Where Bank of Montreal (USA) (BMO)’s Turning for Growth

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Bank of Montreal (USA) (NYSE:BMO)On Wednesday, Bank of Montreal (USA) (NYSE:BMO) will release its latest quarterly results. With a solid reputation as a strong Canadian financial institution, the bank has benefited from superior conditions in the Canadian economy over the past several years, avoiding much of the trouble that U.S. banks suffered during the financial crisis in 2008.

Yet one thing that many investors don’t realize about Bank of Montreal (USA) (NYSE:BMO) is that like its U.S. peers, it is far more than just a bank. With extensive other financial operations, the financial giant has exposure to investments and asset management as well. Let’s take an early look at what’s been happening with Bank of Montreal over the past quarter and what we’re likely to see in its quarterly report.

Stats on Bank of Montreal

Analyst EPS Estimate $1.50
Change From Year-Ago EPS 4.2%
Revenue Estimate $3.97 billion
Change From Year-Ago Revenue 0.2%
Earnings Beats in Past 4 Quarters 4

Source: Yahoo! Finance.

What’s driving Bank of Montreal higher?
Analysts have increased their views on Bank of Montreal (USA) (NYSE:BMO)’s earnings prospects in recent months, boosting their estimates for the April quarter and for the full 2013 fiscal year by $0.04 to $0.05 per share. The stock hasn’t responded much, however, remaining roughly unchanged since late February.

It’s easy for U.S. investors to paint Canadian banks with a single brush-stroke, as the differences in the banking system helped keep Bank of Montreal and its peers safer during the financial crisis five years ago. As Canada’s housing market has kept rising even after the housing bust south of its border, however, investors have gotten increasingly concerned about the potential health of its banks, especially the largest ones. With downgrades for Canadian Imperial Bank of Commerce (USA) (NYSE:CM), Toronto-Dominion Bank (USA) (NYSE:TD) , and Bank of Montreal (USA) (NYSE:BMO) among a total of six banks in January, Moody’s Corporation (NYSE:MCO) identified higher debt levels among Canadian consumers as driving potential risk for the economy.

More recently, further economic headwinds could spell trouble for Bank of Montreal (USA) (NYSE:BMO) and its peers. The plunge in gold and other precious metals threaten the mining industry, which plays an important role in the Canadian economy. That’s one area in which the bank’s purchase of U.S.-based Marshall & Ilsley proved prescient, as it helped diversify Bank of Montreal’s geographical exposure at what proved to be an opportune time.

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