Jesus puts his money in the Bank of Montreal .. Jesus saves, Jesus saves, Jesus saves

Aug 23rd, 2009 | By | Category: In Brief
Bank of Montreal's main Montreal branch at Place d'Armes in downtown Montreal. In 1977, BMO's operational headquarters moved to First Canadian Place in downtown Toronto. But its legal head office remains in Montreal.

Bank of Montreal's main Montreal branch at Place d'Armes in downtown Montreal. In 1977, BMO's operational headquarters moved to First Canadian Place in downtown Toronto. But its legal head office remains in Montreal.

[UPDATED AUGUST 24,  25, 27]. We first heard the (almost certainly false?) prophecy that the Bank of Montreal is in some kind of quite serious difficulty from twitterings on the net. One source is something called Washington’s Blog, which posted a short piece headlined “Is the Bank of Montreal (Canada’s 4th Largest Bank) About to Crash?” on Wednesday, August 19.

According to this source “Dan Amos[s] – who called the crash of Lehman and other giants beforehand – says that a major bank is lying about its ability to pay shareholder dividends, has been gaming its books, and is about to crash.”Â  Washington’s Blog also cites Stock Gumshoe, which reported last Sunday, August 16: “‘On Monday the 24th at Noon I’ll reveal the next major Bank Stock set to CRASH.’ That’s the big-letters headline from Dan Amoss in a new teaser ad for his Strategic Short Report … I can tell you that the stock must be … BMO Financial Group, usually better known as Bank of Montreal (trades at BMO in both NY and Toronto).”

For a more comprehensive look at what seems at least something more like the original source try “On Monday the 24th at Noon I’ll reveal the next major Bank Stock set to CRASH.” There are various forums and other sites that have discussed the issue as well. See, e.g.: The Okanagan’s Discussion Forum ;, countering propaganda ; Market Ticker Forums ; and Whispers from the Village on the Edge of the Rainforest.

The small grains of truth at the bottom of the biggest hyperbole here may be hinted at in two more mainstream articles. On Friday, August 21 the Wall Street Journal reported: “Loan Losses To Be Focus Of Cdn Banks 3Q Earnings … As usual, Bank of Montreal (BMO) will kick off the earnings season, releasing its financials on Tuesday [August 25].” But: “the strong capital ratios at the banks have alleviated any investor concerns. Rather, attention will be paid to dividend policy, especially after insurer Manulife Financial Corp. (MFC) took the unusual step of cutting its dividend by 50% last month.”

Shooting the Rapids, c.1879 by Frances Anne Hopkins

Shooting the Rapids, c.1879 by Frances Anne Hopkins

Today Andrea Hopkins at Reuters is more or less similarly reporting: “Recession may start wearing on Canada’s banks … Just below the surface, the banks are likely to start showing some wear and tear, even as they cling to their well-earned reputation as the strongest survivors of the global financial meltdown.” At the same time: “Virtually no one sees Canada’s banks rattling investors with big losses when they start reporting third-quarter earnings on Tuesday. Profits are likely to come in between 10 percent and 16 percent lower, a result that investors will take in stride, given a still-sluggish economic climate.”

In line with this more mainstream reporting, Bank of Montreal stock prices increased somewhat over the last three days of this past week, in both Toronto and New York.  Like others, we will nonetheless be keeping at least one eye on what happens over the week of August 24-28 and beyond. Not only is “BMO” [i.e. Bee-Moe, as the brokers say these days] Canada’s fourth-largest bank (albeit only the fifth-largest “financial institution”) in 2009, it is also modern Canada’s oldest bank. It was founded in 1817, on the profits of the ancient multiracial (or “Indian-European”) fur trade, which first spread the Canadian economy from the Atlantic to the Arctic to the Pacific oceans – with the help of the aboriginal transportation technology of the canoe and portage. If this bank ever were to “crash” in any terminal sense, that would be very big news indeed, for Canadians in all regions of the country – and almost all walks of life.

UPDATE AUGUST 25, 10 AM EDT: Meanwhile  this morning CBC News has reported: “Bank of Montreal posts profit increase … A poll of analysts by Reuters had expected 90 cents per share in earnings. The bank’s results translate to 97 cents per common share.” And the stock price is already up by more than $2 over yesterday. So BMO partisans can certainly breathe easier for now! As it happens, Mr. Amoss’s prophecy does indeed seem false.

* * * *

UPDATE AUGUST 27, 8:30 PM EDT: Other Canadian bank financials are now in. It seems that CIBC has posted results at least very vaguely similar to those some were predicting for BMO (although even here there appear to be no real hints of anything drastic). On other fronts TD Bank seems a case of glass half empty or half full. And Canada’s largest bank, the Royal, has apparently done rather well (“despite rise in loan loss provisions”).

See: “CIBC posts lower-than-expected profit” ; “TD Bank third-quarter profits fall to $912 million from $997 million a year ago” ; “TD beats profit expectations, ramps up lending” ; “Royal Q3 profits up 24 per cent at $562M despite rise in loan loss provisions.” What does it all mean finally? Of course you can never altogether tell.  But see “Banks help TSX close higher.” And  Canadian banks still appear to be in some kind of better shape than their brothers and sisters in the United States.  On the US scene this week see “Banks on Sick List Top 400 … Industry’s Health Slides as Bad Loans Pile Up; Deposit-Insurance Fund Shrinks.”

UPDATE AUGUST 25, 10 AM EDT: For another report on this morning’s surprise results see “Bank of Montreal profit up 6.9 percent.”

UPDATE AUGUST 24, 9PM EDT: Two further reports today were interesting enough:

(1) “Bank of Montreal Falls After Newsletter Predicts Dividend Cut … Bank of Montreal fell C$1.85, or 3.6 percent, to C$49.01, the biggest drop since May 27″  …

(2)  “Option bears eye Bank of Montreal puts before results … A number of option traders on Monday took a bearish stance on Bank of Montreal … a day before Canada’s fourth-largest bank was due to report quarterly results.”

UPDATE AUGUST 24, 12:45 PM EDT: Though the price has declined somewhat this morning, just as the Canadian Press is reporting: “Bank earnings expected to hit bottom in Q3 on commercial real estate loan losses.”

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