The wealth management arm of Canada’s BMO Financial Group had a strong start to its financial year, with a 23% growth in reported net income.
The group performance too improved as loan loss reserves fell, with profit increasing from the prior year before the onset of the Covid-19 crisis and also from the previous quarter.
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All the business units reported growth, led by US personal and commercial banking.
Wealth performance
The division’s reported net income for the quarter to January 2021 stood at C$358m ($284.7m), up C$67m or 23% from a year ago.
Adjusted net income at the unit increased 22% to C$366m from C$300m.
Total revenue at the unit dropped to C$1.98bn from C$2.02bn while revenue, net of CCPB, rose 5% to C$1.37bn. Non-interest expense dipped 1% to C$906m.
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By GlobalDataIn traditional wealth, reported net income soared 37% to C$286m from C$209m while adjusted net income increased 35% year-on-year to C$294m.
Stronger global markets, and a rise in online brokerage revenue from higher transaction volumes attributed to a 7% growth in traditional wealth revenue to C$1.24bn.
Assets under management increased 8% to C$518.72bn as a result of stronger global markets and growth in client assets. Assets under administration grew 9% to C$44.78bn.
BMO Capital Markets
The reported net income at the unit increased 36% to C$483m in Q1 2021 from C$356m a year earlier whereas adjusted net income soared 35% year-on-year to C$489m.
Total revenue of C$1.57bn was C$205m or 15% from the previous year. The performance was driven by rise in global markets revenue while investment and corporate banking revenue remained almost flat.
Group highlights
Overall, the banking group posted a net income of C$2.02bn in the November-January quarter, a 27% surge from C$1.59bn a year ago.
Revenue rose 3% to C$6.97bn from C$6.75bn over the period.
Loan loss provisions in Q1 2021 dropped to C$156m from C$432m in the previous quarter and C$349m in Q1 2020.
BMO Financial Group CEO Darryl White said: “We achieved solid revenue growth of 6%, compared with the prior year and the prior quarter, and continued to effectively manage expenses and strategically invest for future growth, with operating leverage above 7% and an efficiency ratio of 56.3%.
“Credit performance was very strong, reflecting both the credit quality of our loan portfolio and our commitment to superior risk management. All businesses performed well, particularly in our U.S. segment, which remains a key driver of diversified earnings growth now and in the future.”
