Bank of Montreal today reported a 7% drop in third-quarter earnings on a charge largely related to reducing risk in its commodities business.
The bank said it earned $660 million, or $1.28 a share, in the three months ended July 31. That compares with profit of $710 million, or $1.38 a share, a year earlier.
It said the results were affected by losses in its commodities business of $149 million ($97 million after tax), as the bank reduced the size and risk of its commodities portfolio.
The bank said its other businesses performed well, overall, as they generated net income of $757 million or $1.47 per share. In those businesses, revenue grew 5.9% from a year ago and net income rose by $47 million, or 6.6%.
Earnings in P&C Canada rose 1% to a record $350 million. Excluding the impact of a $38 million ($25 million after tax) gain on the MasterCard International Inc. (MCI) IPO and a $26 million recovery of prior years’ income taxes in the third quarter a year ago, as well as a $14 million recovery of prior years’ income taxes in the current quarter, P&C Canada’s earning rose 14%.
BMO Capital Markets earnings grew 45%, excluding the impact of the commodities losses, driven by broad-based revenue growth and a lower effective tax rate.
Net income increased 26% in Private Client Group, driven by strong revenue growth in full-service investing and mutual funds.
P&C U.S. earnings decreased 17% as margin has declined in a difficult economic and competitive environment. P&C U.S. net income would have increased quarter-over-quarter in each period in fiscal 2007 in the absence of acquisition integration costs.
“P&C Canada performed well,” said Bill Downe, president and CEO, in a news release. “Its operating performance improved more than the reported results might suggest, as there was a substantial investment gain and tax recovery in the third quarter a year ago.”
“With the exception of the commodities business, we had good results in BMO Capital Markets, with revenues in some of our investment banking businesses doubling from a year ago. Private Client Group also performed well, increasing its income by 26% on strength in full-service investing and mutual funds,” Downe added.
The bank also raised its divided by 2¢, or 3%, to 70¢ a share.