BMO Stock Forecast & Price Target

Bank of Montreal's performing Allowance for Credit Losses (ACLs) as a proportion of gross loans stands at 0.56%, reflecting a positive trend with a year-over-year increase that outpaces its peers and surpasses pre-pandemic levels. Additionally, the bank has experienced remarkable growth in trading revenues, which rose approximately 67% quarter-over-quarter and 77% year-over-year, driven by strong performance in both equities and fixed income trading. Furthermore, capital markets earnings have shown significant improvement, rising about 119% quarter-over-quarter and 45% year-over-year, contributing to an upward revision in core earnings per share estimates for the coming years.

The Bank of Montreal reported a provision for credit losses (PCLs) of $1,011 million in Q1/25, which was significantly lower than the estimated $1,396 million, indicating potential weaknesses in credit quality. The performing PCLs also declined to $152 million from the previous quarter's $416 million, reflecting concerns about borrower performance and overall credit risk. Although the common equity tier 1 (CET1) ratio remained steady at 13.6%, above estimates, the declining trend in credit quality metrics raises red flags about the bank's financial health going forward.