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Higher insurance claims pull down BMO's fiscal Q4 profit

Bank of Montreal on Dec. 5 posted fiscal fourth-quarter net income attributable to bank shareholders of C$1.23 billion, or C$1.81 per share, compared to C$1.34 billion, or C$2.02 per share, in the year-ago quarter.

The S&P Capital IQ consensus normalized EPS estimate was C$1.99.

Revenues improved year over year to C$5.66 billion from C$5.28 billion. The Toronto-based lender, however, recorded higher insurance claims, commissions and changes in policy benefit liabilities of C$573 million, up from C$79 million. Provision for credit losses also rose to C$208 million for the recent quarter, versus the year-ago C$174 million figure.

Higher reinsurance claims of $112 million — which were due largely from the impact of hurricanes Irma, Maria and Harvey — cut fourth-quarter net income growth by approximately 8%, according to Bank of Montreal. A further 1% reduction in net income growth was attributed to the weaker U.S. dollar. The bank also recorded a $41 million posttax restructuring charge.

Net interest margin on average earning assets was unchanged from the previous year at 1.57%. It was 1.55% in the linked quarter.

For the fiscal year ended Oct. 31, 2017, net income attributable to bank shareholders was C$5.35 billion, or C$7.92 per share. For fiscal 2016, it was C$4.62 billion, or C$6.92 per share. The S&P Capital IQ consensus normalized EPS estimate was C$7.98.

The board of Bank of Montreal declared a quarterly dividend of 93 Canadian cents per share, up by 3 cents from the prior quarter. Payout will be on Feb. 27, 2018, to shareholders of record on Feb. 1, 2018.