Bank of Montreal kicked off the quarterly earnings season for Canada’s big banks with a bang on Wednesday, announcing that its profit more than doubled and the money it sets aside to cover bad loans fell by more than 90 per cent.
BMO said Wednesday its net income came in at just over $1.3 billion, up from $689 million a year ago.
Just about every facet of the bank’s business made more money in the three-month period up to the end of April, from the core Canadian retail banking business to wealth management, capital markets and its U.S. unit.
The profit jump came as the bank set aside far less money to cover bad loans. Known as loan-loss provisions, Canadian banks spent most of the pandemic ratcheting that figure higher, to pay for loans they had given out and were worried may have to be written off.
This time last year, BMO had set aside more than $1.1 billion to cover potential bad loans.
But that figure has fallen as low as just $60 million, a sign the bank is far more confident in its outlook for its consumer and business clients.
“This quarter, we continued to deliver very strong results with all of our businesses performing well,” CEO Daryl White said. “We enter the second half of the year with strong momentum.”
Under normal circumstances, a bank being flush with cash would likely hike its dividend to shareholders. But BMO didn’t do that, holding the payout steady at $1.06 per share, because it is not allowed to increase its dividend under current rules the banking regulator OSFI put on the industry as a precaution in March 2020.