Bank of Montreal Plans to Buy Back Shares After Quarterly Earnings Hit by Charge

By Robb M. Stewart

Bank of Montreal aims to launch a share-buyback program in the third quarter after notching improved results from its operations in the latest quarters, despite being slugged by a charge from the sale of assets.

The big Canadian bank's net income fell in the fiscal third quarter to 1.75 billion Canadian dollars (US$1.26 billion), or C$2.38 a share, from C$2.33 billion, or C$3.14, a year earlier.

The result for the period was squeezed by a number of one-time items, including a C$962 million charge from the sale of its transportation and vendor finance businesses and C$10 million for an exit from 138 branches in the U.S.

On an adjusted basis used by the lender to reflect its underlying business performance, Bank of Montreal reported a rise in earnings to C$3.96 a share for the three months to July 31, topping the C$3.77 consensus forecast of analysts polled by FactSet.

Overall revenue for the period increased 10% to C$9.9 billion, beating the C$9.73 analysts had expected. Net interest income for the period edged up 1.3% to C$5.57 billion, while noninterest revenue jumped 24% to C$4.33 billion.

Each of the bank's business segments delivered record pre-provision pretax earnings, Chief Executive Darryl White said. There was sustained momentum in capital markets and wealth management, and continued commercial loan growth in both Canada and the U.S., he said. Bank of Montreal's credit performance also improved, reflecting what White said was proactive risk management and a diversified portfolio.

Bank of Montreal, one of a handful of big lenders that together control most of Canada's banking assets, recorded a total provision for credit losses of C$722 million. That compares with the C$739 million put aside the quarter before and C$797 a year earlier. Analysts had expected a provision of C$780 million for the latest quarter to cover loans that may sour.

The bank, which has set a target of exiting 2027 with a return on equity of 15%, saw the measure contract to 8.4% in the latest quarter from 11.6% last year, due to a charge related to a reduction in goodwill associated with the sale of its transportation and vendor finance businesses. On an adjusted basis, return on equity widened to 14%.

Bank of Montreal's common equity tier 1 ratio held steady on the prior quarter at 13%, though that was narrowed slightly from 13.5% a year earlier. The capital ratio remains well above the no-less-than-11% of risk-weighted assets that Canada's banking regulator requires from each of the country's big banks.

The lender said it plans to buy back up to 25 million of its shares under a so-called normal course issuer bid. It aims to file a notice of its plans with the Toronto Stock Exchange and begin the one-year buyback program on or around Sept. 8.

Bank of Montreal, one of the top 10 banks in North America by assets, during the quarter expanded its reach in Australia and strengthened its position in metals and mining with a deal to buy the capital markets business of advisory firm Euroz Hartleys Group. Earlier this month, the bank and Royal Bank of Canada agreed to sell their jointly-owned Moneris commerce platform to technology investor to Francisco Partners for C$2 billion.

Write to Robb M. Stewart at robb.stewart@wsj.com

(END) Dow Jones Newswires

August 25, 2026 06:28 ET (10:28 GMT)