Bank of Montreal Earnings: Strong Recovery on Net Interest Margin Expansion and Trading Revenue

Bank of Montreal saw solid performance across nearly every part of its business.

Michael Miller, CFA 26 February, 2025 | 4:28PM
Facebook Twitter LinkedIn

The Bank of Montreal (BMO) building is standing in downtown Toronto, Ontario, Canada

Key Morningstar Metrics for Bank of Montreal


What We Thought of Bank of Montreal’s Earnings

Bank of Montreal BMO started fiscal 2025 strong, with revenue increasing 21% to C$9.27 billion, partially thanks to a 75% jump in trading revenue. Meanwhile, net income increased 65%, or 21% on an adjusted basis.

Why it matters: We generally do not read too deeply into trading revenue increases because of its volatility, but Bank of Montreal saw solid performance across nearly every part of its business. The bank’s shares are up 5% on the release, which makes sense to us, given the quality of the results.

  • Adjusted net interest income rose 11% from last year, thanks to solid loan growth and the firmwide net interest margin expanding to 1.93% from 1.84%, primarily thanks to the bank’s Canadian banking and capital market businesses.
  • Provisions for credit losses fell to C$1.01 billion from C$1.52 billion last quarter. However, impaired loan formations still rose sequentially, and we expect charge-offs to be slightly higher in 2025 than in 2024, though we expect credit deterioration to plateau soon.

The bottom line: We maintain our fair value estimate of C$145 per share. We see the stock as roughly fairly valued following the market’s positive response to earnings.

  • While we expected the bank to recover from its weak performance in 2023 and early 2024, it is still good to see it deliver better profitability. The bank’s return on equity increased to 10.6% from 7.2% last year.

Key stats: Noninterest revenue was a major source of strength in the quarter. Fee-based revenue increased 24% (15% excluding trading). In particular, the firm saw its brokerage, investment, and custodial revenue increase by 15% to C$1.2 billion.

BMO Financial Group Stock vs. Morningstar Fair Value Estimate

Source: Morningstar Direct. Latest price as of 10:44 AM EST. Data as of Feb. 26, 2025.


The author or authors do not own shares in any securities mentioned in this article. Find out about Morningstar's editorial policies.

Facebook Twitter LinkedIn

About Author

Michael Miller, CFA  is an equity analyst for Morningstar Research Services LLC, a wholly owned subsidiary of Morningstar, Inc.

© Copyright 2025 Morningstar, Inc. All rights reserved.

Terms of Use        Privacy Policy       Disclosures        Accessibility