Big Six go six-for-six as BMO hikes dividend and plans buyback
BNN Bloomberg
Bank of Montreal has made it a clean sweep for Canada's Big Six lenders in dishing out dividend hikes and share buybacks.
Bank of Montreal has made it a clean sweep for Canada's Big Six lenders in dishing out dividend hikes and share buybacks.
BMO announced Friday morning that it will seek regulatory approval to repurchase up to 22.5 million of its common shares. It also said its board approved a 25-per cent boost to the quarterly dividend, which will lift it to $1.33 per share, effective with the payment scheduled for Feb. 28.
The flurry of moves by banks this week to share their wealth with investors was anticipated after the Office of the Superintendent of Financial Institutions ended its ban on share buybacks and dividend hikes on Nov. 4.
The regulator imposed that prohibition in March 2020 as it sought to shield Canada's financial system from a feared surge in loan defaults during the COVID-19 pandemic. However, that onslaught of sour loans never materialized as extraordinary measures were introduced by the banks and federal government to support individuals and businesses.
BMO also posted a 52 per cent surge in annual profit on Friday, as net income for the fiscal year ending Oct. 31 rose to $7.75 billion from $5.10 billion in 2020. In the fiscal fourth quarter, BMO earned $2.16 billion, up 36 per cent from a year earlier amid growth in all of its major divisions and improved credit quality. Indeed, $126 million was freed up from funds that were previously set aside as loan-loss provisions. In the prior quarter, BMO released $70 million from its provisions.
On an adjusted basis, the fiscal fourth-quarter profit worked out to $3.33 per share; analysts, on average, were expecting $3.21.
