performance Amid Economic Challenges
Adjusted Net Income: Increased 1% to $2 billion.
Adjusted Earnings Per Share (EPS): Increased to $2.62, up from $2.59 last year.
Pre-Provision Pre-Tax (PPPT) Growth: 12% increase.
Revenue Growth: Increased 9% across all businesses.
Expenses Growth: Increased 6%.
Operating Leverage: Positive at 2.7%.
Common Equity Tier 1 (CET1) Ratio: 13.5%.
Dividend Increase: $0.04, up 5% from last year.
Return on Equity (ROE): Improved to 10.6% year to date.
Net Interest Margin (NIM) Expansion: Up 4 basis points sequentially.
Loan Growth: Average loans grew 3% year over year on a constant currency basis.
Customer Deposit Growth: Up 5% from last year, excluding currency impact.
Trading Revenue: Strong performance, particularly in commodities.
Wealth Management ROE: 29% year to date, up from 24% a year ago.
Total Provision for Credit Losses (PCL): $1.1 billion, or 63 basis points.
Impaired Provisions: $765 million, or 46 basis points, down from prior quarter.
Warning! GuruFocus has detected 6 Warning Signs with BMO.
Release Date: May 28, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Bank of Montreal (NYSE:BMO) reported a 1% increase in adjusted net income and earnings per share, reaching $2 billion and $2.62, respectively.
The bank achieved a 12% growth in pre-provision pre-tax earnings (PPPT), demonstrating strong performance across its diversified businesses.
BMO's capital position remains robust with a CET1 ratio of 13.5%, supporting client needs, growth investments, and shareholder returns through share buybacks and dividend increases.
BMO Wealth Management delivered a return on equity of 29% year to date, with strong net new asset growth and market share gains in Canadian mutual funds.
BMO Capital Markets exceeded guidance with strong trading revenue, particularly in commodities, and continued strength in securitization, contributing to a PPPT of $684 million.
The economic backdrop in North America remains challenging, with GDP growth expected to slow to 1% in Canada and 1.3% in the US in 2025.
Impaired provisions for credit losses remain a concern, with ongoing uncertainty and volatility in the economic environment related to trade policies.
BMO's US P&C segment experienced a sequential decline in commercial loan growth, reflecting muted borrowing demand in the market.
The bank's non-interest revenue was impacted by markdowns in capital markets and a loss on the sale of a US non-relationship credit card portfolio.
Macro uncertainties have kept demand muted across client segments, affecting business activity and loan demand in both Canada and the US.
Q: Can you discuss the outlook for US commercial loan growth and the strategy for optimizing funding in the US? A: Darryl White, CEO, explained that while the US commercial loan growth has been muted, the bank is committed to improving ROE, particularly in the US. The focus is on optimizing the balance sheet and repricing lower-value deposits, which has improved NIM by 5 basis points. Erminia Johannson, Head of North American Personal and Business Banking, added that the strategy involves building deeper relationships in core deposits and acquiring new customers. Nadim Hirji, Head of BMO Commercial Banking, noted that while borrowing demand is muted, pipelines are healthy, and sentiment is improving, which could lead to positive loan growth in the latter half of the year.
Q: Are there more opportunities for balance sheet restructuring in the US following the sale of the credit card portfolio? A: Tayfun Tuzun, CFO, stated that the bank is continuously evaluating its balance sheet to improve ROE. While no specific announcements were made, it is reasonable to expect more decisions in the future as part of their strategic plan.
Q: What are you hearing from US commercial customers that makes you comfortable with the current credit allowances? A: Piyush Agrawal, Chief Risk Officer, mentioned that the credit situation is stable, and customers are managing well despite the economic environment. Nadim Hirji added that customer sentiment is improving, and they are focusing on cost discipline and strategic planning, which supports a positive outlook for the commercial book.
Q: How are you approaching the US stress test results, and will it affect capital allocation? A: Tayfun Tuzun, CFO, indicated that the bank's strong capital position in the US is expected to continue, and the stress test results are not anticipated to have a significant impact on capital management.
Q: Can you elaborate on the potential impact of tariffs on your credit model and PCL expectations? A: Piyush Agrawal, Chief Risk Officer, explained that the economic forecast has been adjusted to reflect a weaker outlook due to tariffs, impacting Canadian GDP and unemployment projections. However, the bank remains cautiously optimistic, and PCLs are expected to remain manageable unless there is a significant escalation in trade tensions.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Yahoo
38 minutes ago
- Yahoo
Workiva Inc. (WK) Appoints Astha Malik to Its Board of Directors
Workiva Inc. (NYSE:WK) is one of the 11 Best Tech Stocks to Buy On the Dip. On May 29, Workiva Inc. (NYSE:WK) announced the appointment of Astha Malik, Chief Business Officer of Braze, to its board of directors. Malik brings 25 years of experience in driving growth and scaling high-growth SaaS companies. The company also released its Q1 2025 results on May 1. The revenue of $206 million grew 17% year-over-year driven by a 20% increase in subscription and support revenue. Both of these financial indicators surpass management's guidance despite a challenging environment characterized by a cautious buying environment and flat professional services revenue. A software engineer debugging a compliance code on a laptop in a modern office setting. After the earnings release, analyst Alexander Sklar from Raymond James maintained an Overweight rating on Workiva Inc. (NYSE:WK) lowering the price target from $125 to $105. The analyst noted the company showed strong bookings in Q1 however, the tough macroeconomic environment led to a conservative outlook by Raymond James. Regardless, Workiva Inc. (NYSE:WK) maintained its full-year revenue guidance at $864 million to $868 million. Workiva Inc. (NYSE:WK) is a technology company that operates a cloud-based platform that enables organizations to streamline and automate financial, sustainability, and compliance reporting processes. Its SaaS platform combines ERP, HCM, and CRM applications, supporting real-time collaboration and integrated reporting across teams. While we acknowledge the potential of WK as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock. READ NEXT: The Best and Worst Dow Stocks for the Next 12 Months and 10 Unstoppable Stocks That Could Double Your Money. Disclosure: None. Melden Sie sich an, um Ihr Portfolio aufzurufen.
Yahoo
38 minutes ago
- Yahoo
Citi Rates Protagonist Therapeutics (PTGX) as Buy Protagonists Drugs Opportunity
Protagonist Therapeutics, Inc. (NASDAQ:PTGX) is one of the 10 biotech stocks screaming a buy. On June 17, Citi initiated coverage of the stock with a 'Buy' rating and a $72 price target. The research firm remains bullish about the company's prospects owing to the strong potential of its drug candidates. A scientist in a lab coat examining a Petri dish containing a biopharmaceutical culture. The company's partnership with Takeda on Rusfertide to treat polycythemia Vera (PV) and oral IL-23 (icotrokinra) is one of the developments that underscore the research firm's favorable rating. Rusfertide demonstrated strong potential in PV patients in phase 3 trials, affirming its potential to address unmet needs. Citi is especially bullish about adding Rusfertide to existing therapies to expand its use case. In addition, the firm echoed the company's strategic partnership with Johnson & Johnson for multiple inflammation indications. According to Citi, Protagonist Therapeutics shares have outperformed over the past three months, going up by a 40% gain compared to a 2% gain of the S&P 500. It expects the company's combined revenues to climb to $700 million by 2032, above consensus estimates of $680 million. Protagonist Therapeutics, Inc. (NASDAQ:PTGX) is a biopharmaceutical company that develops peptide-based drugs to treat various diseases, including rare and prevalent ones. Its pipeline includes treatments for blood disorders like polycythemia Vera and inflammatory conditions like ulcerative colitis and psoriasis. While we acknowledge the potential of PTGX as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock. READ NEXT: 13 Best Software Stocks to Buy Now and 11 Must-Buy AI Stocks Analysts Are Betting On. Disclosure: None. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
38 minutes ago
- Yahoo
Here's Why Globant S.A. (GLOB) Has Trembled More Than 55% This Year
Globant S.A. (NYSE:GLOB) is one of the 11 Best Tech Stocks to Buy On the Dip. The company released its Q1 2025 results on May 15. Globant S.A. (NYSE:GLOB) missed revenue and EPS estimates causing the stock to dip. It posted a revenue of $611.09 million, reflecting 7% growth. However, this was below the market consensus by $10.37 million. The EPS of $1.50 also missed estimates by $0.08. On May 16, Arvind Ramnani analyst at Piper Sandler downgraded Globant S.A. (NYSE:GLOB) from Buy to Hold, while also adjusting the price target from $154 to $116. The analyst noted they had already estimated the macro headwinds, which impacted the revenue growth thereby reducing its estimates. A close-up of an experienced game engineer's hands typing a complex code on a laptop. Impax US Sustainable Economy Fund mentioned Globant S.A. (NYSE:GLOB) in its Q1 2025 investor letter. The fund noted that the company delivered satisfactory results driven by broad demand through various industry verticals and also witnessed revenue growth in new markets. Despite the satisfactory growth, the stock has trembled more than 55.87% on a year-to-date basis mainly due to a complex macroeconomic environment impacting customer spending. The fund anticipates the economic pressure to impact the revenue projections. Management of Globant S.A. (NYSE:GLOB) anticipates second-quarter revenue to be at least $612.0 million, reflecting 4.2% year-over-year growth. Impax US Sustainable Economy Fund stated the following regarding Globant S.A. (NYSE:GLOB) in its Q1 2025 investor letter: 'Globant S.A. (NYSE:GLOB) (Information Technology) is a software solutions provider helping to enhance productivity and drive increasing digital infrastructure in the transition to a more sustainable economy. The stock was down despite delivering satisfactory results, due to broad demand across multiple industry verticals and significant revenue growth in new markets. However, political volatility and macroeconomic pressures in Latin America are expected to affect demand, resulting in slightly lower revenue projections for the upcoming fiscal year.' While we acknowledge the potential of GLOB as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock. READ NEXT: The Best and Worst Dow Stocks for the Next 12 Months and 10 Unstoppable Stocks That Could Double Your Money. Disclosure: None. Sign in to access your portfolio
