(Toronto) Bank of Montreal said Tuesday it is focused on its $16.3 billion acquisition of Bank of the West, which topped its fourth-quarter results, and will rebuild its balance sheet over the next few months. quarters.
“The completion of our acquisition of Bank of the West on 1er February, is a historic moment for Bank of Montreal and the next natural step in our North American growth strategy,” CEO Darryl White said in a conference call.
“We are thrilled to welcome thousands of new employees and 1.8 million customers to the BMO family, as we come together with a common vision to drive progress for our customers and communities. »
A one-time charge related to the closing of the acquisition squeezed the bank’s first-quarter profit to $247 million from $2.93 billion in the same period last year.
With the closing of the deal, which came about three months later than expected when it was announced in late 2021, the bank is now focused on integrating the banks and delivering the $670 million in cost savings. expected costs.
Overall, the acquisition of Bank of the West is expected to add US$2 billion in pre-tax and provision profits, including the cost savings Mr White said he is confident will achieve.
“At the start of owning the asset, my level of confidence increased on these revenue synergies,” he told the conference.
The acquisition of Bank of the West adds to the first quarter a pre-tax loss of 2.01 billion linked to the management of the impact of changes in interest rates between the announcement and the closing of its purchase of Bank of the West. West on its fair value and goodwill.
Adjusted results also down
Elsewhere in its results, the bank said it was impacted by current market conditions, compared to strong capital markets results in the first quarter of last year, as well as a 9% increase in expenses.
Revenue totaled 6.47 billion, down from 7.72 billion a year earlier, while provisions for credit losses were 217 million, compared to a recovery of 99 million in the previous first quarter.
On an adjusted basis, Bank of Montreal says it earned $3.22 per share for its first quarter, down from adjusted earnings of $3.89 per share in the same quarter last year.
Analysts on average had expected adjusted earnings of $3.16 per share, according to forecasts compiled by financial data firm Refinitiv.
Earnings were higher than expected on the back of better trading revenue, which was also witnessed by other banks reporting results these days, as well as lower-than-expected provisions for credit losses, it said. Scotiabank analyst Meny Grauman.
“Although the results only slightly exceeded expectations, investors’ attention is now turning to the positive aspects of the agreement with Bank of the West. »
Bank of Montreal said its Canadian personal and commercial banking business gained $980 million in the most recent quarter, up from $1 billion in the same quarter last year, as it faced higher spending and a provision higher for credit losses.
The bank’s U.S. personal and commercial banking operations brought in $698 million, up from $681 million a year ago, helped by a stronger U.S. dollar.
Meanwhile, Bank of Montreal’s wealth management division earned 277 million, up from 315 million a year ago.
Bank of Montreal said its capital markets operations brought in $503 million, down from $705 million a year ago, due to market conditions, which led to lower investment banking revenue and business and revenue from global markets, as well as higher expenses and lower recovery of the provision for credit losses.
The bank’s corporate services segment, which included the charge for the acquisition of Bank of the West, posted a loss of $2.21 billion, compared with a profit of $228 million a year earlier.