From the core Canadian retail banking business to wealth management, capital markets and its U.S. division, almost all aspects of the banking business made more money in the three months to the end of April.

Decrease in loan loss reserves

As profits increase, the funds allocated by banks are far less than non-performing loans.

Banks of Canada, known as loan loss reserves, spent most of the high fees to pay for the large loans they had issued and feared that they might need to write off.

At this time last year, BMO had allocated more than $1.1 billion in funds to repay potential non-performing loans.

But this figure has been as low as only 60 million US dollars, which shows that the bank is confident in the prospects of its consumers and business customers.

CEO Daryl White said: “In this quarter, we continued to achieve very strong results, and all businesses performed well.” “We entered the second half of the year with a strong momentum.”

Criticism of rising fees

BMO’s strong financial performance comes as the big banks as a whole face criticism for raising fees during the pandemic.

Weekend CBC News Report What is disturbing about Canadians is that their bank has increased various fees for basic banking services.

BMO’s data shows that the bank did make more money from fees than before. According to CIBC Bank analyst Paul Holden (Paul Holden), in the last quarter, BMO collected $1.598 billion in so-called core fees. During the quarter, the bank collected US$1.643 billion in such fees, an increase of US$45 million. Card fees alone rose from US$81 million in the previous quarter to US$122 million in this quarter.

These profits also come from the following background: Growing concerns about the Canadian housing market, Because record low interest rates have pushed prices to record highs, and affordability is thinner than ever.

next week, New stress test rules aim to make housing loans more difficult to obtain, BMO said in a conference call with analysts on Wednesday that it will pay close attention to new applications in areas where prices are particularly high.

According to data compiled by Bloomberg Intelligence analyst Paul Gulberg (Bloomberg Intelligence), compared with other large banks in Canada, BMO’s housing mortgage exposure is less, about 130 billion Canadian dollars (accounting for One-third of its total loans) are linked to housing real estate. In contrast, rivals Royal Bank and Imperial Bank of Canada have more than half of the loans.

This may be why the bank is not too worried about the risks of the increasingly fragile real estate market. Erminia Johannson, head of BMO’s North American Personal and Commercial Banking business unit, said in a conference call with analysts: “We can assume that given the housing prices and sales we are seeing now, there will be some moderation.” The bank’s quarter. .

“However, it is certain that Canada will remain a fairly strong mortgage market for some time to come.”

No dividend increase

Under normal circumstances, cash-rich banks are likely to increase dividends to shareholders.

However, BMO did not do so, stabilizing the dividend at $1.06 per share, because BMO is not allowed to increase its dividend under current rules. Banking regulator OSFI uses the industry as a preventive measure March 2020.