BMO Stock Forecast & Price Target

Bank of Montreal (BMO) has demonstrated a strong performance in its net interest margin, with improvements noted across multiple segments, including a quarterly increase in core lending NIM to 1.85% and a reported NIM up by 9 basis points to 1.69%. Additionally, BMO’s capital optimization strategy has positioned it favorably, with a robust excess capital level that could facilitate a potential share buyback of approximately 4%. The bank is anticipated to achieve solid earnings per share (EPS) growth of 14% in fiscal 2026 and 10% in fiscal 2027, reflecting the positive trajectory of its commercial lending and overall financial health.

The Bank of Montreal's net interest margin (NIM) in Personal and Commercial Banking remained stagnant at 3.90% quarter-over-quarter, indicating potential challenges in revenue generation amid a competitive banking environment. Additionally, the provision for credit losses (PCL) of CAD 797 million fell short of both internal estimates and consensus expectations, suggesting concerns over asset quality and risk management. While the bank reported a significant increase in core cash earnings per share, the lack of growth in NIM combined with lower-than-expected PCLs raises questions regarding the sustainability of profitability moving forward.