TORONTO — Bank of Montreal (TSX:BMO) delivered a number of surprises Tuesday, including an unexpected dividend increase and first-quarter results that beat analyst estimates, although its profit and revenue were both lower than a year before.
The bank said net income slipped to $1.05 billion or $1.53 per share from $1.12 billion or $1.63 per share a year earlier.
On an adjusted basis, earnings were $1.52, beating analyst expectations by four cents, according to a survey by Thomson Reuters.
Total revenue was down slightly from a year earlier, falling by one per cent to $4.08 billion from $4.12 billion. The consensus estimate had been for revenue to fall further to $3.9 billion and for adjusted earnings to drop to $1.48 per share.
Provisions for credit losses were one of the weaknesses of the results.
The money set aside to cover bad loans increased to $178 million from $141 million.
Chief executive Bill Downe said all of the bank’s major divisions in Canada and the United States — where it operates under the BMO Harris Bank brand — performed well during the three-month period, which ended Jan. 31.
“Looking ahead, we are well-positioned to leverage our North American platform and deliver sustained earnings growth,” Downe said in a statement.
The bank also said its quarterly dividend will be going up two cents to 74 cents per share.
Most of Canada’s big banks were expected to increase their dividends, but several analysts had said before the earnings report that they didn’t anticipate Bank of Montreal to hike its payout to shareholders.
Barclays analyst John Aiken said that BMO’s decision to raise its dividend came as a surprise to him.
“Given the importance of dividend yields to the banks’ valuations, it will likely put some pressure on others who do not announce similar increases this quarter,” he added.