Bank of Montreal’s drive to cut expenses comes at a cost: 810 jobs and $357-million charge
|National Post 03 Dec 2019 at 09:46|
The lender took the charge, which was $484 million before taxes, mostly for severance payments as it eliminated 810 full-time positions, or 1.7 per cent of its workforce, in the fiscal fourth quarter.
Chief Executive Officer Darryl White cited a “clear bank-wide focus on disciplined expense management” while announcing earnings that beat analysts’ expectations. The Toronto-based bank has “a number of initiatives under way, including today’s announcement of a restructuring charge, that will serve to accelerate our momentum and help us meet our efficiency objectives over the long-term,” he said in a statement Tuesday.
“It is difficult for us to credit good expense control in the face of yet another restructuring charge from this bank, this time approaching $500 million,” CIBC Capital Markets analyst Robert Sedran said in a note to clients. “However, the underlying segment performance was solid with improving volume growth, positive operating leverage and stable credit quality. A decent result.”
The job cuts were mostly in Canada and are the deepest since the last large round of reductions in May 2016, when it announced a 4 per cent cut to its workforce, amounting to about 1,850 jobs. The bank had 45,513 employees as of the end of October, down from 46,323 at the end of July. The latest move comes about six months after the bank eliminated about 100 jobs across its capital-markets division.
The restructuring costs contributed to a 30 per cent decline in net income in the quarter, with the bank posting earnings of $1.19 billion, or $1.78 a share. Adjusted per-share earnings were $2.43, beating the $2.41 average estimate of 14 analysts in a Bloomberg survey. The bank raised its quarterly dividend 2.9 per cent to $1.06 a share.
Wealth management led profit growth in the quarter, with a 22 per cent increase in earnings from the year earlier, while Canadian and U.S. banking also gained. Earnings from the company’s BMO Capital Markets unit fell 9.7 per cent amid a tougher year for dealmaking.
Also in the earnings announcement:
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