2 Min Read
(Reuters) -Bank of Montreal on Tuesday reported a decline in third-quarter profit as the Canadian lender set aside more rainy-day funds to cover potential losses from loan defaults.
The results come as the Bank of Canada’s ten interest rate hikes since last year have slowed the housing market, increased consumer debt and delayed mortgage repayments, forcing banks to set aside more money to protect against potential loan losses and restraining their earnings growth.
BMO said it set aside C$492 million to cover for credit losses compared with C$136 million a year ago.
The aggressive hikes, however, have allowed banks to charge higher rates and boost their net interest income, the difference between what banks earn on loans and pay on deposits.
At Bank of Montreal, net interest income for the quarter rose to C$4.91 billion, compared with C$4.20 billion last year.
The bank reported adjusted net income of C$2.04 billion ($1.50 billion), or C$2.78 per share, in the three months ended July 31, compared with C$2.13 billion, or C$3.09 apiece, a year earlier.
($1 = 1.3609 Canadian dollars)
Reporting by Nivedita Balu in Toronto and Pritam Biswas in Bengaluru; Editing by Shweta Agarwal and Bernadette Baum
