BMO Bank of Montreal sets sights on U.S. expansion after year of overhaul

The Bank of Montreal (TSX:BMO) has set it sights on growing its U.S. business, it said Tuesday after spending more than a year overhauling and revamping the operations. BMO chief executive Bill Downe said the bank is launching a massive advertising blitz now that the int

The Bank of Montreal (TSX:BMO) has set it sights on growing its U.S. business, it said Tuesday after spending more than a year overhauling and revamping the operations.

BMO chief executive Bill Downe said the bank is launching a massive advertising blitz now that the integration of Milwaukee-based Marshall and Ilsley Corp. is complete.

“This month we’re blanketing our U.S. footprint with some of the strongest advertising and promotions the bank has ever developed, online, outdoor, broadcast and in-branch,” Downe said on a conference call with analysts.

“A significant value in our U.S. business has been realized and 100 per cent of our efforts are now back on our first priority, being in the market with confidence, growing our customer base and building the bank and its earnings as a consequence.”

BMO doubled down on its U.S. operations when it acquired Marshall and Ilsley last year for US$4.1 billion in a bid to give it the scale and reach needed to compete south of the border.

The work at BMO Harris Bank, its banner in the U.S., included a rebranding and refreshing of more than 600 bank branches and the upgrading of more than 1,300 bank machines.

The push in the U.S. came as BMO reported a fourth-quarter profit of $1.08 billion on Tuesday as its capital markets business more than doubled its earnings compared with a year ago.

On a per share basis for the quarter ended Oct. 31, BMO reported a profit of $1.59 per share, up from $768 million or $1.11 per share.

BMO’s revenue in the fourth quarter from all business segments totalled $4.18 billion, up from $3.82 billion in the fourth quarter of 2011.

The bank’s adjusted earnings amounted to $1.65 per share compared with expectations of $1.43 per share on an adjusted basis for the fourth quarter, according to estimates compiled by Thomson Reuters.

The quarterly revenue estimate had been $3.8 billion.

The increase came as the bank said the Canadian housing market appeared to be slowing in most markets.

“We continue to see growth in residential mortgage market share, and believe the changes to Canada’s mortgage market announced earlier this year, which are aligned with BMO’s risk practices and ongoing efforts to encourage Canadians to borrow smartly, are having the desired moderating effect on housing prices in most markets,” Downe said.

He noted that a “concerted focus on efficiency was reflected in a reduction of 700 full-time employees.”

BMO Capital Markets helped drive the quarter as the division earned $293 million, up from $143 million a year ago.

Personal and commercial banking in Canada earned $439 million, about the same as a year ago, while the U.S. division earned $130 million, down from $155 million.

Downe said the bank completed the conversion of its core banking platform in the U.S. during the quarter.

“Over the past two years, with the acquisition of Marshall & Ilsley Corp., we have fundamentally transformed the bank, changed its growth trajectory, and enhanced long-term value for shareholders.

“BMO Harris Bank has strong deposit market share positions in our core Midwest markets, and our U.S. footprint has doubled in size.”

The bank’s private client group earned $166 million for the quarter, up from $137 million.

Despite the better than expected results, RBC Capital Markets analyst Andre-Philippe Hardy maintained a “sector perform” rating on the bank.

“We continue to believe that the shares of banks with better revenue growth will perform better in the next 12 months,” Hardy wrote in a note to clients.

He noted that BMO did not grow year-over-year revenues for its Canadian personal and commercial banking, while revenue slipped five per cent at its U.S. personal and commercial banking operations.

“We believe that better revenue growth in retail banking divisions is needed for BMO’s stock to perform well on a sustained basis relative to peers,” Hardy wrote.

The quarter brought Bank of Montreal’s total earnings for the 2012 financial year to $4.19 billion or $6.15 per diluted share, up from $3.11 billion or $4.84 per diluted share the previous year.

Revenue for the full 2012 financial year increased to $16.1 billion from $13.9 billion.

In the third quarter, the bank announced plans to close 24 of its U.S. BMO Harris bank branches in the U.S. Midwest, as an effort to scale back on overlapping branches after the acquisition of Marshall & Ilsley.

BMO was one of the Canadian banks that was put under review by Moody’s Investors Services, which rates the credit of governments, public sector institutions and corporations.

Moody’s said the review was prompted by concerns about consumer debt levels and home prices in Canada, where the banking sector is the major source of mortgage lending.

BMO also said Tuesday it will buy back up to 15 million of its shares on the Toronto Stock Exchange through a normal course issuer bid that will end on Jan. 24, 2014.

There were about 650.7 million BMO common shares issued and outstanding at Oct. 31.

Shares in the company closed up 34 cents at $59.63 on the Toronto Stock Exchange on Tuesday.

Get local stories you won't find anywhere else right to your inbox.
Sign up here

Just Posted

A health worker holds up a dose of the AstraZeneca vaccine against COVID-19 in Rome, Tuesday, Feb. 23, 2020. THE CANADIAN PRESS/AP-Cecilia Fabiano/LaPresse via AP
Health Canada approves AstraZeneca’s COVID-19 vaccine

Canada has pre-ordered 20 million doses of the AstraZeneca vaccine

A fallen Western Red cedar tree at Francis/King Regional Park in Saanich, B.C., Thursday, May 26, 2016. THE CANADIAN PRESS/Chad Hipolito
Logging delay agreement for B.C. old-growth tree stand helps endangered spotted owls

Deal announced to hold off logging watershed for a year

An arrest by Red Deer RCMP is facing online scrutiny. No charges have been laid and the incident is still under investigation. (Screenshot of YouTube video)
Red Deer RCMP investigating violent arrest caught on video

Police say officer ‘acted within the scope of his duties’

Emily Keeping of Wetaskiwin, Alta., was last seen at 4:20 p.m. on Feb. 25, 2021 at the FasGas on 49 St and 50 Ave in Wetaskiwin. Supplied/ Wetaskiwin RCMP.
Wetaskiwin RCMP seek assistance in locating missing 11-year-old

Emily Keeping was last seen on Feb. 25, 2021 at the FasGas on 49 St and 50 Ave in Wetaskiwin.

FILE - Cameron Forte (right) and his Fraser Valley Bandits are 2-0 at the Canadian Elite Basketball League Summer Series after being the Saskatchewan Rattlers. (CEBL photo)
CEBL releases 14-game 2021 schedule, hopes to see fans attend games in person

Season will kick off with the Edmonton Stingers and the Fraser Valley Bandits

FILE - Keegan Messing performs during the Men’s Short program at the 2020 Canadian Tire National Skating Championships in Mississauga, Ont., Friday, Jan. 17, 2020. If the world figure skating championships do go ahead in a bubble in March in Sweden, there is a good chance Canada won’t be there. THE CANADIAN PRESS/Frank Gunn
Messing leads Canadian figure skating team at world championships

Messing was the only Canadian to compete on the Grand Prix circuit this season

Nurses episode, titled “Achilles Heel,” was first aired on Global in February 2020. (Photo by THE CANADIAN PRESS)
Global pulls ‘Nurses’ episode after scene with Orthodox Jews deemed anti-Semitic

TORONTO — Global TV says it has pulled an episode of Toronto-set… Continue reading

Lady Gaga is offering a $500,000 reward for the return of her two French bulldogs. (Photo by THE ASSOCIATED PRESS)
Lady Gaga’s dog walker shot, French bulldogs stolen in LA

Dog walker expected to survive injuries

Calgary Flames defenceman Mark Giordano tries to help goaltender David Rittich stop a shot from Ottawa Senators right wing Drake Batherson during first-period NHL action Thursday, February 25, 2021 in Ottawa. THE CANADIAN PRESS/Adrian Wyld
Colin White scores two goals to lead Ottawa Senators to a 6-1 win over Calgary Flames

Colin White scores two goals to lead Ottawa Senators to a 6-1 win over Calgary Flames

Commander of the Royal Canadian Navy Vice-Admiral Art McDonald is seen during an interview with The Canadian Press in Ottawa, Wednesday, Dec. 11, 2019. THE CANADIAN PRESS/Adrian Wyld
Military reeling as new defence chief steps aside amid allegations of misconduct

Military reeling as new defence chief steps aside amid allegations of misconduct

Alberta Premier Jason Kenney speaks during a news conference in Edmonton on Feb. 24, 2020. It’s budget day in the province, and Kenney’s United Conservative government is promising more help in the fight against COVID, but more red ink on the bottom line. THE CANADIAN PRESS/Jason Franson
Alberta’s budget promises more help for COVID-19 with a hard deficit

Alberta’s budget promises more help for COVID-19 with a hard deficit

Most Read