* Bank to cut around 1,850 jobs from 46,000 workforce
* Bank says responding to less transactions in branches
* Some branches set to close over medium term
* Bad loans to oil and gas sector rise to C$410 million
(Adds comments from interview with CFO)
By Matt Scuffham and Marcy Nicholson
TORONTO/NEW YORK, May 25 (Reuters) - Bank of Montreal
BMO.TO will shed around 4 percent of its 46,000 workforce as
part of a drive to cut costs, staff were told in a memo on
Wednesday after the lender reported a decline in quarterly
profit.
Chief Executive Bill Downe said the move, which will see
around 1,850 jobs go, was a response to changing customer
behavior and the advent of new digital technologies.
Banks around the world are cutting branches and staff and
investing in technology as more customers bank online rather
than visit a branch.
"We have taken this step to position the bank for what lies
ahead - and to account for the structural changes underway in
the financial services industry," Downe said in the memo seen by
Reuters.
Speaking to Reuters, Chief Financial Officer Tom Flynn said
more jobs would leave from the retail side than its investment
banking arm, with some branches set to close in the medium term.
Flynn said the number of transactions done by customers
online and via mobile banking apps had risen by 5 million in the
past two years while branch transactions declined.
"We're adjusting how we do business and moving with our
customers," he said.
Canada's fourth biggest bank earlier Wednesday announced a
C$132 million ($101 million) restructuring charge, helping push
its second-quarter net income down 3 percent to C$973 million,
or C$1.45 per share.
Excluding that charge, its earnings were C$1.73 a share.
Analysts on average had expected C$1.75 a share, according to
Thomson Reuters I/B/E/S.
BMO said bad loans to oil and gas companies more than
doubled in the latest quarter and set aside more funds to cover
losses, setting the scene for expected increases in provisions
by other Canadian lenders.
The bank said gross impaired loans to the oil and gas sector
rose to C$410 million from C$162 million during the second
quarter ended on April 30.
Provisions for credit losses increased to C$201 million from
C$161 million. Flynn warned loan loss provisions were likely to
rise further over the course of the year.
Canada's other major banks are also expected to set aside
more funds to cover bad loans this results season.
Energy sector loans accounted for 2 percent of BMO's total
credit portfolio, and the oil-producing province of Alberta
makes up about 6 percent of its loan book.
BMO shares were up 1.3 percent at C$84.27 at 1600ET.
($1 = 1.3081 Canadian dollars)
(Editing by W Simon, Bernard Orr)