08:46 AM EDT, 05/29/2024 (MT Newswires) -- Bank of Montreal's ( NRGD ) (BMO.TO, BMO) Q2 results have a negative impact on the outlook, CIBC Capital Markets analyst Paul Holden said on Wednesday.

Holden said BMO reported a 6% EPS miss relative to consensus, before market open on Wednesday.

"The miss was driven by higher impaired provisions for credit losses (PCLs)," the analyst said in a note to clients.

"Credit losses worse than expected: The total PCL ratio of 44 basis points (bps) increased 3bps sequentially and was higher than consensus at 36bps and our forecast of 38bps," Holden said. "Impaired came in at 41bps, up from 29bps last quarter."

"Performing PCLs of 3bps decreased 6bps quarter over quarter," the analyst said. "The largest jump in impaired came in business loans, particularly in the US."

Holden maintained a Neutral rating and $120 price target on BMO shares.

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