Tuesday, BMO Financial Group (BMO, BMO.TO) reported an increase in net income for the fourth quarter, on higher revenues and lower loan loss provisions. In another development, the company said it has agreed to buy the Diners Club North American franchise from Citigroup, a move which will immediately more than double BMO's overall Corporate Card business. BMO also declared a quarterly dividend of C$0.70 per share on paid-up common shares of Bank of Montreal for the first quarter of fiscal year 2010.
BMO Financial's net income for the fourth quarter available to commons share holders increased to C$609 million or C$1.11 per share from C$535 million or C$1.06 per share in the year-ago period.
The company's interest, dividend and fee income declined to C$2.30 billion from C$3.48 billion in the year-ago period. Interest expense for the quarter declined to C$860 million from C$2.07 billion in the year-ago period.
The company's net interest income increased to C$1.44 billion from C$1.40 billion in the year-ago period.
Provision for credit losses declined to C$386 million from C$465 million in the year-ago period.
Revenues for the quarter were C$2.989 billion, compared with C$2.813 billion in the year-ago quarter.
Net income for the company's P&C Canada segment increased 22% from the year-ago period. Net income in the P&C United States segment increased to US$23 million, up US$12 million from the year-ago period. Private Client Group or PCG net income increased by C$26 million or 32% from the same quarter a year-ago, while net income from BMC Capital markets was in line with the prior year's. However, the Corporate Services segment recorded a net loss of C$171 million during the quarter due to provisions for credit losses and due to low revenue.
Total non-interest revenue for the quarter was C$1.55 billion, compared with C$1.40 billion year-ago. The company's total non-interest expense for the quarter declined to C$1.77 billion from C$1.82 billion year-ago.
Total loans as on October 31 were C$162.09 billion, compared with C$179.35 billion at the end of the year-ago period. Total deposits at the end of the period were C$236.15 billion, compared with C$257.67 billion year-ago.
Bank of Montreal declared a quarterly dividend of C$0.70 per share on paid-up common shares of Bank of Montreal for the first quarter of fiscal year 2010, unchanged from the previous quarter and reflective of an annual dividend of C$2.80 per share.
The dividend on the common shares is payable on February 26, 2010 to shareholders of record on February 1, 2010. The dividends on the preferred shares are payable on February 25, 2010 to shareholders of record on February 1, 2010.
BMO said its medium-term objectives over time was to increase EPS by an average of 10% per year, earning average ROE of between 17% and 20%, achieving average annual cash operating leverage of at least 2 percentage points, and maintaining a strong regulatory capital position.
Year-to-date net income declined to C$1.66 billion or C$3.08 per share from C$1.90 billion or C$3.76 per share year-ago.
Year-to-date total revenue increased to C$11.06 million from C$10.20 million in the year-ago period.
The company also reported today that it has signed a definitive agreement to purchase the Diners Club North American franchise from Citigroup. The company said that the move will immediately more than double BMO's overall Corporate Card business.
The deal provides BMO exclusive rights to issue Diners Club cards to corporate and professional clients in the U.S. and Canada. Diners' corporate Travel and Entertainment or T&E expense card program enhances BMO's own T&E offering in the market and complements the bank's successful Purchasing Card or PCard program. In total, the agreement represents net receivables of almost US$1 billion and approximately US$7.8 billion in card transactions.
Frank Techar, president and chief executive officer, Personal and Commercial Banking, BMO Bank of Montreal said that the acquisition will immediately enhance the company's competitive position by placing it among the top commercial card issuers in North America. The deal also allows BMO to partner with other Diners Club franchisees around the world to deliver world-class Travel & Entertainment to its clients.
Mike Kitchen, senior vice-president, Personal & Commercial Banking, BMO Bank of Montreal stated that businesses are increasingly looking for card providers who have strong offerings in both T&E and PCard markets. "Today, the industry is changing and some clients are demanding a single provider to fulfill their T&E and Purchasing needs. This acquisition gives BMO an even more formidable offering." he said.
The acquisition is expected to close before the end of March.
BMO is currently trading on the New York Stock Exchange at US$50.38, down US$0.61 or 1.20%.
BMO.TO is currently trading on the Toronto Stock Exchange at C$53.47, down C$0.08 or 0.15%.
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