The Motley Fool

This Canadian Bank Could Deliver Superior Returns

Bank sign on traditional europe building facade
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Bank of Montreal (TSX:BMO)(NYSE:BMO) is strategically advantaged compared to the bank’s Canadian peers. Despite some areas of the United States (U.S.) and Canadian economies still lagging, the bank sees that other areas are regaining strength, reaffirming trends that were emerging before the pandemic. The bank, also known as BMO, is well diversified, which ensures that it is not unduly exposed in areas of greater vulnerability.

Delivering consistently strong returns

Each of BMO’s businesses are backed by the resources and reach of a truly North American bank. In commercial banking, for example, BMO is one of the continent’s top 10 lenders, combining regional and sector expertise with disciplined risk management. BMO’s integrated Canada and U.S. teams generate about 30% of total revenues, delivering consistently strong returns.

Further, BMO’S collaborative approach to client relationships, supported by a robust cross-border platform, extends opportunities across commercial and personal banking, wealth management, and capital markets. This integration of talent and capabilities gives BMO a unique competitive advantage, as it helps customers regain stability and move ahead.

Opportunities to invest and grow

In addition, guiding all of BMO’s decisions and actions are the company’s strategic priorities, which it has renewed in the past year to further intensify the bank’s focus on execution. Looking ahead, BMO sees opportunities to invest and grow in areas of strategic importance and in those with attractive financial prospects, as the bank pursues longer-term strategic objectives.

Despite renewing strategic priorities, the fundamentals of BMO’s strategy remain consistent. BMO renewed its priorities for 2021 to reflect its strong momentum and the changing environment. BMO also has world-class client loyalty and growth. The bank has a winning culture driven by alignment, empowerment, and recognition.

Significantly enhanced digital capabilities

In addition, BMO has significantly enhanced digital capabilities for speed, efficiency, and scale. The bank has eliminated complexity through a superior management of risk and capital performance. BMO’s efforts to remove the barriers that have held so many people back are framed by the bank’s overall commitment to sustainability.

Further, the bank is a leader in sustainable finance and other innovative strategies to support the global response to climate change. BMO realizes that that social well-being cannot fully take root as long as the planet is under threat. This is an issue that has only grown more urgent over the past year, as many of the bank’s communities were hit hard by storms, floods, wildfires, and other extreme weather events.

Deep sense of purpose

BMO’s work in this area has been recognized by Wall Street Journal, which placed BMO first among all banks and #15 among 5,500 global companies in the 2020 rankings of the 100 most sustainably managed companies in the world. BMO’s deep sense of purpose appears to be propelling the bank’s business forward.

Leveraging BMO’s pre-crisis strength and momentum, the bank is building a high-performance, digitally enabled bank that’s ready for the future. In digital sales of products and services, for example, BMO is already top tier among Canadian retail banks, and the bank is always looking ahead. This approach should serve long-term shareholders well.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

The Motley Fool has no position in any of the stocks mentioned. Fool contributor Nikhil Kumar has no position in any of the stocks mentioned. 

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