Bank of Montreal's quarterly profit rises on lower rainy day funds

Aug 26 (Reuters) - Bank of Montreal BMO.TO reported a rise in third-quarter profit on Tuesday, helped by higher income from interests and as it set aside less in its provisions for potential loan losses.

High interest rates and a potential trade war with the U.S. led banks to increase loss provisions. But they now expect tariffs to have a milder impact on the economy, easing concerns over credit defaults.

BMO's loan loss provisions came in at C$797 million ($576.83 million) during the third quarter, compared with C$906 million a year ago.

The bank's shares have gained 13% so far in 2025, outperforming peer Royal Bank of Canada, which is expected to report its third-quarter earnings on Wednesday.

BMO's quarterly net interest income — the difference between what banks make on loans and pay out on deposits — came in at C$5.5 billion, compared with C$4.79 billion a year earlier.

The Canadian bank reported a net income of C$2.33 billion, or C$3.14 per share, during the three months ended July 31. That compares with C$1.87 billion, or C$2.48 per share, a year earlier.

Separately, RBC and BMO have placed their Canadian payments joint venture up for sale, in a deal that may value the business as high as $2 billion, Reuters reported earlier in the month citing sources.

Peer Bank of Nova Scotia BNS.TO also reported a rise in third-quarter profit on Tuesday, helped by higher income from interests.

($1 = 1.3817 Canadian dollars)