Bank of Montreal’s drive to improve efficiency has come with a cost: $357 million, along with the most dramatic job cuts by a Canadian bank in more than 15 years.

The lender took the charge, which was $484 million before taxes, mostly for severance payments. The cuts will affect about five per cent of Bank of Montreal’s workforce, executives said on a fiscal fourth-quarter conference call Tuesday. That would equate to about 2,300 positions, based on the company’s year-end headcount.

“This is a sizable move,” Chief Executive Officer Darryl White said on the call, while announcing earnings that beat analysts’ expectations. “We’re on a new path as far as a continuous improvement of the operating efficiency of the bank and this charge is designed to accelerate that path as we go forward.”

The latest restructuring charge -- which follows one taken in the second quarter of 2018, also tied to severances -- included a small amount of real-estate related costs and is part of White’s efforts to improve productivity at what has been Canada’s least-efficient bank. The company’s adjusted efficiency ratio, a measure of what it costs to produce a dollar of revenue, was 60 per cent in the fourth quarter, down from 62.2 per cent a year earlier, as the lender moves toward White’s target of 58 per cent or better by the end of fiscal 2021.

“It is difficult for us to credit good expense control in the face of yet another restructuring charge from this bank, this time approaching C$500 million,” CIBC Capital Markets analyst Robert Sedran said in a note to clients. “However, the underlying segment performance was solid with improving volume growth, positive operating leverage and stable credit quality. A decent result.”

Bank of Montreal shares fell 1.8 per cent to $98.88 at 9:38 a.m. in Toronto. They have gained 11 per cent this year, compared with a 13 per cent increase for Canada’s eight-company S&P/TSX Commercial Banks Index.

The job cuts are across all areas of the bank and are deeper than previous rounds of reductions, including the elimination of 1,850 jobs, or four per cent of the workforce, in May 2016, and the 1,000 positions cut in 2007. The latest move comes about six months after the Toronto-based company pared about 100 jobs across its capital-markets division.

The reductions surpass Bank of Nova Scotia’s 1,500 job cuts, announced in 2014, and the 1,660 positions eliminated by Royal Bank of Canada in 2004. Those were among the Canadian banking industry’s biggest cuts in the past two decades.

Bank of Montreal’s restructuring costs contributed to a 30% decline in net income in the quarter, with the company posting earnings of $1.19 billion, or $1.78 a share. Adjusted per-share earnings were $2.43, beating the $2.41 average estimate of 14 analysts in a Bloomberg survey. The bank raised its quarterly dividend 2.9 per cent to $1.06 a share.

Wealth Management

Wealth management led profit growth in the quarter, with a 22 per cent increase in earnings from the year earlier, while Canadian and U.S. banking also gained. Earnings from the company’s BMO Capital Markets unit fell 9.7 per cent amid a tougher year for dealmaking.

Also in the earnings announcement:

Wealth management had its best quarter for profit growth since last year, with earnings of $267 million, helping lift annual net income to $1.06 billion. The bank aims to get $2 billion in annual profit from wealth management by 2023.

Earnings from Canadian personal-and-commercial banking, Bank of Montreal’s biggest business, rose 6.2 per cent to $716 million.

In the U.S. banking division, which includes Chicago-based BMO Harris Bank, earnings climbed 5.6 per cent to $393 million in the quarter, even after the impact of Federal Reserve interest rate cuts. Net interest margins in the U.S. division narrowed to 3.35 per cent, the lowest since at least 2010.

Earnings from BMO Capital Markets fell 9.7 per cent to $269 million on a decline in revenue from investment banking fees and trading.