BMO's First Quarter 2025 Report to Shareholders, including the unaudited interim consolidated financial statements for the period ended January 31,2025 are available online at www.bmo.com/investorrelations, on the Canadian Securities Administrators' website at www.sedarplus.ca, and on the EDGAR section of the U.S.Securities and Exchange Commission's website at www.sec.gov.
Financial Results Highlights
First Quarter 2025 compared with First Quarter 2024:
— Net income1 of $2,138 million, compared with $1,292 million; adjusted net income1 of $2,289 million, compared with $1,893 million
— Reported earnings per share (EPS)2 of $2.83, an increase from $1.73; adjusted EPS1, 2 of $3.04, an increase from $2.56
— Provision for credit losses (PCL) of $1,011 million, compared with $627 million
— Return on equity (ROE) of 10.6%, an increase from 7.2%; adjusted ROE1 of 11.3%, an increase from 10.6%
— Common Equity Tier 1 (CET1) Ratio3 of 13.6%, compared with 12.8%
Adjusted1 results in the current quarter excluded the following items:
— Impact of aligning accounting policies for employee vacation across legal entities of $70 million ($96 million pre-tax).
— Amortization of acquisition-related intangible assets and any impairments of $79 million ($106 million pre-tax).
— Acquisition and integration costs of $7 million ($10 million pre-tax).
— Impact of the U.S. Federal Deposit Insurance Corporation (FDIC) special assessment partial reversal of $5 million ($7 million pre-tax).
BMO Financial Group (TSX:BMO) (NYSE:BMO) today announced financial results for the first quarter ended January31,2025. Reported net income was $2,138million and EPS was $2.83, an increase from $1,292 million and $1.73 in the prior year. Adjusted net income was $2,289million and adjusted EPS was$3.04, an increase from $1,893 million and $2.56 in the prior year.
“We delivered strong first quarter performance with broad-based revenue growth driving positive operating leverage in each of our operating groups. Provisions for credit losses declined from the prior quarter as expected, and we initiated our share buyback program,” said Darryl White, Chief Executive Officer, BMO Financial Group.
“With the strength of our deep geographic and business diversification, we are well positioned to compete and grow in this dynamic operating environment. Our balance sheet is strong, and we're serving our clients with robust capital and liquidity and business strategies aimed at providing trusted advice – just as we have for over 200 years throughout Canada and the United States,” concluded Mr. White.
Concurrent with the release of results, BMO announced a second quarter2025 dividend of$1.59 per common share, an increase of $0.08 or5% from the prior year, and unchanged from the prior quarter. The quarterly dividend of$1.59 per common share is equivalent to an annual dividend of $6.36per common share. During the quarter, we purchased for cancellation1.2million common shares under the normal course issuer bid.
First Quarter 2025 Performance Review
Adjusted results and ratios in this section are on a non-GAAP basis. Refer to the Non-GAAP and Other Financial Measures section for further information on adjusting items. The order in which the impact on net income is discussed in this section follows the order of revenue, expenses and provision for credit losses, regardless of their relative impact.
Canadian P&C
Reported net income was $894million, a decrease of $27million or3% from the prior year, and adjusted net income was $897million, a decrease of $28million or3%. Results reflected a10% increase in revenue, primarily driven by higher net interest income due to balance growth and higher net interest margin, more than offset by higher expenses and a higher provision for credit losses.
U.S. P&C
Reported net income was $580million, an increase of $20million or4% from the prior year, and adjusted net income was $650million, an increase of $15million or2% from the prior year.
On a U.S. dollar basis, reported net income was $407million, a decrease of $12million or3% from the prior year, and adjusted net income, which excludes amortization of acquisition-related intangible assets, was $456million, a decrease of $19million or4%. Results reflected a2% increase in revenue due to higher non-interest revenue, lower expenses and a higher provision for credit losses.
BMO Wealth Management
Reported net income was $369million, an increase of $129million or53% from the prior year, and adjusted net income was $371million, an increase of $130million or53%. Wealth and Asset Management reported net income was $286million, an increase of $99million or52%, reflecting higher revenue due to the impact of stronger global markets and net sales, partially offset by higher expenses. Insurance net income was $83million, an increase of $30million or57% from the prior year, primarily due to favourable market movements in the current quarter.
BMO Capital Markets
Reported net income was $587million, an increase of $194million or49% from the prior year, and adjusted net income was $591million, an increase of $183million or45%. Results reflected strong revenue performance, primarily in Global Markets, partially offset by higher expenses and a higher provision for credit losses.
Corporate Services
Reported net loss was $292million, compared with reported net loss of $822million in the prior year, and adjusted net loss was $220million, compared with adjusted net loss of $316million. The lower reported net loss was primarily due to the impact of the FDIC special assessment and a net accounting loss related to the sale of a portfolio of recreational vehicle loans in the prior year, partially offset by the impact of aligning accounting policies for employee vacation across legal entitiesin the current quarter.Adjusted net loss was lower, reflecting higher revenue,higher expenses and a lower provision for credit losses.
Credit Quality
Total provision for credit losses was $1,011million, compared with a provision of $627million in the prior year. The provision for credit losses on impaired loans was $859million, an increase of $386million, primarily due to higher provisions in Commercial Banking and Canadian unsecured consumer lending.There was a $152million provision for credit losses on performing loans, compared with a $154million provision in the prior year. The provision for credit losses on performing loans in the current quarter was largely driven by the impact of the uncertain economic environment, including potential tariffs, on future credit conditions, and portfolio credit migration, partially offset by lower balances in certain portfolios.
Refer to the Critical Accounting Estimates and Judgments section of BMO's2024 Annual Report and Note4 of the audited annual consolidated financial statements for further information on the allowance for credit losses as at October31,2024.
Capital
BMO's Common Equity Tier1 (CET1) Ratio was13.6% as at January 31, 2025, relatively unchanged from the fourth quarter of fiscal2024, as internal capital generation was largely offset by higher source currency risk-weighted assets and the impact of the repurchase of common shares for cancellation under BMO's normal course issuer bid.
Non-GAAP and Other Financial Measures
Results and measures in this document are presented on a generally accepted accounting principles (GAAP) basis. Unless otherwise indicated, all amounts are in Canadian dollars and have been derived from our audited annual consolidated financial statements and our unaudited interim consolidated financial statements, prepared in accordance with International Financial Reporting Standards (IFRS), as issued by the International Accounting Standards Board. References to GAAP mean IFRS. We use a number of financial measures to assess our performance, as well as the performance of our operating segments, including amounts, measures and ratios that are presented on a non‑GAAP basis, as described below. We believe that these non‑GAAP amounts, measures and ratios, read together with our GAAP results, provide readers with a better understanding of how management assesses results.
Non-GAAP amounts, measures and ratios do not have standardized meanings under GAAP. They are unlikely to be comparable to similar measures presented by other companies and should not be viewed in isolation from, or as a substitute for, GAAP results.
Certain information contained in BMO's First Quarter2025 Management's Discussion and Analysis dated February24,2025 for the period ended January31,2025, is incorporated by reference into this document. For further details on the composition of our supplementary financial measures, refer to the Glossary of Financial Terms section of BMO's First Quarter2025 Report to Shareholders, which is available online at www.bmo.com/investorrelations and at www.sedarplus.ca.
Adjusted measures and ratios
Management considers both reported and adjusted results and measures to be useful in assessing underlying ongoing business performance. Adjusted results and measures remove certain specified items from revenue, non‑interest expense, provision for credit losses and income taxes, as detailed in the following table. Adjusted results and measures presented in this document are non‑GAAP. Presenting results on both a reported basis and an adjusted basis permits readers to assess the impact of certain items on results for the periods presented, and to better assess results excluding those items that may not be reflective of ongoing business performance. As such, the presentation may facilitate readers' analysis of trends. Except as otherwise noted, management's discussion of changes in reported results in this document applies equally to changes in the corresponding adjusted results.
Tangible common equity and return on tangible common equity
Tangible common equity is calculated as common shareholders' equity, less goodwill and acquisition-related intangible assets, net of related deferred tax liabilities. Return on tangible common equity (ROTCE) is calculated as net income available to common shareholders, adjusted for the amortization of acquisition-related intangible assets and any impairments, as a percentage of average tangible common equity. ROTCE is commonly used in the North American banking industry and is meaningful because it measures the performance of businesses consistently, whether they were acquired or developed organically.
Adjusting Items
Adjusted results in the current quarter, prior year and prior quarter excluded the following items:
— Impact of aligning accounting policies for employee vacation across legal entities of $70 million ($96 million pre-tax) in Q1-2025, recorded in non-interest expense in Corporate Services.
— Amortization of acquisition-related intangible assets and any impairments of $79 million ($106 million pre-tax) in Q1-2025, recorded in non-interest expense in the related operating group. Prior periods included $84 million ($112 million pre-tax) in Q1-2024 and $92 million ($124 million pre-tax) in Q4-2024.
— Acquisition and integration costs of $7 million ($10 million pre-tax) in Q1-2025, recorded in non-interest expense in the related operating group. Prior periods included $57 million ($76 million pre-tax) in Q1-2024 and $27 million ($35 million pre-tax) in Q4-2024.
— Impact of a U.S. Federal Deposit Insurance Corporate (FDIC) special assessment partial reversal of $5 million ($7 million pre-tax) in Q1-2025, recorded in non-interest expense in Corporate Services. Prior periods included a $313 million ($417 million pre-tax) expense in Q1-2024, and an $11 million ($14 million pre-tax) partial reversal of non-interest expense in Q4-2024.
— The impact of a lawsuit associated with a predecessor bank, M&I Marshall and Ilsley Bank, recorded in Corporate Services. Prior periods included $11 million ($15 million pre-tax) in Q1-2024, comprising interest expense of $14 million and non-interest expense of $1 million, and Q4-2024 included the reversal of a fiscal 2022 legal provision, including accrued interest of $870 million ($1,183 million pre-tax), comprising a reversal of interest expense of $589 million and a reversal of non-interest expense of $594 million. For further information, refer to the Provisions and Contingent Liabilities section in Note 25 of the audited annual consolidated financial statements of BMO's 2024 Annual Report.
— Net accounting loss of $136 million ($164 million pre-tax) on the sale of a portfolio of recreational vehicle loans related to balance sheet optimization, recorded in non-interest revenue in Corporate Services in Q1-2024.
Adjusting items in aggregate decreased net income by $151million in the current quarter, compared with a decrease of $601million in the prior year and an increase of $762million in the prior quarter.
Non-GAAP and Other Financial Measures (1)
Summary of Reported and Adjusted Results by Operating Segment
Caution Regarding Forward-Looking Statements
Bank of Montreal's public communications often include written or oral forward-looking statements. Statements of this type are included in this document and may be included in other filings with Canadian securities regulators or the U.S. Securities and Exchange Commission, or in other communications. All such statements are made pursuant to the “safe harbor” provisions of, and are intended to be forward-looking statements under, the United States Private Securities Litigation Reform Act of 1995 and any applicable Canadian securities legislation. Forward-looking statements in this document may include, but are not limited to: statements with respect to our objectives and priorities for fiscal2025 and beyond; our strategies or future actions; our targets and commitments (including with respect to net zero emissions); expectations for our financial condition, capital position, the regulatory environment in which we operate, the results of, or outlook for, our operations or the Canadian, U.S. and international economies; and include statements made by our management. Forward-looking statements are typically identified by words such as “will”, “would”, “should”, “believe”, “expect”, “anticipate”, “project”, “intend”, “estimate”, “plan”, “goal”, “commit”, “target”, “may”, “might”, “schedule”, “forecast”, “outlook”, “timeline”, “suggest”, “seek” and “could” or negative or grammatical variations thereof.
By their nature, forward-looking statements require us to make assumptions and are subject to inherent risks and uncertainties, both general and specific in nature. There is significant risk that predictions, forecasts, conclusions or projections will not prove to be accurate, that our assumptions may not be correct, and that actual results may differ materially from such predictions, forecasts, conclusions or projections. We caution readers of this document not to place undue reliance on our forward-looking statements, as a number of factors – many of which are beyond our control and the effects of which can be difficult to predict – could cause actual future results, conditions, actions or events to differ materially from the targets, expectations, estimates or intentions expressed in the forward-looking statements.
The future outcomes that relate to forward-looking statements may be influenced by many factors, including, but not limited to: general economic and market conditions in the countries in which we operate, including labour challenges and changes in foreign exchange and interest rates; political conditions, including changes relating to, or affecting, economic or trade matters, including tariffs, countermeasures and tariff mitigation policies; changes to our credit ratings; cyber and information security, including the threat of data breaches, hacking, identity theft and corporate espionage, as well as the possibility of denial of service resulting from efforts targeted at causing system failure and service disruption; technology resilience, innovation and competition; failure of third parties to comply with their obligations to us; disruptions of global supply chains; environmental and social risk, including climate change; the Canadian housing market and consumer leverage; inflationary pressures; changes in laws, including tax legislation and interpretation, or in supervisory expectations or requirements, including capital, interest rate and liquidity requirements and guidance, including if the bank were designated a global systemically important bank, and the effect of such changes on funding costs and capital requirements; changes in monetary, fiscal or economic policy; weak, volatile or illiquid capital or credit markets; the level of competition in the geographic and business areas in which we operate; exposure to, and the resolution of, significant litigation or regulatory matters, the appeal of favourable outcomes and our ability to successfully appeal adverse outcomes of such matters and the timing, determination and recovery of amounts related to such matters; the accuracy and completeness of the information we obtain with respect to our customers and counterparties; our ability to execute our strategic plans, complete proposed acquisitions or dispositions and integrate acquisitions, including obtaining regulatory approvals, and realize any anticipated benefits from such plans and transactions; critical accounting estimates and judgments, and the effects of changes in accounting standards, rules and interpretations on these estimates; operational and infrastructure risks, including with respect to reliance on third parties; global capital markets activities; the emergence or continuation of widespread health emergencies or pandemics, and their impact on local, national or international economies, as well as their heightening of certain risks that may affect our future results; the possible effects on our business of war or terrorist activities; natural disasters, such as earthquakes or flooding, and disruptions to public infrastructure, such as transportation, communications, power or water supply; and our ability to anticipate and effectively manage risks arising from all of the foregoing factors.
We caution that the foregoing list is not exhaustive of all possible factors. Other factors and risks could adversely affect our results. For more information, please refer to the discussion in the Risks That May Affect Future Results section, and the sections related to credit and counterparty, market, insurance, liquidity and funding, operational non-financial, legal and regulatory, strategic, environmental and social, and reputation risk, in the Enterprise-Wide Risk Management section of BMO's2024 Annual Report, and the Risk Management section in our First Quarter2025Report to Shareholders, all of which outline certain key factors and risks that may affect our future results. Investors and others should carefully consider these factors and risks, as well as other uncertainties and potential events, and the inherent uncertainty of forward-looking statements. We do not undertake to update any forward-looking statements, whether written or oral, that may be made from time to time by the organization or on its behalf, except as required by law. The forward-looking information contained in this document is presented for the purpose of assisting shareholders and analysts in understanding our financial position as at and for the periods ended on the dates presented, as well as our strategic priorities and objectives, and may not be appropriate for other purposes.
Material economic assumptions underlying the forward-looking statements contained in this document include those set out in the Economic Developments and Outlook section of BMO's2024 Annual Report, as updated in the Economic Developments and Outlook section and the Risk Management – Update on General Economic Conditions and Trade Disputes section in our First Quarter2025Report to Shareholders, as well as in the Allowance for Credit Losses section of BMO's 2024 Annual Report, as updated in the Allowance for Credit Losses section in our First Quarter 2025 Report to Shareholders. Assumptions about the performance of the Canadian and U.S. economies, as well as overall market conditions and their combined effect on our business, are material factors we consider when determining our strategic priorities, objectives and expectations for our business. In determining our expectations for economic growth, we primarily consider historical economic data, past relationships between economic and financial variables, changes in government policies, and the risks to the domestic and global economy.
Investor and Media Information
Investor Presentation Materials
Interested parties are invited to visit BMO's website at www.bmo.com/investorrelations to review the 2024Annual MD&A and audited annual consolidated financial statements, quarterly presentation materials and supplementary financial and regulatory information package.
Quarterly Conference Call and Webcast Presentations
Interested parties are also invited to listen to our quarterly conference call on Tuesday, February 25,2025, at 8:15 a.m. (ET). The call may be accessed by telephone at 416-340-2217 (from within Toronto) or 1-800-806-5484 (toll-free outside Toronto), entering Passcode: 9768240#. A replay of the conference call can be accessed until March 25,2025, by calling 905-694-9451 (from within Toronto) or 1-800-408-3053 (toll-free outside Toronto) and entering Passcode: 9180754#.
A live webcast of the call can be accessed on our website at www.bmo.com/investorrelations. A replay can also be accessed on the website.
BMO's 2024Annual MD&A, audited consolidated financial statements, annual information form and annual report on Form40-F (filed with the U.S.Securities and Exchange Commission) are available online at www.bmo.com/investorrelationsand at www.sedarplus.ca. Printed copies of the bank's complete 2024 audited consolidated financial statements are available free of charge upon request at 416-867-6785 or corp.secretary@bmo.com.
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