Wires

UPDATE 2-Bank of Montreal profit beats on retail banking strength

Nichola Saminather and C Nivedita

(Adds details of earnings throughout)

Dec 3 (Reuters) - Bank of Montreal beat analyst estimates for quarterly profit on Tuesday, helped by strength in its retail banking and wealth management businesses despite rising credit loss provisions.

Adjusted income excluding one-off items rose to C$1.6 billion ($1.20 billion), or C$2.43 per share, from C$1.5 billion, or C$2.32 a year earlier. Analysts had expected C$2.41 per share, according to IBES data from Refinitiv.

Despite global economic weakness and elevated household debt levels, Canada's big five banks' stranglehold on consumer and business lending at home has helped them grow earnings in their retail divisions. Those operating in the United States, including BMO, are also benefitting from healthy household finances in a less concentrated market, albeit with some pressure on margins.

Adjusted net income rose 6.1% in Bank of Montreal's personal and commercial business in Canada, driven by growth in commercial loans. Profit from the U.S. business rose 5.5%, despite a 11-basis-point drop in net interest margins.

The wealth management division's 31% increase in adjusted earnings also helped offset a 9.4% drop in profit from its capital markets business.

Despite the better-than-expected result, Credit Suisse analysts expressed concern about an unsustainable 16% growth in commercial loans in Canada, margin compression in the U.S. and the likelihood that a 4-basis-point margin expansion in Canada will begin to reverse as commercial loan growth slows.

BMO's reported net income fell nearly 30% to C$1.19 billion, or C$1.78 per share, in the fourth quarter, hit by a restructuring charge of C$357 million related to severance and real estate costs. https://reut.rs/2DI7ge5

The bank set aside C$253 million for credit losses in the quarter ended Oct. 31, up 45% from a year earlier.

It also increased its quarterly dividend to C$1.06 from C$1.03. ($1 = 1.3301 Canadian dollars) (Reporting by C Nivedita in Bengaluru; Editing by Maju Samuel and Chizu Nomiyama)