(Reuters) – Bank of Montreal on Friday reported a smaller than expected quarterly profit, pressured by rising expenses and as the Canadian lender was forced to set aside more funds to cover for potential loan losses.

A spike in interest rates and high inflation has made it difficult for banks to grow their mortgage and lending businesses, while many consumers struggle to pay the money they owe as bills pile up.

That has pushed banks to put more money aside, a sum that has increased over the quarters this year, pressuring profits amid growing expenses.

Like others, BMO also built up its provisions for credit losses (PCLs) as gloomy economic conditions prompted caution, setting aside C$446 million ($329.74 million) for the fourth quarter ended Oct. 31, from C$226 million a year earlier.

The bank, Canada’s third largest lender, is the latest to report earnings below estimates, joining peers Scotiabank and TD Bank.

Meanwhile, smaller peer National Bank of Canada (OTC:NTIOF) reported a jump in fourth-quarter profit on Friday, helped by a strong performance at its capital markets unit.

BMO reported net income of C$1.62 billion, or C$2.06 per share, compared with C$4.48 billion, or C$6.51 per share, a year earlier. Expenses rose about 19%.

On an adjusted basis, BMO earned C$2.81 per share, compared with analysts’ estimates of C$2.85, according to LSEG data.

Canada has been on the brink of slipping into a recession, underscoring the impact of the Bank of Canada’s aggressive rate hikes on the economy.

The rate increases, however, have allowed banks to charge higher rates and boost their net interest income – the difference between what banks earn on loans and pay out on deposits. BMO’s net interest income rose 31% to C$4.94 billion in the quarter from a year earlier.

($1 = 1.3526 Canadian dollars)