For the second quarter of fiscal 2023, which ran from February 1 to April 30, BMO Financial Group reported net income of $1.06 billion.
Compared with the same period in 2022, when income was $4.8 billion, this represents a decline of 77.8 per cent.
In the press release issued on May 24, CEO Darryl White notes that the Personal and Commercial Banking businesses continued to deliver good earnings in Canada and the United States. In contrast, Wealth Management and Capital Markets were impacted by lower customer activity.
The second quarter of 2023 was marked by the acquisition of U.S.-based Bank of the West and its subsidiaries from BNP Paribas. Acquisition-related costs totalled $549 million in Q2 and $28 million in Q1 2023.
The press release also notes that the bank's provision for credit losses (PCL) was just over $1 billion, compared with $50 million for the same period a year earlier.
For the first half of the fiscal year, PCL was $1.24 billion in 2023, compared with a recovery of $49 million for 2022.
In the second quarter of 2023, the PCL on impaired loans was $243 million, while the PCL on performing loans was $780 million. Of this provision, $517 million (or $705 million pre-tax), is attributable to the Bank of the West portfolio.
In the Economic Developments and Outlook section of its Report to Shareholders, BMO notes the effects of the Bank of Canada's interest rate hike on the real estate market and on the economy as a whole, including household spending.
“Industry-wide growth in residential mortgage balances has decelerated from almost 11 per cent in early 2022 to below 6 per cent in February 2023 and is expected to moderate further to a low single-digit pace in 2023, as a result of depressed housing market activity,” the report reads.
BMO Wealth Management's net income was $284 million in the second quarter of 2023, down $30 million or 10 per cent from Q2 2022.
In Wealth and Asset management, BMO reported net income of $221 million in the last quarter, a 10.6 per cent downturn from $247 million in Q2 2022.
BMO's insurance business reported net income of $63 million for Q2 2023, compared with $67 million for Q2 2022. This represents a decline of 6 per cent.
Net of claims, commissions and changes in policy benefit liabilities (CCPB), BMO Wealth Management’s net revenue was $1.4 billion in Q2 2023. This represents an increase of $77 million or 6 per cent compared with $1.3 billion reported in Q2 2022.
Looking at the results in closer detail, revenue from wealth and asset management, net of CCPB, was $1.26 billion in Q2 2023, compared with $1.18 billion in Q2 2022. The corresponding increase is $78 million or 6.7 per cent.
Insurance revenue, net of CCPB, was $116 million in the second quarter of 2023, down from $117 million in Q2 2022.