Bank of Montreal (TSX:BMO)(NYSE:BMO) stock has increased 7.7% week-over-week as of close on August 31. The Montreal-based bank released its third quarter 2020 results on August 25.
Like some of its peers, BMO saw an uptick in Q3 2020 as it was able to free itself up from pouring more resources into bad loan provisions.
The bank reported provisions for credit losses of $1.05 billion in Q3 2020 – down from the record amount it reported in the previous quarter. Profit at BMO’s Canadian division dropped 51% year-over-year and net income in its United States operations fell 29%.
Meanwhile, it failed to gain the kind of momentum its peers did in the Capital Markets division. This was largely due to losses from its worst trading day in over 10 years.
Regardless, I’m still bullish on BMO in the long term. Like Canada’s other top banks, there is considerable uncertainty heading into the fall. As mortgage deferrals come to an end, the financials of Canadians during this crisis will be tested. The winding down of programs like CERB will also test millions of citizens who have relied on these payments.
Shares of BMO are still down 14% in 2020 so far. The stock last had a favourable price-to-earnings ratio of 11 and a price-to-book value of 1.0. BMO also offers a quarterly dividend of $1.06 per share, which represents a strong 5.1% yield. It also boasts an excellent balance sheet.
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