BMO Financial wealth management arm has reported a rise in income  in Q3 2020 despite the challenging market conditions triggered by the Covid-19 pandemic. However, higher credit loss provisions dampened the group performance.

Key wealth management metrics

The division’s reported net income for the three-month-period ending 31 July 2020 stood at C$341m ($258.7m). This is a 37% surge from the year-ago figure of C$250m.

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The division’s adjusted net income, which excludes the amortisation of acquisition-related intangible assets, increased 35% year-on-year to C$349m.

In traditional wealth, reported net income soared 20% to C$271m while adjusted net income increased 19% to C$279m.

The growth was attributed to lower expenses, including benefits from cost containment programmes, as well as stronger global markets.

The wealth management unit’s total revenue of C$2.48bn was 18% higher than the previous year.

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Stronger global markets and favourable foreign exchange resulted in a 5% rise in assets under administration to C$411.12bn.

Assets under management increased 7% to C$498.02bn.

BMO Capital Markets

This unit was another growth driver at the bank.

Reported net income at the unit was C$426m in Q3 2020, a 36% surge from Q3 2019.

The unit’s adjusted net income increased 36% year-on-year to C$435m.

Group highlights for BMO in Q3 2020

At a group level, BMO Financial’s reported net income dropped to C$1.23bn from C$1.56bn as it set aside more money in loan loss provisions linked to the pandemic.

Provisions for credit losses in Q3 2020 were C$1.05bn, compared with C$306m a year ago and C$1.12bn in the previous quarter.

Adjusted net income dropped to C$1.26bn from C$1.58bn.

BMO Financial Group CEO Darryl White said: “This quarter, we continued to deliver on our commitment to expense management, a critical and appropriate lever in the current environment. Expenses declined 2% from the prior quarter and year-over-year. Operating leverage for the quarter was 5.3% and year-to-date operating leverage was strong at 2.9%.

“We are moving forward with a strong foundation and good operating momentum, and are well positioned to withstand both economic headwinds and recovery.”