BMO Q3 2026 Deep Dive: One Charge, Two Earnings Stories
In the same eight-quarter table, BMO Q3 2026 is both the worst reported quarter and the best adjusted quarter of the past two years. Reported diluted EPS of $2.38 is the lowest of the eight; adjusted diluted EPS of $3.96 is the highest (Q3 2026 Report to Shareholders, Table 19, p.28–29). One quarter, two numbers, roughly $1.1 billion of distance between them.
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The numbers
For the three months ended July 31, 2026, BMO reported revenue of $9,896 million, net income of $1,750 million (down 25% from $2,330 million), reported EPS of $2.38, down 24% from $3.14, and reported ROE of 8.4% against 11.6% a year earlier (Q3 2026 earnings release). On an adjusted basis: net income $2,859 million, up 19%; adjusted EPS $3.96, up 22%; adjusted ROE 14.0% against 12.0%.
The bridge between the two is disclosed and specific. Adjusting items reduced net income by $1,109 million in the quarter, against $69 million a year ago (release). The bulk is a $962 million after-tax ($1,092 million pre-tax) charge, primarily related to goodwill, tied to the announced sale of BMO’s Transportation Finance and Vendor Finance businesses, a transaction announced May 11, 2026 covering portfolios of roughly US$9.2 billion (CAD$12.9 billion) and CAD$1.7 billion as at July 31, 2026, expected to close in the fourth quarter of fiscal 2026 (Report to Shareholders, p.1–2).
One correction to how this quarter is being described elsewhere: the earnings decline was not a credit event. Provisions for credit losses were $722 million, down from $797 million a year earlier. Total PCL as a percentage of average net loans and acceptances was 41 basis points against 47, and the ratio on impaired loans 41 basis points against 45 (Report to Shareholders, credit risk section). The total allowance for credit losses was $6,030 million, up from $5,739 million at October 31, 2025, split $4,762 million on performing loans and $1,268 million on impaired (p.30). CEO Darryl White’s own summary is three words: “Credit performance improved” (release, p.1). The goodwill charge is what moved the reported line.
Revenue held. The eight-quarter series runs $8,957M, $9,266M, $8,679M, $8,988M, $9,341M, $9,824M, $9,567M, $9,896M from Q4/24 to Q3/26 (Table 19). This quarter is the highest of the eight and about 10% above the year-ago period.
Segments, reported: Canadian P&C $980 million (+16%); U.S. Banking $868 million (+13%); Wealth Management $408 million (+4%, though adjusted Wealth was $480 million, +22%); Capital Markets $645 million (+46%). Corporate Services carried the charge, at a reported net loss of $1,151 million against $120 million a year ago, with an adjusted net loss of $178 million (release). CET1 was 13.0%, unchanged from the prior quarter and down from 13.5% a year ago (p.17). The dividend is $1.71 per share, unchanged sequentially and up $0.08 or 5% year over year, payable November 26, 2026 to holders of record October 30, 2026.
BMO Financial: revenue by quarter, as reported by the company. Source: the bank’s own supplementary financial information.
What it means
The discipline here is holding two things apart. The franchise (what the operating businesses earned from customers) grew: four segments up, revenue at an eight-quarter high, credit ratios better than last year, and White stating that “every business segment delivered record pre-provision pre-tax earnings” (release, p.1). The charge is a balance-sheet consequence of a decision to exit two businesses, recognized when the assets met the held-for-sale test. It is real in the accounting sense, but it does not recur and it does not describe the earning power of what remains.
That gap is why the headline EPS number, read alone, sends a reader in exactly the wrong direction. A 24% decline in reported earnings reads like deterioration. What actually happened is a bank writing down goodwill on a business it chose to sell, in the same quarter its operating segments all grew and its credit metrics improved.
BMO frames the exits in capital terms: on closing, the divestitures “are expected to add approximately 50 basis points to the bank’s CET1 ratio,” and the bank states that on a combined basis “these businesses contributed approximately 2% and 1% to the bank’s reported and adjusted revenue and expenses, respectively, and 5% to the bank’s net income on a reported basis and 3% on an adjusted basis in the current quarter” (Report to Shareholders, p.2). The Moneris sale agreed August 10, 2026 is expected to produce a gain of roughly $620 million pre-tax ($600 million after-tax) on closing, expected by the end of the first quarter of fiscal 2027 (p.2). That is a mirror-image adjusting item pointing the other way.
We are not going to speculate about which number the market is weighting; we have no pricing data here and would only be guessing. What the filing does show is that over nine months the two versions diverge far less: reported EPS of $9.30 is up 10% with reported ROE of 11.1% against 10.5%, while adjusted EPS of $11.11 is up 25% with adjusted ROE of 13.3% against 11.1% (release). Both point the same direction.
The risk
Adjusted results are management’s framing, with no accounting standard behind them. A bank that books a large adjusting item in one quarter and expects another of the opposite sign two quarters later is asking investors to look through a lot. The check is whether the pattern ends: if adjusting items keep appearing, “adjusted” stops being a cleaner view and becomes a habit. Beyond that, Capital Markets at +46% is the most cyclical contributor in the mix, CET1 sits 50 basis points below where it was a year ago before any divestiture benefit, and one quarter of better credit ratios is a data point, not a trend.
The Big Six, same quarter, side by side
| Bank | Revenue (CAD millions) | Diluted EPS | Return on equity |
|---|---|---|---|
| Royal Bank | 18,538 | $4.23 | 17.9% |
| TD Bank Group | 16,885 | $2.74 | 15.8% |
| Scotiabank | 10,535 | $2.27 | 14.1% |
| BMO Financial | 9,896 | $2.38 | 8.4% |
| CIBC | 8,368 | $2.47 | 15.2% |
| National Bank | 4,053 | $3.25 | 16.1% |
Every figure above is taken from that bank’s own Q3 2026 earnings release, supplementary pack or report to shareholders, not from an aggregator. Revenue and EPS are as reported. BMO’s ROE reflects a $962M goodwill charge, which the bank reports as an adjusting item; its adjusted ROE was 14.0%.
What to watch
Fourth-quarter and full-year results cover the three months ending October 31, 2026; BMO did not state a reporting date in the documents we reviewed, so confirm it on the BMO investor relations page. Two things decide the read: whether the Transportation and Vendor Finance sale closes in Q4 as expected and CET1 moves toward that ~50 basis point benefit, and whether reported and adjusted EPS converge once the charge is behind the bank. A Q4 in which the two sit close together settles the argument faster than any commentary.
This piece is the factual read of the quarter, not a rating. Our separate BMO investment view is published on its own. For the peer comparison, see our Canadian bank stocks overview and our Canadian dividend stocks coverage.
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The rest of the Big Six this quarter: Royal Bank, TD Bank Group, Scotiabank, CIBC, National Bank. Our separate investment position on BMO (a hold) is set out in our BMO analysis.
Disclaimer: The content on bestcanadianstocks.ca is for informational and entertainment purposes only and does not constitute financial advice. Past performance is not indicative of future results. Always consult a qualified financial advisor before making investment decisions. Bank figures from each company’s Q3 2026 supplementary pack.
