BMO Financial Group reported net income of $1.3 billion for the second quarter of 2021, which ran from February 1 to April 30.

This result reflects growth of 89.1 per cent or $614 million from the $689 million in net income reported in Q2 2020.

“Higher income across all operating groups was partially offset by a higher net loss in Corporate Services," the financial institution says.

Insurance and wealth management prosper

Four of five operating groups grew in the second quarter of 2021, including BMO Wealth Management.

The group reported net income of $346 million, compared with $144 million in the second quarter of 2020. This growth equalled 140.3 per cent or $202 million, reflecting “higher net revenue, higher expenses and lower provisions for credit losses,” BMO says.

BMO Wealth Management is made up of two sub-groups, Traditional Wealth and Insurance, both of which posted gains:

  • In its Insurance business alone, the financial institution reported net income of $50 million in the second quarter of 2021, versus a net loss of $16 million in Q2 2020. This increase of $66 million is “primarily due to unfavourable market movements in the prior year.”

  • In its Traditional Wealth business alone, BMO reported net income of $296 million in the second quarter of 2021, compared with $160 million in Q2 2020. Net income thus soared by 85 per cent or $136 million, “higher revenue, primarily from growth in client assets, including stronger global markets, the impact of a legal provision in the prior year and higher online brokerage transaction volumes.”

Insurance revenue balloons by more than 700 per cent

BMO Wealth Management net revenue, excluding insurance claims, commissions and changes in policy benefit liabilities (CCPB), for the second quarter of 2021 were $1.4 billion compared with $1.1 billion in Q2 2020. Net revenue thus rose by 28.6 per cent or $311 million.

BMO Wealth Management’s two sub-groups both saw revenue growth:

  • Wealth management revenue, net CCPB, was $1.3 billion, compared with $1.1 billion in Q2 2020. This increase of 20.4 per cent or $219 million over Q2 2020 is due to “higher non-interest revenue from growth in client assets, including stronger global markets, the impact of a legal provision in the prior year and an increase in online brokerage revenue from higher transaction volumes.” However, these factors were “partially offset by the impact of the weaker U.S. dollar.”
  • Insurance revenue, net CCPB, was $105 million compared with $13 million in Q2 2020. This growth of 707.7 per cent or $92 million is “primarily due to the benefit of favourable market movements in the current year relative to unfavourable market movements in the prior year,” BMO says.