Bank of Montreal shares fell more than 5% after the Canadian bank’s provisions for credit losses surged during the fiscal third quarter and both its revenue and profits were short of expectations.
Provision for credit losses nearly doubled year-over-year to C$906 million from C$492 million, significantly more than the C$745 million analysts had expected.
Earnings per share of C$2.64 missed estimates of C$2.76 while revenue of C$8.19 billion was shy of the C$8.24 billion expected.
The company’s US personal and commercial banking segment saw lower revenue attributed to a decrease in non-interest revenue, lower expenses, and a higher provision for credit losses as adjusted net income fell 7% to $539 million.
Canadian personal and commercial banking revenue was up 7% as adjusted net income rose 3% to $920 million.
“While the cyclical increase in credit costs has resulted in loan loss provisions above our historical range, performance has been supported by operating momentum across our diversified businesses, including continued revenue growth in Canadian personal and commercial banking and stronger client activity in our market-sensitive businesses,” BMO Financial Group CEO Darryl White commented.
The company also announced a Q4 dividend of $1.55 per share, unchanged from the previous quarter but up 5% year-over-year.
BMO’s US-listed shares fell 5.5% to US$84, while its Toronto-listed stock was down 5.7% at C$113 on Tuesday morning.