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1. Company Snapshot

1.a. Company Description

Bank of Montreal provides diversified financial services primarily in North America.The company's personal banking products and services include checking and savings accounts, credit cards, mortgages, and financial and investment advice services; and commercial banking products and services comprise business deposit accounts, commercial credit cards, business loans and commercial mortgages, cash management solutions, foreign exchange, specialized banking programs, treasury and payment solutions, and risk management products for small business and commercial banking customers.It also offers investment and wealth advisory services; digital investing services; financial services and solutions; and investment management, and trust and custody services.


In addition, the company provides life insurance, accident and sickness insurance, and annuity products; creditor and travel insurance to bank customers; and reinsurance solutions.Further, it offers client's debt and equity capital-raising services, as well as loan origination and syndication, and treasury management; strategic advice on mergers and acquisitions, restructurings, and recapitalizations, as well as valuation and fairness opinions; and trade finance, risk mitigation, and other operating services.Additionally, the company provides research and access to markets for institutional, corporate, and retail clients; trading solutions that include debt, foreign exchange, interest rate, credit, equity, securitization and commodities; new product development and origination services, as well as risk management advice and services to hedge against fluctuations; and funding and liquidity management services to its clients.


It operates through approximately 900 bank branches and 3,300 automated banking machines in Canada and the United States.Bank of Montreal was founded in 1817 and is headquartered in Montreal, Canada.

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1.b. Last Insights on BMO

Bank of Montreal's recent performance was driven by strong Q1 2025 earnings and revenue growth, with net income increasing 65.5% year-over-year to $2.138 billion, and adjusted net income rising 21.3% to $2.289 billion. The company's broad-based revenue growth, strategic capital management, and robust financial performance have contributed to its recent success. Additionally, a price target raise to C$154 from C$150 by CIBC and an upgrade to a Buy rating by a leading analyst firm reflect growing optimism about the company's earnings prospects.

1.c. Company Highlights

2. BMO Financial Group Delivers Strong Q4 2025 Results with Record Net Income

BMO Financial Group reported adjusted EPS of $3.28 for Q4 2025 and $12.16 for the year, with actual EPS coming in at $3.26, beating analyst estimates of $3.02. The bank delivered record net income of $9.2 billion and increased full-year ROE by 150 basis points to 11.3%, exiting Q4 with momentum at 11.8%. Pre-provision pre-tax profit (PPPT) grew 18% to $15.8 billion, and the efficiency ratio improved by 230 basis points to 56.3%. Impaired provisions moderated to 44 basis points.

Publication Date: Dec -07

📋 Highlights
  • Record Net Income & ROE Growth:: BMO posted record net income of $9.2B in 2025, with full-year ROE rising 150 bps to 11.3% (11.8% in Q4).
  • Capital Returns & Dividend Increase:: Returned $8B+ to shareholders via buybacks and dividends, including a 5% hike to $1.67/share.
  • PPPT Growth & Efficiency Gains:: Pre-provision profit (PPPT) surged 18% to $15.8B, with efficiency ratio dropping 230 bps to 56.3%.
  • Business Segment Highlights:: Canadian P&C achieved 8% PPPT growth; U.S. Banking improved ROE by 170 bps to 8.1%; Capital Markets saw 32% PPPT growth.
  • 2026 Outlook & Strategic Goals:: Targets 15% ROE over 3–5 years, plans mid-single-digit core expense growth, and anticipates mid-single-digit U.S. loan growth by year-end.

Segment Performance

In business highlights, Canadian P&C delivered record revenue and strong PPPT growth of 8%. U.S. Banking saw ROE improvement of 170 basis points to 8.1% and PPPT growth of 7%. Wealth Management had a strong year with record revenues and net income driven by growth in client assets. Capital Markets had strong PPPT performance, up 32%. The bank's diversified business model and strong performance across segments contributed to its overall success.

Outlook and Guidance

For 2026, the bank expects core expense growth in the mid-single-digit range and plans to continue buying back shares while supporting business growth opportunities. The bank will host an All Bank Investor Day on March 26 to share more details on strategy and progress. Economic growth is expected to be modest, with GDP growth of 1.8% in the U.S. and 1.4% in Canada. The bank is well-positioned to benefit from a renewed CapEx cycle.

Valuation and Dividend Yield

With a P/TBV ratio of 1.48, investors are pricing in a certain level of growth and profitability for BMO. The bank's dividend yield of 3.61% is attractive, especially given the recent 5% dividend increase to $1.67 per share. The bank's strong capital position, with a CET1 ratio of 13.3%, provides flexibility to support business growth and return capital to shareholders.

Growth Prospects

Analysts estimate revenue growth of 4.8% for next year, driven by the bank's diversified business model and strong performance across segments. The bank's U.S. business is seeing signs of optimism, with clients expressing cautious positivity and pipelines growing. The bank expects loan growth to pick up in 2026, driven by its strengthened commercial relationships and investments in technology.

3. NewsRoom

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Bank of Montreal's (TSE:BMO) Upcoming Dividend Will Be Larger Than Last Year's

Dec -07

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CrowdStrike (CRWD) Delivers Upside Across Metrics; BMO Lifts Target to $555

Dec -06

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What Analysts Think Is Changing The Albemarle Story After Recent Lithium Market Shifts

Dec -06

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Financial Services Roundup: Market Talk

Dec -05

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Big Six bank bonuses climb on dealmaking profits despite uncertain economy

Dec -05

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BMO Expects Canada to Shed Jobs in November, Sees BoC Holding Rates Next Week

Dec -05

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BMO repayment risk hits new peak for transportation loans

Dec -05

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Gold Royalty Corp (GROY) is One of the Best Up and Coming Canadian Stocks

Dec -05

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4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (3.80%)

6. Segments

Metals & Mining - Gold & Other Precious Metals

Expected Growth: 3.8%

As the global economy grows, demand for precious metals is likely to increase, driving growth in this segment.

7. Detailed Products

Personal Banking

Bank of Montreal offers a range of personal banking services, including chequing and savings accounts, credit cards, loans, and investment products.

Credit Cards

Bank of Montreal offers a variety of credit cards with different features, rewards, and benefits, such as cashback, travel points, and low interest rates.

Mortgages

Bank of Montreal offers a range of mortgage products, including fixed-rate and variable-rate mortgages, with flexible repayment terms and competitive interest rates.

Investments

Bank of Montreal offers a range of investment products, including mutual funds, exchange-traded funds (ETFs), and self-directed investment accounts.

Business Banking

Bank of Montreal offers a range of business banking services, including business chequing and savings accounts, credit cards, loans, and cash management solutions.

Commercial Banking

Bank of Montreal offers a range of commercial banking services, including commercial lending, cash management, and trade finance solutions.

Wealth Management

Bank of Montreal offers a range of wealth management services, including investment advice, portfolio management, and estate planning.

Capital Markets

Bank of Montreal offers a range of capital markets services, including debt and equity underwriting, mergers and acquisitions advisory, and risk management solutions.

8. Bank of Montreal's Porter Forces

Forces Ranking

Threat Of Substitutes

The threat of substitutes for Bank of Montreal is medium due to the presence of alternative financial institutions and digital payment systems. However, the bank's strong brand and customer loyalty mitigate this threat to some extent.

Bargaining Power Of Customers

The bargaining power of customers is low for Bank of Montreal due to the lack of switching options and the complexity of banking services. Customers are also loyal to the bank due to its long history and reputation.

Bargaining Power Of Suppliers

The bargaining power of suppliers is low for Bank of Montreal due to the bank's large size and negotiating power. The bank is able to negotiate favorable terms with its suppliers.

Threat Of New Entrants

The threat of new entrants is low for Bank of Montreal due to the high barriers to entry in the banking industry. New entrants would need to invest heavily in infrastructure and comply with strict regulations.

Intensity Of Rivalry

The intensity of rivalry is high for Bank of Montreal due to the presence of several large banks in Canada. The bank faces intense competition in terms of pricing, product offerings, and customer service.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 76.36%
Debt Cost 9.88%
Equity Weight 23.64%
Equity Cost 9.88%
WACC 9.88%
Leverage 322.99%

11. Quality Control: Bank of Montreal passed 2 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

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TD Bank

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Value: 5.6

Growth: 6.3

Quality: 4.8

Yield: 8.0

Momentum: 9.0

Volatility: 10.0

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A-Score: 6.7/10

Value: 5.3

Growth: 5.2

Quality: 6.5

Yield: 5.0

Momentum: 8.5

Volatility: 9.7

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BMO

A-Score: 6.7/10

Value: 3.8

Growth: 6.1

Quality: 3.6

Yield: 8.0

Momentum: 8.5

Volatility: 10.0

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Citigroup

A-Score: 6.2/10

Value: 6.7

Growth: 4.7

Quality: 4.4

Yield: 5.0

Momentum: 8.5

Volatility: 8.0

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Bank of America

A-Score: 6.2/10

Value: 5.6

Growth: 5.3

Quality: 5.0

Yield: 5.0

Momentum: 7.5

Volatility: 8.7

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NatBank

A-Score: 6.1/10

Value: 4.0

Growth: 4.7

Quality: 4.9

Yield: 6.0

Momentum: 7.0

Volatility: 10.0

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

177.1$

Current Price

177.1$

Potential

-0.00%

Expected Cash-Flows