蒙特利尔银行2025年第二季度初步观察

2Q25 First Look First Look Adjusted EPS exceeded consensus estimates on better thanexpected expenses and NII partiallyoffsetby higher thanmodeled PCLs. Adjusted PPPT declined 7% linked quarter.Still, credit quality was benign with GILs down 3% andformations declining 25% BMO.TO/BMO CTOVERWEIGHTCanada & Latin AmericaBanksPOSITIVEPrice TargetCAD 144.00Price (27-May-25)CAD 144.86Potential Upside/Downside-0.6%Source: Bloomberg, Barclays Research Key Takeaways Canada & Latin America BanksBrian Morton, CFA+1 212 526 2163brian.morton@barclays.comBCI, US Adjusted EPS beats:BMO reported 2Q25 EPS of C$2.50. Excluding a C$2mn reversal ofacquisition and integration costs, C$109mn amortization of acquisition-related intangibles anda C$5mn additional FDIC special assessment, adjusted EPS was C$2.62. Consensus was C$2.54. Revenue lower sequentially:Adjusted revenue increased 9% y-o-y but declined 6% from theprior quarter. Book value decreased 1.3% sequentially to C$108.03 (1.3x). Its CET1 ratio declined10bps to 13.5%. It generated an adjusted ROE of 9.8% (-150bps vs. 1Q25) and adjusted ROTCE of12.8% (-210bps). Average diluted shares decreased 0.6%. Adjusted NII lower:Reported NII fell 5.6% from 1Q25. Excluding trading, adjusted NII declined1.9%. Average earning assets decreased 0.8%. Its net interest margin declined 2bps to 1.60%(+4bps to 1.97% adjusted, ex trading and insurance). Loans down.Average loan balances decreased 0.8% linked quarter. Average consumer loanswere relatively flat while business & government loans declined 6.0%. Deposits lower.Average deposit balances decreased 1.4% from 1Q25 with declines in PB&B andCommercial partiallyoffsetby gains in Wealth Management and Capital Markets. Fees lower.Non-interest income fell 7.4% from the prior quarter, with decreases in other,brokerage, investment & custodial fees and banking & services fees partiallyoffsetby increasesin trading and underwriting & advisory fees. Costs lower.Adjusted expenses decreased 6% from 1Q25 primarily due to prior quarter stockbased compensation for employees eligible to retire and benefits seasonality. The adjustedefficiencyratio rose to 56.5% compared to 56.3% in 4Q24 but declined compared to 58.0% in2Q24. The adjustedeffectivetax rate was 25.0% compared to 24.8% in 1Q25 and 23.6% in 2Q25. GILs decrease.Gross impaired loans decreased 3% to C$6.739bn, with the largest decreases inthe wholesale trade, agriculture and service industries partiallyoffsetby increases in Barclays Capital Inc. and/or one of itsaffiliatesdoes and seeks to do business with companiescovered in its research reports. As a result, investors should be aware that the firm may have aconflict of interest that couldaffectthe objectivity of this report. Investors should consider thisreport as only a single factor in making their investment decision. Please see analyst certifications and important disclosures beginning on page 3.Completed: 28-May-25, 11:33 GMTReleased: 28-May-25, 11:33 GMTRestricted - External transportation and retail trade. GIL formations fell 25% to C$1.771bn. The GIL ratio decreased1bp to 0.99%. PCL higher.Total PCL increased 4% to C$1,054mn with an 11% decrease in the PCL on impairedloansoffsetby a 90% jump in the PCL on performing loans. The PCL ratio on impaired loansdecreased 4bps to 46bps. The APL coverage ratio increased 4bps to 69bps. FIGURE 1. 2Q25 Results vs. Expectations (C$mn) Source: Barclays Research, Company Reports, Bloomberg Analyst(s) Certification(s): I, Brian Morton, CFA, hereby certify (1) that the views expressed in this research report accurately reflect my personal views about any or all of thesubject securities or issuers referred to in this research report and (2) no part of my compensation was, is or will be directly or indirectly related to thespecific recommendations or views expressed in this research report. Important Disclosures: Barclays Research is produced by the Investment Bank of Barclays Bank PLC and itsaffiliates(collectively and each individually, "Barclays"). Allauthors contributing to this research report are Research Analysts unless otherwise indicated. The publication date at the top of the report reflects thelocal time where the report was produced and maydifferfrom the release date provided in GMT. Availability of Disclosures: Where any companies are the subject of this research report, for current important disclosures regarding those companies please refer to https://publicresearch.barclays.com or alternatively send a written request to: Barclays Research Compliance, 745 Seventh Avenue, 13th Floor, New York, NY10019 or call +1-212-526-1072. The analysts responsible for preparing this research report have received compensation based upon various factors including the firm's total revenues,a portion of which is generated by investment banking activities, the profitability and revenues of the Markets business and the potential interest of thefirm's investing clients in research with res