The bank’s domestic personal, commercial, and U.S. banking arms particularly felt the impact
Higher loan loss provisions have considerably affected the profits posted by Bank of Montreal, the institution announced yesterday.
BMO stated that it has allocated $306 million for credit losses, a massive increase from the $186 million just a year ago.
This has pulled down third-quarter profit, ending up considerably lower than market expectations, Reuters reported.
Several crucial BMO units, in particular, have felt the bite of this development. Net income at the domestic personal and commercial banking arm grew by just 1% to $648 million, while its U.S. business similarly ticked up by 1% to $368 million.
Net income increased to $1.56 billion ($2.34 per share) in the quarter ending July 31. To compare, the value was $1.54 billion ($2.31/share) during the same time last year.
These developments followed the trend set last week by RBC and CIBC, which also announced higher provisions for loan losses.
RBC chief financial officer Rod Bolger stated that their growth in expenses slowed down to 2.3% year-over-year. This fell from 6.6% in the first half, giving the bank plenty of elbow room in case of a disturbance.
“We are prepared,” he said. “Given lower interest rates and the expectation of interest-rate cuts, we are prudently focused on driving efficiencies and managing costs.”
“We continue to drive efficiencies, which create opportunities to invest in growth. We reaffirm our guidance from last quarter and expect lower expense growth in the second half of the year.”
Meanwhile, CIBC’s overall provisions for credit losses were $291 million for the third quarter, compared to the $241 during the same time last year.
The bank assured that it is bolstering its resources to ensure its ability to respond to possible impaired loans.
“While our provision for credit losses increased modestly this quarter to $291 million, the quality of our book remained relatively stable, and we remain comfortable with the outlook,” CIBC president and CEO Victor Dodig said late last week.
