BMO Stock Forecast & Price Target

Bank of Montreal's strong performance is highlighted by a rise in performing expected credit losses (ACLs) as a proportion of gross loans, which increased to 0.56%, indicating healthy loan quality compared to both year-over-year and pre-pandemic levels. Additionally, the bank experienced significant growth in trading revenues, climbing approximately 67% quarter-over-quarter and 77% year-over-year, driven by robust performance in both equities and fixed income, currencies, and commodities (FICC) trading. Furthermore, the remarkable increase in capital markets earnings to $591 million, up about 119% quarter-over-quarter and 45% year-over-year, surpasses previous estimates and supports a positive long-term earnings outlook.

A negative outlook on Bank of Montreal's stock is supported by the significant decline in both performing and impaired provisions for credit losses (PCLs), with total PCLs at $1,011 million in Q1/25, which fell approximately 34% quarter-over-quarter and was notably below market estimates. The decrease in performing PCLs, reported at $152 million down from $416 million in the previous quarter, further underscores concerns regarding credit quality and loan performance. Despite achieving a common equity tier 1 (CET1) ratio of 13.6%, which exceeded expectations, the weakened credit metrics reflect potential challenges in maintaining asset quality as economic conditions evolve.