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Bank of Montreal (NYSE: BMO) shows 29x cover on subordinated debt

Filing Impact
(Neutral)
Filing Sentiment
(Neutral)
Form Type
6-K

Rhea-AI Filing Summary

BANK OF MONTREAL (BMO) reports updated earnings coverage ratios for regulatory purposes under National Instrument 44-102 for the 12 months ended July 31, 2026 and October 31, 2025. Earnings before interest on subordinated indebtedness and income tax were $12,771.03 million for the 2026 period, supporting interest coverage on subordinated indebtedness of 29.36 times, up from 26.32 times for the prior 12‑month period. Interest and grossed up dividend coverage on subordinated indebtedness, Class B preferred shares and other equity instruments was 13.38 times for the 2026 period versus 12.70 times previously, based on total interest and grossed up dividend requirements of $954.70 million and $943.75 million, respectively. The ratios use foreign currency amounts translated to Canadian dollars at average monthly exchange rates of $1.3844 and $1.4029 per US$1.00 for the respective periods.

Positive

  • Interest coverage strengthened: Earnings before interest on subordinated debt and tax of $12,771.03 million for the 12 months ended July 31, 2026 covered subordinated interest 29.36 times, up from 26.32 times for the prior period, indicating higher capacity to meet subordinated debt obligations.
  • Total interest and dividend coverage improved: Earnings before interest on subordinated debt and income tax covered combined subordinated interest and grossed up dividends 13.38 times for the 12 months ended July 31, 2026, compared with 12.70 times for the 12 months ended October 31, 2025.

Negative

  • None.
Earnings before interest on subordinated indebtedness and income tax $12,771.03 million 12 months ended July 31, 2026
Earnings before interest on subordinated indebtedness and income tax $11,989.87 million 12 months ended October 31, 2025
Interest coverage on subordinated indebtedness 29.36 times 12 months ended July 31, 2026
Interest coverage on subordinated indebtedness 26.32 times 12 months ended October 31, 2025
Interest and grossed up dividend coverage 13.38 times Subordinated indebtedness and equity instruments, 12 months ended July 31, 2026
Interest and grossed up dividend coverage 12.70 times Subordinated indebtedness and equity instruments, 12 months ended October 31, 2025
Total interest and grossed up dividend requirements $954.70 million 12 months ended July 31, 2026
Average monthly exchange rate $1.3844 per US$1.00 12 months ended July 31, 2026, used for coverage calculations
earnings coverage ratios financial
"The following consolidated financial ratios for the Bank, are calculated"
subordinated indebtedness financial
"Interest coverage on subordinated indebtedness | | 29.36 times"
Debt that carries lower priority for repayment than other borrowings, meaning holders are paid only after higher‑priority creditors are made whole if the borrower runs into financial trouble; think of it as standing at the back of a queue at a checkout. It matters to investors because it usually carries higher interest to compensate for greater risk, affects how much creditors recover in default, and influences a borrower’s overall credit profile and cost of borrowing.
Grossed up dividend coverage financial
"Grossed up dividend coverage on Class B Preferred Shares"
National Instrument 44-102 – Shelf Distributions regulatory
"disclosed in accordance with Section 8.4 of National Instrument 44-102"
effective tax rate financial
"adjusted to a before-tax equivalent using an effective tax rate"
The effective tax rate is the percentage of a company's profits that it pays in taxes. It shows how much of its earnings go to taxes after all deductions and credits are considered. For investors, it indicates how much of the company's income is taken by taxes, impacting overall profitability and financial health.

FAQ

What earnings coverage ratios did BMO (BANK OF MONTREAL) report for July 31, 2026?
For the 12 months ended July 31, 2026, BMO reported interest coverage on subordinated indebtedness of 29.36 times, grossed up dividend coverage of 23.73 times, and combined interest and grossed up dividend coverage of 13.38 times, all calculated on a consolidated basis.

How did BMO’s earnings coverage on subordinated indebtedness change versus October 31, 2025?
BMO’s interest coverage on subordinated indebtedness increased from 26.32 times for the 12 months ended October 31, 2025 to 29.36 times for the 12 months ended July 31, 2026, based on earnings before interest on subordinated indebtedness and income tax.

What were BMO’s earnings before interest on subordinated indebtedness and income tax for the latest 12-month period?
For the 12 months ended July 31, 2026, BMO’s earnings before interest on subordinated indebtedness and income tax were $12,771.03 million, compared with $11,989.87 million for the 12 months ended October 31, 2025, as disclosed in the earnings coverage calculation.

What dividend requirements did BMO have on Class B preferred shares and other equity instruments?
For the 12 months ended July 31, 2026, BMO’s dividend requirements on all Class B preferred shares and other equity instruments were $519.77 million, adjusted to a before‑tax equivalent using an effective tax rate of 25.78%. For the prior 12‑month period, the amount was $488.22 million at a 24.45% rate.

What total interest and grossed up dividend requirements underpin BMO’s combined coverage ratio?
BMO’s interest requirements for subordinated indebtedness and grossed up dividends on preferred shares and other equity instruments were $954.70 million for the 12 months ended July 31, 2026 and $943.75 million for the 12 months ended October 31, 2025, forming the basis for the combined coverage ratios of 13.38 and 12.70 times.

What exchange rates did BMO use in calculating the earnings coverage ratios?
Foreign currency amounts were converted to Canadian dollars using average monthly exchange rates of $1.3844 per US$1.00 for the 12 months ended July 31, 2026 and $1.4029 per US$1.00 for the 12 months ended October 31, 2025.

AI-generated analysis. How Rhea-AI works. Not financial advice.

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Form 6-K: How Foreign Companies Report to the SEC →
 
 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 6-K

Report of Foreign Private Issuer

Pursuant to Rule 13a-16 or 15d-16

of the Securities Exchange Act of 1934

 

For the month of: August, 2026    Commission File Number: 001-13354

BANK OF MONTREAL

(Name of Registrant)

 

100 King Street West  
1 First Canadian Place   129 rue Saint-Jacques
Toronto, Ontario   Montreal, Quebec
Canada, M5X 1A1   Canada, H2Y 1L6
(Executive Offices)   (Head Office)

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F:

Form 20-F ☐   Form 40-F ☒

 

 

 
 

EXHIBIT INDEX

 

Exhibit    Description of Exhibit
99.1    Earnings Coverage Ratio

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

    BANK OF MONTREAL
    By:  

/s/ Rahul Nalgirkar

    Name:   Rahul Nalgirkar
    Title:   Chief Financial Officer
Date: August 25, 2026     By:  

/s/ Pascale Elharrar

    Name:   Pascale Elharrar
    Title:   Corporate Secretary

Exhibit 99.1

BANK OF MONTREAL

EXHIBIT TO FINANCIAL STATEMENTS FOR THE QUARTER ENDED

JULY 31, 2026

EARNINGS COVERAGE RATIOS

The information in this document is disclosed in accordance with Section 8.4 of National Instrument 44-102 – Shelf Distributions.

The following consolidated financial ratios for the Bank, are calculated for the 12 months ended July 31, 2026 and October 31, 2025.

 

     12 Months Ended
July 31, 2026
Actual		    12 Months Ended
October 31, 2025
Actual
Interest coverage on subordinated indebtedness    29.36 times    26.32 times
Grossed up dividend coverage on Class B Preferred Shares and other equity instruments(1)    23.73 times    23.63 times
Interest and grossed up dividend coverage on subordinated indebtedness, Class B Preferred Shares and other equity instruments    13.38 times    12.70 times

Note:

 

(1)

As at July 31, 2026 and October 31, 2025, there were no Class A Preferred Shares outstanding.

In calculating the earnings coverage ratios, foreign currency amounts have been converted to Canadian dollars using rates of exchange as at the end of each month. For the 12 month periods ending July 31, 2026 and October 31, 2025 the average monthly exchange rates were $1.3844 per US$1.00 and $1.4029 per US$1.00, respectively.

The Bank’s earnings before interest on subordinated indebtedness and income tax for the 12 months ended July 31, 2026 were $12,771.03 million, which is 29.36 times the Bank’s aggregate interest on subordinated indebtedness requirement for this period. The Bank’s earnings before interest on subordinated indebtedness and income tax for the 12 months ended October 31, 2025 were $11,989.87 million, which is 26.32 times the Bank’s aggregate interest on subordinated indebtedness requirement for this period.

The Bank’s dividend requirements on all of its Class B preferred shares and other equity instruments were $519.77 million for the 12 months ended July 31, 2026, adjusted to a before-tax equivalent using an effective tax rate of 25.78% and for the 12 months ended October 31, 2025 were $488.22 million, adjusted to a before-tax equivalent using an effective tax rate of 24.45%. The Bank’s earnings before income tax for the 12 months ended July 31, 2026 were $12,336.10 million, which is 23.73 times the Bank’s aggregate dividend and interest requirements for this period. The Bank’s earnings before income tax for the 12 months ended October 31, 2025 were $11,534.34 million, which is 23.63 times the Bank’s aggregate dividend and interest requirements for this period.

The Bank’s interest requirements for its subordinated indebtedness and grossed up dividends on its preferred shares and other equity instruments for the 12 months ended July 31, 2026 were $954.70 million and for the 12 months ended October 31, 2025 were $943.75 million. The Bank’s earnings before interest on subordinated indebtedness and income tax for the 12 months ended July 31, 2026 were $12,771.03 million, which is 13.38 times the Bank’s aggregate dividend and interest requirements for this period. The Bank’s earnings before interest on subordinated indebtedness and income tax for the 12 months ended October 31, 2025 were $11,989.87 million, which is 12.70 times the Bank’s aggregate dividend and interest requirements for this period.

The amounts and ratios reported above are derived from information in the unaudited interim consolidated financial statements for the three and nine months ended July 31, 2026 and the audited consolidated financial statements for the year ended October 31, 2025.

Source: View Original Filing on SEC EDGAR

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