Feb 27 (Reuters) - Bank of Montreal reported a fall in its first-quarter adjusted profit on Tuesday, as the bank set aside a large reserve against potential credit losses in a turbulent economy.

Geopolitical pressures and a high interest rate environment have darkened the economic outlook for Canada, prompting lenders to shore up reserves in case customers default on their loans.

Provisions for credit losses rose to C$627 million for the quarter ended Dec. 31, up from C$217 million in the year ago period.

However, multiple rate hikes by the Bank of Canada allowed the lender to charge higher interest on loans boosting its net interest income (NII).

Bank of Montreal's NII, the difference between what banks earn on loans and pay out on deposits, rose 17.4% to C$4.72 billion in the reported quarter.

The bank reported a quarterly adjusted net income of C$1.89 billion ($1.40 billion), or C$2.56 per share, compared with C$2.16 billion, or C$3.06 per share, a year earlier. ($1 = 1.3491 Canadian dollars) ($1 = 1.3492 Canadian dollars) (Reporting by Pritam Biswas in Bengaluru; Editing by Savio D'Souza and Shinjini Ganguli)