Canada's big five banks made a record combined profit of $6.1 billion in the three months ended in November, with the full-year earning at $22.4 billion, a sharp rise over the previous year.

The full-year combined result in 2010 was $19.5 billion, a 15 per cent increase.

The banks benefited from strength in domestic retail banking operations and loan growth.

For the fourth quarter, ended in November, the banks' combined profit rose 36 per cent from $4.5 billion in the same period in 2010.

Bank of Montreal was the last of the five to report, on Tuesday, announcing an increase of 21 per cent compared with a year earlier, to $897 million.

Toronto-based BMO earned $1.34 per share in the three months, up from $739 million, or $1.24 per share, a year ago. Revenue increased to $3.88 billion from $3.23 billion.

Still, it missed analysts’ expectations for adjusted earnings, which came in at $1.27 per share. Analysts had expected $1.31 per share, according to a poll by Thomson Reuters.

The bank's shares closed down 3.5 per cent, or $2.10, at $57.79 on the Toronto Stock Exchange.

Bank of Montreal 3-month chart

For the full year, net income rose $450 million to $3.3 billion.

CEO Bill Downe partially attributed the improvement to July's $4-billion acquisition of Marshall & Ilsley Corp. that "has fundamentally changed our competitive position in the U.S. Midwest."

"I'm pleased with our progress against all elements of the integration plan to date. Our expectations around performance and our confidence in the potential of the business are unwavering," he added.

BMO originally anticipated $250 million US in cost savings from the acquisition, but increased that target to $300 million in its second-quarter report.

Full-year net income was a record $2 billion in its personal and commercial banking divisions.

It credited both a 10 per cent gain in its Canadian division, and a $34-billion increase in deposit shares in the U.S., at its newly acquired banks, along with BMO's Chicago-based Harris Bank subsidiary.

During the fourth quarter, BMO's Canadian personal and commercial banking operations posted an increase of 1.5 per cent to $424 million.

However, the bank's capital markets division posted a 30 per cent tumble in profits to $149 million over the same time last year as it contended with volatile market conditions that affected revenues.

"There is no question that the softening economic environment has had an impact on market conditions, and consumer and business confidence," Downe said in a release.

With files from The Canadian Press