Bank of Montreal May Decline; Barrick Gold, Potash May Retreat

By John Kipphoff

Aug. 26 (Bloomberg) -- Bank of Montreal may fall, based on bids on the Toronto Stock Exchange, after posting third-quarter profit that missed analysts' estimates, because of higher-than- expected loan losses.

Bank of Montreal, the first Canadian bank to report earnings for the period ended in July, was downgraded to ``sell'' by Dundee Securities Corp. analyst John Aiken in Toronto, who called the results ``disappointing.''

Barrick Gold Corp. and Potash Corp. of Saskatchewan Inc. may slide, bids indicated, as metals and grain prices decline.

Standard & Poor's/TSX Composite Index fell 1.2 percent to 13,288.96 yesterday in Toronto. Canada's equity benchmark, which derives three-quarters of its value from financial, materials and energy stocks, has slid 12 percent from its June 18 peak after commodity prices slumped on concern lenders' credit losses will slow global growth and demand for resources.

Bank of Montreal may fall 31 cents to C$43.75, according bids already submitted in Toronto. Canada's fourth-largest lender by assets said third-quarter profit fell 21 percent to C$521 million ($494.5 million), or 98 cents a share, from C$660 million. Excluding one-time items, profit was C$1 a share, Bank of Montreal said. That missed the median estimate of C$1.20 a share from 12 analysts in a Bloomberg survey.

Bank of Montreal set aside C$484 million for bad loans, five times more than a year ago, including C$247 million for two corporate loans linked to the U.S. housing market. Canada's six biggest banks will probably report the worst earnings drop in more than five years on rising costs to cover bad loans and a slowdown in investment-banking revenue, Andre-Philippe Hardy at RBC Capital Markets said in a report last week.

Biggest Bank

Royal Bank of Canada may decline 39 cents to C$44.75, bids suggested. The nation's biggest bank is scheduled to report results on Aug. 28.

Bank of Nova Scotia, which reports later today, was indicating 13 cents higher at C$47.64. Canada's third-biggest bank may report third-quarter profit of C$1.03 a share before one-time items, the average estimate of five analysts polled by Bloomberg.

Barrick Gold, the largest bullion mining company, may fall 58 cents to C$35.50, based on bids. Potash Corp., the biggest maker of crop nutrients by market value, may slip C$1.10 to C$185.

Gold declined in London for a third day as the U.S. dollar strengthened, diminishing demand for the precious metal and other commodities as an alternative investment. Copper and wheat prices retreated also.

U.S. stock-index futures declined, led by mining companies, as a retreat in metal prices overshadowed a private report that signaled the housing slump may be starting to stabilize.

To contact the reporter on this story: John Kipphoff in Montreal at jkipphoff@bloomberg.net.