BMO Financial Group reported a solid start to fiscal 2026, with higher profit and returns on equity driven by record revenue across all operating segments and a materially lower provision for credit losses.
For the quarter ended Jan. 31, 2026, BMO posted net income of $2.49 billion, up from $2.14 billion a year earlier. Diluted EPS rose to $3.39 from $2.83, while reported return on equity (ROE) increased to 12.1% from 10.6%.
On an adjusted basis – which excludes specified items including severance – net income was $2.55 billion, compared to $2.29 billion a year earlier, and adjusted EPS was $3.48, up from $3.04. Adjusted ROE was 12.4%, up from 11.3%. The quarter included $147 million after tax ($202 million pre‑tax) in severance costs tied to efficiency initiatives.
“BMO had a very strong start to the year… delivering higher return on equity and double-digit earnings growth,” said Darryl White, CEO of BMO Financial Group, noting record revenue in every operating segment and strong fee growth in market‑driven businesses.
BMO’s total provision for credit losses (PCL) was $746 million, down from $1.01 billion a year earlier. PCL on impaired loans fell to $739 million, largely due to lower provisions in U.S. banking, while PCL on performing loans dropped to $7 million from $152 million. Management highlighted portfolio credit migration, partly offset by lower balances in some books and improved macroeconomic scenarios.
For insurance readers watching commercial real estate (CRE) exposures, BMO’s disclosures in its 2025 annual report showed office and retail CRE loans are a relatively modest slice of its total loan book, with the bulk of CRE tied to multi‑residential and industrial assets. The bank has continued to add to allowances in segments viewed as higher risk, but has not reported outsized impairments relative to peers, which may be relevant for insurers modeling counterparty risk and systemic credit scenarios.
Like its peers, BMO is navigating a “higher‑for‑longer” interest‑rate environment. Net interest income grew in Canadian P&C on the back of wider margins and balance growth, while US net interest income was pressured by deposit competition and mix shifts but still rose modestly.
Canadian personal and commercial banking reported net income of $948 million and adjusted net income of $951 million, both up 8% year over year. Revenue increased 7%, driven by higher net interest income and higher non‑interest income, including above‑trend card fee revenue tied to revised rewards redemption assumptions.
Meanwhile, US banking reported net income of $742 million, up 17%, and adjusted net income of $802 million, up 13%. A weaker US dollar reduced reported Canadian‑dollar results by about 5%.
In US dollars, reported net income rose 21% to $539 million and adjusted net income 18% to $583 million, mainly due to lower PCL. Revenue grew 2%, although expenses increased faster as the bank continued to integrate its expanded US footprint and invest in technology.
Wealth management – which now includes Burgundy Asset Management – reported net income of $352 million, up 7%, and adjusted net income of $380 million, up 16%. Asset‑management earnings benefited from stronger equity markets and net flows, a trend also visible at other Canadian banks and relevant to insurers with asset‑management arms. Insurance net income within the segment was $79 million, down 5%, reflecting volatility in policyholder experience and market factors.
Capital markets reported net income of $657 million, up 11%, and adjusted net income of $660 million, also up 11%, supported by stronger equities trading and higher advisory fee revenue. For insurance‑linked securities investors, BMO’s capital‑markets performance underscores the continued profitability of trading and underwriting franchises in a more volatile rate and credit environment.
Corporate Services recorded a reported net loss of $210 million, improving from a $291 million loss a year earlier, mainly due to prior‑year accounting adjustments and a larger partial reversal of the FDIC special assessment. On an adjusted basis, the net loss widened to $242 million from $219 million, reflecting higher expenses partly offset by stronger treasury‑related revenue.
BMO’s board declared a second‑quarter 2026 dividend of $1.67 per common share, unchanged from the prior quarter and up $0.08, or 5%, from a year earlier.
Among major Canadian banks that have reported for the same period, BMO’s profitability sits just below the top of the pack. Scotiabank’s adjusted ROE for Q1 2026 was about 13.0%, while National Bank of Canada reported an adjusted ROE around the mid‑teens, leaving BMO in the middle of the Big‑Six range. CET1 capital of 13.1% keeps BMO slightly below Scotiabank and National on headline ratios, but still comfortably above OSFI’s domestic stability buffer requirements and well‑placed for ongoing buybacks and dividend growth.
For insurers and asset managers holding Canadian bank paper, that combination of mid‑teens‑target ROE, strong internal capital generation and still‑elevated allowances for credit losses remains broadly supportive of the sector’s credit profile, even as economic growth slows.
