BMO Shares Surge on Earnings Post

With bank confidence slow in coming around, Bank of Montreal's(BMO Quote) second-quarter earnings announcement this morning was all the more titillating. By most accounts, BMO's earnings, along with good consumer index numbers, helped boost the market today.

Still, a sober assessment must be made: First, the bank reported a net income of C$358 million. That's down from C$642 million in the year-ago period -- a whopping 44% reduction.

More importantly, credit loss set-asides were increased to C$372 million. That's a C$221 million increase from the same period last year. In a considerable understatement, the earnings release said that "the credit environment was considerably weaker than a year ago." About C$127 million of that came from Canadian operations, while C$245 million came from the U.S.

Still, this was, in fact, all better than analysts had predicted. The commercial banking segment also posted a $350 million income, or $30 million better than the year ago period.

"Conditions remain challenging in credit markets and the capital markets environment," Bill Downe, President and CEO of BMO said. "However, we are appropriately positioned to cope with these conditions. Our strong capital and liquidity positions permit us to make opportunistic acquisitions, such as the acquisition of the Canadian life insurance business we completed in the quarter."