Canada's BMO Takes COVID-19 Hit

Tom Burroughes

27 May 2020

Toronto-listed BMO Financial Group, whose business groups include private banking, yesterday reported C$715 million ($520.7 million) in net income for the three months to April 30, more than halving from the C$1.522 billion a year earlier as provisions for credit losses shot up.

The banking group, like so many others, has set aside more money to cover loan losses linked to the COVID-19 pandemic.

Revenues in the quarter stood at C$5.264 billion, down from C$6.213 billion a year earlier, BMO said in a statement. Total provision for credit losses rose to C$1.118 billion, up from C$176 million a year before.

Interest before income taxes stood at C$860 million, falling from C$1.913 billion.

BMO announced a dividend of C$1.06 per common share, unchanged from the prior quarter and up C$0.03 per share or 3 per cent from the previous year. The quarterly dividend of C$1.06 per common share is equivalent to an annual dividend of C$4.24 per common share.

The banking group’s Common Equity Tier 1 ratio – a standard global measure of a bank’s capital buffer - was 11.0 per cent as at April 30, 2020. The ratio, which remains “comfortably above the minimum regulatory expectation”, the bank said, fell from 11.4 per cent at the end of the first quarter. “The change in our ratio largely reflects loan growth in support of our customers,” it said.

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Reported net income was C$144 million, compared with C$305 million in the previous year, and adjusted net income was C$153 million, compared with C$315 million. Adjusted net income excludes the amortization of acquisition-related intangible assets.

“We continue to support our clients' evolving needs during this challenging time, including providing expert advice and help to access financial relief measures, extending the grace period for most insurance premiums, digitizing processes and enabling our call centres to support a significant increase in online brokerage transaction volumes and new accounts,” the bank said.