Bank of Montreal Plans to Buy Back Shares After Strong Quarter for Capital Markets, Wealth Management — Update

By Robb M. Stewart

Bank of Montreal aims to launch a share-buyback program after its capital markets and wealth management operations drove stronger-than-expected earnings in the latest quarter.

The big Canadian lender benefited from double-digit revenue growth and an improved credit performance in its fiscal third quarter, with the lowest provision on impaired loans in the last 10 quarters, though its bottom line was squeezed by one-time charges for its exit from certain businesses.

Bank of Montreal's net income fell to 1.75 billion Canadian dollars (US$1.26 billion), or C$2.38 a share, in the three months to July 31 from C$2.33 billion, or C$3.14, a year earlier.

The result was held back by one-time items including a C$962 million charge related to the planned sale of its transportation and vendor finance businesses and C$10 million for the exit from 138 branches in the U.S.

On an adjusted basis, Bank of Montreal reported a rise in earnings to C$3.96 a share, 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 billion analysts had expected.

Each of the bank's business segments delivered record earnings before provisions and tax, 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, 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 million a year earlier. Analysts had expected a provision of C$780 million for the latest quarter to cover loans that may sour.

The bank saw its return on equity 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 the transportation and vendor finance businesses. On an adjusted basis, the performance ratio widened to 14%.

While on a call with investors, White said the strength of the bank's core operating performance for the quarter reinforced confidence in delivering a sustainable 15% return on equity exiting fiscal 2027.

Bank of Nova Scotia, another of Canada's largest banks, also recorded strong-than-expected earnings for the quarter on the back of a record result from its global wealth management and global banking and markets operations. Scotiabank, which lowered its credit-loss provision from the quarter before, saw its return on equity widen to 14.1% from 13.1% a quarter earlier.

Results from the banks kick off earnings season for the sector in Canada at a time when the country's economy has improved but business uncertainty remains high after President Trump threatened fresh tariffs on imports from Canada that would built on new levies introduced in recent days. Executives from both lenders said clients are positioned to navigate the challenging trade environment.

"The Canada-U.S. relationship is going through a period of adjustment, and the uncertainty that brings represents a headwind in both countries for trade related sectors and domestic affordability more broadly," White said. "Against that backdrop, the world is looking for places that can deliver long-term growth and support resiliency in an increasingly uncertain environment, and Canada has real advantages a stable financial system, abundant resources, world class talent and a platform to export globally through the world's most comprehensive set of free trade agreements."

Bank of Montreal said it plans to buy back up to 25 million of its shares, or roughly 3.6% of outstanding stock, 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 shares edged up 0.2% in early trading to C$239.18, outpacing a flat Toronto market. Bank of Nova Scotia shares rose 3.4% to C$124.40.

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

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August 25, 2026 10:41 ET (14:41 GMT)