Thank you
BMO EPS of $3.23 beat estimates of $2.96; revenue of $8.98B beat estimates of $8.90B. Bank of Montreal advanced toward a 15% midterm ROE, reaching 12% in fiscal 3Q, with loan growth and credit-quality normalization as anchors of sustained improvement. Trade and economic uncertainty could limit expansion, as US loans moderated even as Canadian consumers remained resilient. Net interest income might hold, consistent with guidance for stable all-bank net interest margin in 4Q, and expectations for limited loan growth. Capital Markets and Wealth help, but remain variable. The bank is on track for positive operating leverage in 2025. Impaired provisions could hold in 4Q, leading to 2025 credit provisions of a high-40-bp targeted ratio. Despite positive 3Q trend, performing reserves could fluctuate. Consensus 25% 2026 provisions decline remain key for earnings expansion. But overall a good quarter.
BNS EPS of $1.88 beat estimates of $1.73; revenue of $9.48B beat estimates of $9.31B. Scotiabank's better-than-expected 3Q results, including lower provisions than cautioned, put it on track to reach a 5-7% 2025 EPS goal. The bank expects growth in 2026, linked to efficiency progress. It signaled the potential return of operating leverage next year, yet economic caution leaves investors reserved on revenue growth, with consensus implying flat operating leverage. The Canadian unit shows improvement with efficiency potential, as international business made transition progress. Canadian net interest margin could improve slightly. Wealth and Capital Markets are robust, but could be variable ahead. The bank could have better-than-expected 2H impaired provisions at or over 2Q's 57 bps, as it delivered a 3Q ratio decline. It is cautious on provision levels as macro trends remain uncertain. All-in, this was one of the best quarters from BNS in some time.
Of the two, today, we would side with BNS. RY is a 'safer' bank but we are comfortable with BNS and TD as well.