At the start of each quarter, BMO assesses whether to enter into hedging transactions that are designed to partially offset the pre-tax effects of exchange rate fluctuations in the quarter on our expected U.S.-dollar-denominated net income for that quarter. As such, these activities partially mitigate the impact of exchange rate fluctuations, but only within that quarter.
The gain or loss from hedging transactions in future periods will be determined by both future currency fluctuations and the amount of any underlying future hedging transactions.
Q3 2013 vs Q3 2012
Net income was $1,137 million for the third quarter of 2013, up $167 million or 17% from a year ago. Earnings per share were $1.68, up 18% from $1.42 a year ago.
Adjusted net income was $1,136 million, up $123 million or 12% from a year ago. Adjusted earnings per share were $1.68, up 13% from $1.49 a year ago. Adjusted results and items excluded in determining adjusted results are disclosed in detail in the preceding Adjusted Net Income section and in the Non-GAAP Measures section, together with comments on the uses and limitations of such measures.
On an adjusted basis, revenues increased by more than expenses, with particularly strong growth in non-interest revenue, and provisions for credit losses declined. P&C Canada had good results, driven by higher balance and fee volumes across most products and lower provisions for credit losses, partially offset by the impact of lower net interest margin and increased expenses. PCG produced strong results, benefiting from higher Insurance net income as well as a 37% increase from the traditional wealth businesses due to growth in client assets and increased transaction volumes. BMO Capital Markets adjusted net income improved from a year ago, driven by good performance across our diversified businesses. Increases in trading revenue and equity underwriting, more than offset a decline in mergers and acquisitions and in interest-rate-sensitive businesses and higher employee costs. P&C U.S. results also increased due to the benefits of lower provisions for credit losses and reduced expenses, partially offset by lower revenues. Corporate Services adjusted results declined due to lower revenues and higher expenses and low taxes a year ago, partially offset by higher recoveries of credit losses.
Q3 2013 vs Q2 2013
Net income increased $162 million or 17% and earnings per share increased $0.26 or 18%. Adjusted net income increased $139 million or 14%, and adjusted earnings per share increased $0.22 or 15%.
Adjusted net income grew due to higher revenues and lower provisions for credit losses, partially offset by increased expenses. Net income growth was driven by strong growth in P&C Canada and PCG. P&C Canada adjusted net income increased due to higher revenues as a result of higher balance and fee volumes across most products and three extra days, and lower provisions for credit losses, partially offset by increased expenses. PCG overall results were significantly higher due to improved results in its Insurance business as well as 16% growth in its traditional wealth businesses. BMO Capital Markets results grew, as higher revenues more than offset higher expenses and increased provisions for credit losses. P&C U.S. adjusted net income declined due to reduced revenue, primarily due to a decline in net interest margin, partially offset by lower provisions for credit losses. Corporate Services adjusted results declined due to lower revenues and higher expenses and taxes, partially offset by higher recoveries of credit losses.
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