Bank of Montreal (TSX:BMO) saw its first-quarter profits shrink, but analysts say lower oil prices didn’t have as much of an impact as anticipated.

“Everyone’s talking about oil and how that’s going to impact the banks, but the full impact hasn’t really hit yet and I think it’s going to take a couple of quarters before it does,” said Morningstar analyst Dan Werner.

BMO on Tuesday was the first of the big Canadian banks to release its first-quarter results, reporting a profit of $1 billion or $1.46 per share, down from $1.06 billion or $1.58 per share a year ago. Revenue grew to $5.06 billion, from $4.48 billion.

On an adjusted basis, BMO said it earned $1.04 billion or $1.53 per share for the quarter, down from $1.08 billion or $1.161 per share a year ago. That’s 10 cents below analyst expectations of $1.63 per share of adjusted profits.

BMO attributed the lower adjusted profit to falling long-term interest rates on its insurance business, which the bank said reduced its adjusted earnings by six cents per share.

Some analysts had predicted that investment banking business from the oilpatch would dry up during the quarter due to the recent plunge in the price of oil.

Although BMO’s capital markets division — which includes investment banking — saw its revenues drop 20 per cent from a year ago to $221 million, analysts said the segment performed better than expected.

Meanwhile, “exceptionally strong growth” south of the border offset slowing growth in BMO’s domestic retail banking operations, according to Barclays analyst John Aiken.

BMO’s U.S. banking business increased its first-quarter profits by 15 per cent to $192 million, while its Canadian banking arm grew profits by four per cent to $502 million.

All of the big Canadian lenders are facing headwinds, including tight lending margins due to rock-bottom interest rates and a growing reluctance by stretched Canadian consumers to take on more debt.

Despite these challenges, BMO’s chief executive says he expects the bank’s revenue to improve during the second half of the year.

“The current operating environment poses both challenges and opportunities,” Bill Downe told investors during a conference call Tuesday. “In this environment, we’re keeping a close check on expense growth.”

Royal Bank (TSX:RY) and National Bank (TSX:NA) will report their earnings on Wednesday, with TD Bank (TSX:TD) and CIBC (TSX:CM) slated to follow on Thursday. Scotiabank (TSX:BNS) will report on March 3.