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BMO
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2008
Thursday 28 August 2008 (BMO : TSX : $44.80)
Q3 EPS reduced as belated loan losses more than offset tax recovery
Blackmont Capital maintains "hold", 12-month target price is $44.06
BMO Nesbitt Burns maintains "market perform", 12-month target price is cut to $49.00
Desjardins Securities downgrades to "hold", 12-month target price is $53.00
Dundee Capital Markets downgrades to "sell", 12-month target price is $47.00
RBC Capital Markets maintains "underperform", 12-month target price is $44.00
Sunday 29 June 2008 TORONTO: BMO LAYS OFF 150
The Bank of Montreal has announced layoffs in its capital markets division. BMO wouldn't specify the number, but the Canadian Press reports 150 job losses. The layoffs affect the bank's operations in Canada and the U.S. The country's six biggest banks reported earnings lower by almost one-half in the second quarter, mostly due to their capital markets divisions.
Wednesday 04 June 2008 (BMO : TSX : $48.28)Weak industry to weigh on company
RBC Capital Markets maintains "underperform", 12-month target price is $44.00
Thursday 29 May 2008 (BMO : TSX : $47.67)Credit pressures rising
Blackmont Capital reiterates "hold", 12-month target price is cut to $54.00
Desjardins Securities continues "buy", 12-month target price is $57.50
Dundee Capital Markets continues "sell", 12-month target price is increased to $47.00
RBC Capital Markets maintains "underperform", 12-month target price is $44.00
Wednesday 28 May 2008 (BMO) - $47.76 - Cost Pressures Are Rising
Underperform, Average Risk, Price Target: $44.00
BMO reported EPS below RBC CM’s expectations on a core basis ($1.17 versus $1.30) because of weaker than anticipated core capital markets results. Results were above expectations on a GAAP basis ($1.24 versus $1.02) as the bank benefited from net gains in capital markets versus our expectations for net writedowns. Credit deterioration was evident in the quarter, with impaired loan formations and specific provisions for credit losses rising significantly from Q2/07. RBC CM expects further pressure on loan losses in upcoming quarters. Retail profitability was close to estimates, private client earnings were ahead, and capital markets were short on a core basis as mentioned above. RBC CM believes that BMO’s price is likely to lag its peers given its outlook for greater deterioration in credit quality near term, retail banking results that are likely to lag the leading banks on a combination of revenue and bottom line growth, greater concerns over the sustainability of wholesale earnings than most peers, and continued overhang from off-balance sheet exposures.
Tuesday May 27, 2008 BMO trims profits
Bank reports Q2 net income of $642 million, sees easing in credit crisis
It is the first time since he took charge of BMO last year that chief executive Bill Downe has turned in a set of quarterly earnings free from the impact of significant one-off charges.
The bank reported profit of $642 million, or $1.25 a share, in the second quarter of fiscal 2008, down from profit of $671 million, or $1.29 a share, in the same period of last year.
BMO trims profit, raises hopes
Friday 02 May 2008 Losses in Bank of Montreal, Loblaw, Citigroup and Bear Stearns call could have
been anticipated and prevented by the use of this simple tool. When the average
stopped rising, flattened out and then began to fall for these stocks, it was time
to “abandon ship.” Did these signals come in time?
Definitely. The 40-week moving average signal for Bank of Montreal (now at
$50.25) came at $69 on July 27, 2007 to prevent a potential 27-per-cent loss. Ron Meisels
Tuesday 29 April 2008 (BMO : TSX : $50.44)Further concern over loan losses
RBC Capital Markets maintains "underperform", 12-month target price is $44.00
Thursday 17 April 2008 (BMO : TSX : $46.15) Investor day highlights
BMO Capital Markets maintains "market perform", 12-month target price is $49.50
Desjardins Securities maintains "buy", 12-month target price is $60.00
RBC Capital Markets maintains "underperform", 12-month target price is $44.00
TD Newcrest maintains "hold", 12-month target price is $53.00
Tuesday 15 April 2008 (BMO : TSX : $46.29) Even more negative in near term
Dundee Securities rates a "sell", 12-month target price is cut to $45.00
(BMO) - $45.81 - Thesis Unchanged After Investor Day Underperform, Average Risk, Price Target: $44.00
BMO's management teams provided an update on initiatives across its retail banking and wealth management businesses. RBC CM took away several themes. The bank has placed greater emphasis on customer service and early indications show that the bank improved its customer satisfaction scores, although it is not clear that the bank is catching up with the leading banks. Capital levels are expected to remain higher than normal in the near term. The wholesale division will reduce its risk profile (this was discussed in the Q&As). Credit quality is deteriorating but the bank expects it to remain better than the industry. Bank of Montreal's stock has improved since mid-March with the tightening of credit spreads and after announcing the restructuring of Apex and Sitka. However, BMO trades at a 1.5x forward P/E discount to its peers, and RBC CM believes the stock will likely continue to trade at a discount as wholesale banking is a larger contributor to earnings than its peers, and BMO likely faces more revenue sustainability issues as management reviews its businesses and focuses on reducing risk. In addition, retail banking is likely to continue to lag the leading banks. BMO is spending a lot of effort but the payoff is likely to take time and the challenge is to do so profitably, in our view. A positive outcome from the bank's initiatives to improve its retail bank performance would likely have positive implications for the stock.
Friday 28 March 2008 (BMO : TSX : $46.22 | NYSE : US$45.35)
Near term risk of major write downs avoided
RBC Capital Markets maintains a "underperform", target price raised to $44.00
Monday 24 March 2008 (BMO : TSX : $44.45 | NYSE : US$43.47)
Agreements signed to restructure trusts
RBC Capital Markets maintains a "underperform", target price not given
Friday Mar 21, 2008 BMO stock rises on restructuring of two of its commercial paper trusts
Bank of Montreal's deal to restructure two of its commercial paper trusts has removed some of the bank's near-term problems...News of the agreement helped send BMO shares up 5.7 per cent to close at $44.51 on the Toronto Stock Exchange yesterday.
Tuesday 11 March 2008 (BMO : TSX : $42.10) Not likely to issue equity
Dundee Capital Markets maintains "sell", 12-month target price is $46.00
Friday 07 March 2008 TORONTO: BMO STOCK CONTINUES PLUNGE
The credit crisis in the U.S. took its toll on the value of Canadian banking stocks on Thursday. The Bank of Montreal's fell by seven per cent to $42, the stock now having dropped 22 per cent in the past week. BMO was trading at $54 on Feb. 27. BMO has said it's uncertain about the fate of two asset-backed commercial paper trusts which it administers, trusts which have been seriously affected by the subprime mortgage crisis. Shares of the Royal Bank of Canada, the Bank of Nova Scotia, Toronto-Dominion Bank and Canadian Imperial Bank of Commercial also fell although less steeply than BMO's.
Wednesday 05 March 2008 (BMO : TSX : $46.89), Net Change: -1.47, % Change: -3.04%, Volume: 6,042,798
Like driving forward while looking through your rear-view mirror. For Q1F08, the bank reported net income of $255 million,
which was down $93 million or 27%. Excluding significant items, net income declined by $56 million, or 8.4% to $617 million.
Results included losses of $362 million after tax in respect of charges for certain trading activities and valuations adjustments
and an increase in the general allowance for credit losses. The bank stated, “We are reducing the size of our off-balance sheet
businesses and seeking a better balance between risk and return. To reduce volatility and improve profitability, we are ensuring
that our trading activities are primarily supporting clients with whom we have broad and valuable relationships. We will also
reduce capital allocated to other trading areas and to certain of our lending portfolios where returns are not sufficiently
attractive.” A little late, huh? Given the economic slowdown, and the challenges faced, the company announced that it would
not be hitting its 2008 targets which include 10-15% earnings growth and ROE of 18-20%. The company announced that
BMO's investment in ABCP of six BMO-sponsored Canadian securitization conduits have declined to $1,797 million as at
January 31, 2008, compared with $5,931 million at October 31, 2007. And they have have commitments to provide backstop
liquidity facilities to these conduits totalling up to $23.0 billion. BMO is fully supportive of the resolution of the Montreal
Accord. BMO also sponsors Apex Trust and Sitka Trust, which provides credit protection on highly-rated leveraged super
senior tranches of a diversified pool of U.S. and European corporate credits via credit default swaps. BMO believes that the
actual credit losses that will be realized over time in the transactions that Apex has entered into should be very modest.
Tuesday 04 March 2008 BMO profit slumps 27 per cent
Bank of Montreal hit by first-quarter writedowns related to credit crunch
Monday 03 March 2008 (BMO : TSX : $52.35 | NYSE : US$53.95)
Ongoing ABCP saga
RBC Capital Markets maintains a "underperform", target price not given
Sunday 02 March 2008 Bank of Montreal (BMO) - $54.83 - ABCP Conduits: Negotiating Stakes Are Rising
Underperform, Average Risk br>
On February 19, Bank of Montreal disclosed that it expected Apex/Sitka Trust to be restructured but that, failing a restructuring, it could write off its entire net exposure ($495 million). These conduits entered into levered super-senior CDO transactions, similar to the frozen ABCP sponsored by third parties. DBRS wrote that Sitka entered into an agreement with a swap counterparty to extend the due date of a collateral call notice received by Sitka to the close of business February 27, 2008. RBC CM suspects that negotiations are ongoing between Bank of Montreal (as the sponsor of the trusts) and the counterparties but would highlight three points; a) there is a buyer of swaps from Canadian ABCP conduits that has apparently become more nervous about counterparty exposure to these trusts. If Bank of Montreal cannot restructure these conduits, losses are likely. B) Whether that same counterparty is also a counterparty to the non bank trusts that are under the Montreal Accord is unknown, but it is certainly a possibility. C) The alternative option for trusts facing collateral calls from swap counterparties is to find alternative sources of funding, which could include margin facilities. Whether those could be available is an unknown.
Thursday 21 February 2008
(BMO : TSX : $54.10 | NYSE : US$53.37)More charges and management changes
Credit Suisse maintains "neutral", 12-month target price is $63.00
Dundee Capital Markets downgrades to "underperform", 12-month target price is cut to $56.00
RBC Capital Markets maintains "underperform", 12-month target price is cut to $54.00
Scotia Capital Markets maintains "sector underperform", 12-month target price is $75.00
TD Newcrest maintains "hold", 12-month target price is $70.00
Tuesday 12 February 2008 Bank of Montreal (BMO : TSX : $55.45)
Difficult capital markets environment and weakening credit conditions
Credit Suisse maintains "neutral", 12-month target price is cut to $63.00
Monday 28 January 2008 (BMO : TSX : $55.28 | NYSE : US$54.85)
More difficult macro environment
RBC Capital Markets maintains a "underperform", target price cut to $58.00
Thursday 17 January 2008 (BMO : TSX : $55.35)
Links Finance reduced its collateral base
Blackmont Capital maintains "buy", 12-month target price is $63.00
Thursday 10 January 2008 (BMO) - Structured investment vehicles have US$70 billion of medium-term debt maturing this year, according to a competitor’s analyst. Dresdner Bank AG's K2 Corp., Bank of Montreal's Links Finance Corp. and nine other SIVs have to repay $21 billion of medium-term notes before April, analysts wrote. The figures are based on SIVs that haven't been bailed out by banks.
2007
Monday 17 December 2007 (BMO : TSX : $58.11), Net Change: -1.62, % Change: -2.71%, Volume: 2,345,351
“I’d never join a club that would have me as a member.” – Woody Allen. Shares kept sliding on Friday, as another bank was
punished for challenges with sub-prime debt and fancy financial engineering. Earlier on Friday, Citigroup (C) announced that it
decided to bring on $49 billion of so-called SIV assets (Structured Investment Products) onto its balance sheet, as it commits to
supporting its SIVs. There are concerns that BMO will need to make a decision over the next six months as to whether it will
support $22 billion of SIVs it sponsors. The Wall Street Journal reported that the Bank of Montreal was one of two banks
remaining that had not yet taken steps to restructure its SIV debt. It was reported by Dow Jones that the impact to the firm could
be small. The day before, BMO made a shelf filing with the SEC, stating that it would sell from time to time up to $6 billion of
debt securities, potentially providing the flexibility to shore up its balance sheet, if the need arises.
Thursday 13 December 2007 Bank of Montreal (BMO : TSX : $60.57)
Structured investment vehicle exposure
Blackmont Capital maintains "buy", 12-month target price is $72.00
Thu 29/11/2007Bank of Montreal (BMO : TSX : $59.92)
Despite the rally, BMO continues to trade at a discount to peers
Blackmont Capital maintains a "buy", target of $72.00
Canaccord Adams maintains a "market perform", target of $67.00
Desjardins Securities maintains a "hold", lowers target to $72.00 from $72.50
RBC Capital Markets maintains an "underperform", target of $66.00
Scotia Capital maintains a "sector underperform", target of $80.00
Wednesday 28 November 2007 The financial sector rallied as Bank of Montreal (BMO) posted better-than-expected quarterly profit and set earnings target that exceeded forecasts. Notable financial sector advancers included Toronto-Dominion (TD), Royal Bank (RY) and Bank of Montreal with share price increases of 4.5%, 2.4% and 4.6%, respectively.
(BMO) - $57.95 - Results In-Line, 2008 Outlook Unchanged
Underperform, Average Risk, Price Target: $66.00
Q4 core cash EPS of $1.38 was between RBC CM’s expectations of $1.40 and consensus estimates of $1.35. Management's 2008 GAAP EPS objective translates into approximately $5.85 to $6.10 on a cash EPS basis, and is in-line with RBC CM’s expectations of $5.80. Capitalization was stronger than expected, with the Tier 1 ratio at 9.5% as approximately $10 billion in Canadian residential mortgages were removed from the balance sheet during the quarter. Credit trends were not as favourable as in recent quarters, as provisions for credit losses and impaired loan formations both rose, and the bank added to its general reserves. Domestic retail earnings were not as high as expected due to net interest income margin pressure, offsetting a better quarter from the U.S. division on expense management. RBC CM expects BMO's stock to continue trading at a discount to its Canadian banking peers on weaker retail banking growth, more exposure to low multiple wholesale earnings, and more exposure to potential calls on liquidity if the financial services system sees more liquidity contraction.
Wednesday 28 November 2007
Bank of Montreal (BMO-T, BMO-N) C$57.95 Jason Bilodeau, CFA, 416 308 3741
HOLD (Unchanged);Target: C$70.00 (Unchanged)
Q4/07: Not That Great; Better Yet to Come
(BMO : TSX : $57.95), Net Change: 2.55, % Change: 4.60%, Volume: 4,107,463
Still better than the Bank of Moose Jaw. Fourth quarter profits dropped by 35% to $452 million after sucking up $530 million
in charges and write-downs associated with SIVs and ABCP. That amounts to $0.87 per share but it would have been $1.42 had
it not been for “significant items”. The profit on the full year was down by 20%, thanks in part to an $853 million commodity
trading loss and a “difficult capital markets environment”. Reading Larry Summers’ bearish editorial in the Financial Times two
days ago doesn’t make us want to rush out and buy Canadian bank stocks. But it is far smarter to search for an entrance price
when the headline news is so negative and stock is hitting 52-week lows than to be chasing it when hitting new highs.
Bank of Montreal
(BMO-T, BMO-N) C$57.95
Q4/07: Not That Great; Better Yet to Come
Event
Core cash fully diluted EPS of C$1.39 was ahead of consensus of C$1.36.
Helped by strong wholesale revenues, good wealth management results and a
pick-up in U.S. P&C. Canadian P&C was disappointing after a strong Q3/07
and credit trends were worse than expected. Guidance implies '08 EPS of
C$5.76-C$6.03 v consensus of C$5.88.
Impact
BMO - Maintain HOLD. We see upside across the group on a 12-month
view and would expect BMO to participate, but we see stronger opportunities
elsewhere. 1) High-end of guidance looks optimistic and year likely to
be back-end loaded 2) domestic P&C likely to continue posting sub-par
results 3) our SIV concerns are reduced (not eliminated), but market likely to
remain sensitive to the issue 4) U.S. remains a challenge and a source of
potential acquisition risk.
Industry. We believe the strongest results are yet to come from the group,
and based on yesterday’s positive response, they could be a source of relief
for the group.
Details
Management expects EPS growth of 10-15% in '08. Management used a
low base for ’07 of C$5.24, ignoring its own adjustment for capital losses.
The high-end of the range looks optimistic in the face of what we expect will
be ongoing margin pressure, reduced capital markets activity and rising credit
costs. Further, with what we expect will be a back-end loaded year, we are
concerned management may have set the market up for some disappointment
in 1H/08.
Domestic P&C momentum. Quarter suggests ongoing investment combined
with revenue challenges will crimp operating leverage and bottom-line near
term. Volume trends are decent, although concentrated in cards and personal
loans (potentially higher risk), while mortgages and deposits are flat. We
believe BMO is heading in the right direction, but likely to yield sub-par
trends for several more quarters.
Company Profile
Bank of Montreal (BMO) is the fourth largest
chartered bank in Canada, by market cap.
The bank offers a broad range of products
and services in Canada and the U.S., either
directly, through Chicago-based subsidiary
Harris Bank, or via BMO Nesbitt Burns.
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