BMO profit dips on slowdown in investment banking
BMO 3-month chart
Second-quarter earnings fell at BMO Financial Group as it reported weaker investment banking business, but it said credit markets were improving.
BMO said it made $642 million in Q2 ($1.26 cash earnings per share), compared to $671 million ($1.31 a share) last year.
The consensus of analysts who follow BMO was that the bank would report a profit of $1.19 a share, according to Thomson Financial.
"Our outlook is improving as there are indications that concerns are easing in credit markets as credit spreads are trending towards more normal levels and we are encouraged by these developments," said CEO Bill Downe in a release.
The bank said its Canadian personal and commercial banking unit had one of its best quarters ever and its private client group had record earnings.
But profit at its investment banking division fell 7.5 per cent.
BMO set aside $151 million for credit losses in Q2. That's almost triple the $59 million it set aside last year. It expects loan loss provisions will rise in the coming quarters.
But the bank also reported that it was able to recover $42 million in charges it had previously booked relating to earlier debt writedowns.
BMO was the first of the big six banks to report Q2 earnings this week. The bottom lines and the share prices of most of the banks have been battered by concerns over writedowns and credit market losses arising from exposure to the U.S. subprime mortgage market.
In Q1, BMO took a $324-million after-tax charge from credit market losses as it reported a 27-per-cent drop in profits.
On Tuesday, BMO shares were down $1.07 to $47.93 in late afternoon TSX trading.
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