Press Release: BMO Financial Group Reports First Quarter 2021 Results
BMO Financial Group Reports First Quarter 2021 Results
Canada NewsWire
TORONTO, Feb. 23, 2021
BMO's First Quarter 2021 Report to Shareholders, including the unaudited interim consolidated financial statements for the period ended January 31, 2021, is available online at www.bmo.com/investorrelations and at www.sedar.com.
Financial Results Highlights
First Quarter 2021 Compared With First Quarter 2020:
TORONTO, Feb. 23, 2021 /CNW/ - For the first quarter ended January 31, 2021, BMO Financial Group (TSX: BMO) (NYSE: BMO) recorded net income of $2,017 million or $3.03 per share on a reported basis, and net income of $2,038 million or $3.06 per share on an adjusted basis.
"We had a very strong start to the year, continuing to build on clear and consistent operating momentum to deliver first quarter adjusted net income of over $2 billion, earnings per share of $3.06, and pre-provision, pre-tax earnings growth of 16% from last year and 13% from last quarter. 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," said Darryl White, Chief Executive Officer, BMO Financial Group.
"In addition to our strong financial results this quarter, we were proud to be named as the top North American bank in Corporate Knights' 2021 Global 100 Most Sustainable Corporations in the World and are pleased to be an early signatory to the United Nations Principles for Responsible Banking. We remain resolute in the support of our customers and communities in the face of ongoing challenges related to the pandemic and are focused on helping them recover stronger as the economy rebounds."
"We have a diversified and resilient model, a strong capital position and good momentum across our businesses that are well-positioned for the evolving environment. We are executing against a strategy to accelerate long-term growth and deliver top-tier shareholder value," concluded Mr. White.
Reported net income increased 27% and adjusted net income increased 26% from the prior year. Adjusted results exclude the amortization of acquisition-related intangible assets and acquisition integration costs. The increase in net income was driven by net revenue(3) growth of 6%, with increases across all operating groups, a decrease in expenses and lower provisions for credit losses.
Return on equity (ROE) was 15.7%, compared with 13.3% in the prior year, and adjusted ROE was 15.8%, compared with 13.5%. Return on tangible common equity (ROTCE) was 18.2%, an increase from 15.7% in the prior year, and adjusted ROTCE was 18.2%, an increase from 15.8%.
Concurrent with the release of results, BMO announced a second quarter 2021 dividend of $1.06 per common share, unchanged from the prior quarter and the prior year. The quarterly dividend of $1.06 per common share is equivalent to an annual dividend of $4.24 per common share.
First Quarter Performance Review
Canadian P&C
Reported and adjusted net income was $737 million, an increase of $38 million or 5% from the prior year. Results were driven by higher revenue, with an increase in net interest income, partially offset by a decrease in non-interest revenue, lower expenses and a modest decrease in the provision for credit losses.
During the quarter, Canadian P&C and Visa Canada launched the new BMO eclipse Visa Infinite and BMO eclipse Visa Infinite Privilege credit cards. The new cards are designed to meet the everyday lifestyle needs of Canadians by providing both accelerated earnings on key spending categories and increased flexibility and choice in redemptions.
U.S. P&C
Reported net income was $582 million, an increase of $231 million or 66% from the prior year, and adjusted net income was $589 million, an increase of $228 million or 63%.
Reported net income was US$454 million, an increase of US$187 million or 70% from the prior year, and adjusted net income was US$459 million, an increase of US$184 million or 67%. Results were driven by higher revenue with increases in both net interest income and non-interest revenue, lower expenses and a lower provision for credit losses, primarily due to lower commercial provisions.
During the quarter, we launched BMO EMpower, a five-year, US$5 billion pledge aimed at addressing key barriers faced by minority businesses, communities and families in the United States. As part of BMO's Purpose to Boldly Grow the Good in business and life, BMO EMpower is a series of long-term lending pledges designed to drive meaningful change and champion racial equity.
BMO Wealth Management
Reported net income was $358 million, an increase of $67 million or 23% from the prior year, and adjusted net income was $366 million, an increase of $66 million or 22%. Results were driven by higher net revenue, and a modest decrease in expenses and in the provision for credit losses. Traditional Wealth reported net income was $286 million, an increase of $77 million or 37%, and adjusted net income was $294 million, an increase of $76 million or 35%, driven by higher revenue, primarily reflecting stronger global markets and higher online brokerage revenue. Insurance net income was $72 million, compared with $82 million in the prior year.
BMO was recognized by Investment Week's Sustainable and ESG Investment Awards, winning Best Sustainable and ESG Research Team for the third consecutive year and Best Sustainable and ESG Equity Fund for its BMO Responsible Global Equity Fund. In addition, we entered into an agreement to divest our private banking business in Hong Kong and Singapore to J. Safra Sarasin Group. The transaction is subject to regulatory approvals and other customary closing conditions and is expected to close in the first half of calendar 2021.
BMO Capital Markets
Reported net income was $483 million, an increase of $127 million or 36% from the prior year, and adjusted net income was $489 million, an increase of $127 million or 35%. Results were driven by strong revenue performance in Global Markets, partially offset by higher performance-based expenses, with a modest decrease in the provision for credit losses.
During the quarter, we continued to support clients with our deep industry expertise and insights across different sectors. BMO Capital Markets acted as left lead arranger, joint bookrunner and administrative agent on US$500 million of senior secured credit facilities for Centerbridge Partners' acquisition and combination of daVinci Payments and North Lane Technologies under Syncapay Inc. We also acted as financial advisor, joint lead arranger and joint bookrunner for Clearlake Capital's and TA Associates' portfolio company, Ivanti Software, on $1.8 billion of acquisition financing of MobileIron and Pulse Secure.
Corporate Services
Corporate Services reported and adjusted net loss for the quarter was $143 million, compared with a net loss of $105 million in the prior year. Results decreased, primarily due to higher expenses and the impact of a favourable tax rate in the prior year.
Adjusted results in this First Quarter Performance Review section are non-GAAP amounts or non-GAAP measures. Please refer to the Non-GAAP Measures section.
The order in which the impact on net income is discussed in this section, and elsewhere in the MD&A, follows the order of revenue, expenses and provision for credit losses, regardless of their relative impact.
Capital
BMO's Common Equity Tier 1 (CET1) Ratio was 12.4% as at January 31, 2021. The CET1 Ratio increased from 11.9% in the prior quarter, driven by strong internal capital generation and other net positive changes, including lower risk-weighted assets.
Credit Quality
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