Bank of Montreal has increased its offering linked to the Solactive Canada AR 30 Index in a shift towards the dividend underlying sector during the first quarter of 2021.

SRP data shows that the majority of structured products issued during the period of 1 November 2020-31 January 2021 (Q1 21) by BMO offered exposure to multiple Solactive underlyings, including the Canada Pipelines AR Index, Canada Insurance AR Index, and MicroSectors US Big Banks 2.5% AR Index, in addition to the Canada AR 30 index.

This can be compared with the previous year in which National Bank of Canada, Bank of Nova Scotia, CIBC, and Royal Bank of Canada ranked as top underlyings with the banking sector proving its dominance during the period.

The Solactive Canada Bank 30 AR Index aims to track the performance of the Solactive Canada Bank TR Index adjusted for a synthetic dividend and is tied to over 270 structured products in the Canadian market.

The most recent product tied to this underlying is the BMO Callable Equity Income Notes, Series 1931 (CAD). With a strike date of 28 January 2021, this income product has a seven-year tenor and will reach maturity on 28 January 2028.

If the underlying is above 75% of its initial level on any observation date, the product will pay a fixed coupon of 8.01% pa.

Besides Bank of Montreal which has issued a total of 136 products overall in Q1, other issuers of products linked to this index are CIBC (108), Scotiabank (23), and TD Securities (four).

BMO continues to rank as top issuer group in the Canadian market with an issuance of 310 structured products in Q1 21, compared with 296 in Q1 20.

The bank’s issuance fluctuated slightly throughout the year, hitting a record low in the third quarter of 2020 with just 233 products from 277 recorded in Q2 20. However, the volumes recovered in the final quarter with issuance climbing to 289 products.

Earnings

For the first quarter, the Canadian Financial Group led by Darryl White recorded a net income of C$2 billion (US$1.6 billion) on a reported basis and C$2 billion on an adjusted basis.

Reported net income in capital markets was C$483m (US$387m), an increase of C$127m (US$102m) or 36% from the prior year while adjusted net income was C$489m (US$392m), an increase of C$127m (US$102m) or 35%.

The figures were driven by a strong revenue performance in global markets, partially offset by higher performance-based expenses.

The bank’s corporate services segment suffered a net loss of C$143m (US$115m), compared with a net loss of C$105m (US$84m) in the prior year.

Results decreased, primarily due to higher expenses and the impact of a favourable tax rate in the prior year.