Bank of Montreal delivered impressive second-quarter results that exceeded analyst expectations, with adjusted earnings per share of $3.67 beating the consensus estimate of $3.45. According to LSEG Data & Analytics, the bank's net income climbed to $2.63 billion for the quarter ended April 30, representing a gain of more than 30% from $1.96 billion in the prior year period. Diluted EPS jumped 41% to $3.53, while on an adjusted basis, BMO earned $2.73 billion. Revenue reached $9.57 billion, surpassing the $9.42 billion estimate and representing a 10% increase from $8.68 billion in Q2 fiscal 2025. The strong performance drove BMO Financial stock to surge 4.9% in pre-market trading following the results announcement. The robust fee revenue across capital markets, wealth management, and treasury and payments businesses contributed significantly to the bank's strong quarterly performance.
BMO's strong performance was primarily attributed to exceptional results in its capital markets and wealth management divisions. As reported by LSEG Data & Analytics, the capital markets unit delivered a 47% profit surge to $638 million, fuelled by stronger global markets activity and investment and corporate banking revenue. The US division posted $790 million, compared with $601 million a year earlier, with fee-driven revenue across global markets and investment and corporate banking driving much of the capital markets jump. The wealth management business added $428 million in profit, a 34% jump from $320 million a year earlier, with the division's performance bolstered by the ongoing integration of Burgundy Asset Management, the Toronto-based firm BMO acquired to deepen its high-net-worth client offering. The bank's adjusted net income for its Canadian business segment grew 15% to $884 million, a 16% gain on the $764 million posted a year earlier, driven by higher revenue and easing credit costs despite a rise in expenses.
BMO demonstrated significant improvement in credit loss provisions during the quarter. According to LSEG Data & Analytics, the bank's provisions for credit losses declined to $739 million from $1.05 billion in the prior year quarter. PCLs for impaired loans decreased by $31 million to $734 million, primarily due to lower provisions in capital markets and U.S. banking segments. The bank noted that the performing provision was driven by model changes and portfolio credit migration, while the prior year reflected changes in macroeconomic environment. The improved credit metrics contributed to the bank's enhanced financial performance and return on equity. Performing loan provisions collapsed to just $5 million from $289 million, as macroeconomic fears eased and the bank benefited from stronger global markets and investment banking performance.
BMO announced a third quarter fiscal 2026 dividend of $1.71 per common share, up from $1.67 per share in the previous quarter, representing a 5% increase from the prior year. As reported by LSEG Data & Analytics, the board declared the quarterly dividend, marking the latest in a sequence of increases that reflects the bank's improving capital position. During the quarter, BMO repurchased 6.0 million common shares at an average price of $193.47 per share. The bank expects to record a net after-tax charge of approximately $1.1 billion pre-tax related to the sale in the fourth quarter of fiscal 2026, primarily related to goodwill. The quarterly dividend of $1.71 is equivalent to an annual dividend of $6.84 per common share.
BMO disclosed it entered into a definitive agreement on May 11, 2026, with Stonepeak for the sale of its Transportation Finance and Vendor Finance businesses, with the transaction expected to close in the fourth quarter of fiscal 2026. According to LSEG Data & Analytics, the bank's Common Equity Tier 1 Ratio stood at 13.0% as of April 30, 2026, compared with 13.5% in the prior year. CEO Darryl White noted that the results continued to demonstrate meaningful progress and momentum, with the bank once again strengthening ROE and delivering strong EPS growth across its capital markets, wealth management and treasury and payments segments. The bank's Common Equity Tier 1 Ratio was 13.0% as of April 30, 2026, a decrease from 13.1% at the end of the first quarter of 2026, as internal capital generation was more than offset by the impact of the purchase of common shares for cancellation and higher source currency risk-weighted assets. The bank also announced the establishment of the BMO Institute for Applied Artificial Intelligence & Quantum, dedicated to responsible AI governance and client support as businesses integrate AI technology.
