Bank of Montreal (BMO:CA) (BMO)
National Bank of Canada increased its 12 month target price on Bank of Montreal to C$181 from C$173, citing ongoing and broad-based improvements in the bank’s credit quality. The research firm noted that loan-loss provisions have been trending lower than previously expected, supported by healthier borrower performance across both personal and commercial lending portfolios. This improvement suggests that BMO’s credit cycle risks are easing, particularly in sectors that had shown early signs of stress, such as commercial real estate and small business lending.
National Bank highlighted that BMO’s disciplined underwriting practices, combined with a more stable macroeconomic backdrop, have contributed to lower impaired loan formations and reduced write-offs. The bank’s U.S. operations, especially its BMO Harris franchise continue to demonstrate resilience, with asset quality metrics strengthening as integration efforts from past acquisitions mature. Analysts also emphasized that BMO’s capital position remains solid, giving the bank more flexibility for dividend growth and potential share buybacks once regulatory conditions become more favorable. The increased valuation forecast reflects stronger confidence in BMO’s forward earnings trajectory, improved risk-adjusted returns, and the expectation that moderating credit costs will support profitability in the coming quarters.
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