BMO Shares Climb on Strong Q4 Earnings and Dividend Hike
Canada's fourth-largest bank beats analyst estimates, driven by robust performance in its U.S. operations and capital markets division.
Bank of Montreal (NYSE: BMO) shares gained in early trading after the company posted fourth-quarter earnings that significantly surpassed analyst expectations and announced a dividend increase, signaling a confident outlook to kick off the Canadian banking sector's reporting season.
The stock rose 0.8% to $126.76 after the bank reported strong results underpinned by its expanding U.S. footprint and a resilient capital markets business. The performance offers an early indication of strength in a sector closely watched for signs of economic health.
For the quarter ending October 31, 2025, BMO reported adjusted net income of $2.51 billion, a 63% surge from the same period last year. This translated to an adjusted earnings per share of $3.28, comfortably beating the consensus estimate of approximately $2.16 per share. According to the official company announcement, revenue also exceeded forecasts, driven by strong performances across its key divisions.
The bank's U.S. operations were a standout contributor to the results. BMO has been strategically focused on growing its presence south of the border, a move highlighted by its acquisition of Bank of the West. In a significant strategic shift, BMO announced it was realigning its reporting segments to create a unified "U.S. Banking" division. This new structure combines its U.S. wealth management operations with its personal and commercial banking units, aiming to provide a more integrated and comprehensive view of its American business.
"Our results this quarter reflect the diversified strength of our businesses and the positive impact of our strategic acquisitions," said Darryl White, Chief Executive Officer of BMO Financial Group. "The performance in our U.S. segment and the continued momentum in our capital markets division underscore our ability to execute and deliver for our shareholders."
In a move reflecting its strong financial position, BMO's board of directors approved a 2.5% increase in its quarterly dividend. The bank will now pay a quarterly dividend of $1.67 per common share, up four cents. This marks another step in the bank's long history of providing shareholder returns and suggests management's confidence in its earnings stability and capital position moving forward.
The capital markets division also delivered robust results, benefiting from favorable market conditions and strong client activity in trading and investment banking. This performance helped offset pressures seen in other areas of the banking sector, such as concerns over loan loss provisions and net interest margins amid a complex economic environment.
As the first of Canada's major banks to report fourth-quarter results, BMO's strong performance sets a positive tone for its peers, including Royal Bank of Canada (RBC) and Toronto-Dominion Bank (TD), who are scheduled to report later in the week. Investors will be closely watching to see if the trends of U.S. operational strength and capital markets resilience are replicated across the industry. Despite the strong results, analysts maintain a cautiously optimistic outlook, with a consensus 12-month price target of $118.28, suggesting the recent rally has priced in much of the good news.