Summer Sale
50% off Premium Yearly
Opinions Andrew Hamlin
Bank of MontrealBMO.TOCOMMENTNov 18, 2014
Stock price when the opinion was issued
As of Jun 17, 2026. Market Open.
You might be interested:
In view of his other two Past Top Picks, this demonstrates why you don't build a 3-stock portfolio ;) Doing well in US. Bad credit is starting to show up in non-prime, but all the banks are running squeaky-clean credit portfolios.
Brian MaddenWill continue to own as long as it's technically sound. Doing a great job across business lines. Not adding at this time. It can be on your list to add once markets improve after current correction.
David BurrowsLikes it. Stable dividend, never cut. Assets grew in wealth management because markets went up. They get fees on the higher asset base. Banks could be under pressure if inflation starts to rise, so be cautious. For new $$, diversify elsewhere.
When rates rose in 2022, hit the hardest with loan losses (especially in US).
Outlook is favourable. He owns BMO, RY, and TD. All 3 had good earnings, with TD probably the best. But the other two were also strong.
Tight, well-regulated oligopoly. A need, not a want. Diversified by geography and line of business. Good line of sight through the cycle to high, single-digit rate of dividend growth. He's overweight the banks.
Brian Madden
When he looks at the sector, great numbers across the board. Many raised dividends, ROEs are improving. Yield curve is more upward-sloping, which is helping. PCLs have been a concern and ticked up, but less than what market expected. Better growth numbers. Expectations for earnings numbers are being increased. All the names are looking good here.
When he looks at banks, he looks at the dividend and growth at the most reasonable price. Really likes BMO here.
It was the lowest-quality beat of all the banks reporting. The beat was because they released provisions back into earnings. The only one of the Big 5 she doesn't own. Always trades at a premium, and she doesn't understand why.
Issue last year of quality of US loans. Took a lot of provisions, but now has released those. This signals everything in the US is OK, but she disagrees based on where we are in the credit cycle. The release is premature.
His firm owns RY, BMO, and TD as cornerstone holdings in its dividend-growers mandate. Canadian banking is a stable, well-regulated oligopoly. Structurally profitable, heavy barriers to entry. Diversified by line of business and by geography. Its fee-based businesses should be very profitable this quarter.
One fly in ointment: tepid loan growth demand, especially in mortgages, and to a lesser extent in commercial loans. Thinks the worst of credit loss provisions is behind the Canadian banks.
Brian Madden
If you own this name and you're comfortable selling it at this level, as you think it's not going to go up from here and may even go down, then this seems like an OK strategy.
For him, he typically likes to leave a bit of upside between where the stock's trading and where he sells the call.
If you look at the Canadian banks, they're pretty stable businesses. Volatility's not as high, so neither are the options premiums. Selling something closer to the money, or even in the money, can make sense. You're really riding a fine line that what you expect is going to happen actually does over a short period. That's pretty hard to predict, so he'd leave a little bit offside.
Banks look pretty good here, not spectacular, but okay. The #1 performing bank this year is National Bank (NA-T), an astounding 25% or so. Bank of Montreal is right in line with the other banks and has done reasonably well year-to-date. Nothing wrong with it and thinks it will do reasonably well. Thinks Canadian banks are a little challenged here and regulators are really clamping down on capital requirements. Dividends are going to grow with earnings and earnings are slowing down a little. Don't expect as strong a dividend growth as we have seen over the last couple of years.