Bank of Montreal profit rose 6.9% in the third quarter, the bank said Tuesday.

The bank posted net earnings of $557 million, or 97¢ a share, in the quarter, ended July 31. That was up from $521 million, or 98¢ cents a share, a year earlier. The company had more shares outstanding in the current quarter than a year ago.

BMO’s revenue for the quarter was $3 billion, up 12% from $2.66 billion in the second quarter and up from $2.75 billion in the third quarter of 2008.

“Our core businesses continue to deliver good results, with record revenues in the quarter and bottom line growth in a slower economy,” said Russ Robertson, CFO at BMO, in a conference call on Tuesday.

The bank set aside less money to cover bad loans during the third quarter. Provisions for loan losses fell to $417 million from $484 million a year ago. The provision levels remain higher than average, a trend that is likely to continue in the quarters ahead, according to Tom Flynn, executive vice-president and chief risk officer.

“Provisions are elevated, and we expect this to continue given weakness in the economy and high unemployment levels,” Flynn said in Tuesday’s conference call.

But he added that he is encouraged by an apparent stabilization in the number of delinquencies on consumer loans in Canada.

“We aren’t calling a bottom here, what we are saying is that we’re seeing moderation in the negative trend that we’ve seen,” Flynn said.

On a sector basis, Canadian personal and commercial banking net income was $356 million, up $41 million, or 13%, from a year ago.

P&C U.S. net income was US$23 million, down US$5 million, or 16%, from a year ago.

Within the private client group, net income for the quarter was $120 million, an increase of $42 million, or 54%, from the second quarter. Effective in the third quarter, all of BMO’s insurance businesses now operate within the group. At the same time, the term investments business has moved to P&C Canada.

The bank’s insurance segment displays strong potential for growth, according to Bill Downe, president and CEO of BMO.

“Insurance will play an important part in the expansion of our wealth management businesses for BMO,” he said in the conference call.

Net income for BMO Capital Markets for the quarter was $343 million, an increase of $80 million, or 30%, from a year ago. Revenues increased by $221 million, or 27%. The strong performance in the quarter compared to a year ago was driven by significantly higher trading revenues as well as improved performance in corporate banking, according to the bank’s executives.

“BMO Captial Markets had another quarter of strong financial performance,” said Downe. “We’re benefiting from revenue opportunities across a number of our trading businesses.”

The bank continued to work at strengthening its balance sheet during the second quarter, reporting a Tier 1 capital ratio of 11.71% at the end of the quarter. These efforts will help BMO take advantage of growth opportunities as they emerge going forward, according to Downe.

“There are going to be opportunities to generate superior growth as growth returns,” he said. “We’re well positioned to participate as these opportunities emerge.”

One region showing particular potential for growth is China, where Downe said he sees prospects for expansion in all of BMO’s operating groups. The bank participated in the recent trade mission to China hosted by Finance Minister Jim Flaherty, and Downe noted that the bank launched an expanded Beijing office during the mission.

“China remains a key differentiator for us, and a positive option for future growth,” he said. “The country continues to show compelling market dynamics and a prolonged trend to wealth accumulation.”

BMO’s dividend was unchanged at 70¢ a share.

IE