BMO announced its earnings yesterday. Among the mortgage-related highlights…
BMO’s net interest margins were up quite a bit last quarter. Part of that was due to securitizing low-margin mortgages, part was due to “deposits outpacing loan growth,” and part due to “favourable prime rates relative to BA rates.”
That last point suggests BMO has been making ample spreads on their variable-rate mortgages. It also hints that BMO’s variable rate premiums can still be easily reduced further.
BMO’s Readiline LOC product is their baby. BMO said Readiline is “driving” loan growth, which rose 15% YOY.
BMO mentioned in its earnings report that its stated income mortgages are “no longer in use.” (This isn’t really news to BMO followers but it may be of interest to competitors who don’t know.)
BMO’s market share in mortgages continues to slide. In this most recent quarter, BMO’s share dropped 0.86% from a year ago. Its decision to stop lending through the broker channel has been the root of the problem.To this effect, company spokesperson, Ralph Marranca, says:
“One of the primary reasons for exiting the mortgage broker channel was that our customers were confused about BMO products being in the market at different prices. This was not consistent with our Brand Promise of making money make sense for our customers. We understood and expected that market share declines would follow in the short term but our spreads have been improving, we continue to invest in our proprietary sales force and expect higher mortgage growth in the future.”