Bank Of Montreal (BMO)

Price$174.88Cached quoteAs of 2026-09-11 20:21 UTC

AI: Overvalued

Price checkThe shares price in strong earnings growth and leave little room for an ordinary banking slowdown.

Using the observed New York price and the matching Canadian exchange rate, BMO trades near 17 times annualized first-half 2026 earnings and roughly 21 times fiscal 2025 earnings. Its market price is also close to twice the book value implied by recent shareholder equity and common shares outstanding; book value means assets left for shareholders after liabilities. Canadian banks recently traded around 16 times expected earnings versus a ten-year average near 10.8 times. BMO's improving results justify a premium, but today's valuation looks too demanding for a cyclical lender.

Big pictureEarnings are recovering strongly, but credit conditions and capital markets still make those profits cyclical.

The supplied history shows net income rising from C$4.4 billion in fiscal 2023 to C$8.7 billion in 2025, while revenue reached C$36.3 billion. Momentum strengthened in 2026: first-half net income rose 25% to C$5.1 billion and diluted earnings per share climbed 30%. Unlike an industrial company, a bank's operating cash flow swings heavily with deposits, loans, and securities, so it is a poor measure of durable cash generation. Credit costs remain more important: second-quarter provisions for possible loan losses were C$739 million, improved from C$1.05 billion.

Business strengthBMO has solid capital, growing dividends, and active buybacks that are shrinking the share count.

BMO's common equity Tier 1 ratio was 13.0% in the second quarter, a regulatory measure of its highest-quality capital relative to risky assets. The bank also increased its quarterly dividend to C$1.71, up 5% from a year earlier. Capital allocation has become more shareholder-friendly: BMO repurchased 12 million shares during the first half for about C$2.27 billion and had bought 17.8 million under its current program by April. Common shares outstanding were about 700.4 million, so buybacks are meaningfully offsetting dilution rather than merely covering employee awards.

What could change the storyFaster loan growth could justify the premium, while renewed credit losses would make it look expensive.

The strongest bull case is that BMO sustains double-digit earnings growth as Canadian and U.S. lending improves, Bank of the West integration benefits deepen, and capital markets remain strong. Second-quarter capital-markets net income rose 46%, showing that upside clearly. The bear case is equally concrete: Canadian insolvencies were rising and BMO still reserved C$739 million for credit losses in the quarter. At roughly 17 times annualized first-half earnings, the price assumes current improvements persist. Earnings nearer fiscal 2025 levels would leave investors paying about 21 times profit, difficult to justify for a cyclical bank.

AI: News

Second-quarter earnings beatProfit jumped as credit costs improved and capital markets delivered much stronger earnings.

On May 27, BMO reported second-quarter net income of C$2.63 billion, up 34% from a year earlier, while diluted earnings per share increased 41% to C$3.53. Provisions for possible loan losses fell to C$739 million from C$1.05 billion. Reuters reported that BMO beat profit expectations and that its capital-markets business increased net income 46%. The shares rose slightly alongside the results, although that price movement cannot be attributed solely to the earnings release.

Finance businesses soldBMO agreed to shed capital-heavy lending assets and redirect resources toward higher-return businesses.

On May 11, BMO agreed to sell its Transportation Finance and Vendor Finance businesses to Stonepeak, covering about C$14.5 billion of loans. BMO expects an approximately C$0.9 billion after-tax accounting charge but estimates the transaction will add about 0.28 percentage points to its core capital ratio and improve return on equity by roughly 0.30 percentage points. BMO will retain a 19.9% minority stake. The deal matters because it trades some current lending assets for stronger capital efficiency and flexibility elsewhere.

Dividend and buybacks increasedBMO raised its dividend while continuing large buybacks, sending more earnings back to shareholders.

Alongside second-quarter results, BMO raised its quarterly common dividend to C$1.71 per share, 5% above the prior year. It also disclosed that it bought six million shares during the quarter at an average C$193.47 each, after six million more in the first quarter. Repurchases reduce the number of shares dividing future profits, while dividends provide direct cash returns. This combination strengthens the shareholder case, although buying stock at increasingly high valuation multiples reduces the potential value created by each repurchased share.

First-quarter recordLower expected loan losses and broad revenue growth pushed BMO shares to a record after earnings.

On February 25, BMO reported adjusted first-quarter earnings of C$3.48 per share, ahead of the C$3.20 analyst estimate cited by Reuters. Credit provisions fell to C$746 million from C$1.01 billion, while every operating segment reported record revenue. Reuters reported that BMO shares rose about 4% to a record level that day. The result mattered because it provided early evidence that credit normalization and stronger fee businesses could lift profitability after the weaker returns that followed the Bank of the West acquisition.

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Financial statements

	2025	2024	2023	2022	2021	2020	2019	2018	2017	2016
Revenue	$36.27B	$32.80B	$29.26B	$33.71B	$27.19B	$25.19B	$25.48B	$22.91B	$22.11B	$21.09B
Net income	$8.72B	$7.33B	$4.44B	$13.54B	$7.75B	$5.10B	$5.76B	$5.45B	$5.34B	$4.63B
Net profit margin	24.05%	22.34%	15.16%	40.16%	28.52%	20.24%	22.60%	23.81%	24.15%	21.96%
Basic EPSper basic share	CA$11.46	CA$9.52	CA$5.77	CA$20.04	CA$11.60	CA$7.56	CA$8.68	CA$8.19	CA$7.93	CA$6.94
Diluted EPSper diluted share	CA$11.44	CA$9.51	CA$5.76	CA$19.99	CA$11.58	CA$7.55	CA$8.66	CA$8.17	CA$7.90	CA$6.92

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Community posts

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@tickerstat3 days ago
First Citizens completes integration of 138 branches acquired from BMO
First Citizens Bank ($FCNCA) confirmed the successful conversion of 138 branches acquired from BMO Bank ($BMO), with the associated customer accounts now transferred to its banking platforms. The transaction brought approximately $5 billion ...
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Bank Of Montreal (BMO)

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First Citizens completes integration of 138 branches acquired from BMO