BMO Misses Quarterly Target
CBJ – Despite earning about $1 billion in the last quarter, The Bank of Montreal did not hit its financial target, primarily due to falling oil prices. There is widespread concern about the impact on both revenues from its capital markets operations and the bank’s $5.9- billion oil and gas related loan portfolio.
“If oil prices remain depressed, there will be some strain on some of these loans,” BMO’s chief risk officer, Surjit Rajpal, said during a conference call. “Nothing to worry about today but it all depends on how long the prices remain low.”
Oil prices have tumbled by about 50% from mid-summer highs due to much lower demand with the U.S. opting to increase domestic drilling operations, primarily through fracking. With the U.S. buying much less oil from the OPEC nations it has created a glut in the global supply.
The results from BMO’s investment and corporate banking business were the weakest they have been in two years, with advisory fees, trading and commissions all down.