TORONTO - The Bank of Montreal (TSX:BMO) is raising its dividend for the first time in five years as it reported Tuesday that third-quarter net income grew by 37 per cent.
BMO said its dividend will be boosted by two cents to 72 cents per share, marking the first increase since 2007.
In the quarter, the bank posted net income of $970 million or $1.42 per share, up from $708 million, or $1.09 per share, a year earlier.
On an adjusted basis, earnings were $1.01 billion, or $1.49 per share, beating analyst expectations by 10 cents a share, according to a survey by Thomson Reuters.
Adjusted results factored in the acquisition of U.S. bank Marshall & Ilsley Corp. last year.
"Our business continues to deliver consistent and attractive profitability within a sound risk framework and the growth we are experiencing remains consistent with our strategy," said president and CEO Bill Downe in a release.
"We increased the dividend, reflecting our strong capital position and our confidence in our continued ability to generate sustained earnings growth."
Revenue increased to $3.88 billion from $3.32 billion.
Shares of the bank rose 93 cents in early trading to $58.63 on the Toronto Stock Exchange.
In its Canadian retail banking operations, the company reported net income rose 2.4 per cent to $453 million, an increase of $10 million.
In the U.S., personal and commercial banking profits grew 43 per cent to US$129 million, including the acqusition of Marshall & Ilsley.
The capital markets division reported a 14 per cent decline in net income to $232 million from a year ago, though it rose 2.9 per cent from the previous quarter.
Barclays analyst John Aiken said the results were a positive surprise.
"The dividend increase had not necessarily been anticipated and the bank was able to show some strong sequential growth in its U.S. platform," he wrote in a note.
Earlier this year, Downe highlighted the bank's continuing plans to lower costs across its operations as part of a long-term review that examines all of its businesses.
In June, the bank announced plans to close 24 of its U.S. BMO Harris bank branches in the U.S. Midwest in an effort to scale back on overlapping branches after the acquisition of a Milwaukee-based rival.
Bank of Montreal has more than 46,000 employees across its North American operations, which include retail banking, wealth management and investment banking, as well as the Chicago-based Harris Bank subsidiary.
What Canada's Bank CEOs Earned Last Year
6. Louis Vachon, National - $7.5 Mln
<strong>Profit per dollar earned by the CEO: $162.27</strong> National Bank's Louis Vachon took home $7.5 million, the lowest total of any of the six major banks, but the most in terms of the bank's net income.
5. Gerry McCaughey, CIBC - $9.5 Million
<strong>Profit per dollar earned by the CEO: $326.32</strong> Gerry McCaughey's total compensation grew 12 per cent, to $9.5 million, in 2011. Source: <a href="https://www.cibc.com/ca/pdf/investor/proxy2012.pdf" target="_hplink">CIBC Management Proxy Circular</a>
4. Bill Downe, BMO - $9.9 Million
<strong>Profit per dollar earned by the CEO: $330.81</strong> Bill Downe's total compensation for 2011 was up 4.2 per cent from his 2010 pay of $9.5 million. Source: <a href="http://ca.reuters.com/article/businessNews/idCATRE81Q1W320120227" target="_hplink">Reuters</a>
3. Gordon Nixon, RBC - $10.1 Million
<strong>Profit per dollar earned by the CEO: $480.40</strong> Gordon Nixon's total compensation fell 8 per cent in 2011, to $11 million. Source: <a href="http://www.rbc.com/newsroom/2012/0206-proxy.html" target="_hplink">RBC Management Proxy Circular</a>
2. Rick Waugh, Scotiabank - $10.6 Mln
<strong>Profit per dollar earned by the CEO: $501.71</strong> Waugh's total earnings for 2011, at $10.6 million, were down slightly from the $10.66 million he earned in 2010. Source: <a href="http://www.thestar.com/business/article/1137400--scotiabank-ceo-s-pay-down-slightly-from-2010" target="_hplink">Toronto Star</a>
1. Ed Clark, TD Bank - $11.3 Million
<strong>Profit per dollar earned by the CEO: $517.45</strong> Ed Clark's total compensation for 2011 was meant to be around $12 million, but the bank's board scaled it back to $11.3 million -- roughly the same as in 2010. Source: <a href="http://www.thestar.com/business/article/1135817--td-bank-ceo-ed-clark-s-pay-down-to-11-3-million-in-2011" target="_hplink">Toronto Star</a>