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–$7.4B, up 65% due to a significant legal provision reversal; adjusted EPS was $9.68, down $2.13, and reported EPS was $9.51–$9.68, up $3.75.

• Record adjusted pre-provision pre-tax earnings (PPPT) of $13.4B, up 5% year-over-year; reported PPPT up 64%.

• Positive operating leverage achieved for the last three quarters and full year at 1.6%; efficiency ratio improved by nearly 100 bps to 58.6%.

• Dividend increased by $0.04 to $1.59 per share (5% increase), and intention to repurchase up to 20M shares under an NCIB announced.

• CET1 ratio rose 110 bps to 13.6%, providing ample capital for growth and shareholder returns.

Financial highlights

• Q4 reported EPS was $2.94 and net income was $2.3B, up 35% year-over-year; adjusted EPS was $1.90 (down from $2.93) and adjusted net income was $1.5B (down 31%).

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

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

• Q4 adjusted operating leverage was 2.4%; reported 29.8%.

• Average loans grew 5% year-over-year (excluding RV loan sale and auto book wind-down); customer deposits up $61B or 9%.

Outlook and guidance

• Management expects provisions for credit losses to moderate through 2025, with full-year impaired losses in the high 40s bps, and quarterly variability.

• Projected expense growth in 2025 to be mid-single digits, with continued positive operating leverage.

• Capital outlook remains strong, with CET1 expected to stay above the 12.5% management target, supporting share repurchases.

• Effective tax rate for 2025 expected in the 24%-25% range due to global minimum tax.

• Focused on rebuilding ROE to 15% medium-term target through U.S. segment improvement, capital optimization, and disciplined balance sheet management.