Where Bank of Montreal's Turning for Growth

On Wednesday, Bank of Montreal (NYSE: BMO  ) will release its latest quarterly results. With a solid reputation as a strong Canadian financial institution, the bank has benefited from superior conditions in the Canadian economy over the past several years, avoiding much of the trouble that U.S. banks suffered during the financial crisis in 2008.

Yet one thing that many investors don't realize about Bank of Montreal is that like its U.S. peers, it is far more than just a bank. With extensive other financial operations, the financial giant has exposure to investments and asset management as well. Let's take an early look at what's been happening with Bank of Montreal over the past quarter and what we're likely to see in its quarterly report.

Stats on Bank of Montreal

Analyst EPS Estimate

$1.50

Change From Year-Ago EPS

4.2%

Revenue Estimate

$3.97 billion

Change From Year-Ago Revenue

0.2%

Earnings Beats in Past 4 Quarters

4

Source: Yahoo! Finance.

What's driving Bank of Montreal higher?
Analysts have increased their views on Bank of Montreal's earnings prospects in recent months, boosting their estimates for the April quarter and for the full 2013 fiscal year by $0.04 to $0.05 per share. The stock hasn't responded much, however, remaining roughly unchanged since late February.

It's easy for U.S. investors to paint Canadian banks with a single brush-stroke, as the differences in the banking system helped keep Bank of Montreal and its peers safer during the financial crisis five years ago. As Canada's housing market has kept rising even after the housing bust south of its border, however, investors have gotten increasingly concerned about the potential health of its banks, especially the largest ones. With downgrades for Canadian Imperial Bank of Commerce (NYSE: CM  ) , Toronto-Dominion (NYSE: TD  ) , and Bank of Montreal among a total of six banks in January, Moody's identified higher debt levels among Canadian consumers as driving potential risk for the economy.

More recently, further economic headwinds could spell trouble for Bank of Montreal and its peers. The plunge in gold and other precious metals threaten the mining industry, which plays an important role in the Canadian economy. That's one area in which the bank's purchase of U.S.-based Marshall & Ilsley proved prescient, as it helped diversify Bank of Montreal's geographical exposure at what proved to be an opportune time.

But one area where Bank of Montreal is really focusing its efforts is on attracting investment customers. With a full line of mutual funds, the company's global asset management arm has more than $125 billion in assets under management, making up a substantial part of the overall company's $540 billion in assets. Moreover, the company has its BMO InvestorLine online brokerage, matching up favorably against Toronto-Dominion's TD Direct and National Bank of Canada's National Bank Direct Brokerage in a recent survey of investor satisfaction.

In Bank of Montreal's report, look for the company to give guidance about its potential credit exposure. Last month, the bank argued that the housing market remains stable, but if that starts to deteriorate, then investors might get spooked even if the actual impact on the bank is minimal. That could give opportunistic investors a good buying opportunity.

Many investors are scared about investing in big banking stocks after the crash, but the sector has one notable stand out. In a sea of mismanaged and dangerous peers, it stands out as The Only Big Bank Built To Last. You can uncover the top pick that Warren Buffett loves in The Motley Fool's new report. It's free, so click here to access it now.

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