BMO Q3 profit mixed by charges, adj. growth

BMO Financial Group posted reported net income of $1,750 million for the third quarter ended July 31, 2026, down from $2,330 million in the prior year. Reported diluted earnings per share were $2.38, compared with $3.14 a year earlier. Reported return on equity was 8.4%, versus 11.6% in the prior-year quarter.

On an adjusted basis, performance improved year over year. Adjusted net income rose 19% to $2,859 million from $2,399 million, while adjusted EPS increased 22% to $3.96 from $3.23. Adjusted return on equity was 14.0%, up from 12.0% in the prior year, reflecting stronger underlying earnings.

The quarter’s reported results were significantly affected by divestiture-related items. Adjusting items in aggregate reduced net income by $1,109 million in the period. Total divestiture impacts were $1,106 million, or $973 million after tax.

These included a $1,092 million pre-tax charge, or $962 million after tax, tied to the announced sale of BMO’s Transportation Finance and Vendor Finance businesses, primarily related to a reduction in goodwill. There were also divestiture-related costs of $14 million, or $10 million after tax, associated with the announced sale of 138 branches in select U.S. markets.

Total revenue for the quarter was $9,896 million across BMO’s businesses. The bank reported total provision for credit losses of $722 million, compared with $797 million in the prior year, indicating a lower level of credit charges. The combination of solid revenue and reduced credit provisions supported the increase in adjusted earnings despite the divestiture-related charges.

The Capital Markets segment was a major contributor to the stronger adjusted performance. Reported net income in Capital Markets was $645 million, an increase of $203 million or 46% from the prior year. Adjusted net income for the segment was $649 million, also up $203 million or 45%.

Segment results were driven by higher revenue in Global Markets and in Investment and Corporate Banking, along with a lower provision for credit losses. These factors more than offset higher expenses in the business, supporting robust year-over-year profit growth.

During the quarter, BMO repurchased 3.8 million common shares for cancellation under its normal course issuer bid. The average purchase price was $239.37 per share. These buybacks reduced the number of shares outstanding and formed part of the bank’s capital management activities.

Management highlighted that every business segment delivered record pre-provision, pre-tax earnings in the quarter. The bank framed the results as consistent with its commitments to elevate return on equity and accelerate growth, even as reported profit was weighed down by divestiture-related goodwill charges.