Bank of Montreal (BMO) Q4 2024 earnings summary

Executive summary

• Fiscal 2024 adjusted net income was $7.4B, down 15% year-over-year, while reported net income was $7.3B, up 65% due to a significant legal provision reversal; Q4 net income was $2.3B, up 35% year-over-year, but adjusted net income fell 31%.

• Adjusted EPS for fiscal 2024 was $9.68, down $2.13 year-over-year; reported EPS was $9.51, up $3.75; Q4 adjusted EPS was $1.90, down from $2.93, and reported EPS was $2.94, up from $2.19.

• Record adjusted pre-provision pretax earnings (PPPT) of $13.4B, up 5% year-over-year, with growth across all operating groups and positive operating leverage.

• Announced a dividend increase of CAD 0.04 to CAD 1.59 per share for Q1 2025, up 5% year-over-year, and intention to repurchase up to 20M shares under an NCIB.

• Strategic focus on digital innovation, customer growth, U.S. market integration, and regulatory compliance, with continued technology modernization and industry recognition.

Financial highlights

• Q4 2024 revenue was $8,957M, up 8% year-over-year; adjusted revenue was $8,368M, flat year-over-year; Q4 adjusted expenses down 2%.

• Q4 provision for credit losses was $1,523M, up from $446M last year; fiscal 2024 PCL was $3,761M.

• CET1 ratio improved to 13.6%, up 110 bps year-over-year, providing strong capital flexibility.

• Deposits grew by $61B (9%) year-over-year; average loans grew 5% excluding portfolio sales.

Outlook and guidance

• Management expects provisions for credit losses to moderate through 2025, with impaired losses projected in the high 40s basis points.

• Anticipate continued positive operating leverage, margin stability, and stronger net interest income growth in 2025.

• Expense growth expected in the mid-single-digit range for 2025, with ongoing investment in growth and efficiency.

• Effective tax rate for 2025 expected to be 24%-25% due to global minimum tax implementation.

• Targeting a return on equity (ROE) of 15% over the medium term, driven by U.S. segment improvement, capital optimization, and disciplined risk management.