Summary Quarterly Earnings Trends (Cont'd.)
BMO's quarterly earnings trends were reviewed in detail on pages 96 and 97 of BMO's 2012 annual MD&A. Readers are encouraged to refer to that review for a more complete discussion of trends and factors affecting past quarterly results including the modest impact of seasonal variations in results. Table 13 outlines summary results for the third quarter of fiscal 2011 through the second quarter of fiscal 2013.
Periodically, certain business lines and units within the business lines are transferred between client operating groups to more closely align BMO's organizational structure with its strategic priorities. Comparative figures have been restated to conform to the current presentation. In the first quarter of fiscal 2013, we commenced charging provisions for credit losses to the bank's operating groups based on actual credit losses incurred. Previously we had charged the groups with credit losses based on an expected loss provisioning methodology. Prior period results have been restated accordingly.
We have remained focused on embracing a culture that places the customer at the centre of everything we do. Economic conditions were at times challenging for some of our businesses in 2011 and 2012, but conditions have improved overall and quarterly adjusted results have generally trended higher over the past two years. In recent quarters, we have become more focused on improving our productivity.
P&C Canada volume growth remains strong across most products in both personal and commercial segments. Net income has generally trended higher. Excluding the effect of three fewer days in the most recent quarter, revenue grew moderately and expenses were lower than in the preceding quarter, with the continuing effects of good volume growth partially offset by the ongoing impact of net interest margin pressure in the low interest rate environment.
P&C U.S. results started to improve significantly late in the third quarter of 2011, due to the benefits of the M&I acquisition as well as increases in commercial loan balances, which had seen minimal growth since the economic downturn that started in 2007. P&C U.S. had very strong results in the first quarter of 2013. Net income has generally been stable to improving with good core commercial and industrial loan growth and lower expenses. Net interest margin has been declining, as expected.
PCG operating results have been strong in recent quarters. Quarterly results in PCG, excluding Insurance, have grown on a relatively consistent basis, driven by growth in client assets and a continued focus on productivity. Quarterly results in Insurance have been subject to variability.
BMO Capital Markets results in the first nine months of 2012 were good, but results in the final quarter of 2012 were stronger, due to increased revenues and a recovery of prior periods' income taxes. Strong results continued in the first two quarters of 2013, with very strong results in the first quarter in investment banking revenue, primarily merger and acquisition fees.
BMO's overall provisions for credit losses measured as a percentage of loans and acceptances continued to trend lower in recent quarters relative to 2012 and 2011. Adjusted provisions, which exclude provisions on the M&I purchased performing loan portfolio and changes in the collective allowance, were relatively consistent throughout 2012 and into the second quarter of 2013 and lower than in 2011, primarily due to recoveries of provisions on the M&I purchased credit impaired loan portfolio and an improvement in the U.S. credit environment.
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