TORONTO (Reuters) - Bank of Montreal (TO:BMO), Canada's fourth-largest lender, posted a higher quarterly profit that topped market expectations on Tuesday, lifted by growth in its U.S. retail banking business.
However, bad loans in the energy sector shot up in the first quarter, reflecting the impact of a collapse in the oil price and signaling that the Canadian banks were not immune to the oil-related slowdown in Western Canada.
Gross impaired loans in the oil and gas sector jumped C$162 million ($118.15 million), from none recorded in the year-earlier period and C$102 million in the fourth quarter.
Provisions for that sector's credit losses climbed to C$22 million from virtually zero a year earlier.
Energy sector loans form 2 percent of BMO's total loan portfolio, and the oil-producing province of Alberta makes up about 6 percent of its loan book. Net income for the first quarter ended Jan. 31 was C$1.07 billion, or C$1.58 per share, compared with C$1 billion, or C$1.46 per share, a year earlier. Excluding special items, earnings were C$1.75 per share. Analysts on average had expected C$1.72 a share, according to Thomson Reuters I/B/E/S. The company recorded a 31 percent increase in earnings at its U.S. personal and commercial banking division and an 18 percent rise at its capital markets unit. Canadian retail banking earnings were 5 percent higher, while net income fell at its wealth management unit.
($1 = 1.3711 Canadian dollars)