BMO Stock Forecast & Price Target

The Bank of Montreal (BMO) has demonstrated solid performance with a core lending net interest margin (NIM) of 1.85%, reflecting a sequential increase in profitability across its segments. The bank's capital optimization strategy, bolstered by a strong excess capital position enabling potential share buybacks of approximately 4%, supports a robust earnings per share (EPS) growth forecast of 14% and 10% for fiscal years 2026 and 2027, respectively. Additionally, the improvements in commercial lending and core net originations further enhance the positive outlook for BMO's financial performance.

The Bank of Montreal's net interest margin (NIM) in Canadian personal and commercial banking remained unchanged at 3.90%, indicating challenges in improving profitability amidst a competitive banking environment. Additionally, the total provision for credit losses (PCLs) of CAD 797 million fell below both internal estimates and market consensus, suggesting potential risks in asset quality that may not be effectively addressed. Despite reporting a year-over-year increase in core cash earnings per share, the persistent flat NIM and lower-than-expected provisions raise concerns about long-term earnings sustainability and risk management capabilities.