Bank of Montreal Earnings: Higher Credit Costs Remain a Drag on Bottom-Line Results

Narrow-moat-rated Bank of Montreal reported second-quarter earnings that were a bit worse than we had expected, as rising credit costs and weakness in the firm's US banking business placed downward pressure on bottom-line results. Adjusted net revenue increased 2.5% from last year and 1.8% from last quarter to CAD 8 billion. Meanwhile, adjusted earnings per share was CAD 2.59, 10% lower than last year. While these results were moderately disappointing, they do not change our thesis for the firm, and we do not expect to materially alter our CAD 134/USD 101 fair value estimate.