Bank of Montreal has delivered a robust financial performance for its fourth quarter, exceeding analyst expectations on the back of significant profit growth in its wealth management and capital markets divisions. The bank also announced a dividend increase, signaling confidence in its financial health and future prospects.
Strong Quarterly and Annual Performance
For the three months ending October 31, BMO reported a net income of $2.29 billion, a figure nearly matching the $2.3 billion earned in the same period last year. This translated to net earnings per share of $2.97. More notably, the bank's adjusted net income, which excludes one-time items, surged to $2.51 billion from $1.54 billion a year ago.
This resulted in adjusted earnings per share of $3.28, comfortably beating the average analyst estimate of approximately $3.04 per share. For the entire 2025 fiscal year, BMO's net income reached $8.72 billion, marking a substantial 19% increase from the previous year's $7.3 billion.
Key Drivers: U.S. Operations, Wealth, and Capital Markets
The bank's success was powered by standout performances in several key business segments. Its U.S. operations saw adjusted net income jump by $518 million year-over-year to reach $871 million. Even more impressive were the gains in the Wealth Management and Capital Markets units.
Adjusted net income in the Wealth Management segment grew by 27%, while the Capital Markets division nearly doubled its profit with a staggering 97% increase. This growth highlights the bank's successful navigation of market conditions and effective capital deployment in these areas.
Dividend Hike and Improved Credit Outlook
Reflecting its strong financial position, BMO's board approved an increase to its quarterly dividend. The payout will rise by four cents to $1.67 per common share, effective at the end of the first quarter in 2026. This move directly returns value to shareholders.
Furthermore, the bank reported a significantly improved outlook on credit risk. Its total provisions for credit losses (PCL) for the quarter stood at $755 million. This amount is half the $1.5 billion set aside in the same quarter last year and also represents a $42 million decrease from the previous quarter, indicating a healthier loan portfolio and reduced economic uncertainty.
In a statement, BMO Chief Executive Darryl White characterized fiscal 2025 as a "strong year" for the bank, citing robust earnings growth and an improved return on equity. "We are deploying capital to drive future growth and higher shareholder returns," White stated, underscoring the strategic decisions behind the positive results. The bank's performance, particularly in capital markets and wealth management, positions it favorably as it moves into the new fiscal year.
