Big Six drops to six for six as BMO raises dividend, plans buyout

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Big Six drops to six for six as BMO raises dividend, plans buyout


The Bank of Montreal wiped out Canada’s big six lenders by increasing dividends and buying back stocks.

BMO announced on Friday morning that it would seek regulatory approval to repurchase up to 22.5 million of its common shares. He also said his board of directors approved a 25% increase in the quarterly dividend, which would bring it to $ 1.33 per share, effective with the payment scheduled for Feb. 28.

The wave of moves by banks this week to share their wealth with investors was expected after the Office of the Superintendent of Financial Institutions ended its ban on share buybacks and dividend hikes on November 4.

The regulator imposed the ban in March 2020 as it sought to protect Canada’s financial system from a feared increase in defaults during the COVID-19 pandemic. However, this bitter loan attack never materialized as extraordinary measures were introduced by the banks and the federal government to support individuals and businesses.

BMO also posted a 52% increase in annual profits on Friday, as net income for the fiscal year ending Oct. 31 rose to $ 7.75 billion, from $ 5.10 billion in 2020. Au fourth quarter of fiscal year, BMO earned $ 2.16 billion, up 36%. compared to a year earlier in the context of growth in all of its major divisions and improvement in credit quality. In fact, $ 126 million has been freed from funds that were previously set aside as loan loss provisions. In the prior quarter, BMO took $ 70 million from its provisions.

On an adjusted basis, fourth quarter tax profit was $ 3.33 per share; analysts were expecting an average of $ 3.21.

“A modest beat for BMO in the quarter, but the focus will be on relative return on capital, with BMO announcing both the largest increase in its dividend and the largest share buyback program. Having said that, the earnings were good, although not spectacular, ”Barclays Capital analyst John Aiken said in a report to clients.

The main contributor to fourth quarter earnings was BMO’s personal and business banking activities in Canada, where net income jumped 42 percent year-over-year to $ 921 million despite higher expenses . The division’s revenue grew 13% year-over-year, and its average residential mortgage portfolio grew just over 9% to $ 115.9 billion.

Profit growth was even stronger south of the border, where BMO’s personal and commercial banking unit saw net income jump 66% year-over-year to $ 408 million Americans, as its business lending to corporate clients has grown and net interest income (the difference between what a bank earns interest on loans and what it pays on deposits) has grown to US $ 856 million compared to US $ 800 million a year earlier.

Meanwhile, BMO’s capital markets unit saw profits rise 41 percent to $ 536 million, and net income from wealth management activities rose 15 percent to $ 369 million.

“Looking to 2022, we will continue to position BMO for growth with the economic recovery that will follow. We are making targeted investments in technology and talent to improve the customer experience and provide cutting-edge advice to help them make real financial progress, ”BMO CEO Darryl White said in a statement. .

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