Bank of Montreal (BMO) reported a strong third quarter for fiscal 2025, highlighting the momentum building across its North American banking operations. Net income rose 25% year-over-year to C$2.33 billion, while adjusted earnings reached C$2.40 billion, up 21%, driven by solid loan growth, higher net interest income, and effective expense management.
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Earnings per share climbed 26% to C$3.14, and return on equity improved to 11.6%, marking the second consecutive quarter of double-digit profitability. Adjusted EPS came in at C$3.23, with adjusted ROE at 12.0%. The results were supported by lower credit losses and continued improvement in U.S. operations, where net income jumped 51% year over year.
BMO’s balance sheet remains one of the strongest among Canadian peers, with a Common Equity Tier 1 (CET1) ratio of 13.5%, well above regulatory minimums. The bank declared a quarterly dividend of C$1.63 per share, up 5% from a year earlier, and announced a new share repurchase program authorizing up to 30 million shares for buyback, replacing its previous 20 million authorization.
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Financial Story
BMO’s third-quarter performance reflected steady operating leverage and disciplined execution across all business segments. Total revenue rose 9.7% year-over-year to C$8.99 billion, led by C$5.5 billion in net interest income from both Canadian and U.S. retail banking. The bank achieved a positive operating leverage for the seventh straight quarter, underscoring management’s commitment to cost control amid moderate loan growth.
| Metric | Q3 2025 | YoY Change | Commentary |
|---|---|---|---|
| Reported Net Income | C$2.33B | +25% | Driven by U.S. and Wealth Management growth |
| Adjusted Net Income | C$2.40B | +21% | Excludes one-time items and integration costs |
| EPS (Reported) | C$3.14 | +26% | Strongest quarterly result in over two years |
| EPS (Adjusted) | C$3.23 | +22% | Consistent across all business segments |
| Revenue | C$8.99B | +9.7% | Supported by higher net interest income |
| Net Interest Income | C$5.50B | +14.7% | Margin improvement across retail banking |
| Provision for Credit Losses | C$797M | -12% | Reflects stronger loan quality |
| ROE (Reported) | 11.6% | +160 bps | Improved profitability |
| CET1 Ratio | 13.5% | +50 bps | Ample buffer for buybacks |
| Dividend | C$1.63/share | +5% | 4.1% forward yield |
| Share Buyback Authorization | 30M shares | New | Replacing prior 20M program |
The Canadian Personal and Commercial (P&C) segment posted net income of C$867 million, down 5% as higher provisions offset revenue growth. The U.S. P&C division delivered standout results, with adjusted net income rising 42% to C$769 million, driven by lower expenses, improved margins, and lower credit loss provisions. Wealth Management added C$441 million in adjusted net income, up 21%, while Capital Markets rose 12% to C$442 million on higher trading and advisory activity.
Credit performance remained resilient. The provision for credit losses fell to C$797 million, down from C$906 million a year earlier. Improved macroeconomic assumptions and lower U.S. commercial loan losses drove the decline. Meanwhile, the non-interest expense ratio held steady at 57%, reflecting stable cost control despite ongoing investments in digital capabilities and risk systems.
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Broader Market Context
Canada’s banking sector remains well-capitalized but faces slowing loan growth amid higher rates and cautious consumer spending. Against this backdrop, BMO’s U.S. business has become its key earnings driver, now contributing nearly one-third of total profits. The U.S. expansion following the Bank of the West acquisition continues to provide scale, deeper commercial relationships, and a growing retail footprint.
The upcoming acquisition of Burgundy Asset Management, announced in June 2025, underscores BMO’s broader pivot toward fee-based revenue. Burgundy’s strong reputation in wealth management and high-net-worth investing complements BMO’s existing platform and positions it to capture more affluent clients seeking integrated banking and investment solutions.
1. U.S. Operations Lead Earnings Growth
The most striking aspect of BMO’s latest results was the surge in U.S. P&C profitability. Adjusted net income from the U.S. business jumped 42% to C$769 million, helped by stronger margins, lower expenses, and improving credit quality. Revenue in U.S. dollar terms grew 3%, driven by both higher lending activity and non-interest income.
BMO’s cross-border strategy, combining Canadian stability with U.S. growth, has proven increasingly effective. The U.S. business now contributes over 30% of total profits, and with the integration of Bank of the West nearly complete, management expects continued cost synergies and scale benefits through fiscal 2026.
The acquisition has also diversified BMO’s loan book toward faster-growing U.S. commercial markets, particularly in the Midwest and California, giving the bank a larger footprint in high-margin lending categories.
2. Wealth and Capital Markets Provide Stability
While banking operations drive core earnings, BMO’s wealth and capital markets divisions remain reliable profit centers. BMO Wealth Management delivered C$441 million in adjusted net income, buoyed by stronger markets and a rebound in client inflows. The insurance unit also benefited from a one-time portfolio sale gain, further strengthening results.
Capital Markets earned C$442 million, up 12%, as trading and advisory activity rebounded with improved market conditions. While competition remains intense, BMO’s capital markets franchise has expanded its advisory pipeline and cross-border transaction capabilities, aligning with its North American integration strategy.
Management noted that stronger fixed-income performance and corporate lending activity helped offset softer equity issuance, suggesting a balanced recovery across asset classes heading into 2026.
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3. Strong Capital and Shareholder Returns
BMO’s capital strength continues to support aggressive shareholder returns. The CET1 ratio of 13.5% provides ample capacity for dividends and buybacks, while leverage and liquidity remain conservative. The new 30 million–share buyback authorization, a 50% increase over the previous plan, signals confidence in ongoing earnings growth.
At the same time, BMO’s dividend track record remains among the most consistent in the Canadian market, with a payout ratio of roughly 45%. The bank has now delivered 12 consecutive years of dividend growth, positioning itself as a dependable income play with an improving growth profile.
Management also emphasized that capital levels remain strong even under stressed scenarios, leaving room for both organic expansion and selective M&A opportunities, reinforcing BMO’s disciplined yet shareholder-focused approach to capital allocation.
The TIKR Takeaway
BMO’s Q3 results underscore the success of its balanced strategy, leveraging Canadian stability, U.S. expansion, and diversified fee-based businesses to drive steady growth. With double-digit EPS growth, improving ROE, and a rising dividend, the bank is demonstrating that scale and discipline remain the cornerstones of profitability in a high-rate environment.
Looking ahead, investors will focus on two key catalysts: integration of Burgundy Asset Management and the pace of credit normalization. While provisions remain elevated, underlying asset quality is improving. The combination of strong capital, healthy profitability, and consistent execution makes BMO one of the more attractive long-term holds among Canada’s Big Six banks.
Should You Buy, Sell, or Hold Bank of Montreal’s Stock in 2025?
At roughly C$172 per share, BMO trades at just 9.6x forward earnings and yields over 4%, offering a compelling mix of income and value. With robust capital ratios, a growing U.S. presence, and disciplined cost control, BMO provides stable, dividend-backed growth potential. For investors seeking defensive exposure with upside to the North American recovery, BMO is well worth considering for an investment portfolio.
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Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any stocks mentioned. Thank you for reading, and happy investing!
