Capital markets slowdown dents BMO’s quarterly profit and overshadows strong lending trends – MONTREALINABOX

A steep drop in revenue from capital markets dragged down Bank of Montreal’s BMO-T third-quarter profit despite strong demand for loans from retail clients, bringing a tepid earnings season for Canada’s large banks to a close and underlining the uncertainty those lenders face in the coming months.

An abrupt slowdown in underwriting and advisory work for investment bankers, compounded by weaker revenue from trading, loomed large over BMO’s quarterly results. Capital markets revenue fell 20 per cent year-over-year and profit was down 53 per cent, to $262-million. The drop-off was most acute in the investment and corporate banking unit, where revenue fell 36 per cent, as many corporate clients sat on the sidelines to wait out market upheavals.

In a possible sign that BMO doesn’t expect deal-making to return any time soon to the booming levels seen last year, the bank reported $49-million in severance pay in its capital market division as it trims staff in an effort to maintain profitability. The bank did not reveal how many jobs it is cutting.

The slowdown in capital markets was not unique to BMO – revenues from investment banking and trading divisions fell at most Canadian banks in the fiscal third quarter, which ended…


Capital markets slowdown dents BMO’s quarterly profit and overshadows strong lending trends – MONTREALINABOX – Source

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