Bank of Montreal: Poor US Performance and Higher Credit Costs Are a Drag on Results
Narrow-moat-rated Bank of Montreal reported weak third-quarter earnings, as high credit costs, particularly from the bank’s US operations, weighed on results. Revenue increased 1.7% from last year and 2.7% from last quarter to CAD 8.2 billion. On the other hand, adjusted net income fell 7.3% to CAD 1.98 billion, and these results translate to return on equity of 10%. As we incorporate these results, we do not plan to materially alter our CAD 133/USD 97 fair value estimates for Bank of Montreal. We see the shares as modestly undervalued at the current price.
United States