TORONTO — BMO Financial Group says it is winding down its non-Canadian investment and corporate banking business in the energy sector as the bank topped expectations with a $1.6-billion profit in its latest quarter.
Chief executive Darryl White said Tuesday the move is part of BMO's efforts to better allocate resources in places where they can deliver strong returns now and in the future.
"Going forward, BMO Capital Markets' energy business will be focused on the Canadian energy market, where we believe our competitive positioning is strongest and where we will continue our deep and long-standing commitment to supporting clients," he told analysts on a conference call to discuss the bank's latest financial results.
White's remarks come as Canadian banks and the country's economy are trying to stage a rebound from the COVID-19 pandemic, which prompted governments and financial institutions to streamline their processes and dig into their coffers to offer relief.
Despite the added pressures and a recent second wave of the virus, BMO reported Tuesday a fourth-quarter profit of nearly $1.6 billion or $2.37 per share, up from nearly $1.2 billion or $1.78 per share a year ago.
On an adjusted basis, BMO says it earned $2.41 per share, down from an adjusted profit of $2.43 per share in the same quarter last year.
Analysts on average had expected an adjusted profit of $1.90 per share, according to financial data firm Refinitiv.
Revenue totalled nearly $6 billion, down from almost $6.1 billion in the same quarter last year.
White indicated that things continue to look up for the bank — one of the reasons why it was able to start paring back the amount of money it is putting aside to account for bad loans.
Total provisions for credit losses amounted to $432 million, up from $253 million a year ago, but down from nearly $1.1 billion in its third quarter.
BMO will continue to be disciplined with its expense management and efforts to bring efficiency to its operations, White said.
"While we expect revenue growth in parts of our business could remain constrained in the near term, we are committed to our financial objectives over the medium term," he said.
The bank, White added, has already strengthened its competitive and capital position and identified opportunities to grow as business investment and consumer spending recover and the globe gets better at managing COVID-19.
"Looking ahead to 2021, while the path of the pandemic and the economic recovery remains uncertain, we now know that vaccines will be available relatively soon, and there's good reason to be optimistic about the associated economic recovery accelerating as 2021 progresses."
This report by The Canadian Press was first published Dec. 1, 2020.
Companies in this story: (TSX:BMO)
Tara Deschamps, The Canadian Press