Bank of Montreal warns of loss provision pressures after profit miss, shares fall
Business
Bank of Montreal warns of loss provision pressures after profit miss, shares fall
TORONTO (Reuters) - Bank of Montreal on Tuesday warned it would need to continue to set aside money for loans that are unlikely to be repaid, after the Canadian lender reported lower-than-expected profit for the sixth time in a row.
The lender however said it would start to see a recovery in 2025 as central banks cut interest rates and unemployment stabilizes which would ease some pressure for consumers and businesses falling behind on their loan repayments.
Third-quarter loan loss provisions were higher than analysts had forecast, in part due to impaired provisions for two customers, one in the US and one recorded under its Capital Markets business.
"We've investigated the circumstances that led to recent impairments, and the conclusion is, for some customers, the combination of prolonged high interest rates, economic uncertainty and changing consumer preferences had an acute impact," BMO's CEO Darryl White told analysts.
Fifteen accounts drove about half of the year to date impaired provisions in its wholesale portfolio, White said.
Chief Risk Officer Piyush Agrawal said the increase in loss provisions in the retail sector was "systemic" and in wholesale, he said it was not "thematic to a sector".
"I'm confident we've looked through our files," he said about the bank's loans to larger clients or companies.
Meanwhile, peer Bank of Nova Scotia Canada's fourth largest bank by market capitalization, reported better than expected profit powered by strong growth at its businesses at home and overseas, which spans across North America, Latin America and the Caribbean.
