Bank of Montreal

topped analysts’ expectations as it reported higher profits in its United States, capital markets and wealth-management segments and kept aside a lower amount of money to tackle loans that may potentially go bad.

Its net income for the three months ending July 31 was $2.33 billion, compared to $1.86 billion during the same period a year ago, resulting in net earnings per share of $3.14.

BMO’s adjusted net income — which removes the impact of non-recurring items — was $2.39 billion, compared to $1.98 billion a year ago, resulting in adjusted earnings per share of $3.23, which was above analysts’ expectations of about $2.97 per share.

Chief executive Darryl White said in a statement on Tuesday that the bank’s “disciplined execution” helped improve its credit performance and profitability, especially in its U.S. businesses.

BMO is the first of Canada’s Big Six to release its third-quarter results. The big-bank earnings are often considered a signpost of the country’s economy.

Given the uncertainty surrounding

tariffs

, analysts are closely monitoring the provisions for credit losses (PCLs), which refer to the reserves lenders set aside to address potentially problematic loans. This is a key metric for measuring the health of a bank’s loan book as well as the ability of households and businesses to pay their debts.

Most lenders increased their PCLs in the previous quarter, but

analysts expect PCLs to have declined

in the third quarter.

BMO’s total PCLs were $797 million, compared to $906 million a year ago. It reported lower PCLs in its U.S. businesses and capital markets, but higher PCLs in its Canadian commercial banking and unsecured consumer lending segments.

The bank’s adjusted net income in its U.S. segment was $769 million, up 42 per cent from last year. Its adjusted net income from its wealth management and capital markets segments increased by 21 per cent and 12 per cent, respectively.

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But the lender’s adjusted income for its Canadian business declined by five per cent, or $50 million, to $870 million.

John Aiken, an analyst at Jefferies Inc., said BMO’s “strong beat” should receive an “initial warm reception” by investors, but the bank appears to have modestly missed expectations for most of its business segments except for U.S. retail.

“The bulk of the better-than-expected results came from lower-than-forecast provisions,” he said in a note on Tuesday. “We view the quality of earnings as being not as high as we had originally anticipated and, along with negative loan growth in the U.S., we anticipate that we could potentially see stronger earnings from BMO’s peers.”

Mike Rizvanovic, an analyst at Bank of Nova Scotia, said in a note that the headline beat could move consensus expectations a bit higher for fiscal 2026.

BMO also announced a quarterly dividend of $1.63 per common share, which is unchanged from the prior quarter.

• Email: nkarim@postmedia.com