BMO Stock Forecast & Price Target

Bank of Montreal (BMO) demonstrated positive momentum in its core lending net interest margin (NIM), with an increase to 1.85% for the all-bank NIM and 2.84% for Canadian personal and commercial banking. The bank's capital optimization strategy has also yielded a strong excess capital position, allowing for a potential share buyback of approximately 4%, which is expected to contribute to robust earnings per share (EPS) growth of 14% in fiscal 2026 and 10% in fiscal 2027. Furthermore, early signs of improvement in commercial lending coupled with strong performance across its business segments strengthen BMO's financial outlook.

The Bank of Montreal's net interest margin (NIM) for personal and commercial banking remained stagnant at 3.90% quarter-over-quarter, indicating pressure on profitability margins. Additionally, total provisions for credit losses (PCLs) amounted to $797 million, which was below both internal estimates and consensus expectations, potentially reflecting concerns over credit quality and lending risk. Despite reporting a core cash EPS growth of 22% year-over-year, the slower-than-expected improvement in key financial metrics raises concerns about future performance sustainability.