Key Takeaways:
Bank of Montreal plans to repurchase up to 25 million common shares, about 3.6 percent of its public float, starting Sept. 8.
"We continue to reallocate and deploy capital to areas positioned to deliver sustainable and long-term value for our shareholders," Darryl White, chief executive of BMO Financial Group, said.
The buyback, subject to approval from the Office of the Superintendent of Financial Institutions and the Toronto Stock Exchange, runs through Sept. 7, 2027. It follows third-quarter results in which reported net income fell 25 percent to $1.75 billion on a $962 million after-tax goodwill charge tied to the announced sale of BMO's Transportation and Vendor Finance businesses. Adjusted net income rose 19 percent to $2.86 billion, and adjusted earnings per share climbed 22 percent to $3.96. The Common Equity Tier 1 ratio stood at 13.0 percent as of July 31.
The program replaces BMO's current buyback, which ends Sept. 4, and gives management discretion over timing and amount based on market conditions. BMO repurchased 3.8 million shares in the quarter at an average price of $239.37 and declared a fourth-quarter dividend of $1.71 per share, up 5 percent from a year earlier.
The 25 million shares represent about 3.6 percent of the 696.9 million shares in BMO's public float as of July 31, with 697.1 million shares issued and outstanding. Purchases will be made through the Toronto Stock Exchange and other designated venues, including automatic purchase plans, block trades and private agreements. Except for purchases under exemption orders, which generally occur at a discount, BMO will pay the prevailing market price. Its shares trade on both the Toronto and New York stock exchanges.
All operating segments delivered higher adjusted earnings in the quarter, led by Capital Markets, where reported net income jumped 46 percent to $645 million. Canadian personal and commercial banking net income rose 16 percent to $980 million, while U.S. banking gained 13 percent to $868 million. Provision for credit losses fell to $722 million from $797 million a year earlier.
The buyback gives management room to return capital even as the divestiture charge weighs on reported results. Investors will watch the program's execution pace after it begins Sept. 8, alongside progress on the sale of the Transportation and Vendor Finance businesses.
This article is for informational purposes only and does not constitute investment advice.
