DOWNLOAD
Sub-sector: Consumer Finance and Banking
BMO Financial
- Sector: Financial Services
- Sub Sector: Consumer Finance and Banking
- Region: Canada
Access this content:
If you are an existing investor, log in first to your Metrobank Wealth Manager account.
If you wish to start your wealth journey with us, click the “How To Sign Up” button.
Fundamental View
AS OF 13 Aug 2025BMO is geographically diversified within Canada & via its commercial banking business in the U.S. and is also well-diversified by revenue with contribution from fee income businesses.
Credit has performed worse than peers in 2024, but losses have stabilized in 2025, based on underwriting and risk management changes in recent years as well as seasoning effects.
Business Description
AS OF 13 Aug 2025- BMO Financial Group is the third largest depository institution in Canada with C$1.44 tn in assets as of F2Q25 and a market capitalization of US$77 bn. Total deposits were C$958 bn at F2Q25.
- BMO operates 1,890 branches in Canada and the United States in 2024.
- As of YE24, BMO had 1,013 branches within the United States, mostly in the Midwest. BMO ranked 11th in deposit market share in the U.S. (SNL), with a top-2 share in Illinois.
Risk & Catalysts
AS OF 13 Aug 2025BMO has a strong core deposit base in Canada and in the U.S., which mitigates the potential for a liquidity event. BMO remains well-capitalized relative to requirements with a target CET1 ratio of 12.5% (13.5% at F2Q25).
BMO closed the acquisition of Bank of the West from BNP Paribas in February 2023, significantly expanding its footprint in the U.S. We don’t expect deal integration to have much impact on the credit profile.
We view real estate-related risk in Canada as manageable for BMO given low LTV of exposures in vulnerable markets and conservative underwriting. Commercial real estate accounts for ~10% of total loans, and office is quite manageable at ~1% of total.
Credit trends have largely stabilized in 1H25, while provisions could incrementally increase in 2H25 in light of current macro uncertainties.
BMO’s reserves and capital levels all point to BMO maintaining a conservative balance sheet stance and having flexibility to manage through a more extended period of macro weakness in Canada.
Key Metric
AS OF 13 Aug 2025| $ mn | FY21 | FY22 | FY23 | FY24 | LTM 2Q25 |
|---|---|---|---|---|---|
| Revenue | 20,509 | 26,727 | 21,694 | 24,095 | 25,173 |
| Net Income | 6,167 | 10,519 | 3,291 | 5,380 | 5,935 |
| ROAE | 0.98% | 0.98% | 0.98% | 0.98% | 0.98% |
| NIM | 1.56% | 1.56% | 1.56% | 1.56% | 1.56% |
| Net Charge-offs / Loans | 0.14% | 0.08% | 0.14% | 0.39% | 0.43% |
| Total Assets | 797,018 | 860,451 | 969,851 | 1,011,587 | 1,042,299 |
| Unsecured LT Funding | 51,915 | 64,886 | 63,418 | 115,839 | 118,598 |
| CET1 Ratio (Fully-Phased-In) | 13.7% | 16.7% | 12.5% | 13.6% | 13.5% |
CreditSight View Comment
AS OF 16 Sep 2025We maintain our Market perform for BMO, with our preference within the group remaining to trade up in quality to RBC and TD. Surprising deterioration in asset quality metrics was the story throughout the latter part of F2024, with provisions well above historical average levels. Management has attributed the weakness largely to large wholesale loans to new borrowers originated in 2021, but given the steady climb in reserve coverage as well as changes to risk management and underwriting in recent years, BMO is confident quarterly provision ratios should moderate across F2025 alongside further potential benefits from efficiency initatives. This appeared to be the case thus far with the improvement in credit performance particularly notable in F3Q25.
Recommendation Reviewed: September 16, 2025
Recommendation Changed: August 26, 2020
Featured Issuers
Bank of Philippine Islands
SK Hynix
Hyundai Motor
