BMO Financial Group reported net income of $4.5 billion for fourth quarter 2022, which ran from August 1 to October 31. Income soared by 107.6 per cent or $2.3 billion compared with Q4 2021.

For fiscal 2022, the financial institution’s net income was $13.5 billion, versus $7.7 billion in 2021. This represents an increase of 74.6 per cent or $5.8 billion.

Three of BMO’s five operating groups advanced in 2022, but BMO Wealth Management is not among them.

This sector had net income of $1.2 billion in 2022, compared with $1.4 billion in 2021. This decrease of 9.5 per cent or $131 million “was partially due to divestitures that reduced net income growth by 2 per cent, with higher underlying revenue more than offset by higher underlying expenses,” BMO explains.

In fourth quarter 2022 alone, BMO Wealth Management’s net income was $298 million. This amounts to a decrease of 13.6 per cent or $47 million from Q4 2021.

Traditional wealth management  

BMO Wealth Management comprises two sub-sectors, Insurance and Wealth and Asset Management, both of which declined in 2022. 

Wealth and Asset Management saw net income slide to $992 million from $1.2 billion in 2021. This amounts to a decrease of 10.6 per cent or $117 million. 

For fourth quarter 2022 alone, this sub-segment had net income of $221 million, down 23 per cent or $66 million from Q4 2021, “primarily due to higher underlying expenses from continued investments in the business and divestitures.”

Insurance  

The Insurance sub-segment had net income of $259 million in 2022, compared with $273 million in 2021, for a decline of 5.1 per cent or $14 million. 

For fourth quarter 2022 alone, this sub-segment reported net income of $77 million, an increase of 32.8 per cent or $19 million over Q4 2021, “primarily due to benefits from changes in investments to improve asset liability management.”

Revenue 

Net of insurance claims, commissions and changes in policy benefit liabilities (CCPB), BMO Wealth Management’s net revenue for both sub-sectors combined was $5.2 billion in 2022, compared with $5.6 billion in 2021. This result is down 7.9 per cent or $447 million.

For fourth quarter of 2022 alone, revenue was $1.3 billion, for a decrease of 9.7 per cent or $139 million from Q4 2021.

Both of BMO Wealth Management’s sub-segments experienced a downturn in revenues in 2022:

Revenue from Wealth and Asset Management operations, net of CCPB, was $4.7 billion in 2022, compared with $5.2 billion in 2021. This decrease of 8.2 per cent or $426 million is “due to divestitures.” 

For fourth quarter 2022 alone, revenue was $1.2 billion. This decrease of 12.6 per cent or $168 million compared with Q4 2021 occurred “as divestitures and the impact of weaker global markets were partially offset by higher net interest income from higher margins and strong loan and deposit growth, as well as the impact of higher net new client assets,” BMO explains.

Insurance revenue, net of CCPB, was $455 million in 2022, compared with $476 million in 2021. This decrease of 4.4 per cent or $21 million was “primarily due to less favourable market movements in the current year relative to the prior year.”

For fourth quarter of 2022 alone, revenue was $135 million, equal to an increase of 27.4 per cent or $29 million over Q4 2021, “primarily due to benefits from changes in investments to improve asset liability management.”

CCPB

Insurance claims, commissions and changes in policy benefit liabilities were negative $683 million in 2022, down sharply from $1.4 billion in 2021.

“CCPB decreased, primarily due to changes in the fair value of policy benefit liabilities and the impact of lower annuity sales. The changes were largely offset in revenue," BMO notes.