Fitch Ratings has affirmed its long-term and short-term ratings on Bank of Montreal, and its U.S. affiliates Harris Bankcorp and Harris N.A.

The long-term IDR of BMO is affirmed at AA-; the long-term IDR of Harris Bankcorp Inc. is AA-.

The rating agency says that the affirmation reflects BMO’s good capitalization, diverse franchise, and sound financial fundamentals. “The depth of this franchise gives BMO a diverse and stable earnings mix,” Fitch says.

“BMO also benefits from the better performance of the Canadian housing sector and overall economy throughout the financial crisis,” it notes while Harris’ exposure to subprime U.S. mortgages and high loan-to-value home equity loans “was relatively well-controlled”.

Earnings at the bank have rebounded, due to “solid revenue growth, good expense control, and sharply lower loan loss provisions” Fitch says. Asset quality has also improved, it says, liquidity “remains comfortable”, and capital levels “compare well” to international peers, it says.

The rating outlook is stable, Fitch says. “BMO’s ratings have limited upside, since they are already higher than at most North American financial institutions. An unexpectedly large increase in loan, trading or other operational losses could result in downward rating pressure,” it adds.

IE