Financial Results Highlights
Third Quarter 2019 Compared With Third Quarter 2018:
-- Reported net income of $1,557 million and adjusted net income(1) of $1,582 million, both up 1% -- Reported EPS(2) of $2.34 and adjusted EPS(1, 2 )of $2.38, both up 1% -- Net revenue(3) of $5,779 million, up 5% -- Provision for credit losses (PCL) of $306 million compared with $186 million in the prior year; includes provision for performing loans of $63 million -- ROE of 13.2%, compared with 14.7%; adjusted ROE(1) of 13.5%, compared with 15.0% -- Common Equity Tier 1 Ratio of 11.4% -- Dividend of $1.03 unchanged from the prior quarter, up 7% from the prior year
Year--to-Date 2019 Compared With Year-to-Date 2018:
-- Reported net income of $4,564 million, up 22%; adjusted net income(1,4,5) of $4,642 million, up 4% -- Reported EPS(2) of $6.88, up 23%; adjusted EPS(1,2 )of $7.00, up 5% -- Net revenue(3) of $17,022 million, up 6% -- Provision for credit losses of $619 million compared with $487 million in the prior year -- ROE of 13.5%, up from 12.3%; adjusted ROE(1) of 13.7% compared with 14.6%
(All dollar amounts are stated in Canadian dollars unless otherwise indicated)
TORONTO, Aug. 27, 2019 /PRNewswire/ -- For the third quarter ended July 31, 2019, BMO Financial Group recorded net income of $1,557 million or $2.34 per share on a reported basis, and net income of $1,582 million or $2.38 per share on an adjusted basis.
"BMO continued to deliver strong operating results this quarter demonstrating the resilience of our diversified North American platform, with adjusted earnings per share of $2.38, good revenue growth of 5% and positive operating leverage. Our Canadian and U.S. Personal and Commercial banking businesses together delivered 9% growth in pre-provision pre-tax profit contribution with good balance momentum. Capital Markets continues to perform well, with record revenue in Investment and Corporate Banking. While provisions for credit losses increased this quarter from very low levels, overall credit quality remains strong," said Darryl White, Chief Executive Officer, BMO Financial Group.
"We remain committed to our strategic priorities, including our focus on improving efficiency, which was below 60% on an adjusted basis this quarter, and growing our diversified U.S. businesses, which contributed 34% of the bank's year-to-date adjusted earnings. Our capital position remains strong at 11.4% and we are taking actions to continue to position our businesses for growth and sustainable long-term performance," concluded Mr. White.
Return on equity (ROE) was 13.2%, compared with 14.7% in the prior year, and adjusted ROE was 13.5% compared with 15.0% in the prior year. Return on tangible common equity (ROTCE) and adjusted ROTCE were both 15.8% in the current quarter, compared with 18.0% on both a reported and an adjusted basis in the prior year.
Concurrent with the release of results, BMO announced a fourth quarter 2019 dividend of $1.03 per common share, unchanged from the preceding quarter and up $0.07 per share or 7%from the prior year. The quarterly dividend of $1.03 per common share is equivalent to an annual dividend of $4.12 per common share.
(1) Results and measures in this document are presented on a GAAP basis. They are also presented on an adjusted basis that excludes the impact of certain items. Adjusted results and measures are non-GAAP and are detailed for all reported periods in the Non-GAAP Measures section, where such non-GAAP measures and their closest GAAP counterparts are disclosed. (2) All Earnings per Share (EPS) measures in this document refer to diluted EPS, unless specified otherwise. EPS is calculated using net income after deducting total dividends on preferred shares and distributions on other equity instruments. (3) Net revenue is reported on a basis that nets insurance claims, commissions and changes in policy benefit liabilities (CCPB) against insurance revenue. (4) Reported net income in the first quarter of 2018 included a $425 million (US$339 million) charge due to the revaluation of our U.S. net deferred tax asset as a result of the enactment of the U.S. Tax Cuts and Jobs Act. (5) Reported net income in the second quarter of 2018 included a $192 million after-tax ($260 million pre-tax) restructuring charge, primarily related to severance, as a result of an ongoing bank-wide initiative to simplify how we work, drive increased efficiency, and invest in technology to move our business forward. The restructuring charge is included in non-interest expense in Corporate Services. Note: All ratios and percentage changes in this document are based on unrounded numbers.
Our complete Third Quarter 2019 Report to Shareholders, including our unaudited interim consolidated financial statements for the period ended July 31, 2019, is available online at www.bmo.com/investorrelations [http://www.bmo.com/investorrelations] and at www.sedar.com [http://www.sedar.com/].
Third Quarter Operating Segment Overview
Canadian P&CReported net income of $648 million increased $7 million or 1% and adjusted net income of $649 million increased $8 million or 1% from the prior year. Adjusted net income excludes the amortization of acquisition-related intangible assets. Results reflect good revenue growth, largely offset by higher provisions for credit losses and higher expenses.
During the quarter, we were named Best Commercial Bank in Canada by World Finance for the fifth consecutive year. The award celebrates innovation and a commitment to customer excellence, recognizing best-in-class organizations in a variety of sectors. Earning this award for five consecutive years is reflective of the work BMO has done to develop strong customer loyalty and deepen sector strength.
U.S. P&CReported net income of $368 million increased $4 million or 1% and adjusted net income of $379 million increased $3 million or 1% from the prior year. Adjusted net income excludes the amortization of acquisition-related intangible assets.
Reported net income was US$277 million compared with US$279 million and adjusted net income was US$285 million compared with US$288 million in the prior year, with good revenue performance offset by higher provisions for credit losses and higher expenses.
BMO Harris Bank was recognized by Forbes' Magazine as one of America's Best Employers for Women in 2019. This ranking results from an independent survey of 60,000 U.S. employees nationwide, including 40,000 women, in companies with at least 1,000 employees in their U.S. operations.
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