(Reuters) -Canada’s Bank of Montreal (BMO) reported quarterly profit below analysts’ estimates on Tuesday, its sixth miss in a row, hurt by weakness in its U.S. retail segment and as the lender made bigger than expected provisions for potential bad loans.
A higher-for-longer interest rate environment has increased the risk of consumers and businesses falling behind on their loan repayments, nudging lenders to set aside more rainy-day funds.
Provision for credit losses jumped to C$906 million ($672.8 million) in the third quarter, from C$492 million a year earlier. Analysts were expecting C$734 million, according to LSEG data.
BMO purchased U.S. regional lender Bank of the West for $16.3 billion last year, giving it exposure to nearly 2 million customers, about 500 retail branches and commercial and wealth offices across the midwest and Western United States.
But BMO and other Canadian banks that have sought growth opportunities south of the border have faced many challenges in a competitive U.S. banking market, forcing them to spend more to retain deposits and boost loan growth.
BMO, Canada’s third-largest lender, said adjusted net income at its U.S. personal and commercial banking segment fell 7%, while earnings from its business at home rose 3%, helped by higher margins.
The bank’s adjusted net income fell to C$1.98 billion, a 7.8% decline from a year earlier.
BMO earned C$2.64 per share, compared with analysts’ expectation of C$2.76.
($1 = 1.3466 Canadian dollars)
(Reporting by Arasu Kannagi Basil in Bengaluru and Nivedita Balu in Toronto; Editing by Shilpi Majumdar and David Holmes)
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