When comparing two of Canada’s banking giants—Bank of Montreal (TSX:BMO) and National Bank of Canada (TSX:NA)—investors have plenty to weigh. With both institutions recently releasing their first-quarter 2025 earnings, their latest performance and future outlook are now clearer. But which one stands out as the better investment right now? Let’s break it down.
Earnings Performance
BMO posted a strong net income of $2.14 billion for the quarter ending January 31, 2025, a significant jump from $1.29 billion in the same period last year. This equates to earnings per share (EPS) of $2.83, up from $1.73 year over year. On an adjusted basis, which excludes certain one-time items, net income reached $2.29 billion, with adjusted EPS rising to $3.04 from $2.56.
National Bank also delivered solid results, reporting a net income of $997 million for the quarter, an 8% increase from $922 million the previous year. Diluted EPS came in at $2.78, up from $2.59, while adjusted net income climbed to $1.05 billion, with adjusted EPS increasing 13% to $2.93.
Business Growth
BMO’s quarterly revenue surged 21% year over year to $9.27 billion, fueled by higher net interest income and non-interest revenue across all segments. Strong performances from BMO Capital Markets and BMO Wealth Management were key contributors.
National Bank also experienced notable growth, with revenue reaching $3.18 billion, up from $2.71 billion a year ago. Its Wealth Management division stood out, posting net income of $242 million—a 23% increase. Additionally, the Financial Markets segment saw net income jump 35% to $417 million.
Risk Management
Both banks are taking a cautious approach by setting aside reserves for potential loan defaults. BMO’s provisions for credit losses (PCL) climbed to $1.01 billion, up from $627 million the previous year. Meanwhile, National Bank’s PCL rose to $254 million from $120 million year over year.
Return on equity (ROE), a key measure of profitability, also showed divergence. BMO’s ROE improved to 10.6% from 7.2% last year, with an adjusted ROE of 11.3%. National Bank, while slightly down from 17.1% last year, still delivered a strong ROE of 16.7%, signaling continued efficiency.
Valuation and Dividends
For income-focused investors, dividends are an important consideration. BMO maintained its quarterly dividend at $1.59 per share, translating to an annual payout of $6.36. National Bank declared a dividend of $1.14 per share, ensuring both stocks provide steady income potential.
From a valuation standpoint, BMO’s market capitalization stood at approximately $108.41 billion at the time of writing, with a trailing price-to-earnings (P/E) ratio of 13.90. National Bank, with a market cap of $47.06 billion, trades at a lower P/E ratio of 10.91, which could appeal to value-conscious investors.
Additionally, National Bank’s recent acquisition of Canadian Western Bank strengthens its expansion efforts nationwide. Meanwhile, BMO continues to grow its presence in both Canadian and U.S. markets, leveraging its diverse business model to sustain growth.
The Verdict
Both BMO and National Bank delivered impressive first-quarter results. BMO’s higher earnings and larger market presence reflect its broad operational scope, while National Bank’s strong ROE and lower valuation suggest efficiency and potential upside. Moreover, its recent acquisition could drive further growth. Ultimately, investors should consider their own strategies and risk tolerance when choosing between these two well-positioned bank stocks. Either way, both remain solid investment options on the TSX today.
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