BMO is the fourth largest bank in Canada and the eighth in North America.
They have solid growth prospects and an attractive yield.
The bank is trading around fair valuation, but doesn't stack up to its peers.
I recently did articles on the 3 biggest banks in Canada, The Bank of Nova Scotia (NYSE:
The Bank of Montreal (NYSE:
They currently carry an 11.2% Tier I Capital, the best of all the big 5 Canadian banks, the closest being the Canadian Imperial Bank of Commerce (NYSE:
Like RY and TD, BMO derives their income primarily from Canada and the United States. Within those countries, approximately 2/3 is in personal and commercial banking, with the rest coming from their wealth management and capital markets divisions. I will look into their growth prospects in these markets more closely later in the article.
Loans/assets and loans/deposits are 2 ratios that an investor can use when analyzing a bank to determine how conservative they are. A higher ratio on either one shows that the bank is willing to loan out a higher amount in comparison to their deposits on hand and total assets. While it's obvious that this ratio can be too high, it can also be too low, showing a bank is not carrying enough loans to drive further earnings. The standard benchmark I have seen is a loan/deposit ratio of ~80-90%. Anything too much lower than that may show a bank is having issues driving loan growth to keep up with their deposits. As we can see above, BMO falls right into the middle of all the big banks, including Wells Fargo (NYSE: