Bank of Montreal Stock Tumbles After Earnings—Here’s Why
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Key TakeawaysBank of Montreal missed profit and sales estimates Wednesday as it increased its provision for credit losses and reported a decline for its U.S. unit.The Canadian bank set aside C$705 million ($517 million) to cover bad loans, more than in the previous quarter and above analysts' forecasts.Bank of Montreal's U.S. personal and commercial banking income dropped as net interest income fell.
Shares of Bank of Montreal or BMO Financial Group (BMO) plunged over 8% in intraday trading Wednesday after the Canadian financial firm posted worse-than-expected results. The money it set aside to cover bad loans rose from the prior quarter and it also reported that its U.S. business weakened.The bank reported fiscal second-quarter adjusted earnings per share (EPS) of C$2.59 ($1.90), with revenue rising 2.4% from a year ago to C$7.97 billion ($5.84 billion). Net interest income slipped 6.2% to C$4.52 billion ($3.32 billion). All three metrics missed analysts' estimates compiled by Visible Alpha. BMO Loan Loss Provision IncreasedBMO’s loan loss provision of C$705 million ($517 million) rose from the first quarter and was above what analysts had anticipated. Net income at the U.S. personal and commercial (P&C) banking segment fell 26% to C$543 million ($398 million). BMO said the U.S. results reflected “lower revenue due to a decrease in net interest income, primarily from lower margins, and lower non-interest revenue, lower expenses and a higher provision for credit losses.” Canadian P&C net income rose 6% to C$872 million ($639 million).BMO Stock Sinks Further Into Negative Territory for 2024The news sent shares of Bank of Montreal down about 8.6% on the New York Stock Exchange to $87.84 as of 2:50 p.m. ET Wednesday and further into negative territory for the year. Shares have lost about 11% of their value since the start of 2024.
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