Bank of Montreal today reported a 10% increase in profit for the fourth quarter ended October 31.

The bank said an improved credit performance and lower costs led to the improved performance.

Net income for the quarter was $563 million, or $1.06 a share, up from $513 million, or 97¢ a share, in the year-before period.

BMO reported $13 million net recovery of credit losses, comprised of $37 million of specific provisions for credit losses and a $50 million reduction of the general allowance, compared with $95 million of specific provisions and no reduction of the general allowance a year ago

Quarterly revenue declined 4.2% and expenses declined 3.4%, in part due to the weaker U.S. dollar, the bank said.

Return on equity for the quarter slipped to 17.8%, down marginally from 17.9%.

For the year, the bank recorded net income of $2,351 million in 2004, up $526 million from 2003, and said it had achieved or exceeded all of its annual financial targets.

“We had an extremely successful year,” said Tony Comper, president and CEO, in a release. “We achieved our cash productivity target and surpassed all our other financial targets for 2004, earning our highest-ever net income.”

The bank said each group improved their productivity and earned record net income in 2004. Personal and Commercial Client Group earned net income of just over $1 billion, up $66 million or 7.0% from a year ago as strong volume growth more than offset the impact of reduced net interest margin.

The Private Client Group earned $231 million, up $87 million or 60% from 2003 and Investment Banking Group earned $856 million, up $135 million or 19%. BMO said both units benefited from the more favourable capital markets environment, particularly in the first half of the year.

The bank also declared quarterly dividend of 44¢ per share, unchanged from the previous quarter.

BMO shares slipped 77¢ to $57.08 in morning trading on the Toronto Stock Exchange.