BMO Adjusted Profit Jumps 19% as Bank Plans Buyback of Up to 25 Million Shares

Bank of Montreal said adjusted net income rose 19% from a year earlier to C$2.859 billion in its fiscal third quarter, as several operating divisions produced higher earnings and provisions for credit losses declined. Alongside the results, BMO said it intends to repurchase for cancellation up to 25 million common shares through a new normal course issuer bid, subject to approvals from Canada’s banking regulator and the Toronto Stock Exchange.

Reported results moved in the opposite direction. Net income fell 25% to C$1.750 billion and diluted earnings per share dropped to C$2.38 from C$3.14, largely because the bank recorded a charge connected with the announced sale of its Transportation Finance and Vendor Finance businesses. That difference between reported and adjusted performance is central to the quarter: underlying earnings improved, but divestiture-related accounting charges weighed heavily on the statutory bottom line.

Adjusted earnings rise across BMO’s main businesses

In its third-quarter results, BMO said adjusted diluted EPS increased 22% to C$3.96 from C$3.23, while adjusted return on equity rose to 14.0% from 12.0%. Adjusted revenue reached C$9.959 billion, up from C$8.988 billion a year earlier. Net interest income was C$5.567 billion, compared with C$5.496 billion, while adjusted non-interest revenue increased to C$4.392 billion from C$3.492 billion.

The bank’s adjusted figures are non-GAAP measures that remove specified items from reported results. BMO said adjusting items reduced third-quarter net income by C$1.109 billion, compared with a C$69 million reduction in the same quarter last year. The largest current-period item was the announced sale of the Transportation Finance and Vendor Finance businesses, which produced a C$1.092 billion pre-tax charge, or C$962 million after tax, primarily related to goodwill. BMO also recorded C$14 million of pre-tax costs related to the announced sale of 138 branches in selected U.S. markets, along with other acquisition-related and intangible-amortization adjustments.

Operating gains were spread across several divisions. Canadian Personal and Commercial Banking generated adjusted net income of C$983 million, up 15%, helped by a 6% increase in revenue and lower credit-loss provisions, partly offset by higher expenses. U.S. Banking adjusted net income rose 11% to C$925 million in Canadian-dollar terms. On a U.S.-dollar basis, adjusted net income increased 9% to US$661 million as revenue rose 5%, with higher expenses absorbing part of the benefit.

Wealth Management posted adjusted net income of C$480 million, a 22% increase. Within that division, Wealth and Asset Management adjusted earnings climbed 31% to C$392 million, reflecting stronger global markets, net sales and higher net interest income, according to the bank. Capital Markets delivered one of the largest year-over-year increases, with adjusted net income rising 45% to C$649 million on higher revenue in Global Markets and Investment and Corporate Banking and a lower provision for credit losses.

The stronger adjusted quarter also extended BMO’s year-to-date improvement. For the first nine months of fiscal 2026, adjusted net income rose 21% to C$8.143 billion and adjusted diluted EPS increased 25% to C$11.11. Reported net income for the same period was C$6.869 billion, up 7% from a year earlier, showing how the quarter’s large divestiture-related charge narrowed the gap between underlying operating momentum and reported profit growth over the full year to date.

Credit costs ease while the capital ratio holds at 13%

Total provision for credit losses was C$722 million in the third quarter, down from C$797 million a year earlier and C$739 million in the previous quarter. Provisions on impaired loans declined by C$65 million year over year to C$708 million, with BMO pointing mainly to lower provisions in Canadian P&C and U.S. Banking. The provision on performing loans was C$14 million, compared with C$24 million a year earlier.

BMO said the performing-loan provision reflected changes in the macroeconomic outlook, partly offset by improved portfolio credit quality. The lower overall provision supported earnings, but the remaining C$708 million charge on impaired loans shows that credit costs were still material. That matters for the capital plan because credit charges reduce earnings available to build regulatory capital, support lending and fund shareholder distributions.

The Common Equity Tier 1 ratio was 13.0% at July 31, unchanged from the end of the second quarter and below 13.5% a year earlier. BMO said internal capital generation during the quarter was offset by common-share repurchases and higher source-currency risk-weighted assets. The sequential stability of the CET1 ratio provides important context for the planned new buyback, since any repurchases must be managed alongside regulatory capital requirements and the bank’s balance-sheet needs.

BMO also declared a fourth-quarter dividend of C$1.71 per common share, unchanged from the prior quarter and 5% above the year-earlier level. The quarterly payout is equivalent to C$6.84 on an annualized basis. During the third quarter, the bank bought 3.8 million common shares for cancellation under its existing normal course issuer bid at an average price of C$239.37 per share, showing that share repurchases were already part of its capital-return program before the new authorization was proposed.

Proposed buyback would cover about 3.6% of BMO’s public float

The planned normal course issuer bid would allow BMO to purchase for cancellation up to 25 million common shares. The bank said that amount represents about 3.6% of its public float as of July 31, when it had 697,146,398 common shares issued and outstanding and a public float of 696,863,163 shares.

The program is not yet in effect. BMO said it intends to file a notice with the Toronto Stock Exchange and must receive approvals from the Office of the Superintendent of Financial Institutions and the exchange. Subject to those approvals, the new bid is expected to begin on or around September 8, 2026, and run through September 7, 2027, unless it is ended earlier. The existing normal course issuer bid began on September 5, 2025, and is scheduled to continue until September 4, 2026.

Purchases under the proposed program could be made through the Toronto Stock Exchange, other designated exchanges, alternative Canadian trading systems or other methods permitted by securities regulators. BMO said the timing and amount of purchases would remain at management’s discretion and would depend on factors including market conditions and capital levels. Except for purchases made under certain exemption orders, which the bank said would generally occur at a discount to the prevailing market price, shares would be bought at the market price at the time of acquisition.

An authorization for up to 25 million shares does not mean BMO is committed to repurchase the full amount. If shares are bought and cancelled, the common-share count would decline, which can support per-share measures when other factors are unchanged. The actual financial effect will depend on how many shares BMO ultimately purchases, the prices paid and the bank’s earnings and capital position over the life of the program.

Because the proposed bid is conditional, BMO’s next step is not immediate buying but securing OSFI and Toronto Stock Exchange approvals. If those approvals arrive on schedule, purchases could begin around September 8. The bank has left both the pace and amount discretionary, so future repurchase activity, rather than the 25 million-share ceiling alone, will show how aggressively it chooses to return capital after the quarter’s stronger adjusted earnings.