Bank of Montreal’s earnings for the third quarter came in a bit above most analyst expectations, but its wealth management segment provided record results with net earnings doubling to $218 million.
For the third quarter ended July 31, BMO Financial Group reported a 17% rise in net income to $1.14 billion on a reported basis and a 12% rise net income of $1.14 billion or $1.68 per share on an adjusted basis. Net income for the bank’s private client group (PCG) doubled from third quarter 2012, coming in at $218 million while adjusted net income of $225 million was up $111 million, or 97%.
"Private Client Group posted record earnings in traditional wealth, up 37% year over year,” said Bill Downe, president and chief executive. “Insurance results, where interest rate declines have affected financial performance over a number of quarters, benefited from changes in long-term rates.”
Adjusted net income in BMO’s traditional wealth business was a record $131 million, or a 37% year-on-year rise. Assets under management and administration grew by $63 billion, or 13% year-on-year, to $527 billion, driven mainly by growth in new client assets coupled with market appreciation.
The PCG is the umbrella for BMO’s wealth management businesses including BMO Nesbitt Burns, BMO Investorline, mutual funds, insurance, BMO Harris Private Banking and BMO Private Bank. It operates in both Canada, the US, China and the UK.
BMO said the PCG results reflected growth in client assets, increased transaction volumes and a focus on productivity. Adjusted net income in its insurance business was $94 million, up $76 million from a year ago, driven by a $42 million after-tax benefit from increases in long-term interest rates relative to a $45 million after-tax charge a year ago.