(Reuters) – Bank of Montreal reported a fall in its fourth-quarter profit on Friday, as higher provisions for potential credit defaults offset gains from a rise in its interest income.
The lender built up its provisions for credit losses (PCLs) as gloomy economic conditions prompted caution. PCLs at the bank surged to C$446 million, from C$226 million a year earlier.
Canada has been on the brink of slipping into a recession, underscoring the impact of the Bank of Canada’s aggressive rate hikes on its economy.
However, the hikes have allowed banks to charge higher rates and boost their net interest income – the difference between what banks earn on loans and pay out on deposits.
Bank of Montreal reported a quarterly net income of C$1.62 billion ($1.20 billion), or C$2.06 per share, compared with C$4.48 billion, or C$6.51 per share, a year earlier.
Net interest income at the lender rose 31% to C$4.94 billion in the quarter from a year earlier.
($1 = 1.3527 Canadian dollars)
(Reporting by Jaiveer Singh Shekhawat in Bengaluru; Editing by Pooja Desai)
