This U.S. Expansion May Spur a Takeover

Article Excerpt

BANK OF MONTREAL $67 (Toronto symbol BMO; SI Rating: Above average) aims to double the size of its Harris Bank subsidiary in Chicago, to 400 branches over the next five years. Revenue at this division grew 8% in the first fiscal quarter ended January 31, 2006, partly due to acquisitions. But income rose 16%, as economies of scale let Harris cut its productivity ratio (non-interest expenses like salaries and overhead divided by revenue — the lower, the better) from 68.7% to 67.8%. Increasing Harris’ size could also turn this subsidiary into an attractive takeover target for larger U.S. banks. A strong U.S. operation also increases Bank of Montreal’s own takeover appeal. However, it’s unlikely that Ottawa will permit Canadian banks to merge anytime soon. We look on takeover possibilities as a bonus. But takeover or no, we see Bank of Montreal as a buy. buy…

You are trying to access subscriber-only content.

To read this article, you may subscribe or sign in.
If you are already a subscriber, log in here.

If you wish to become a subscriber, click here. Or you may enjoy access to all our publications when you become a Member of Pat McKeough's Inner Circle Pro.