Investors showed little patience following the latest announcements from the Bank of Montreal, which led to a 6.16% drop in the lender’s stock price on Tuesday. After revealing its most recent quarterly earnings, investors decisively exited the stock. By the end of trading, shares of the Bank of Montreal had plummeted over 6%, in stark contrast to the S&P 500 index, which ended the day with a modest 0.2% gain.
Disappointment in Earnings
In the fiscal third quarter of 2024, the Bank of Montreal reported revenue of slightly over 8.2 billion Canadian dollars (approximately $6.1 billion), marking a small increase compared to the same quarter in 2023. However, the adjusted non-GAAP net income took a downturn, reporting CA$1.98 billion ($1.47 billion), or CA$2.64 ($1.96) per share, compared to the previous year’s profit of $2.15 billion ($1.59 billion).
This earnings figure did not meet analysts’ expectations. On average, financial experts had predicted adjusted net income of CA$2.77 ($2.05) per share for the Bank of Montreal.
During this period, the bank significantly raised its provisions for credit losses, nearly doubling the amount from the previous year to CA$906 million ($671 million), compared to CA$492 million ($365 million) in the prior year.
Focus on Diversification and U.S. Growth
In the earnings announcement, CEO Darryl White noted the bank’s ongoing efforts to diversify and expand its U.S. banking operations, highlighting the addition of new customers.
