The Financial Post reports in its Thursday edition that Bank of Montreal has been downgraded by an influential Bay Street analyst on concern the lender is building up credit losses at a faster pace than its U.S. peers. A Bloomberg dispatch to the Post says that Royal Bank of Canada analyst Darko Mihelic cut his rating on BMO to sector perform and reduced his price target to $118 from $124. The stock fell sharply on a day banks did well generally. BMO has posted two quarters of disappointing results as it set aside more money for potentially bad loans and signalled that provisions for credit losses could remain high for the rest of the year. The lender acquired U.S.-based Bank of the West last year, significantly increasing its U.S. footprint -- as well as its exposure to credit losses south of the border. "We have seen enough evidence that BMO's credit is not as strong as we once thought and hence a lower valuation is warranted," Mr. Mihelic wrote. "We believe that as the credit cycle progresses, BMO's risk premium will move higher, as BMO's U.S. credit result appears to be an outlier among its U.S. peer group," he said, adding that the bank's second-quarter credit results were worse than its Canadian rivals.