Bank of Montreal's results from its capital markets division point to a tepid first quarter from Canada's securities business.
BMO is the first of the big Canadian banks to report results for the period ending Jan. 31, and its investment banking and trading unit managed to increase earnings from the weak fourth quarter. However, business didn't keep pace with activity in the first quarter of last year, and the firm is taking a restructuring charge as it cuts costs to deal with a slowdown in deals.
From the first quarter of last year, net income in capital markets fell $62-million, or 24 per cent, to $198-million. Investment and corporate banking revenue fell by 29 per cent to $259-million while trading revenue fell 14 per cent to $513-million.
With business looking slower for some time, BMO is trimming its ranks and said it is focused on expense control.
The capital markets business is cutting about 60 people out of a staff of about 2,300, so it's hardly a large swing of the axe. Still, BMO said it will take a charge of about $68-million, in all likelihood to cover severance payments to the people let go.
"While we are focusing on expense management, including executing on a restructuring to align BMO Capital Markets' cost structure with the current and future business environment, we remain committed to our North American platform in support of our strategy," the bank said in its earnings release.
The bank said that it is seeing some positive signs in deal activity, especially in its home market of Canada.