Bank of Montreal (TSX:BMO)(NYSE:BMO) released its fourth-quarter results on Tuesday — the last of the big banks to report its earnings. Net income of $1.23 billion was down 9% from the $1.35 billion in profit that the bank recorded a year ago.
Adjusted earnings per share of $1.94 were down from $2.10 per share a year ago and fell short of the $1.99 in per-share earnings that analysts were expecting for the quarter. The bank did see revenues climb to $5.66 billion, a year-over-year increase of more than 7%.
The market was undecided on the results, as the stock was down less than 1% by the close of Tuesday’s trading session. Let’s take a closer look at the results to see whether or not BMO is a good buy after its latest quarter.
Reinsurance claims hurt the bank’s profits
The bank saw reinsurance claims rise in Q4, as three big hurricanes this year — Harvey, Irma, and Maria — created lots of devastation and resulted in $112 million worth of claims this past quarter and cost the company $0.17 in per-share earnings.
Other expenses further eroded profits
The bank incurred $41 million in after-tax expenses due to restructuring. BMO also had a 20% higher provision for credit losses this quarter, which added $34 million in costs to the company’s financials.
Canadian operations the lone bright spot in Q4
BMO says a weaker U.S. dollar was to blame for the company’s disappointing results south of the border. The company’s U.S. personal and commercial banking segment recorded profits of $280 million for the quarter — a decrease of 3% from a year ago.
The bank’s wealth management segment saw a 38% year-over-year decline in net income, while the capital markets division also saw profits decrease 17% from a year ago.
BMO saw the strongest performance in its Canadian personal and commercial banking segment, which saw profits reach $624 million — a 6% increase from 2016.
Strong overall performance for the year
Despite a disappointing Q4, BMO had a strong year with profits up 16% from 2016 and earnings per share of $7.92 also rising 14% year over year. The company’s top line showed more timid growth with sales of $22.3 billion up just 6% year over year.
Dividend increased by 3%
The bank announced that its quarterly dividend will rise to $0.93, which is a $0.03 increase from last quarter’s payment. The rate hike comes in a little bit higher and earlier than I expected it to.