Q3 2023 Bank of Montreal Earnings Call

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Speaker 1: This conference is being recorded. This conference is being recorded.

This conference is being recorded.

It's called the homes that don't go as you see.

Speaker 2: All participants please stand by your conferences ready to begin.

All participants please standby your conference is ready to begin.

Speaker 2: Good morning and welcome to BMO Financial Group's Q3, 2023 Learning Series and Conference Call for August 29, 2000.

And welcome to BMO financial group's Q3, 2020 earnings release and conference call for August 29, 2023, you'll host for today is Christine Vu. Please go ahead.

Speaker 2: Your host for today is Christine Vio. Please go ahead.

Speaker 3: Thank you. We will begin the call today with remarks from Gerald White, BMO's CEO , followed by Typhoon Tizun, our Chief Financial Officer, and Piyush Agrawal, our Chief Risk Officer.

Thank you we will begin the call today with remarks from Darryl White Bmo's CEO, followed by Typhoon, Susan our Chief Financial Officer, and Piyush Agra, while our chief risk Officer also present to take questions are Ernie Johansen head of beam on North American personal and business banking Nadeem Hershey head of BMO commercial banking.

Speaker 3: Also present to take questions are Ernie Johanson, Head of BMO North American Personal and Business Banking, Nadim Herji, Head of BMO Commercial Banking, Dan Barkley, Head of BMO Capital Markets, Deland Kamenga, Head of BMO Wealth Management, and Daryl Hackett, BMO US CEO .

Dan Barclay head of BMO capital market Challenge Kananga head of BMO wealth management, and Darryl Hackett Emo U S C.

Speaker 3: As noted on slide 2, forward-looking statements may be made during this call, which involve assumptions that have inherent risks and uncertainties. Multiple results could differ materially.

As noted on slide two forward looking statements may be made during this call, which involve assumptions that have inherent risks and uncertainties actual results could differ materially from these statements I would also remind listeners that the bank uses non-GAAP financial measures to arrive at adjusted results management matters, just performance on a reported and adjusted basis and concern.

Speaker 3: I would also remind listeners that the bank uses non-GAAP financial measures to arrive at adjusted results, management measures performance on a reported and adjusted basis, and considers both to be useful in assessing underlying business performance. Daryl and Tyson will be referring to adjusted results in their remarks, unless otherwise noted as reported. And with that, I'll turn the call over to Daryl. Thank you, Christine, and good morning, everyone.

We're supposed to be useful in assessing underlying business performance Geralyn typhoon, we will be referring to adjusted results in their remarks, unless otherwise noted as reported and with that I'll turn the call over to Daryl. Thank you Christina and good morning, everyone.

Speaker 4: I'd like to start this morning by acknowledging the ongoing devastating wildfires impacting British Columbia and the Northwest Territory.

I'd like to start this morning by acknowledging the ongoing devastating wildfires impacting British Columbia, and the northwest territories, we're committed to doing our part to help make sure the families businesses and communities get the support they need including financial relief for options and options for those affected.

Speaker 4: We're committed to doing our part to help make sure the families, businesses and communities get the support they need, including financial relief and options for those affected.

Speaker 4: Also, today I'd like to welcome Daryl Hackett, our US CEO , to his first investor call. Daryl has been with BMO since 2004, most recently as president of BMO Wealth Management US. His track record of dedication to our client's success, extensive community leadership, and commitment to eliminating barriers to inclusion will be a key contributor to the ongoing success of BMO US.

So today I would like to welcome Darryl Hackett, our U S. CEO to his first investor call Daryl has been with BMO since 2000 and for most recently as president of BMO wealth management U S. His track record of dedication to our clients' success extensive community leadership and commitment to eliminating barriers to inclusion will be.

Key.

Contributor to the ongoing success of BMO U S.

Speaker 4: Turning to the quarter, our performance continues to reflect the strength, diversification, and active management of our businesses in an evolving environment.

Turning to the quarter our performance continues to reflect the strength diversification and active management of our businesses in an evolving environment.

Speaker 4: This quarter, we reported earnings per share of $2.78, impacted by one-time items that we will discuss.

This quarter, we reported earnings per share of $2.78 impacted by one time items that we will discuss.

Speaker 4: Pre-provision, pre-tax earnings were up 6% from last year, and all bank revenue was up 22% driven by record results in Canadian personal and commercial banking, supported by double-digit deposit growth, and good contribution from the Bank of the West.

Pre provision pretax earnings were up 6% from last year and all bank revenue was up 22% driven by record results in Canadian personal and commercial banking supported by double digit deposit growth and good contribution from the bank of the west.

Speaker 4: Credit performance is normalizing in line with our expectations with higher provisions this quarter compared with historically low levels.

Credit performance is normalizing in line with our expectations with higher provisions this quarter compared with historically low levels.

Speaker 4: Our balance sheet remains strong, reflecting our long-standing track record of superior risk management.

Our balance sheet remains strong, reflecting our long standing track record of superior risk management.

Speaker 4: We further strengthened our capital position with a CET1 ratio of 12.3%, an increase from Q2 despite the impact of the closing of the air miles transaction.

We further strengthened our capital position with a CET one ratio of 12, 3% an increase from Q2, despite the impact of the closing of the air miles transaction.

Speaker 4: For the year to date, return on equity was 12.6% and return on tangible common equity was 15.8%.

For the year to date return on equity was 12, 6% and return on tangible common equity was 15, 8%.

Speaker 4: As we discussed last quarter, we're taking action to adjust to market forces that are creating near-term headwinds for the industry and negative operating leverage for us this year.

As we discussed last quarter, we're taking action to adjust to market forces that are creating near term headwinds for the industry and negative operating leverage for us this year.

Speaker 4: We have a proven track record of disciplined expense management while making targeted investments where we have the best opportunities to support our customers and deliver sustainable growth.

We have a proven track record of disciplined expense management, while making targeted investments, where we have the best opportunities to support our customers and deliver sustainable growth.

Speaker 4: Our approach has delivered positive operating leverage in each of the last five years and continuous improvement in our efficiency.

Our approach has delivered positive operating leverage in each of the last five years and continuous improvement in our efficiency.

Speaker 4: Our results this quarter included severance costs in each of our businesses related to workforce reductions representing approximately 2.5% of our total FTE, which is complementary and incremental to our ongoing Bank of the West integration program.

Our results this quarter included severance severance costs in each of our businesses related to workforce reductions representing approximately two 5% of our total FTE, which is complementary and incremental to our ongoing bank of the west integration program.

Speaker 3: We're undertaking these changes to enable us to accelerate our efficiency initiatives and align investment with customer and market opportunities.

We're undertaking these changes to enable us to accelerate our efficiency initiatives and align investment with customer and market opportunities.

Speaker 3: We expect the impact of these initiatives combined with the expense synergies still to come from the Bank of the West to result in a return to positive operating leverage for fiscal 2024.

We expect the impact of these initiatives combined with the expense synergies still to come from the bank of the West to result in a return to positive operating leverage for fiscal 2024.

Speaker 3: Our U.S. segment has consistently contributed to the bank's earnings growth and efficiency improvement.

Our U S segment has consistently contributed to the bank's earnings growth and efficiency improvements.

Speaker 3: This quarter, for the first time, pre-provisioned pre-tax earnings in the US exceeded $1 billion US double where we were four years ago.

This quarter for the first time pre provision pre tax earnings in the U S exceeded $1 billion U S double where we were four years ago.

Speaker 3: We have a differentiated position in the US market, ranking in the top 10 of diversified banks while benefiting from the strength of BMO's trillion dollar North American balance sheet.

We have a differentiated position in the U S market ranking in the top 10 of diversified banks, while benefiting from the strength of BMO as Trillium dollar North American balance sheet.

Speaker 3: and we're positioned to accelerate our long-term growth strategy as we complete the acquisition of the Bank of the West. Conversion is on track for

And we're positioned to accelerate our long term growth strategy as we complete the acquisition of the bank of the West.

Conversion is on track for the upcoming Labor day weekend, we're bringing the best of both companies together for our employees and ensuring a smooth transaction for our customers, who will benefit from the greater convenience speed and product options of a broader company with deeper resources.

Speaker 3: We're bringing the best of both companies together for our employees and ensuring a smooth transaction for our customers, who will benefit from the greater convenience, speed and product options of a broader company with deeper resources.

Speaker 3: Employees and customers are embracing our entry into the market and we're already seeing a strong response to our offers and campaigns having opened thousands of new accounts and that's before the full rollout of product capabilities and marketing post conversion next weekend.

Employees and customers are embracing our entry into the market and we're already seeing a strong response to our offers and campaigns having opened thousands of new accounts and that's before the full rollout of product capabilities and marketing post conversion next weekend.

In addition.

Speaker 3: We've added hundreds of active clients in our trading businesses and continue to complete one client transactions between commercial and capital markets.

We've added hundreds of active clients in our trading businesses and continue to complete one client transactions between commercial and capital markets.

Speaker 3: We know that brand recognition is one of the most powerful factors in attracting new customers, and our brand campaign reinforces the scale and the strength of BMO.

We know that brand recognition as one of the most powerful factors in attracting new customers and our brand campaign reinforces the scale and the strength of BMO.

Speaker 3: Well, Bimo may be new to parts of California. We're letting customers know we're not new to banking. And we're here to stay.

Well BMO, maybe new to parts of California, we're letting customers know, we're not new to banking and we're here to stay.

Speaker 3: We're confident in the power of our integrated North American franchise and our strategy to help clients make real financial progress.

We're confident in the power of our integrated North American franchise, and our strategy to help clients make real financial progress.

Speaker 3: Canadian P&C delivered another quarter of strong performance with personal and business banking breaking through two billion dollars in revenues for the first time and continuing to grow market share.

Canadian P&C delivered another quarter of strong performance with personal and business banking breaking through $2 billion in revenues for the first time and continuing to grow market share.

Speaker 3: leading customer acquisition and strong customer onboarding has been a key contributor to our growth.

Leading customer acquisition and strong customer Onboarding, there has been a key contributor to our growth.

Speaker 3: Our new to Canada segment, for example, is up 40% over last year. We're focused on meeting customers where they are, including our branch inside Calgary's Gateway Newcomer Center, where our teams provide specialized guidance and resources.

Our new to Canada segment. For example is up 40% over last year, we're focused on meeting customers, where they are including our branch inside Calgary as Gateway Newcomer Center, where our teams provide specialized guidance and resources.

Speaker 3: In addition, this quarter we closed the acquisition of air miles. Canada's longest standing and most recognized loyalty program with 10 million active customers representing half of Canadian households.

In addition, this quarter, we closed the acquisition of Air Mouse, Canada's longest standing and most recognized loyalty program with 10 million active customers representing half of Canadian households.

Speaker 3: We're leveraging BMO's strengths in innovation and digital to expand and enhance the program and are already seeing early success in attracting new collectors and partners.

We're leveraging BMO strengths in innovation and digital to expand and enhance the program and are already seeing early success in attracting new collectors and partners.

Speaker 3: In USP&C, we grew revenue 51%, reflecting the addition of the Bank of the West.

And U S. P&C, we grew revenue 51%.

Reflecting the addition of the bank of the West.

Speaker 3: While loan demand has been muted across the industry, we're continuing to add customers and deepen relations.

While loan demand has been muted across the industry, we're continuing to add customers and deepen relationships.

Speaker 3: This quarter, we launched BIMO VPEO, an integrated payable solution, expanding a product capability within Bank of the West to all U.S. clients. It's a great example of working together as one unified bank and building our position as a leader in B2B payments.

This quarter, we launched BMO V payout, an integrated payables solution expanding our product capability within bank of the west to all U S. Clients. It is a great example of working together as one unified bank and building our position as a leader in BTB payments.

Speaker 3: We're committed to actively fostering a culture that gives people space to innovate.

We're committed to actively fostering a culture that gives people space to innovate.

Speaker 3: BIMA was the only financial institution named among the top 30 companies on Fast Company's Best Workplaces for Innovators list and we were recently recognized by J.D. Power ranking as the first in customer satisfaction with online banking in Canada.

BMO was the only financial institution named among the top 30 companies on fast company's best workplaces for innovators list and we were recently recognized by J D power ranking first in customer satisfaction with online banking in Canada.

Speaker 3: These are testament to how BMO's digital first strategy and industry leading experiences are exceeding our customers evolving expectations.

These are testament to how Bmo's digital first strategy and industry, leading experiences are exceeding our customers' evolving expectations.

Speaker 3: In BIMO wealth management, we continue to deliver results and extend our leadership in the ETF market. This quarter, we further expanded our innovative suite of active exchange-traded funds to provide investors with more choice and portfolio customization.

And BMO wealth management, we continued to deliver results and extend our leadership in the ETF market. This quarter. We further expanded our innovative suite of active exchange traded funds to provide investors with more choice and portfolio customization.

Speaker 3: People of Capital markets had a solid performance, including good revenue contribution in the US, even as client activity remained below historical trends.

BMO capital markets had a solid performance, including good revenue contribution in the U S. Even as client activity remained below historical trends.

Speaker 3: We have key momentum in key areas, ranking in the top 10 in global and North American M&A, and adding products and capabilities in our US rates business. Examples of how we're continuing to provide value-added expertise and products in support of our clients.

We have key momentum in key areas ranking in the top 10 in global and North American M&A, and adding products and capabilities in our U S rates business. Examples of how we're continuing to provide value added expertise and products in support of our clients' needs.

Speaker 3: Our purpose to boldly grow the good in business and life guides all we do. This quarter, we were included in corporate night's listings of Canada's best 50 corporate citizens with top quartile scores in board gender diversity and executive racial diversity, the only Canadian bank named to the list.

Our purpose to boldly grow the good in business and life got guidance. All we do this quarter. We were included in corporate Knights listings of Canada's best 50, corporate citizens with top quartile scores in board gender diversity and executive racial diversity, the only Canadian bank named to.

The lift.

Speaker 3: In addition, we received a top quartile sustainable revenue score reflecting our commitment to sustainable financing and responsible investment.

In addition, we received a top quartile sustainable revenue score, reflecting our commitment to sustainable financing and responsible investing.

Speaker 3: As we look ahead, we're all aware of the macro headwinds facing the industry.

As we look ahead, we're all aware of the macro headwinds facing the industry.

Speaker 3: These external forces are influencing the environment we're all operating in, and I believe they could persist for some time to come.

These external forces are influencing the environment, we're all operating in and I believe they could persist for some time to come.

Speaker 3: Against that backdrop, what sets BMO apart is the strength of our team and the emphasis that we've placed on dynamically managing our business to control the forces that we can control.

Against that backdrop, what sets <unk> apart is the strength of our team and the emphasis that we've placed on dynamically managing our business to control the forces that we can control.

Speaker 3: We're taking action to reduce our cost base while making investments to drive high performance for the long term, including realizing the synergies from Bank of the West.

We're taking action to reduce our cost base, while making investments to drive high performance for the long term, including realizing the synergies from bank of the west.

Speaker 3: I'm confident that our unique and differentiated North American growth strategy sets us apart on both sides of the border.

I'm confident that our unique and differentiated north American growth strategy sets us apart on both sides of the border.

Speaker 3: We have the scale across our Canadian and US franchises to continue to support our customers, advance our digital strategy, and make meaningful differences in the communities that we serve.

We have the scale across our Canadian and U S franchise is to continue to support our customers advance our digital strategy and make meaningful differences in the communities that we serve.

I'll now turn it over to Typhoon <unk>.

Speaker 5: Thank you, Darrell. Good morning and thank you for joining us. My comments will start on slide nine. Third quarter reported EPS was at $1.97, and net income was $1.5 billion.

Thank you Darryl good morning, and thank you for joining US my comments will start on slide nine.

Third quarter reported EPS was $1 97, and net income was $1 $5 billion.

Speaker 5: Adjusting items are shown on slide 38 and include acquisition-related impacts for integration costs and amortization of intangibles which decreased net income by 370 million dollars and 85 million dollars respectively as well as a 131 million dollar after-tax charge related to tax measures enacted by the Canadian government that amended the HST definition for financial service.

Adjusting items are shown on slide 38 and include acquisition related impacts for integration costs and amortization of intangibles, which decreased net income by $370 million and $85 million, respectively, as well as a $131 million after tax charge.

Related to tax measures enacted by the Canadian government that amended the HST definition for financial services.

Speaker 5: The remainder of my comments will focus on adjusted results.

The remainder of my comments will focus on adjusted results.

Speaker 5: Adjusted EPS was $2.78 and net income was $2 billion, down 4% from last year.

Adjusted EPS was $2 and 78 and net income was $2 billion down 4% from last year.

Speaker 5: Our results this quarter were impacted by severance costs and legal provisions which reduce net income by $245 million and earnings per share by $0.34 on a combined basis.

Our results this quarter were impacted by severance costs and legal provisions, which reduced net income by $245 million and earnings per share by 34 cents on a combined basis.

Speaker 5: Revenue increased 22% with good organic growth in each of our operating groups and the benefit of acquisition.

Revenue increased 22% with good organic growth in each of our operating groups and the benefit of acquisitions.

Speaker 5: Expenses increased 33% primarily due to the impact from acquisition.

<unk> increased 33%, primarily due to the impact from acquisitions.

Speaker 5: PPPT of $3.1 billion was up 6%, driven by strong growth in our Canadian P&C business, contributions from our Bank of the West acquisition, and higher results in BMO capital markets.

P. P. P T of $3 $1 billion was up 6% driven by strong growth in our Canadian P&C business contributions from our bank of the West acquisition and higher results in BMO capital markets.

Speaker 5: Total PCL was $492 million including a $159 million provision for performing loans, compared with a total provision of $136 million in the prior year. Pewsh will speak to these.

Total PCL was $492 million, including a $159 million provision for performing loans compared with a total provision of $136 million in the prior year Piyush will speak to these in his remarks.

Speaker 5: Turning to slide 10, the acquisition of Bank of the West contributed $167 million to net income, $1.1 billion to revenue, and $749 million to expenses.

Turning to slide 10, the acquisition of bank of the West contributed $167 million through net income $1 $1 billion to revenue and $749 million to expenses.

Speaker 5: We are pleased with the Bank of the West's second quarter post-closing results, as their contribution remains in line with our expectations.

We are pleased with the bank of the West second quarter post closing results as their contribution remains in line with our expectations.

Speaker 3: We are highly focused on successfully executing our systems conversion and brand unification this weekend, which will complete the full integration of Bank of the West within our US segment.

We are highly focused on successfully executing our systems conversion and brand unification. This weekend, which will complete the full integration of bank of the west within our U S segment as.

Speaker 3: As we have shared with you since the announcement, our confidence level in achieving the cost synergies remains very high.

As we have shared with you since the announcement our confidence level in achieving the cost synergies remains very high.

Speaker 3: to date, we have been tracking ahead of our expectations on cost synergies. And with the benefit of additional analysis over the last two quarters since we closed the transaction, we believe there is potentially more upside, including third-party expenses and technology costs.

To date, we have been tracking ahead of our expectations on cost synergies and with the benefit of additional analysis over the last two quarters. Since we closed the transaction. We believe there is potentially more upside, including third party expenses and technology costs.

Speaker 3: We plan to give you a final post conversion update when we report our fourth quarter earnings on all relevant matters.

We plan to give you a final post conversion update when we report our fourth quarter earnings on all relevant metrics.

Speaker 3: Moving to the balance sheet on slide 11. Average loan growth was 22% year over year, or 21% on a constant currency basis, including Bank of the West, and good growth across our business.

Moving to the balance sheet on slide 11 average loan growth was 22% year over year or 21% on a constant currency basis, including bank of the west and good growth across our businesses.

Speaker 3: Sequentially, period and loans were down 1% or flat on a constant currency base.

<unk> period end loans were down 1% or flat on a constant currency basis.

Speaker 3: Consumer loans were higher driven by mortgage growth in Canadian PNC, while business and government loans were lower as growth in BMO capital markets in Canadian PNC was offset by lower commercial loans in US PN.

Consumer loans were higher driven by mortgage growth in Canadian P&C, while business and government loans were lower as growth in BMO capital markets and Canadian P&C was offset by lower commercial loans and U S. P&C.

Operator: This conference is being recorded, cette conférence est enregistrée.

Operator: This conference is being recorded. Cette conférence est enregistrée. All participants please stand by your conferences ready to begin.

Speaker 3: We expect loan demand in the U.S. will remain muted through the end of the year, continuing the trends that we have seen during the last two quarters, while modest growth is expected to continue in Canada.

We expect loan demand in the U S will remain muted through the end of the year continuing the trends that we have seen during the last two quarters, while modest growth is expected to continue in Canada.

Operator: All participants, please stand by, your conference is ready to begin.

Christine Viau: Good morning and welcome to BMO Financial Group's Q3 2023 earnings release and conference call for August 29, 2023. Your host for today is Christine Viau. Please go ahead. Thank you. We will begin the call today with remarks from Gerald White, BMO CEO, followed by Tayfun Tuzun, our Chief Financial Officer, and Piyush Agrawal, our Chief Risk Officer. Also present to take questions, our earnings Johansson, head of BMO North American Personal and Business Banking, Nadim Hergie, head of BMO Commercial Banking, Dan Barkley, head of BMO Capital Market, Dalland Kamenga, head of BMO Wealth Management, and Darryl Hackett, BMO US CEO.

Christine Viau: Good morning and welcome to BMO Financial Group's Q3 2023 earnings release and conference call for August 29, 2023. Your host for today is Christine Viau, please go ahead.

Speaker 3: Average customer deposits increase 22% year over year from bank of the west and higher balances in Canadian PNC and BMO capital markets.

Average customer deposits increased 22% year over year from bank of the west and higher balances in Canadian P&C and BMO capital markets.

Christine Viau: Thank you, we will begin the call today with remarks from Gerald White, BMO CEO, followed by Tayfun Tuzun, our Chief Financial Officer and Piyush Agrawal, our Chief Risk Officer.

Speaker 3: Sequentially, period end deposit balances were stable and up 1% on a constant currency basis with strong growth in term deposits in Canada, offset by declines in our US, PNC, and wealth management business.

When Chile period end deposit balances were stable and up 1% on a constant currency basis with strong growth in term deposits in Canada offset by declines in our U S P&C and wealth management businesses.

Christine Viau: Also present to take questions are Ernie Johansson, head of BMO North American Personal and Business Banking, Nadim Hergie, head of BMO Commercial Banking, Dan Barkley, head of BMO Capital Markets, Dalland Kamenga, head of BMO Health Management, and Darrel Hackett, BMO US CEO.

Speaker 3: Turning to slide 12, the continued strong deposit growth in Canada is the result of continued success in customer acquisition, new products and digital investments across our retail and commercial businesses, and we have seen signs of term migrations starting to slow.

Turning to slide 12, the continued strong deposit growth in Canada is the result of continued success in customer acquisition, new products and digital investments across our retail and commercial businesses and we have seen signs of term migrations starting to slow in the U S trends have stabilized and.

Unknown Executive: As noted on slide two, forward looking statements may be made during this call, which involve assumptions that have inherent risks and uncertainties. Actual results could differ materially from these statements.

Unknown Executive: As noted on slide two forward looking statements may be made during this call, which involve assumptions that have inherent risks and uncertainties. Actual results could differ materially from these statements. I would also remind listeners that the bank uses non-gap financial measures to arrive at adjusted results, management measures performance on a reported and adjusted basis, and considers both to be useful in assessing underlying business performance. Darryl and Tayfun will be referring to adjusted results in their remarks unless otherwise noted as reported.

Speaker 3: In the US, trends have stabilized and going forward, our enhanced digital platform combined with a larger retail branch network and our advanced treasury management capabilities addressing the needs of our commercial clients, especially post-conversion, should help us grow our deposit base.

Going forward, our enhanced digital platform combined with a larger retail branch network and our advanced Treasury management capabilities addressing the needs of our commercial clients, especially post conversion should help us grow our deposit base.

Unknown Executive: I would also remind listeners that the bank uses non-gap financial measures to arrive at adjusted results, management measures performance on a reported and adjusted basis, and considers both to be useful in assessing underlying business performance. Darrel and Tayfun will be referring to adjusted results in their remarks, unless otherwise noted as reported.

Turning to slide 13.

Speaker 3: On an ex-trading basis, net interest income was up 25%, and net interest margin was up seven basis points from the prior year, driven by Bank of the West, and strong balance growth and margin expansion in the underlying business.

On an ex trading basis net interest income was up 25% and net interest margin was up seven basis points from the prior year driven by bank of the west and strong balance growth and margin expansion in the underlying businesses.

Darrel Hackett: And with that, I'll turn the call over to Darrel. Thank you, Christine and good morning everyone.

Darryl Hackett: And with that, I'll turn the call over to Darryl. Thank you, Christina, and good morning, everyone.

Darryl Hackett: I'd like to start this morning by acknowledging the ongoing devastating wildfires impacting British Columbia and the Northwest Territories. We're committed to doing our part to help make sure the families, businesses, and communities get the support they need, including financial relief for options and options for those affected.

Darrel Hackett: I'd like to start this morning by acknowledging the ongoing devastating wildfires impacting British Columbia and the Northwest Territories. We're committed to doing our part to help make sure the families, businesses, and communities get the support they need, including financial relief for options and options for those affected.

Speaker 3: year-over-year growth was partially offset by the impact of higher low-yielding asset balances for liquidity purposes.

Year over year growth was partially offset by the impact of higher low yielding asset balances for liquidity purposes.

Speaker 3: Net interest margin was up two basis points from last quarter, driven by higher margins in Canadian P&C, partially offset by lower margins in US P&C and wealth.

Net interest margin was up two basis points from last quarter, driven by higher margins in Canadian P&C, partially offset by lower margins in U S P&C and wealth businesses.

Darrel Hackett: Also, today I'd like to welcome Darrel Hackett, our US CEO to his first investor call. Darrel has been with BMOS since 2004, most recently as president of BMO Wealth Management, US. His track record of dedication to our client success, extensive community leadership, and commitment to eliminating barriers to inclusion will be a key contributor to the ongoing success of BMO US.

Darryl Hackett: Also, today I'd like to welcome Darryl Hackett, our US CEO, to his first investor call. Darryl has been with BMO since 2004, most recently as President of BMO Wealth Management, US. His track record of dedication to our client success, extensive community leadership, and commitment to eliminating barriers to inclusion will be a key contributor to the ongoing success of BMO US.

Speaker 3: In Canadian PNC, NIM increased by seven basis points, driven by wider deposit margins, as well as higher loan margins and favourable change in our loan and deposit.

In Canadian P&C NIM increased by seven basis points, driven by wider deposit margins as well as higher loan margins and favorable change in our loan and deposit mix.

Speaker 3: In USPNC, NIM was reduced by 16 basis points sequentially, driven by lower deposit balances and margins, as well as lower loan markets.

And U S. P&C NIM was reduced by 16 basis points sequentially, driven by lower deposit balances and margins as well as lower loan margins.

Darrel Hackett: Turning to the quarter, our performance continues to reflect the strength, diversification, and active management of our businesses in an evolving environment. This quarter, we reported earnings for share of $2.78, impacted by one-time items that we will discuss. Pre-previsioned pre-tax earnings were up 6% from last year, and all bank revenue was up 22% driven by record results in Canadian personal and commercial banking, supported by double digit deposit growth, and good contribution from the Bank of the West.

Darryl Hackett: Turning to the quarter, our performance continues to reflect the strength, diversification, and active management of our businesses in an evolving environment. This quarter, we reported earnings for share of $2.78, impacted by one-time items that we will discuss. Pre-previsioned pre-tax earnings were up 6% from last year, and all bank revenue was up 22% driven by record results in Canadian personal and commercial banking, supported by double-digit deposit growth, and good contribution from the Bank of the West.

Speaker 3: We continue to expect relative stability in our overall margin, as the benefit of reinvestment of equity in non-maturity deposits at higher yields offsets pressures from higher deposit costs.

We continue to expect relative stability in our overall margin as the benefit of reinvestment of equity and non maturity deposits at higher yields offsets pressures from higher deposit costs.

Speaker 3: Although we may see some nim tightening in Canada over the next couple of quarters based on strong pricing competition in loans and deposits, in the US we expect a more stable outlook.

Although we may see some NIM tightening in Canada over the next couple of quarters based on strong pricing competition in loans and deposits in the U S. We expect a more stable outlook.

Darrel Hackett: Credit performance is normalizing in line with our expectations with higher provisions this quarter compared with historically low level. Our balance sheet remains strong, reflecting our long-standing track record of superior risk management We further strengthened our capital position with a CET-1 ratio of 12.3% and increase from Q2 despite the impact of the closing of the air miles transaction. For the year-to-date return on equity was 12.6% and return on tangible common equity was 15.8%.

Darryl Hackett: Credit performance is normalizing in line with our expectations with higher provisions this quarter compared with historically low level. Our balance sheet remains strong, reflecting our long-standing track record of superior risk management. We further strengthened our capital position with a CET-1 ratio of 12.3 percent and increase from Q2 despite the impact of the closing of the air miles transaction. For the year to date, return on equity was 12.6 percent and return on tangible common equity was 15.8 percent.

Moving to slide 14 expenses increased 33% from last year, mainly due to bank of the west and higher severance costs sequentially.

Speaker 3: expenses increased 33% from last year, mainly due to Bank of the West and higher severance costs.

Speaker 3: Sequentially, expenses were down 1%, excluding the impact of severance costs three more days in the current quarter and the addition of two months of results from the acquired air miles visit.

Sequentially expenses were down 1%, excluding the impact of severance costs three more days in the current quarter and the addition of two months of results from the acquired air miles business.

Speaker 3: As we predicted earlier in the year, the expense trends are improving based on our decision to curb expense growth earlier in the year and reinforced by the dynamic expense management actions we have taken this quarter to moderate growth and meet our commitment to positive operating leverage and improved efficiency.

As we predicted earlier in the year the expense trends are improving based on our decision to curb expense growth earlier in the year and reinforced by the dynamic expense management actions, we have taken this quarter to moderate growth and meet our commitment to positive operating leverage and improved efficiency.

Darrel Hackett: As we discussed last quarter, we're taking action to adjust to market forces that are creating near-term headwinds for the industry and negative operating leverage for us this year. We have a proven track record of discipline to expense management while making targeted investments where we have the best opportunities to support our customers and deliver sustainable growth. Our approach has delivered positive operating leverage in each of the last five years and continuous improvement in our efficiency.

Darryl Hackett: As we discussed last quarter, we're taking action to adjust to market forces that are creating near-term headwinds for the industry and negative operating leverage for us this year. We have a proven track record of discipline to expense management while making targeted investments where we have the best opportunities to support our customers and deliver sustainable growth. Our approach has delivered positive operating leverage in each of the last five years and continuous improvement in our efficiency.

Speaker 3: This quarter, we incurred severance costs to accelerate operational efficiencies across the bank, while we continue to align resources to areas that will support long-term customer growth.

This quarter, we incurred severance costs to accelerate operational efficiencies across the bank, while we continue to align resources to areas that will support long term customer growth.

Speaker 3: We expect this to drive expense savings of approximately $200 million in fiscal 2024 and run rate savings of approximately $250 million by early 2025.

We expect this to drive expense savings of approximately $200 million in fiscal 2024 and run rate savings of approximately $250 million by early 2025.

Darrel Hackett: Our results this quarter included severance costs in each of our businesses related to workforce reductions representing approximately 2.5% of our total FTE which is complementary and incremental to our ongoing bank of the West integration program. We're undertaking these changes to enable us to accelerate our efficiency initiatives and align investment with customer and market opportunities. We expect the impact of these initiatives combined with the expense synergies still to come from the bank of the West to result in a return to positive operating leverage for fiscal 2024.

Darryl Hackett: Our results this quarter included severance costs in each of our businesses related to workforce reductions representing approximately 2.5 percent of our total FTE, which is complementary and incremental to our ongoing Bank of the West integration program. We're undertaking these changes to enable us to accelerate our efficiency initiatives and align investment with customer and market opportunities.

Speaker 3: In addition, we have identified further actions to optimize real estate, technology, and procurement costs.

In addition, we have identified further actions to optimize real estate technology and procurement costs.

Speaker 3: Next quarter, we will record an impairment charge of approximately $45 million for real estate reduction opportunities that will generate future savings.

Next quarter, we will record an impairment charge of approximately $45 million for real estate reduction opportunities that will generate future savings.

Speaker 3: The estimated cumulative run rate benefits from the severance costs and these additional actions are estimated to exceed $400 million at an annualized basis.

The estimated cumulative run rate benefits from the severance costs and these additional actions are estimated to exceed $400 million at an annualized basis.

Darryl Hackett: We expect the impact of these initiatives combined with the expense synergies still to come from the Bank of the West to result in a return to positive operating leverage for fiscal 2024. Our U.S, segment has consistently contributed to the bank's earnings growth and efficiency improvement. This quarter for the first time pre-provisioned pre-tax earnings in the U.S, exceeded $1 million U.S, double where we were four years ago. We have a differentiated position in the U.S, market, ranking in the top 10 of diversified banks while benefiting from the strength of BMO's trillion dollar North American balance sheet.

Speaker 3: Combined with the targeted cost synergies at Bank of the West, we expect these will result in positive operating leverage in 2024 and help us continue to invest in our businesses while keeping our expense growth at acceptable levels.

Combined with the targeted cost synergies with bank of the West. We expect these will result in positive operating leverage in 2024 and help us continue to invest in our businesses, while keeping our expense growth at acceptable levels.

Darrel Hackett: Our U.S, segment has consistently contributed to the bank's earnings growth and efficiency improvements. This quarter for the first time pre-provisioned pre-tax earnings in the U.S, exceeded $1 billion U.S, double where we were four years ago. We have a differentiated position in the U.S, market ranking in the top 10 of diversified banks while benefiting from the strength of BIMO's trillion dollar North American balance sheet. And we're positioned to accelerate our long-term growth strategy as we complete the acquisition of the bank of the West.

Speaker 3: We expect our expense trends to start reflecting these benefits starting in the first quarter of 2024, once the conversion-related activities this quarter are behind.

We expect our expense trends to start reflecting these benefits starting in the first quarter of 2020 for once the conversion related activities. This quarter are behind us.

Speaker 3: Turning to slide 15, our capital position remains strong with a common equity tier one ratio of 12.3% of 10 basis points from the prior quarter.

Darryl Hackett: And we're positioned to accelerate our long-term growth strategy as we complete the acquisition of the Bank of the West. Conversion is on track for the upcoming Labor Day weekend. We're bringing the best of both companies together for our employees and ensuring a smooth transaction for our customers who will benefit from the greater convenience, speed, and product options of a broader company with deeper resources. Employees and customers are embracing our entry into the market and we're already seeing a strong response to our offers and campaigns having opened thousands of new accounts and that's before the full rollout of product capabilities and marketing post conversion next weekend.

Turning to slide 15, our capital position remains strong with a common equity tier one ratio of 12, 3% up 10 basis points from the prior quarter.

Darrel Hackett: Conversion is on track for the upcoming Labor Day weekend. We're bringing the best of both companies together for our employees and ensuring a smooth transaction for our customers. We will benefit from the greater convenience, speed and product options of a broader company with deeper resources. Employees and customers are embracing our entry into the market and we're already seeing a strong response to our offers and campaigns having opened thousands of new accounts.

Speaker 3: Internal capital generation shares issued under the Dividend Reinvestment Plan and lower source current VRWA. Primarily reflecting change in assets, we're most mostly offsets by the AERMiles acquisition and the impact from acquisition integration costs and tax-related charge in the current quarter.

Internal capital generation shares issued under the dividend reinvestment plan and lower resource lowest source currency, our Wi primarily reflecting change in assets, where mass mostly offset by the air miles acquisition and the impact from acquisition integration costs and tax related charge in the current.

Quarter.

Speaker 3: Moving to the operating groups and starting on slide 16.

Moving to the operating groups and starting on slide 16.

Darrel Hackett: And that's before the full rollout of product capabilities and marketing post conversion next weekend. In addition, we've added hundreds of active clients in our trading businesses and continue to complete one client transactions between commercial and capital markets.

Speaker 3: Canadian PNC delivered net income of $923 million, down 4% from the prior year.

Canadian P&C delivered net income of $923 million down 4% from the prior year.

Darryl Hackett: In addition, we've added hundreds of active clients in our trading businesses and continue to complete one client transactions between commercial and capital markets. We know that brand recognition is one of the most powerful factors in attracting new customers and our brand campaign reinforces the scale and the strength of BMO. Well, BMO may be new to parts of California. We're letting customers know we're not new to banking and we're here to stay.

Speaker 3: Pre-provisioned pre-tax earnings grew 10% year over year, offset by higher provisions for credit loss.

Pre provision pretax earnings grew 10% year over year offset by higher provisions for credit losses.

Speaker 3: Record revenue of $2.8 billion in the quarter was up 10%, driven by 10% growth in net interest income, reflecting both strong balance growth and higher margins, as well as 11% growth in non-interest revenue due to higher card fees, as well as the acquisition of air with increasedif rating.

Darrel Hackett: We know that brand recognition is one of the most powerful factors in attracting new customers and our brand campaign reinforces the scale and the strength of BIMO. While BIMO may be new to parts of California, we're letting customers know we're not new to banking and we're here to stay. We're confident in the power of our integrated North American franchise and our strategy to help clients make real financial progress.

Record revenue of $2 $8 billion in the quarter was up 10% driven by 10% growth in net interest income, reflecting both strong balanced growth and higher margins as well as 11% growth in noninterest revenue due to higher card fees as well as the acquisition of air miles.

Speaker 3: Expenses were up 10% versus prior year, reflecting the impact of severance costs and inclusion of air mines.

Darryl Hackett: We're confident in the power of our integrated North American franchise and our strategy to help clients make real financial progress.

Expenses were up 10% versus prior year, reflecting the impact of severance costs and inclusion of air miles.

Darrel Hackett: Harris, Canadian PNC delivered another quarter of strong performance with personal and business banking breaking through two billion dollars in revenues for the first time and continuing to grow market share. Leading customer acquisition and strong customer onboarding has been a key contributor to our growth. Our new to Canada segment, for example, is up 40% over last year. We're focused on meeting customers where they are, including our branch inside Calgary's Gateway Newcomer Center, where our teams provide specialized guidance and resources.

Darryl Hackett: Harris, Canadian PNC delivered another quarter of strong performance with personal and business banking breaking through two billion dollars in revenues for the first time and continuing to grow market share. Leading customer acquisition and strong customer onboarding has been a key contributor to our growth. Our new to Canada segment, for example, is up 40 percent over last year. We're focused on meeting customers where they are, including our branch inside Calgary's Gateway Newcomer Center, where our teams provide specialized guidance and resources.

Speaker 3: loans were up 7% year over year with 8% growth in residential mortgage lending and 7% in commercial loans and were up 1% from the prior quarter.

Loans were up 7% year over year with 8% growth in residential mortgage lending and 7% in commercial loans and were up 1% from the prior quarter.

Speaker 3: Deposit increased 12% year over year, and 3% sequentially across both retail and commercial businesses with strong growth in term deposits.

Deposits increased 12% year over year, and 3% sequentially across both retail and commercial businesses with strong growth in time deposits.

Speaker 3: Moving to USPNC on slide 17. My comments here will speak to the US dollar performance.

Moving to U S. P&C on slide 17, my comments here will speak to the U S dollar performance.

Speaker 3: Net income was $489 million, up 10%, mainly due to the contribution from Bank of the West.

Darrel Hackett: In addition, this quarter we closed the acquisition of air miles. Canada's longest standing and most recognized loyalty program with 10 million active customers representing half of Canadian households. We're leveraging BMO strengths and innovation and digital to expand and enhance the program and are already seeing early success in attracting new collectors and partners.

Darryl Hackett: In addition, this quarter we closed the acquisition of air miles. Canada's longest standing and most recognized loyalty program with 10 million active customers representing half of Canadian households. We're leveraging BMO strengths and innovation and digital to expand and enhance the program and are already seeing early success in attracting new collectors and partners. In US PNC, we grew revenue 51 percent reflecting the addition of the Bank of the West. While loan demand has been muted across the industry, we're continuing to add customers and deepen relationships.

Net income was $489 million up 10%, mainly due to the contribution from bank of the west.

Speaker 3: Pre-provision pre-tax earnings growth of 22% was partially offset by higher provisions for credit loss.

Pre provision pretax earnings growth of 22% was partially offset by higher provisions for credit losses.

Speaker 3: Revenue was up 51% year over year driven by Bank of the West.

Revenue was up 51% year over year, driven by bank of the West.

Speaker 3: Sequentially, revenue was down 3% due to lower deposit margins and lower loan balance.

Sequentially revenue was down 3% due to lower deposit margins and lower loan balances.

Darrel Hackett: In US PNC, we grew revenue 51%, reflecting the addition of the Bank of the West. While loan demand has been muted across the industry, we're continuing to add customers and deepen relationships. This quarter we launched BMO VPO, an integrated payable solution, expanding a product capability within Bank of the West to all US clients. It's a great example of working together as one unified bank and building our position as a leader in B2B payments.

Speaker 3: Expenses increased 82% year over year, primarily due to the impact of Bank of the West, and up 4% quarter over quarter, primarily due to severance and higher advertising costs. As we prepare to roll out, our unified brand across our US market.

Expenses increased 82% year over year, primarily due to the impact of bank of the west and up 4% quarter over quarter, primarily due to severance and higher advertising costs as we prepared to rollout our unified brand across our U S markets.

Darryl Hackett: This quarter we launched BMO VPEO, an integrated payable solution, expanding a product capability within Bank of the West to all US clients. It's a great example of working together as one unified bank and building our position as a leader in B2B payments.

Speaker 3: loans were up 53% from the prior year driven by the Bank of the West and declined 1% quarter over quarter, primarily in commerce.

Loans were up 53% from the prior year driven by the bank of the West and declined 1% quarter over quarter, primarily in commercial.

Speaker 3: Deposit increased 41% year over year and declined 3% sequential.

Deposits increased 41% year over year and declined 3% sequentially.

Darrel Hackett: We're committed to actively fostering a culture that gives people space to innovate. BMO with the only financial institution named among the top 30 companies on fast companies best workplaces for innovators list. And we were recently recognized by JD Power, ranking first in customer satisfaction with online banking in Canada. These are testament to how BMO's digital first strategy and industry leading experiences are exceeding our customers evolving expectations.

Darryl Hackett: We're committed to actively fostering a culture that gives people space to innovate. BMO with the only financial institution named among the top 30 companies on fast companies best workplaces for innovators list. And we were recently recognized by JD Power ranking first in customer satisfaction with online banking in Canada. These are testament to how BMO's digital first strategy and industry leading experiences are exceeding our customers evolving expectations. In BMO wealth management, we continue to deliver results and extend our leadership in the ETF market.

Speaker 3: Moving to slide 18, BMO wealth management net income was $304 million, down from $325 million last year. Wealth and asset management net income was $223 million compared with $264 million in the prior year.

Moving to slide 18, BMO wealth management net income was $304 million down from $325 million last year wealth.

Wealth and asset management, net income was $223 million compared with $264 million in the prior year.

Speaker 3: contributions from back of the West and growth in new client assets were more than offset by lower net interest income and higher expense.

Contributions from bank of the West and growth in new client assets were more than offset by lower net interest income and higher expenses.

Darrel Hackett: In BMO wealth management, we continue to deliver results and extend our leadership in the ETF market. This quarter, we further expanded our innovative suite of active exchange-traded funds to provide investors with more choice and portfolio customization.

Speaker 3: insurance net income was 81 million dollars compared with 61 million dollars in the prior year, driven by favorable market movements in the current quarter.

Insurance net income was $81 million compared with $61 million in the prior year driven by favorable market movements in the current quarter.

Darryl Hackett: This quarter, we further expanded our innovative suite of active exchange-traded funds to provide investors with more choice and portfolio customization. BMO capital markets had a solid performance, including good revenue contribution in the US, even as client activity remained below historical trends. We have key momentum in key areas, ranking in the top 10 in global and North American M&A and adding products and capabilities in our US rates business, examples of how we're continuing to provide value added expertise and products in support of our client's needs.

Speaker 3: expenses were up 15%, mainly due to the impact of Bank of the West, investments made in the business last year, and severance costs in the quarter.

Expenses were up 15%, mainly due to the impact of bank of the West investments made in the business last year and severance costs in the quarter.

Darrel Hackett: BMO capital markets had a solid performance, including good revenue contribution in the US, even as client activity remained below historical trends. We have key momentum in key areas, ranking in the top 10 in global and North American M&A and adding products and capabilities in our US rates business, examples of how we're continuing to provide value added expertise and products in support of our clients' needs.

Moving to slide 19.

Speaker 3: BMO Capital Market's net income was $316 million up 18% year over year.

BMO capital markets net income was $316 million up 18% year over year.

Speaker 3: Revenue in global markets was up 7% reflecting higher trading activities.

Revenue in global markets was up 7%, reflecting higher trading activity.

Speaker 3: Improved client activity in investment and corporate banking and the prior year markdowns on loan underwriting commitments resulted in a 35% increase in revenues year over year.

Improved client activity in investment and corporate banking and the prior year markdowns on loan underwriting commitments resulted.

Darrel Hackett: Our purpose to boldly grow the good in business and life guides all we do. This quarter, we were included in corporate night listings of Canada's best 50 corporate citizens with top quartile scores in board gender diversity and executive racial diversity, the only Canadian bank named to the list. In addition, we received a top quartile sustainable revenue score, reflecting our commitment to sustainable financing and responsible investing.

Darryl Hackett: Our purpose to boldly grow the good in business and life guides all we do. This quarter, we were included in corporate night listings of Canada's best 50 corporate citizens with top quartile scores in board gender diversity and executive racial diversity, the only Canadian bank named to the list. In addition, we received a top quartile sustainable revenue score, reflecting our commitment to sustainable financing and responsible investing.

And a 35% increase in revenues year over year.

Speaker 3: Expenses were up 17% driven by higher performance-based compensation and legal provisions.

Expenses were up 17% driven by higher performance based compensation and legal provisions.

Turning now to slide 20.

Speaker 3: Corporate services net loss was $159 million compared with $187 million in the prior quarter and net income of $7 million in the prior year.

Corporate services' net loss was $159 million compared with $187 million in the prior year quarter and net income of $7 million in the prior year.

Darryl Hackett: As we look ahead, we're all aware of the macro headwinds facing the end. The external forces are influencing the environment we're all operating in and I believe they could persist for some time to come. Against that backdrop, what sets Bimo apart is the strength of our team and the emphasis that we've placed on dynamically managing our business to control the forces that we can control. We're taking action to reduce our cost space while making investments to drive high performance for the long term, including realizing the synergies from Bank of the West.

Darrel Hackett: As we look ahead, we're all aware of the macro headwinds facing the end of the market. We're taking action to reduce our cost base while making investments to drive high performance for the long term, including realizing the synergies from investing. We're taking action to reduce our cost base while making investments to drive high performance for the long term, including realizing the synergies from the bank of the West.

Speaker 3: To conclude, we acted with pace this quarter to accelerate operational efficiencies that are necessary to align our operating performance with our long-term commitment to positive operating leverage. And we will continue to exercise discipline expense management going forward while remaining focused on our long-term growth strategy.

To conclude we acted with pace this quarter to accelerate operational efficiencies that are necessary to align our operating performance with our long term commitment to positive operating leverage and we will continue to exercise disciplined expense management going forward, while remaining focused on our long term growth strategies.

Speaker 3: The strength of our North American franchise supported by the underlying diversification of our businesses will continue to create a significant differentiation for BMO as the banking industry continues to evolve. I will now turn it over to Piyush.

The strength of our North American franchise supported by the underlying diversification of our businesses. We will continue to create a significant differentiation for BMO as the banking industry continues to evolve.

I will now turn it over to Peter.

Darryl Hackett: I'm confident that our unique and differentiated North American growth strategy sets us apart on both sides of the border. We have the scale across our Canadian and US franchises to continue to support our customers, advance our digital strategy, and make meaningful differences in the communities that we serve.

Darrel Hackett: I'm confident that our unique and differentiated North American growth strategy sets us apart on both sides of the border. We have the scale across our Canadian and U.S, franchises to continue to support our customers, advance our digital strategy, and make meaningful differences in the communities that we serve.

Thank you typhoon and good morning, everyone.

Speaker 6: Our risk performance continues to reflect strong risk management discipline across the bank against a backdrop of significant monetary tightening and other macroeconomic headwinds.

Our risk performance continues to reflect strong risk management discipline across the bank against a backdrop of significant monetary tightening and other macroeconomic headwinds.

Speaker 6: Starting on slide 22, the total provision for credit losses was $492 million or 30 basis points.

Starting on slide 22, the total provision for credit losses was $492 million or 30 basis points.

Tayfun Tuzun: I'll now turn it over to Tayfun. Thank you, Darrel.

Tayfun Tuzun: I'll now turn it over to Typhoon. Thank you, Darrell. Good morning and thank you for joining us.

Tayfun Tuzun: Good morning, and thank you for joining us. My comments will start on slide 9. Third quarter, reported EPS was $1.97 and net income was $1.5 billion. Adjusting items are shown on slide 38 and include acquisition related impacts for integration costs and amortization of intangibles which decrease net income by $370 million and $85 million respectively, as well as a $131 million after tax charge related to tax measures enacted by the Canadian government that amended the HST definition for financial services.

Speaker 6: In bad provisions for the quarter, we're $333 million or 21 basis points, up five basis points from prior quarter, consistent with the expected normalization in loss rates.

Tayfun Tuzun: My comments will start on slide 9. Third quarter reported EPS was $1.97 and net income was $1.5 billion. Adjusting items are shown on slide 38 and include acquisition-related impacts for integration costs and amortization of intangibles which decrease net income by $370 million and $85 million respectively, as well as a $131 million after tax charge related to tax measures enacted by the Canadian government that amended the HST definition for financial services. The remainder of my comments will focus on adjusted results.

Embed provisions for the quarter were $333 million or 21 basis points up five basis points from prior quarter consistent with the expected normalization in loss rates.

Moving to slide 23.

Speaker 3: Performing provision for credit losses of 159 million dollars for this quarter Primarily reflected portfolio credit migration, which is a natural outcome of the higher interest rate environment

Performing provision for credit losses of $159 million for this quarter, primarily reflected portfolio credit migration, which is a natural outcome of the higher interest rate environment.

Speaker 3: Over the last five quarters we have added consistency to our allowance to reflect risks in the economy.

Over the last five quarters, we have added consistently to what allowance to reflect risks in the economy.

Speaker 3: are 3.4 billion dollars of performing zone allowance provides good coverage of over 3.4 times on trailing four quarter in pedloff.

A $3 $4 billion of performing loan allowance provides good coverage of over three four times on trailing four quarter impaired losses.

Tayfun Tuzun: The remainder of my comments will focus on adjusted results. Adjusted EPS was $2.78 and net income was $2 billion, down 4% from last year. Our results this quarter were impacted by severance costs and legal provisions which reduce net income by $245 million and earnings per share by 34 cents on a combined basis. Revenue increased 22% with good organic growth in each of our operating groups and the benefit of acquisitions. Expenses increased 33% primarily due to the impact from acquisitions.

Tayfun Tuzun: Adjusted EPS was $2.78 and net income was $2 billion down 4% from last year. Our results this quarter were impacted by severance costs and legal provisions which reduced net income by $245 million and earnings per share by $0.34 on a combined basis. Revenue increased 22% with good organic growth in each of our operating groups and the benefit of acquisitions. Expenses increased 33% primarily due to the impact from acquisitions. PPPT of $3.1 billion was up 6% driven by strong growth in our Canadian PNC business contributions from our Bank of the West Acquisition and higher results in BMO capital markets.

Speaker 3: Turning to the Infared Loan Credit Performance in the Operating Group.

Turning to the impaired loan credit performance in the operating groups.

Speaker 3: Canadian retail impaired loan losses were $174 million or 33 basis points up one basis point from last quarter.

Canadian retail impaired loan losses about $174 million or 33 basis points up one basis point from last quarter.

Speaker 3: For residential real estate secured lending, we continue to view the risk from higher rates as modest given our high credit quality borough base and low LTV.

For residential real estate secured lending we continue to continue to view the risk from higher rate as modest given out high credit quality borrower base and low Ltvs <unk>.

Speaker 3: Dissinquancy rates and losses remain low and based on data over the last couple of quarters.

Delinquency rates and losses remains though and based on data over the last couple of quarters.

Speaker 3: Customers renewing are able to absorb the impact of the higher interest.

Customers renewing are able to absorb the impact of the higher interest rates.

Tayfun Tuzun: PPPT of $3.1 billion was up 6% driven by strong growth in our Canadian PNC business contributions from our bank of the West acquisition and higher results in BMO capital markets. Total PCL was $492 million including a $159 million provision for performing loans compared with a total provision of $136 million in the prior year. Future will speak to these in his remarks. Turning to slide 10, the acquisition of Bank of the West contributed $167 million to net income, $1.1 billion to revenue and $749 million to expenses.

Speaker 3: In US retail, impaired loan losses were $55 million or 41 basis points, up nine basis points from second quarter primarily due to unsecured credit losses.

In U S retail impaired loan losses were $55 million or 41 basis points up nine basis points from second quarter, primarily due to unsecured credit losses.

Tayfun Tuzun: Total PCL was $492 million including a $159 million provision for performing loans compared with a total provision of $136 million in the prior year. We will speak to these in his remarks. Turning to slide 10, the acquisition of Bank of the West contributed $167 million to net income, $1.1 billion to revenue and $749 million to expenses. We are pleased with the Bank of the West's second quarter post-floating results as their contribution remains in line with our expectations.

Turning to our corporate and commercial businesses.

Speaker 3: Canadian Commercial Impaired Loan provisions were $35 million or 13 basis points, up 9 basis points from very low loss levels in Q2.

Canadian commercial impaired loan provisions with $35 million or 13 basis points up nine basis points from very low loss levels in Q2.

Speaker 3: US commercial impaired losses were $64 million or 16 basis points, up 10 basis points from prior quarter driven by a large provision in the retail trade section.

U S commercial embedded losses was $64 million or 16 basis points.

10 basis points from prior quarter, driven by a large provision in the retail trade sector.

Speaker 3: Our capital markets businesses continue to experience low-empaired, low-nresults with a loss of $1 million this quarter.

Our capital markets businesses continue to experience low impaired loan results with a loss of $1 million this quarter.

Tayfun Tuzun: We are pleased with the Bank of the West second quarter post-floating results as their contribution remains in line with our expectations. We are highly focused on successfully executing our systems conversion and brand unification this weekend which will complete the full integration of Bank of the West within our U.S, segment. As we have shared with you since the announcement, our confidence level and achieving the cost synergies remains very high. To date, we have been tracking ahead of our expectations on cost synergies, and with the benefit of additional analysis over the last two quarters since we closed the transaction. We believe there is potentially more upside, including third party expenses and technology costs.

Speaker 3: On slide 24, Bankwide impaired formations of $917 million increase $74 million from second quarter.

On slide 24 bank wide impaired formations of $917 million increased $74 million from second quarter.

Tayfun Tuzun: We are highly focused on successfully executing our systems conversion and brand unification this weekend, which will complete the full integration of Bank of the West within our US segment. As we have shared with you since the announcement, our confidence level and achieving the cost synergies remains very high. To date, we have been tracking ahead of our expectations on cost synergies and with the benefit of additional analysis over the last two quarters since we closed the transaction. We believe there is potentially more upside including third party expenses and technology costs.

Speaker 3: Gross impaired zones was $2.8 billion, up $186 million from prior quarter.

Gross impaired loans was $2 $8 billion up $186 million from prior quarter.

Speaker 3: The gross impaired loan ratio of 44 basis point remains below pre-pandemic levels.

The gross impaired loan ratio of 44 basis point remains below pre pandemic levels.

Yeah.

Speaker 3: On slide 26, we provide an overview of our commercial wireless chat port for this.

On slide 26, we provide an overview of our commercial real estate portfolio.

Speaker 3: The portfolio is well diversified across geographies and property types.

The portfolio is well diversified across geographies and property types.

Speaker 3: Throughout market cycles, we have maintained consistent and disciplined underwriting standards and client selection.

Throughout market cycles, we have maintained consistent and disciplined underwriting standards and client selection.

Tayfun Tuzun: We plan to give you a final post conversion update when we report our fourth quarter earnings on all relevant metrics. Moving to the balance sheet on slide 11, average loan growth was 22% year over year or 21% on a constant currency basis including Bank of the West and good growth across our businesses. Sequentially, period and loans were down 1% or flat on a constant currency basis. Consumer loans were higher driven by mortgage growth in Canadian PNC while business and government loans were lower as growth in BMO capital markets in Canadian PNC was offset by lower commercial loans in US PNC.

Tayfun Tuzun: We plan to give you a final post conversion update when we report our fourth quarter earnings on all relevant metrics. Moving to the balance sheet on slide 11, average loan growth was 22% year over year, or 21% on a constant currency basis, including Bank of the West, and good growth across our businesses. Sequentially, period and loans were down 1% or flat on a constant currency basis. Consumer loans were higher, driven by mortgage growth in Canadian PNC, while business and government loans were lower as growth in BMO capital markets in Canadian PNC was offset by lower commercial loans in US PNC.

Speaker 3: The office sub-segment, which represents 1% of our overall loan portfolio, is monitored closely and is diversified across urban and suburban areas with no concentration in any particular city.

The office sub segment, which represents 1% of our overall loan portfolio is monitored closely and is diversified across urban and suburban areas with no concentration in any particular city.

Speaker 3: As expected, we have seen negative migration in this portfolio, though impairment and losses remain low.

As expected we have seen negative migration in the portfolio do impairment and losses remain low.

Speaker 3: Overall, we are comfortable with our commercial real estate portfolio given the careful client selection, strong credit structures, and credit quality.

Overall, we are comfortable with our commercial real estate portfolio, given the caf with client selection strong credit structures and credit quality.

Speaker 3: As we look ahead, we continue to monitor closely the macro environment.

As we look ahead, we continue to monitor closely the macro environment.

Speaker 3: If the economic outlook unfolds in line with consensus estimates, we expect impaired loss rates to remain within low to mid-20 basis points consistent with this quarter's performance.

The economic outlook unfolds in line with consensus estimates, we expect embedded loss rate to remain within the low to mid 20 basis points consistent with this quarters performance.

Tayfun Tuzun: We expect loan demand in the US will remain muted through the end of the year, continuing the trends that we have seen during the last two quarters, while modest growth is expected to continue in Canada. Average customer deposits increased 22% year over year from Bank of the West and higher balances in Canadian PNC and BMO capital markets. Sequentially, period and deposit balances were stable and up 1% on a constant currency basis with strong growth and term deposits in Canada, offset by declines in our US PNC and wealth management businesses.

Tayfun Tuzun: We expect loan demand in the US will remain muted through the end of the year, continuing the trends that we have seen during the last two quarters while modest growth is expected to continue in Canada. Average customer deposits increased 22% year over year from Bank of the West and higher balances in Canadian PNC and BMO capital markets. Sequentially, period and deposit balances were stable and up 1% on a constant currency basis with strong growth and term deposits in Canada offset by declines in our US PNC and wealth management businesses.

Speaker 3: Given the quality of our portfolio, high allowance coverage and strong risk management capabilities, we remain well positioned to manage current and emerging risks.

Given the quality of our portfolio high allowance coverage and strong risk management capabilities, we remain well positioned to manage current and emerging risks.

Speaker 3: I will now turn the call back to the operator for the Q&A portion of the call. Thank you.

I will now turn the call back to the operator for the Q&A portion of the call. Thank you.

Speaker 2: Thank you. We will now take questions from the telephone lines. If you have a question and you are using a speaker phone, please lift your handset before making your phone.

Thank you we will now take questions from the telephone lines. If you have a question and you are using a speaker phone. Please lift your handset before making your selection.

Speaker 2: If you have a question, please press star 1 on your device's keypad. You may get a solution at any time by pressing star 2. Please press star 1 at the...

Have a question. Please press star one on your devices keypad, you make and so on your question at any time by pushing star two.

Tayfun Tuzun: Turning to slide 12, the continued strong deposit growth in Canada is the result of continued success in customer acquisition, new products and digital investments across our retail and commercial businesses. We have seen signs of term migrations starting to slow. In the US, trends have stabilized and going forward, our enhanced digital platform combined with a larger retail branch network and our advanced treasury management capabilities addressing the needs of our commercial clients, especially post conversion, should help us grow our deposit base.

Tayfun Tuzun: Turning to slide 12, the continued strong deposit growth in Canada is the result of continued success in customer acquisition, new products and digital investments across our retail and commercial businesses, and we have seen signs of term migrations starting to slow. In the US, trends have stabilized and going forward, our enhanced digital platform combined with a larger retail branch network and our advanced treasury management capabilities addressing the needs of our commercial clients, especially post conversion, should help us grow our deposit base.

Please press star one at this time, if you have a question.

Speaker 2: There will be a brief call for all participants registered for questions. We thank you for your patience.

That will be a brief pause among participants register for questions. We thank you for your patience.

Speaker 2: First question is from Abraham Poonamwala from Bank of America. Please go ahead.

Our first question is from Ebrahim <unk> from Bank of America. Please go ahead.

Hey, good morning.

Speaker 7: I guess maybe Typhoon first question is unpacking what you said on the net in your smart and if I heard you correctly, Cadnim could see Titanium, US expect more stabilization.

I guess, maybe typhoon first question just unpacking, what you said on the net interest margin. If I heard you correctly that NIM could see tightening U S expect more stabilization.

Tayfun Tuzun: Turning to slide 13, on an X trading basis, net interest income was up 25% and net interest margin was up 7 basis points from the prior year, driven by Bank of the West and strong balanced growth and margin expansion in the underlying businesses. Year over year growth was partially offset by the impact of higher low yielding asset balances or liquidity purposes. Net interest margin was up to basis points from last quarter, driven by higher margins and Canadian PNC partially offset by lower margins in US PNC and wealth businesses.

Tayfun Tuzun: Turning to slide 13, on an X trading basis, net interest income was up 25% and net interest margin was up 7 basis points from the prior year driven by Bank of the West and strong balanced growth and margin expansion in the underlying businesses. Year over year growth was partially offset by the impact of higher low yielding asset balances or liquidity purposes. Net interest margin was up to basis points from last quarter driven by higher margins and Canadian PNC partially offset by lower margins in US PNC and wealth businesses.

Speaker 3: That's opposite of what I would have thought. I would have expected the US pressure to continue on deposit pricing, some promotions that you might run to post the integration with Bank of the West.

That's the opposite of what I would have thought I would have expected the U S pressure to continue on deposit pricing.

Some promotions that you might've done school.

Core systems integration with bank of the West and in Canada. The back book repricing should serve as a tailwind to the NIM going forward. So clearly I'm missing something if you can.

Speaker 3: And in Canada, the back book repressing should serve as a tailwind to the name going forward. So clearly I'm missing something if you can elaborate on what the dynamics are both on the asset and the deposit side are driving that name outlook.

And elaborate on what the dynamics out both on the asset and the deposit side driving that NIM outlook.

Speaker 5: Sure. I will make some comments and then also turn it over to Ernie and Nadim for what they're seeing in the US and in Canada. So I'll start at the enterprise level, Ibrahim. We actually feel very good about how we are positioned today. Our NIM expanded a couple of basis points. We are guiding for more stability in the foreseeable future. And I like where the rates are today. Clearly, we are benefiting from higher long-term

Sure I will make some comments and then also turn it over to Nadeem for what they're seeing in the U S and Canada. So I'll start at the interpret enterprise level Abraham we actually feel very good about how we are positioned today, our NIM expanded a couple of basis points, we are guiding for more stability.

Tayfun Tuzun: In Canadian PNC, NIM increased by 7 basis points, driven by wider deposit margins, as well as higher loan margins and favorable change in our loan and deposit mix. In US PNC, NIM was reduced by 16 basis points sequentially, driven by lower deposit balances and margins, as well as lower loan margins. We continue to expect relative stability in our overall margin as the benefit of reinvestment of equity and non maturity deposits at higher yields, offsets, pressures from higher deposit costs. Although we may see some nim tightening in Canada over the next couple of quarters, based on strong pricing competition in loans and deposits, in the US we expect a more stable outlook.

Tayfun Tuzun: In Canadian PNC, NIM increased by 7 basis points driven by wider deposit margins as well as higher loan margins and favorable change in our loan and deposit mix. In US PNC, NIM was reduced by 16 basis points sequentially driven by lower deposit balances and margins as well as lower loan margins. We continue to expect relative stability in our overall margin as the benefit of reinvestment of equity and non-missuity deposits at higher yields offsets pressures from higher deposit costs.

And in the foreseeable future.

You know where rates are today are clearly we are benefiting from higher longer rates and we are I think are pretty well positioned.

Speaker 5: And we are, I think, pretty well positioned.

Speaker 5: to deal with whatever the monetary authorities do on Canada and the US. At an enterprise level, I think our NIM positioning looks very good in the current environment. Coming down to Canada and the US, in Canada, this quarter, we have seen the positive spread widening, some loan spread widening. I think our business managed their spreads very well during the quarter, but at the same time.

To deal with whatever the monetary authorities do in Canada, and the U S. So at an enterprise level I think our NIM.

Positioning looks very good in the current environment coming down to sort of Canada, and the U S and Canada. This quarter, we have seen deposit spread widening some loan spread widening and I think our business manage their spreads very well during the quarter, but at the same time, we are aware.

Tayfun Tuzun: Although we may see some nimb tightening in Canada over the next couple of quarters based on strong pricing competition in loans and deposits, in the US we expect a more stable outlook. Moving to slide 14, expenses increased 33% from last year, mainly due to bank of the West and higher severance costs. Sequentially, expenses were down 1%, excluding the impact of severance costs, three more days in the current quarter, and the addition of two months of results from the acquired air miles business.

Tayfun Tuzun: Moving to slide 14. Expenses increased 33% from last year, mainly due to Bank of the West and higher severance costs. Sequentially, expenses were down 1%, excluding the impact of severance costs, three more days in the current quarter, and the addition of two months of results from the acquired air miles business. As we predicted earlier in the year, the expense trends are improving based on our decision to curb expense growth earlier in the year and reinforced by the dynamic expense management actions we have taken this quarter to moderate growth and meet our commitment to positive operating leverage and improved efficiency.

Speaker 5: We are aware of rising pricing competition, both on deposits as well as loans, especially as the quarter came to an end.

Rising pricing competition, both on deposits as well as loans, especially.

As the quarter came to an end and Oh, we're cognizant of how that may impact our NIM going into the next couple of quarters thoughts to comment about.

Speaker 5: And we're cognizant of how that may impact our name going into the next couple of quarters. Thus, the comment about some tightening in Canada. In the US, in Canada, obviously, we also benefited from good deposit growth.

Tayfun Tuzun: As we predicted earlier in the year, the expense trends are improving based on our decision to curb expense growth earlier in the year and reinforced by the dynamic expense management actions we have taken this quarter to moderate growth and meet our commitment to positive operating leverage and improved efficiency. This quarter, we incurred severance costs to accelerate operational efficiencies across the bank, while we continue to align resources to areas that will support long-term customer growth.

Some some tightening in Canada and in the U S and Canada. Obviously, we also benefited from good deposit growth relative.

Speaker 5: relative to long growth during the quarter. That's always very helpful. In the,

Relative to loan growth during the quarter Thats always very helpful. In the U S. The pricing competition continues clearly theres no lights down yet and we're not necessarily anticipating a significant change I think in general migration towards term deposits will continue.

Speaker 5: The pricing competition continues clearly. There's no let down yet.

Speaker 5: And we're not necessarily anticipating a significant change, I think, in general migration towards...

Tayfun Tuzun: This quarter, we incurred severance costs to accelerate operational efficiencies across the bank, while we continue to align resources to areas that will support long-term customer growth. We expect this to drive expense savings over approximately $200 million in fiscal 2024 and run rate savings over approximately $250 million by early 2025. In addition, we have identified further actions to optimize real estate technology and procurement costs. Next quarter, we will record an impairment charge of approximately $45 million for real estate reduction opportunities that will generate future savings.

Tayfun Tuzun: We expect this to drive expense savings over approximately $200 million in fiscal 2024 and run rate savings over approximately $250 million by early 2025. In addition, we have identified further actions to optimize real estate, technology, and procurement costs. Next quarter, we will record an impairment charge of approximately $45 million for real estate reduction opportunities that will generate future savings. The estimated cumulative run rate benefits from the severance costs and these additional actions are estimated to exceed $400 million at an annualized basis.

Speaker 5: term deposits will continue. We are those switching to a more growth mode, both in our personal deposits as well as commercial deposits, which will be helpful, which will support some of that.

We are those switching to a more growth mode.

Within our personal deposits as well as commercial deposits, which will be helpful, which will support.

Speaker 5: stabilization. We are also expecting you know better loan spreads in the US which also is helpful. And then overall the corporate

Some of that.

Stabilization, we are also expecting.

Loan spreads in the U S, which also is helpful and then overall the corporate.

Speaker 5: interest rate risk management related support that is provided by the role over impact of our non-missuity deposits is helping the US PNC business. So I think both of these expectations

Interest rate risk management related support that is provided by the rollover impact of our non maturity deposits is helping.

The U S P&C business, so I think.

Both of these expectations are.

Speaker 5: are in line with what we are seeing in the market as well as our overall risk management approach. With that, any comments, Ernie and Nadim?

Tayfun Tuzun: The estimated cumulative run rate benefits from the severance costs and these additional actions are estimated to exceed $400 million at an annualized basis. Combined with the targeted cost synergies at Bank of the West, we expect these will result in positive operating leverage in 2024 and help us continue to invest in our businesses while keeping our expense growth at acceptable levels. We expect our expense trends to start reflecting these benefits starting in the first quarter of 2024 once the conversion-related activities this quarter are behind us.

Are in line with what we are seeing in the market as well as our overall risk management approach without any comments or any entity Uh huh.

Speaker 4: I would just say it characterized that, loan volumes are down, of course, both sides of the border, but there is a divergence. So in Canada, we're still seeing better loan volume demand and more opportunities for deposit growth, but the competitors sets are different as well. So the Canadian banks are still fighting for market share. They're still fighting on structures. And so we're not seeing as much pricing discipline in Canada, on the other hand, the US.

Sure.

I would just say it characterized that loan volumes are down of course, both sides of the border, but there is a divergence. So in Canada, we're still seeing better loan volume demand and more opportunities for deposit growth, but the competitor sets are different as well. So the Canadian banks are still fighting for market share Theres still.

Tayfun Tuzun: Combined with the targeted cost synergies at the Bank of the West, we expect these will result in positive operating leverage in 2024 and help us continue to invest in our businesses while keeping our expense growth at acceptable levels.

Tayfun Tuzun: We expect our expense trends to start reflecting these benefits, starting in the first quarter of 2024, once the conversion-related activities this quarter are behind us. Turning to slide 15, our capital position remains strong with a common equity tier 1 ratio of 12.3 percent of 10 basis points from the prior quarter. Internal capital generation shares issued under the dividend reinvestment plan and lower source currency RWA, primarily reflecting change in assets, where most mostly offsets by the air miles acquisition and the impact from acquisition integration costs and tax-related charge in the current quarter.

Fighting on structures and so we're not seeing as much pricing discipline in Canada on the other hand the U S.

Speaker 4: with a special, the regional banks tightening up on capital and liquidity. We are seeing structures now tightening. We are seeing banks taking lower holds. And that is leading to stabilization in our margins and spreads within the loan book. That's why we're seeing a bit of a divert.

With our specialty regional banks tightening up on capital and liquidity, we are seeing structures now tightening we are seeing banks, taking lower holds.

Tayfun Tuzun: Turning to slide 15, our capital position remains strong with a common equity tier 1 ratio of 12.3% of 10 basis points from the prior quarter. Internal capital generation shares issued under the dividend reinvestment plan and lower source currency RWA, primarily reflecting change and assets where most mostly offsets by the air miles acquisition and the impact from acquisition integration costs and tax-related charge in the current quarter.

As leading to stabilization in our margins and spreads within the loan book. So that's why we're seeing a bit of a divergence.

Speaker 8: And then on the deposit side, let me just make some comments about US first and Canada. So in the US, we're seeing some actual good performance relative to peers on our retail book. That's a function of both the legacy demo aside, as we like to say, as well as the Bank of the West platform. We're seeing some good success in terms of stabilizing the retail deposit in the Bank of the West market. And offering out promotions, et cetera, and capabilities that are being well received by our colleagues there and our customer base. So as we think about that, coupled with that digital deposit taking, I'm really confident in our US growth strategy around deposits to continue to be at peer or above peers in the marketplace.

And then on the deposit side, let me just make some comments about you asked first than Canada.

So in the U S. We're seeing some actual good performance relative to peers on a retail book, that's a function of both the legacy BMO aside as we like to say as well as the bank of the West a platform. We're seeing some good success in terms of stabilizing the retail deposits.

In the bank or the last market and offering out promotions et cetera, and capabilities that are being well received by our colleagues there and our customer base. So as we think about that coupled with that digital deposit taking I'm really confident in our U S growth strategy around deposits to continue to be.

Tayfun Tuzun: Moving to the operating groups and starting on slide 16, Canadian PNC delivered net income of $923 million, down 4 percent from the prior year. Pre-provisioned, pre-tax earnings grew 10% year over year, offset by higher provisions for credit losses. Record revenue of $2.8 billion in the quarter was up 10%, driven by 10% growth in net interest income, reflecting both strong balance growth and higher margins, as well as 11% growth in non-interest revenue due to higher card fees, as well as the acquisition of air miles.

Tayfun Tuzun: Moving to the operating groups and starting on slide 16. Canadian PNC delivered net income of $923 million down 4% from the prior year. Pre-Provision, pre-tax earnings grew 10% year over year, offset by higher provisions for credit losses. Record revenue of $2.8 billion in the quarter was up 10%, driven by 10% growth in net interest income, reflecting both strong balance growth and higher margins, as well as 11% growth in non-interest revenue due to higher card fees as well as the acquisition of air miles.

At peer or above peers in the market place and then if I switch gears and go to Canada.

In top tier market share growth consistently in deposits in the retail side of the Canadian business, that's driven by our leading acquisition, we have record customer new customer acquisition in Canada that strong digital sales capability branch conversations that are focused on full relationships, we are seeing that shift a bit to turn but as Kate.

Tayfun Tuzun: Expenses were up 10% versus prior year, reflecting the impact of severance costs and inclusion of air miles. Lones were up 7% year over year with 8% growth in residential mortgage lending and 7% in commercial loans and were up 1% from the prior quarter. Deposit increased 12% year over year and 3% sequentially across both retail and commercial businesses with strong growth in term deposits.

Tayfun Tuzun: Expenses were up 10% versus prior year, reflecting the impact of severance costs and inclusion of air miles. Lones were up 7% year over year, with 8% growth in residential mortgage lending, and 7% in commercial loans, and were up 1% from the prior quarter. Deposit increased 12% year over year, and 3% sequentially across both retail and commercial businesses, with strong growth in term deposits.

You mentioned, it's slowing down we're watching it and its plateauing.

So we'll continue to see that happen over the next little while but overall really confident in our ability to continue to drive growth in deposit side going forward.

Speaker 3: God, thanks for the color. And just a very good three-time phone on capital. The mind of the impact from FRTB, Basel's four factor increases in 1, Q24 to the CET1. And separately, if the US Basel endgame NPR were to pass as is.

Got it thanks for the color and just a very kooky typhoon capital and remind us the impact from F. RTD buses to effect to increases in <unk> 24 to the CET, one and separately the U S. Basel endgame NPR were to pass as is it seems like the Oh blood alone.

Speaker 3: for to the CET1 and separately if the US Basel and NPR were to pass as is, it seems like the burden on IAC foreign bank IAC is going to be quite meaningful both in capital markets and otherwise how impactful is that to be most US operations? Thanks, sure. Thanks for the question, Abraham. In terms of the impact of the RTV, we think that the impact will be very, very modest into Q1. The work still continues and we have some additional details that we need to finalize.

Tayfun Tuzun: Moving to USPNC on slide 17, my comments here will speak to the US dollar performance. Net income was $489 million, up 10% mainly due to the contribution from Bank of the West. Pre-Provision, pre-tax earnings growth of 22% was partially offset by higher provisions for credit losses. Revenue was up 51% year over year driven by Bank of the West. Sequentially, revenue was down 3% due to lower deposit margins and lower loan balances.

Tayfun Tuzun: Moving to USPNC on slide 17, my comments here will speak to the US dollar performance. Net income was $489 million, up 10% mainly due to the contribution from Bank of the West. Pre-provisioned pre-tax earnings growth of 22% was partially offset by higher provisions for credit losses. Revenue was up 51% year over year, driven by Bank of the West. Sequentially, revenue was down 3% due to lower deposit margins and lower loan balances.

Speaker 3: seems like the burden on IHC foreign bank IHC is going to be quite meaningful both in capital markets and otherwise how impactful is that to be most US operations? Thanks, sure. Thanks for the question, Abraham. In terms of the impact of the RTV, we think that the impact will be very, very modest.

Iht's Foreign bank I see there's going to be quite meaningful both in capital markets and otherwise how impactful is that to be most U S operations. Thanks sure. Thanks for the question Brian in terms of the impact of a car T. B, we think that the impact will be very very modest.

Speaker 5: into Q1. You know, the work still continues and we have some additional details that we need to finalize, but we are not expecting a big impact into Q1.

Into Q1.

The work still continues and we have some additional details that we need to finalize.

But we are not expecting a big impact into Q1.

Speaker 5: Darrell, would you like to comment on the US side, the regulatory developments in the US side? Yeah, and Typhoon, I'm just going to qualify for people we're going to have to get used to this. When Typhoon said Darrell, he's referring to Darrell Hackett's first call here. It's a great question, Abraham, for him to take as far as the overall environment is concerned in the US. Thank you for that handoff here, and hello everybody. In terms of battle 3 in-game, first, it's really important to remember that we've operated in the US as a significant entity for nearly 40 years.

Darryl would you like to comment on the U S side, the regulatory developments in the U S and so I'm just going to I'm, just going to clarify for people, we're going have to get used to this when typhoon said Darryl he is referring to Darryl Hackett first call here and so it's a great question Abraham for him to take as far as the overall environment is concerned in the U S. Yeah. Thank you for that handoff here and Hello, everybody.

Tayfun Tuzun: Expenses increased 82% year over year, primarily due to the impact of Bank of the West and up 4% quarter over quarter, primarily due to severance and higher advertising costs as we prepared to roll out our unified brand across our US markets. Lones were up 53% from the prior year driven by Bank of the West and declined 1% quarter over quarter, primarily in commercial. Deposit increased 41% year over year and declined 3% sequentially.

Tayfun Tuzun: Expenses increased 82% year over year, primarily due to the impact of Bank of the West, and up 4% quarter over quarter, primarily due to severance and higher advertising costs, as we prepare to roll out our unified brand across our US markets. Lones were up 53% from the prior year driven by Bank of the West, and declined 1% quarter over quarter, primarily in commercial. Deposit increased 41% year over year, and declined 3% sequentially.

In terms of Basel III and game first its really important to remember that we've operated in the U S. S. A significant entity for nearly 40 years and we've effectively began our journey to being a category three U S bank nearly two years ago, when we announced the acquisition of bank of the West earlier this year with the approval and close it.

Speaker 9: and we've effectively begun our journey to being a category three US bank nearly two years ago when we announced the acquisition of Bank of the West.

Tayfun Tuzun: Moving to slide 18, BMOB wealth management net income was $304 million down from $325 million last year. Wealth and asset management net income was $223 million compared with $264 million in the prior year. Contributions from Bank of the West and growth in new client assets were more than offset by lower net interest income and higher expenses. Insurance net income was $81 million compared with $61 million in the prior year, driven by favorable market movements in the current quarter.

Tayfun Tuzun: Moving to slide 18, BMOB wealth management net income was $304 million down from $325 million last year. Wealth and asset management net income was $223 million compared with $264 million in the prior year. Contributions from Bank of the West and growth in new client assets were more than offset by lower net interest income and higher expenses. Insurance net income was $81 million compared with $61 million in the prior year driven by favorable market movements in the current quarter. Expenses were up 15% mainly due to the impact of Bank of the West investments made in the business last year and severance costs in the quarter.

Speaker 9: Earlier this year with the approval and close of Bank of the West, we became a US entity with more than 400 billion in assets, making us a top 10 US bank. So given this, we are uniquely well positioned among our peers, and we've already been maintaining strong capital ratios in our US regulated entities. So while the Basel III in-game proposals are still in early stages,

Bank of the West we became a U S entity with more than 400 billion in assets, making us a top 10 U S bank. So given this we are uniquely well positioned among our peers and we've already been maintaining strong capital ratios in our U S regulated entities. So while the Basel III endgame proposals are still in early stages.

Speaker 9: We feel really prepared, very well prepared for what's to come. And we expect the current proposals to only have a modest impact on our current journey.

We feel really prepared very well prepared for what's to come and we expect the current proposals to only have a modest impact on our current journey.

Thank you.

Tayfun Tuzun: Expenses were up 15% mainly due to the impact of Bank of the West, investments made in the business last year, and severance costs in the quarter. Moving to slide 19, BMOB wealth management net income was $316 million up 18% year over year. Revenue in global markets was up 7% reflecting higher trading activity. Improved client activity in investment and corporate banking, and the prior year markdowns loan-on-the-writing commitments resulted in a 35% increase in revenues year over year. Expenses were up 17% driven by higher performance-based compensation and legal provisions.

Yeah.

Thank you.

Speaker 2: Following question is so many goman on the scotiship?

Following question is from many Goldman.

With Scotiabank. Please go ahead.

Speaker 10: Hi, good morning. Tetsun, I think you were clear in terms of your commentary on expense synergies coming from Bank of the West, but I'm curious, and I apologize if I missed it, but if you could just talk about the outlook for revenue synergies, you know, specifically in the context of a tougher US operating environment, I think that it's clear that what's emerging, so I'm wondering if there's any impact there on your ability to deliver on the revenue synergies that you've guided.

Hi, good morning.

That's what I think you were clear in terms of your commentary on.

Tayfun Tuzun: Moving to slide 19, BMOB wealth management net income was $316 million up 18% year over year. Revenue in global markets was up 7% reflecting higher trading activity. Improved client activity in investment and corporate banking and the prior year markdowns loan-on-on-the-writing commitments resulted in a 35% increase in revenues year over year. Expenses were up 17% driven by higher performance-based compensation and legal provisions.

Expense synergies coming from bank of the West, but I'm I'm curious.

Apologize if I missed it but if you could just talk about the outlook for revenue synergies specifically in the context of a tougher U S operating environment.

Clear.

What's emerging so I'm wondering if there's any impact on your ability to deliver on the revenue synergies that you've guided to.

Speaker 5: Yeah, good question. Look, I mean, we acknowledge the environment, you know, it impacts all banks that are operating in the US, but overall, you know, our expectations remain intact and, you know,

Yeah. Good question look I mean, we acknowledge the environment you know it impacts all banks that are operating in the U S. But overall.

Our expectations remain intact and they don't.

Tayfun Tuzun: Turning now to slide 20, corporate services net loss was $159 million compared with $187 million in the prior quarter and net income of $7 million in the prior year.

Tayfun Tuzun: Turning now to slide 20, Corporate Services Net Loss was $159 million compared with $187 million in the prior quarter and net income of $7 million in the prior year. To conclude, we acted with pace this quarter to accelerate operational efficiencies that are necessary to align our operating performance with our long-term commitment to positive operating leverage and we will continue to exercise discipline expense management going forward while remaining focused on our long-term growth strategies. The strength of our North American franchise supported by the underlying diversification of our businesses will continue to create a significant differentiation for BMO as the banking industry continues to evolve.

Speaker 5: although the timing may change a little bit, we are still, you know, we are still of the opinion that our financial expectations remain well grounded. We have an important weekend coming up with conversion. As I said, we are also doing more work on, you know, potentially identifying additional expense saving opportunities.

Although the timing may change a little bit we are still.

We are still of the opinion that our financial expectations remain well grounded.

Tayfun Tuzun: To conclude, we acted with pace this quarter to accelerate operational efficiencies that are necessary to align our operating performance with our long-term commitment to positive operating leverage and we will continue to exercise discipline expense management going forward while remaining focused on our long-term growth strategies. The strength of our North American franchise supported by the underlying diversification of our businesses will continue to create a significant differentiation for BMO as the banking industry continues to evolve.

We have an important weekend coming up with conversion as I said, we are also.

Doing more work on you know potentially identifying additional expense.

Expense saving opportunities.

Speaker 5: We plan to update you with all these metrics once we get to the end of

We plan to update you.

With all of these metrics are once we get to the end of Q4, but broadly.

Speaker 5: Q4, but broadly, our expectation is that we are still in the same range in terms of our expectations. That's...

Our expectation is that we are still in.

And the same in the same range in terms of our expectations.

Piyush Agrawal: I will now turn it over to Piyush.

Piyush Agrawal: I will now turn it over to Piyush.

That's sort of as a.

Speaker 5: is not necessarily denying the current environment, but I think our expectations and optimism remains the same. Yeah, it's Darrell Manny just to compliment that. I agree with all that. I think the thesis is holding completely. In fact, as days go by, we're getting increasingly encouraged by the thesis on the customer side. And you know, you asked about revenue synergies.

It is not necessarily denying the current environment, but I think our expectations and optimism remains the same.

Piyush Agrawal: Thank you Typhoon and good morning everyone. Our risk performance continues to reflect strong risk management discipline across the bank against a backdrop of significant monetary tightening and other macroeconomic headwinds. Starting on slide 22, the total provision for credit losses was $492 million or 30 basis points. In bad provisions for the quarter were $333 million or 21 basis points up five basis points from prior quarter consistent with the expected normalization in loss rates.

Piyush Agrawal: Thank you Typhoon and good morning everyone. Our risk performance continues to reflect strong risk management discipline across the bank against a backdrop of significant monetary tightening and other macroeconomic headwinds. Starting on slide 22, the total provision for credit losses was $492 million or 30 basis points. In bad provisions for the quarter were $333 million or 21 basis points, up five basis points from prior quarter consistent with the expected normalization in loss rates.

How many just to complement that I agree with all that I think the thesis is holding completely in fact as days go by we're getting increasingly encouraged.

By the thesis on the customer side and you asked about.

Revenue synergies.

Speaker 11: Well, Typhoon's right, we will give you all a complete update at the end of the conversion quarter, which is the one that's coming in the meantime.

Well typhoons right, we will give you all a complete update at the end of the conversion quarter, which is the one that's coming in the meantime.

Speaker 11: We can tell you that the acceleration on

We can tell you that the acceleration on new accounts, new customers the crossover between the commercial business in the capital markets business. We talked to you about that last quarter continues to increase at a healthy rate.

Speaker 11: new accounts, new customers, the crossover between the commercial business and the capital markets business. We talked about that last quarter. Continues to increase at a healthy rate.

Piyush Agrawal: Moving to slide 23, performing provision for credit losses of $159 million for this quarter, primarily reflected portfolio credit migration which is a natural outcome of the higher interest rate environment. Over the last five quarters we have added consistency to our allowance to reflect risks in the economy. Our $3.4 billion of performing loan allowance provides good coverage of over 3.4 times on trailing four quarter impaired losses. Turning to the impaired loan credit performance in the operating groups, Canadian retail impaired loan losses were $174 million or 33 basis points up one basis point from last quarter.

Piyush Agrawal: Moving to slide 23, performing provision for credit losses of $159 million for this quarter primarily reflected portfolio credit migration which is a natural outcome of the higher interest rate environment. Over the last five quarters we have added consistency to our allowance to reflect risks in the economy. Our $3.4 billion of performing loan allowance provides good coverage of over 3.4 times on trailing four quarter impaired losses. Turning to the impaired loan credit performance in the operating groups, Canadian retail impaired loan losses were $174 million or 33 basis points, up one basis point from last quarter.

We've even observed are early days, even before are pretty substantial marketing push which will begin in.

In about 10 days from now.

A real activation at the branch level with the digital platforms as well I don't know Ernie would you would you complement that with some some specificity yeah definitely.

Speaker 8: have not launched all the capabilities of tools, financial planning, etc. in the market, yet, nor are big brand campaigns or major offers that we're going to introduce over the next couple of weeks. Having said that, those the performance of our branch network just being allowed to be able to have different offers and campaigns, we're already seeing a, you know, lift overall, about 20% overall in terms of performance. And that's a function of them reaching out to customers and having great conversations. So the colleagues are ready and the customers are extremely open to these conversations and receptive to what we have to offer. And we haven't brought the full products week as we mentioned earlier to them, as well. Our digital capabilities are performing, you know, we've taken the bank of the West digital capabilities out of the market and put demos in. And they're actually performing at parity, which says, even without the brand advertising, we were able to deliver the same sorts of lists. These are all promising indicators of the future ahead after we get through the next weekend. Thank you so much. Thank you. So we asked that please you limit yourself to one question and one follow up. Following question is from Gabriel DeShine from National Bank Financial. Please go ahead. Yeah, I want to continue on that line of questioning and just, you know, all of you.

As Darrell pointed out we have not launched all the capabilities.

Tools financial planning et cetera in the market, yet nor our big brand campaign or major offers that we're going to introduce over the next couple of weeks, having said that those the performance of our branch network just being allowed to be able to have different offers and campaign we're already seeing.

Piyush Agrawal: For residential real estate secured lending, we continue to view the risk from higher rates as modest given our high credit quality borrower base and low LTVs. Dessinquency rates and losses remain low and based on data over the last couple of quarters, customers renewing are able to absorb the impact of the higher interest rates. In US retail, impaired loan losses were $55 million or 41 basis points up nine basis points from second quarter primarily due to unsecured credit losses.

Piyush Agrawal: For residential real estate secured lending, we continue to view the risk from higher rates as modest given our high credit quality borrower base and low LTVs. Dissinquency rates and losses remain low and based on data over the last couple of quarters, customers renewing are able to absorb the impact of the higher interest rates. In US retail impaired loan losses were $55 million or 41 basis points, up nine basis points from second quarter primarily due to unsecured credit losses.

Lift overall about 20% overall in terms of performance and that's a function of them reaching out to customers. After having great conversations. So the colleagues are ready and the customers are extremely open to these conversations and receptive to what we have to offer and we haven't brought the full product suite as we mentioned earlier to them as well.

Our digital capabilities are performing.

We've taken the bank of the West digital capabilities out of the market and put Beaver dam and they're actually performing at parity, which says even without the brand advertising, we were able to deliver the same sorts of less. So these are all promising indicators of the future ahead. After you get through the next weekend.

Piyush Agrawal: Turning to our corporate and commercial businesses, Canadian commercial impaired loan provisions were $35 million or 13 basis points up nine basis points from very low loss levels in Q2. US commercial impaired losses were $64 million or 16 basis points up 10 basis points from prior quarter and driven by a large provision in the retail trade sector. Our Capital Markets Businesses continued to experience low-impaired loan results with a loss of $1 million in this quarter. On slide 24, bank-wide-impaired formations of $917 million increased $74 million from second quarter. Gross-impaired loans was $2.8 billion up $186 million from prior quarter. The gross-impaired loan ratio of 44 basis-point remains below pre-pandemic levels.

Piyush Agrawal: Turning to our corporate and commercial businesses, Canadian commercial impaired loan provisions were $35 million or 13 basis points, up nine basis points from very low loss levels in Q2. US commercial impaired losses were $64 million or 16 basis points, up 10 basis points from prior quarter driven by a large provision in the retail rate section. Our Capital Markets Businesses continued to experience low-impaired loan results with a loss of $1 million this quarter.

Speaker 10: Thank you so much. Thank you.

Thank you so much.

Thank you.

So we ask that you limit yourself to one question.

And one follow up.

Speaker 2: following question is from Gabriel Deschein from National Bank Financial. Please go ahead. Yeah, I want to continue on that line of questioning and just, you know, all of you, my words, you can tell me if I have it right or not. But the sense I'm getting is maybe there's some, you know, revenue, shortfall versus expectation.

Following question is from Gabriel <unk> from National Bank Financial. Please go ahead, yeah I wanted to continue on that line of questioning just.

You know I'll use my words, you can tell me, if I haven't right or not.

But the sense I'm getting is maybe there's some no revenue.

Piyush Agrawal: On slide 24, bank-wide impaired formations of $917 million increased $74 million from second quarter. Gross impaired loans was $2.8 million up $186 million from prior quarter. The gross impaired loan ratio of $44 basis point remains below pre-pandemic levels.

Shortfall versus expectation.

Speaker 12: related to the Bank of the West Acquisition because of the margins, maybe the loan book and deposit book are both smaller but you still sound pretty confident in your accretion targets and I'm reading through the into the expense management commentary that you might find some additional cost savings to you know keep you on track.

Related to the bank of the West acquisition, because the margins maybe the loan book and deposit book are both smaller.

But you still sound pretty confident in your accretion targets and I'm reading through the into the expense management commentary that.

And you might find some additional cost savings to keep.

Keep you on track, but is that a fair interpretation or.

Piyush Agrawal: On slide 26, we provide an overview of our commercial real estate portfolio. The portfolio is well-diversified across geographies and property types. Throughout market cycles, we have maintained consistent and disciplined underwriting standards and client selection. The office sub-segment, which represents 1% of our overall loan portfolio is monitored closely and is diversified across urban and suburban areas with no concentration in any particular city. As expected, we have seen negative migration in this portfolio, though impairment and losses remain low.

Piyush Agrawal: On slide 26, we provide an overview of our commercial real estate portfolio. The portfolio is well diversified across geographies and property types. Throughout market cycles, we have maintained consistent and disciplined underwriting standards and client selection. The office sub-segment which represents 1% of our overall loan portfolio is monitored closely and is diversified across urban and suburban areas with no concentration in any particular city. As expected, we have seen negative migration in this portfolio, though impairment and losses remain low. Overall, we are comfortable with our commercial real estate portfolio, given the careful client selection, strong credit structures and credit quality.

Speaker 4: Well, first of all, I don't think that we're stepping back, you know, from our overall revenue synergy expectations. I don't think that we're necessarily changing that, you know, Ernie mentioned some of the more promising signs of, you know, how we are getting there. You know, again, as I said,

First of all I don't think that we're stepping back you know from our overall revenue synergy expectations I don't think we're necessarily changing that now.

Already mentioned some of the more promising signs of how.

How we are getting there.

You know again as I said.

Speaker 4: Once we finalize our expense saving as some targets, which we expect to be higher than what we shared with you before, we will also update the accretion numbers. But as I said overall, we believe we are still intact with largely intact with our expectations that we shared with you earlier.

Once we finalize our expense saving Assam.

<unk>, which we expect to be higher than what we shared with you before we will also update.

The accretion numbers, but as I said overall, we believe we are still in <unk>.

Stacked with a largely intact with our expectations that we shared with you earlier in the year. Okay. So one question one follow up.

Piyush Agrawal: Overall, we are comfortable with our commercial real estate portfolio, given the careful client selection, strong credit structures and credit quality. As we look ahead, we continue to monitor closely the macro environment. If the economic outlook unfolds in line with consensus estimates, we expect impaired loss rates to remain within low to mid-20 basis points consistent with this quarter's performance. Given the quality of our portfolio, high allowance coverage and strong risk management capabilities, we remain well positioned to manage current and emerging risks.

Speaker 12: One question, one follow up, I think that's that work.

Hmm.

Speaker 12: i just appear to be coming in the customers renewing at higher rate in the market book are uh... absorbing it or adapting well you know qualified at i mean i don't know what i think i know the i think it's mean but uh...

I'll just finish the comment you made to customers renewing at higher rates on the mortgage book.

Piyush Agrawal: As we look ahead, we continue to monitor closely the macro environment. If the economic outlook unfolds in line with consensus estimates, we expect impaired loss rates to remain within low to mid-20 basis points consistent with this quarter's performance. Given the quality of our portfolio, high allowance coverage and strong risk management capabilities, we remain well positioned to manage current and emerging risks.

They're absorbing it or adapting well can you.

Quantify that or that I mean, I don't know.

I know, what the adjectives mean, but.

So what does that mean and from your perspective sure. So I think the Canadian residential secured book remains high quality because again the customer base has an average FICO of 790 <unk>.

Speaker 6: So I think the Canadian residential secured book remains high quality because again the customer base has an average gitu

Speaker 6: when you've got about 10% renewals a year and if I go back to the last four quarter data

When you've got about 10% renew was a yard and if I go back to the last full quarter of data. We've had significant success in those renewals. They added about a 10% to 20% increase as they come up for renewal and all of them have successfully renewed and the performance is.

Operator: I will now turn the call back to the operator for the Q&A portion of the call. Thank you.

Operator: I will now turn the call back to the operator for the Q&A portion of the call. Thank you.

Speaker 4: We've had significant success in those renewals. They are at about...

Speaker 4: a 10 to 20 percent increase as they come up with renewal and all of them have successfully renewed and the performance has been stellar. In addition, I'll give you the fact that those that are even not due today, you've got programs underway to reach out to customers, you reach out to about 40 percent of the customers.

Operator: We will now take questions from the telephone lines. If you have a question and you are using your speaker phone, please lift your handset before making your selection. If you have a question, please press star 1 on your device's keypad. You may cancel your question at any time by pressing star 2.

Operator: We will now take questions from the telephone lines. If you have a question and you are using your speaker phone, please lift your handset before making your selection. If you have a question, please press star 1 on your device's keypad.

Further in addition, I'll give you the fact that for those that are even not do today, you've got programs under way to reach out to customers, who reach out to about 40% of the customers and we are getting very good positive feedbacks on why they can go to the customers have come up and either topped off payments. If there are negative am.

Operator: You may cancel your question at any time by pressing star 2. Please press star 1 at this time if you have a question. There will be a brief pause while participants register for questions. We thank you for your patience.

Operator: Please press star 1 at this time if you have a question. Then we will brief off our participants' legislative questions.

Speaker 4: and we're getting very good positive feedback. So voluntarily, customers have come up and either top tough payment if they're a negative M or increase their payments as they're going forward.

Operator: We thank you for your patience.

Ebrahim Poonawala: Our first question is from Abraham Punevala from Bank of America. Please go ahead.

Ebrahim Poonawala: Our first question is from Abraham Punevala from Bank of America. Please go ahead. Good morning. I guess maybe typhoon first question is unpacking what you said on the net in your smart hand. If I heard you correctly, cad name could see tightening, you expect more stabilization. That's opposite of what I would have thought. I would have expected the US pressure to continue on deposit pricing. Some promotions that you might run post system integration with Bank of the West.

Our increased debt payments as there going forward.

Speaker 4: So even though the back book, the big majorities are 25, 26, the early success you see from anecdotal data of four quarters and our expectations because of the strength of the Canadian customer in the secured portfolio gives us a very high level of confidence.

So even though the back book the Big maturities are $25 96 mhm. The early success you received from anecdotal data of full quarters, and our expectations because of the strength of the Canadian customer in the secured portfolio.

Ebrahim Poonawala: Good morning. I guess maybe Typhoon's first question is unpacking what you said on the net in your smart hand. If I heard you correctly, CADNIM could see tightening, U.S, expect more stabilization. That's opposite of what I would have thought. I would have expected the U.S, pressure to continue on deposit pricing, some promotions that you might run for the post-system integration with Bank of the West. And in Canada, the back book repricing should serve as a tailwind to the name going forward.

It gives us a very high level of confidence.

Alright, thank you.

Thank you.

Speaker 2: Following question is from Doug Young from the Jordan capital markets, please go ahead

Our following question is from Doug Young from Desjardins Capital markets. Please go ahead.

Speaker 13: Hi, good morning. Just maybe the drill down on the US commercial mom book.

Ebrahim Poonawala: And in Canada, the back book repricing should serve as a tailwind to the name going forward. So clearly, I'm missing something if you can elaborate on what the dynamics are both on the asset and the deposit side are driving that name outlook.

Hi, good morning, just.

Maybe to drill down on the U S commercial loan book.

Ebrahim Poonawala: So clearly, I'm missing something if you can elaborate on what the dynamics are both on the asset and the deposit side driving that name outlook. Sure. I will make some comments and then also turn it over to Ernie and Nadine for what they are seeing in the U.S, and Canada. So I'll start at the enterprise level, Abraham. We actually feel very good about how we are positioned today. Our NIM expanded a couple of basis points.

Speaker 13: Obviously down sequentially it seems and you can crack me if I'm wrong that maybe it's down a little bit more than what we would have seen some some of your peers I'm just trying to understand a little bit more and I understand the economic side of it is there Any particular part of the book that's contracting more or where you're seeing

Obviously down sequentially. It seems and you can correct me if I'm wrong, maybe it's down a little bit more than what we would've seen some some of your peers I'm just trying to understand a little bit more and I understand the economic side of it is there any particular part of the book, that's contracted more or where youre seeing.

Tayfun Tuzun: Sure, I will make some comments and then also turn it over to Ernie and the Dean for what they're seeing in the US and Canada. So I'll start at the enterprise level, Abraham. We actually feel very good about how we are positioned today. Our name expanded a couple of basis points. We are guiding for more stability in the foreseeable future. And I like where the rates are today. Clearly, we are benefiting from higher longer rates.

Speaker 13: less retention, just hoping to get a little bit more color. And then maybe just kind of weaving that in to the NIM discussion is the lone balance movement.

Less retention, just hoping to get a little bit more color and then maybe just kind of weaving that in.

The NIM discussion is the loan balance movement.

Ebrahim Poonawala: We are guiding for more stability in the foreseeable future. And I like where the rates are today. Clearly, we are benefiting from higher longer rates. And we are, I think, pretty well positioned to deal with whatever the monetary authorities do in Canada and the U.S. So at an enterprise level, I think our NIM positioning looks very good in the current environment. Coming down to Canada and the U.S, in Canada, this quarter, we have seen the deposit spread widening, some loan spread widening.

Speaker 13: have a positive negative impact on your nymphs and your nymph eyes look.

Have a positive negative impact on your Nims and your NIM might look.

Speaker 14: So in terms of segments, I would say that when you look at segments that are more reliant on M&A activity, we're seeing more softer loan growth in those areas versus our general diversified businesses. Private equity, of course, has slowed down. Real estate has, of course, slowed down quite drastically. So those would be the segments that would have the biggest effects.

So in terms of segments I would say that when you look at segments that are more reliant on M&A activity, we're seeing more <unk>.

Tayfun Tuzun: And we are, I think, pretty well positioned to deal with whatever the monetary authorities do on Canada and the US. So at an enterprise level, I think our name positioning looks very good in the current environment. Coming down to Canada and the US in Canada, this quarter, we have seen the deposit spread widening, some loan spread widening. And I think our business managed their spreads very well during the quarter. But at the same time, we are aware of rising pricing competition both on deposits as well as loans, especially as the quarter came to an end.

Softer loan growth in those areas versus our general diversified businesses.

Pivot equity of course has slowed down real estate has of course slowed down quite drastically. So those would be the segments that would have the biggest effect, but you know what we're looking at right. Now is demand is starting to increase we are seeing pipelines, increasing as we move into Q4. So I expect that we'll see better growth in the U S franchise as we go into fiscal 'twenty four but.

Speaker 14: What we're looking at right now is demand starting to increase. We're seeing pipelines increasing as we move into Q4. So I expect that we'll see better growth in the US franchise as we go into Fiscal 24. But...

Ebrahim Poonawala: And I think our business managed their spreads very well during the quarter. But at the same time, we are aware of rising pricing competition, both on deposits as well as loans, especially as the quarter came to an end. And we are cognizant of how that may impact our NIM going into the next couple of quarters thus the comment about some tightening in Canada. In the U.S., in Canada, obviously, we also benefited from good deposit growth relative to loan growth during the quarter.

Speaker 14: We can't deny the macroeconomic background that we're under. When we look at deploying our capital, we are laser focused on not just volume growth, but rather how do we optimize return for our shareholders?

We can't deny the macroeconomic background that we're under so when we look at deploying our capital. We are laser focused on not just volume growth, but rather how do we optimize return for our shareholders. How do we go after sole bank relationships, our left lead where we get the treasury and payment services revenue the cash management fee revenue.

Speaker 14: How do we go after sole bank relationships or left lead where we get the Treasury and Payment Services revenue, the cash management fee revenue, and how do we also get sure of wallet and make sure that we're getting the trading products and one client referrals to our wealth and capital markets calling. So we're not going after volume, we're going after quality, because it's these relationships both existing and new that add the most significant shareholder value. And when the commercial banking demand does come back,

Tayfun Tuzun: And we're cognizant of how that may impact our name going into the next couple of quarters thus the comment about some tightening in Canada. In the US, in Canada, obviously, we also benefited from good deposit growth relative to loan growth during the quarter. That's always very helpful. In the US, the pricing competition continues clearly. There's no letdown yet. And we're not necessarily anticipating a significant change, I think, in general migration towards term deposits will continue.

And how do we also get share of wallet and make sure that we're getting are trading products and one client referrals to our wealth and capital markets colleagues. So we're not going after volume we're going after quality because its these relationships both existing and new that add the most significant shareholder value and when the commercial banking demand does come back.

Ebrahim Poonawala: That's always very helpful. In the U.S., the pricing competition continues clearly. There's no letdown yet. And we're not necessarily anticipating a significant change, I think, in general migration towards term deposits will continue. We are those switching to a more growth mode, both in our personal deposits as well as commercial deposits, which will be helpful, which will support some of that stabilization. We are also expecting better loan spreads in the U.S., which also is helpful.

Speaker 14: We are on both sides of the border, extremely well positioned to meet or probably beat what the market will be at at that time. Especially when we see the M&A activity increasing and when you think about M&A activity, if I look at our mid market M&A groups pipeline right now, it's probably the biggest pipeline that I've seen in two to maybe three years. So we're definitely starting to see the turn coming. But as always, when it comes to Q4, we'll update you on growth numbers at that time. I mean, I compliment that. It's Gerald speaking.

We are on both sides of the border are extremely well positioned to meet or probably beat what the market will be at that time, especially when we see the M&A activity, increasing and then when you think about M&A activity. If I look at our mid market M&A groups pipeline right now, it's probably the biggest pipeline that I've seen and two to maybe three years. So we're.

Tayfun Tuzun: We are those switching to a more growth mode, both in our personal deposits as well as commercial deposits, which will be helpful, which will support some of that stabilization. We are also expecting better loan spreads in the US, which also is helpful. And then overall, the corporate interest rate risk management related support that is provided by the role over impact of our non maturity deposits is helping the US PNC business. So I think both of these expectations are in line with what we are seeing in the market as well as our overall risk management approach.

Definitely starting to see the term comment, but as always when it comes to Q4, we'll update you on our growth numbers at that time, yes, I just I I mean that complement that Doug. It's Daryl speaking the when I look at the quarter over cover at quarter sequential commercial growth that you referred to in the U S.

Ebrahim Poonawala: And then overall, the corporate interest rate risk management related support that is provided by the role over impact of our non-maternity deposits is helping the U.S. PNC business. So I think both of these expectations are in line with what we are seeing in the market as well as our overall risk management approach. With that, any comments, Ernie and Nadim? Sure. I would just say it characterized that, you know, loan volumes are down, of course, both sides of the border, but there is a divergence.

Speaker 11: The, you know, when I look at the quarter or quarter sequential commercial growth that you're referred to in the US.

Speaker 11: You know, on the surface, you might come to the conclusion that it's a little bit below market, but I'm not fussed by it and I'll tell you why. Some of that is, and by the way, when I say a little bit, like a very little bit.

On the surface you might come to the conclusion that it's a little bit below market, but I'm not fussed by it and I'll tell you why some of that is and by the way when I say, a little bit like a very little bit. Some of that is explained by mix, which which nadeem was just into and some of it is actually explained by the fact that we have July in our quarter in the U S.

Nadim Hirji: With that, any comments, Ernie and Nadim? Sure. I would just say it characterized that, you know, loan volumes are down, of course, both sides of the border, but there is a divergence. So in Canada, we're still seeing better loan volume demand and more opportunities for deposit growth, but the competitors sets are different as well. So the Canadian banks are still fighting for market share. They're still fighting on structures. And so we're not seeing as much pricing discipline in Canada.

Thanks, Don and I think when you adjust for those two things Youll see that were pretty much right on market is my hypothesis and more importantly.

Speaker 11: that we're pretty much right on market is my hypothesis. And more importantly, the point Nadine made just now when the sun comes out on the industry and it will one day, we've shown time and time again that when it does, we can perform better than market in commercial banking with the fourth largest book on the continent and we expect that we'll be able to do that again. And the great news about that is that we will also simultaneously have the flow through of the efficiency of the program that we announce today as well as the full flow through of the efficiency of the bank of the West Synergies and when you put all of those things together for us, that's what to me gets me excited because it's a pretty differentiated outcome for our bank. And on your name question, in quarters when deposit growth exceeds low

Ebrahim Poonawala: So in Canada, we're still seeing better loan volume demand and more opportunities for deposit growth. But the competitors sets are different as well. So the Canadian banks are still fighting for market share. They're still fighting on structures. And so we're not seeing as much pricing discipline in Canada. On the other hand, the US, with a special, the regional banks tightening up on capital and liquidity, we are seeing structures now tightening. We are seeing banks taking lower holds.

The point being made just now when when the Sun comes out on the industry and it will one day.

We've shown time and time again that when it does we can perform better than market and commercial banking with the fourth largest book on the continent, and we expect that we'll be able to do that again and and the great news about that is that we will also simultaneously have the flow through of the efficiency of the program that we have.

Nadim Hirji: On the other hand, the US, with a special, the regional banks tightening up on capital and liquidity, we are seeing structures now tightening. We are seeing banks taking lower holds. And that is leading to stabilization in our margins and spreads within the loan book. So that's why we're seeing a bit of a divergence.

Ebrahim Poonawala: And that is leading to stabilization in our margins and spreads within the loan book. So that's why we're seeing a bit of a divergence. And then on the deposit side, let me just make some comments about US first, then Canada. So in the US, we're seeing some actual good performance relative to peers on our retail book. That's a function of both the legacy demo aside, as we like to say, as well as the Bank of the West platform.

<unk> today as well as the full flow through of the efficiency of the bank of the west synergies and when you put all of those things together for US that's what to me. It gets me excited because it's a pretty differentiated outcome for our bank.

Nadim Hirji: And then on the deposit side, let me just make some comments about US first, then Canada. So in the US, we're seeing some actual good performance relative to peers on our retail book. That's a function of both the legacy bemo aside, as we like to say, as well as the Bank of the West platform. We're seeing some good success in terms of stabilizing the retail deposits in the Bank of the West market and offering out promotions, et cetera, and capabilities that are being well received by our colleagues there and our customer base. So as we think about that, coupled with that digital deposit taking, I'm really confident in our US growth strategy around deposits to continue to be at peer or above peers in the marketplace.

Speaker 5: That's what to me gets me excited because it's a pretty differentiated outcome for our bank.

Speaker 4: And on your name question, Doug, in quarters when deposit growth exceeds long growth, we see a positive impact of that on our name. The past quarter and Q3 are long growth exceeded deposit growth, so therefore that had a negative impact on our name. Next quarter, we are predicting a stable loan environment and potentially a better deposit environment, which should be marginally helpful for our name and Q4. It's an important view.

And on your NIM question Doug.

No.

In quarters, when deposit growth exceeds loan growth, we see a positive impact of that on our NIM.

This past quarter in Q3, our loan growth exceeded deposit growth. So therefore that had a negative impact on our NIM next quarter, we are predicting a stable loan environment and potentially a better deposit environment, which should be marginally helpful for our NIM in Q4.

Ebrahim Poonawala: We're seeing some good success in terms of stabilizing the retail deposits in the Bank of the West market. And offering out promotions, et cetera, and capabilities that are being well received by our colleagues there and our customer base. So as we think about that coupled with that digital deposit taking, I'm really confident in our US growth strategy around deposits to continue to be at peer or above peers in the marketplace. And then by switch gears and go to Canada, we are in top tier market share growth consistently into deposits in retail side of the Canadian business.

I appreciate it thank you.

Speaker 2: Vie of following question is from Paul old, then from C I.

Thank you.

<unk> question is from Paul Holden from CIBC. Please go ahead.

Speaker 15: Thank you, good morning. Quick question on capital management, just wondering the process behind the driptest count and when that might come off, given you are seeing a build in the CT or you should be seeing a build in the CT, one I think on our organic basis, given the slow, long growth environment, and then obviously with the operating efficiency improvements expected, that'll also help organic capital generation. And then you've provided some pretty neutral slash positive outlook for FRTP and Basil 3.

Thank you good morning.

Nadim Hirji: And then if I switch gears and go to Canada, we are in top tier market share growth consistently into deposits and retail side of the Canadian business. That's driven by our leading acquisition, we have record customer, new customer acquisition in Canada, that strong digital sales capability branch conversations that are focused on full relationships. We are seeing that shift a bit to turn, but as Typhoon mentioned, it's slowing down, we're watching it and it's plateauing. And so we'll continue to see that happen over the next little while, but overall really confident in our ability to continue to drive growth into deposits side going forward.

Quick question on capital management, just wondering the thought process behind the drip discount and when that might come off giving you are seeing.

Ebrahim Poonawala: That's driven by our leading acquisition. We have record customer new customer acquisition in Canada, that strong digital sales capability branch conversations that are focused on full relationships. We are seeing that shift a bit to turn, but as Typhoon mentioned, it's slowing down, we're watching it and it's plateauing. And so we'll continue to see that happen over the next little while. But overall, really confident in our ability to continue to drive growth and deposit side going forward.

A build in the C T or you should be seeing a build in the seat you want I think on organic basis, given the slow.

Loan growth environment, and then obviously with your operating efficiency improvements expected that'll also help organic capital generation and then you provided some pretty call it neutral.

Neutral positive outlook for F. R. A T P and and Basel III impact.

Speaker 15: impact.

Speaker 4: Yes, so good question. We will be finalizing our FRTV analysis over to this quarter, which will give us more clarity. As I said, we are...

Yes. So good question, we will be finalizing our car T V analysis over this quarter, which.

Tayfun Tuzun: Got it, thanks for the color and just very quickly Typhoon on capital reminder of the impact from FRTB. Basel through factor increases in one Q24 to the CET one and separately if the US Basel endgame NPR were to pass as is, it seems like the burden on IAC foreign bank IAC is going to be quite meaningful both in capital markets and otherwise how impactful is that to be most US operations? Thanks, sure.

Ebrahim Poonawala: God, thanks for the color and just very quickly Typhoon on capital reminder of the impact from FRTB, Basel through factor increases in 1 Q24 to the CET1 and separately, if the US Basel endgame NPR were to pass as is, it seems like the burden on IAC foreign bank IAC is going to be quite meaningful both in capital markets and otherwise how impactful is that to be most US operations? Thanks, sure. Thanks for the question, Abraham.

Which will give us more clarity as I said we are.

Speaker 4: pretty confident that it will have a modest impact on our capital. Look, I mean, when we started the year, we said that the assessment on drip is a quarterly process, that management and the board will go through together. We are maintaining our 12 plus percent CT1 ratio targets.

Pretty confident that it will have a you know a modest impact on our capital.

Look I mean when we.

Started the year, we said that the assessment on drip as a quarterly process that management and the board will go through together.

We are maintaining.

Maintaining our 12 plus percent CET one ratio targets.

Tayfun Tuzun: Thanks for the question, Abraham. In terms of the impact of FRTB, we think that the impact will be very, very modest into Q1. The work still continues and we have some additional details that we need to finalize, but we are not expecting a big impact into Q1.

Ebrahim Poonawala: In terms of the impact of FRTB, we think that the impact will be very, very modest into Q1. The work still continues and we have some additional details that we need to finalize, but we are not expecting a big impact into Q1. Darryl, would you like to comment on the US side, the regulatory developments of the US side? Yeah, Typhoon, I'm just going to clarify for people we're going to have to get used to this.

Speaker 4: across the bank and depending upon what we see in the environment with respect to our WA growth and the regulatory decisions.

Across the bank and depending upon what we see in the environment with respect to our there'll be a growth.

And the regulatory decisions that.

Speaker 4: You know, are still coming in, you know, in the U.S. obviously we've seen it, which as Daryl said does not impact us much. The more clarity we have on the environment, both macro as well as regulatory, the closer we will get to a decision on DRA.

You know are still coming in you know in the U S. Obviously, we've seen it which as Daryl said it does not.

Darryl Hackett: Darryl, would you like to comment on the US side, the regulatory developments in the US side? Yeah, Typhoon, I'm just going to clarify for people we're going to have to get used to this. When Typhoon said Darryl, he's referring to Darryl Hackett's first call here. And so it's a great question, Abraham, for him to take as far as the overall environment is concerned in the US. Yeah, thank you for that handoff here and hello everybody.

Packed as much the more clarity we have on the environment, both macro as well as regulatory the closer we will get to a decision on drip.

Ebrahim Poonawala: When Typhoon said Darryl, he's referring to Darryl Hackett's first call here. And so it's a great question, Abraham, for him to take as far as the overall environment is concerned in the US. Yeah, thank you for that handoff here and hello everybody. In terms of Basel 3 in-game, first it's really important to remember that we've operated in the US as a significant entity for nearly 40 years. And we've effectively begun our journey to being a category 3 US bank nearly two years ago when we announced the acquisition of Bank of the West.

Speaker 15: And then I guess my follow up on that point would be kind of can you give us a sense of what you're operating target range is for the C. T. One we've heard some other banks sort of talk about maybe getting up to 12 and a half plus. Are you sort of thinking the same thing over time? I think a reasonable range is between 12 and 12 and a half percent and then the current environment. As I said before, the.

Got it and then I guess my follow up on my point would be kind of can you give us a sense of what your operating target range is for the C. T. One we've heard some other banks sort of talk about maybe getting up to 12, and a half plus or you sort of thinking the same thing over time I think a reasonable range is between 12 and.

Darryl Hackett: In terms of Basel III in-game, first it's really important to remember that we've operated in the US as a significant entity for nearly 40 years. And we've effectively begun our journey to being a category three US bank nearly two years ago when we announced the acquisition of Bank of the West. Earlier this year, with the approval and close of Bank of the West, we became a US entity with more than 400 billion in assets making us a top 10 US bank.

12, 5% in the current environment and as I said before.

Ebrahim Poonawala: Earlier this year with the approval and close of Bank of the West, we became a US entity with more than 400 billion in assets making us a top 10 US bank. So given this, we are uniquely well positioned among our peers and we've already been maintaining strong capital ratios in our US regulated entities. So while the Basel 3 in-game proposals are still in early stages. We feel really prepared, very well prepared for what to come, and we expect the current proposals to only have a modest impact on our current journey. Thank you.

Speaker 4: The target level capital is impacted by multiple factors, including the environment and the regulatory regime and the peers. So we will be very sensitive to all of those three. I think that the range is still 12 to 12 and a half under the current OSP regime and potentially closer to that 12 and a half point. Thank you for that.

The target level of capital is impacted by multiple factors.

Including the environment and the regulatory regime and the peers. So we will be very sensitive to all of those three I think that.

Darryl Hackett: So given this, we are uniquely well positioned among our peers and we've already been maintaining strong capital ratios in our US regulated entities. So while the Basel III in-game proposals are still in early stages. We feel really prepared, very well prepared for what to come, and we expect the current proposals to only have a modest impact on our current journey. Thank you.

The range is still 12% to 12 and a half under.

Under the current osby regime, and potentially closer to that 12 and a half point.

Got it thank you for that.

Thank you. Our following question is from Lamar Prasad from <unk> Securities. Please go ahead.

Speaker 2: following question is some Lamar Persaud from later leaked as one C-Liamar Persaud

Speaker 13: Hi, maybe for a typhoon, should we think about the severed charges as being a one-quarter phenomenon, or are there further charges coming down the pipeline?

Hi, This is maybe for typhoon.

Should we think about the severance charges.

Being a one quarter phenomenon or are there further charges coming down the pipeline.

Speaker 4: It is a one-quarter phenomenon, and that's the reason why we noted the severance this quarter. We expect continued focus on expense savings, as our commitment to positive operating remains firm, but the severance charge is this quarter.

It is it is a one quarter phenomenon.

And that's the reason why we noted the severance this quarter we expect.

Unknown Executive: I'm curious, and I apologize if I missed it, but if you could just talk about the outlook for revenue synergies, specifically in the context of a tough for US operating environment, I think that's clear that what's emerging. So I'm wondering if there's any impact on your ability to deliver on the revenue synergies that you've guided to. A good question, look, I mean, we acknowledge the environment, you know, it impacts all banks that are operating in the US, but overall, you know, our expectations remain intact, and you know, although the timing may change a little bit, we are still, you know, we are still of the opinion that our financial expectations remain well grounded.

Darryl Hackett: I'm curious, and I apologize if I missed it, but if you could just talk about yellow for revenue synergies, specifically in the context of a tough for US operating environment, I think that's clear that what's emerging, so I'm wondering if there's any impact on your ability to deliver on the revenue synergies that you've guided to. A good question, look, I mean, we acknowledge the environment, you know, it impacts all banks that are operating in the US, but overall, you know, our expectations remain in tax and, you know, although the timing may change a little bit, we are still, you know, we are still of the opinion that our financial expectations remain well grounded.

Continued focus on expense savings.

As our commitment to positive operating remains firm.

But the severance charge this quarter.

Speaker 13: Okay, perfect. And then could you remind us what the conditions are for adjust for legal provisions? But I guess you guys call that higher legal expenses along the reasons for elevated expenses, but just looking at your adjustments, we have seen legal provisions that are adjusted for us. So I guess how do you draw the line in the stands for what you adjust for and what you leave in your, in your core expense numbers?

Okay, perfect and then could you remind us what the conditions are for to adjust for legal provision I guess, you guys called out higher legal expenses and a lot of the reasons for elevated expenses, but.

Just looking at the adjustments we have seen legal provisions that are adjusted part so I guess, how do you draw the line in the sand for for what you were just wondering why you even in your in your core expense numbers, yes.

Speaker 4: We tend not to adjust for legal provisions, you know, in our normal business. We always have legal proceedings and we believe that if there is a reason for us to take reserves that they should be included in our financials on a non-adjusted basis as part of the operating performance.

Yeah, we tend not to adjust for legal provisions you know in our normal business, we always have legal proceedings and we believe that if there is a reason for us to take reserves that they should be included.

Unknown Executive: We have an important weekend coming up with conversion, as I said, we are also doing more work on, you know, potentially identifying additional expense saving opportunities. We plan to update you with all these metrics, once we get to the end of Q4, but broadly, you know, our expectation is that we are still in the same range in terms of our expectations, that sort of is not necessarily denying the current environment, but I think our expectations and optimism remains the same.

Darryl Hackett: We have an important weekend coming up with conversion, as I said, we are also doing more work on, you know, potentially identifying additional expense saving opportunities. We plan to update you with all these metrics once we get to the end of Q4, but broadly, you know, our expectation is that we are still in the same range in terms of our expectations that sort of is not necessarily denying the current environment, but I think our expectations and optimism remains the same.

In our financials on a non adjusted basis as part of the operating performance.

Speaker 5: You might ask then, Lamar, why did we call it out this quarter? I think it really is your question, because you're right. Normally, we don't adjust. And the reason we've called it out this quarter is because it's unusually high. We don't expect that level in the normal course. So we want to do all to know. We want to do all to know that.

Yes.

You might ask then Lamar why why did we call. It out this quarter I think it really is your question because you're right normally we don't adjust and the reason we've called it out this quarter is because it's unusually high we don't expect that level in the normal course. So we wanted you all to know.

We wanted you all to know that.

Speaker 13: Okay, and that's linking to the severance. Is that what it's related to? No, it's not linked to the severance. It's separate from the severance.

Okay, and that's leading to the severance is that what it's related to no. It is not linked to this effort that's separate from the severance.

Unknown Executive: Yeah, Darryl, many just to compliment that, I agree with all that, I think the thesis is holding completely. In fact, as days go by, we're getting increasingly encouraged by the thesis on the customer side, and you know, you asked about revenue synergies. Well, Typhoon's right, we will give you all a complete update at the end of the conversion quarter, which is the one that's coming in the meantime. We can tell you that the acceleration on new accounts, new customers, the crossover between the commercial business and the capital markets business, we talked about that last quarter continues to increase at a healthy rate.

Darryl Hackett: Yeah, it's there are many just to compliment that I agree with all that, I think the thesis is holding completely. In fact, as days go by, we're getting increasingly encouraged by the thesis on the customer side and you know, you asked about revenue synergies. Well, Typhoon's right, we will give you all a complete update at the end of the conversion quarter, which is the one that's coming in the meantime. We can tell you that the acceleration on new accounts, new customers, the crossover between the commercial business and the capital markets business, we talked about that last quarter continues to increase at a healthy rate.

Speaker 4: And it does include the off channel communication settlements that is very public obviously.

Okay and it does include the off channel communications settlements that it's very public obviously.

Okay perfect. Thanks again.

Speaker 2: Thank you. Our following question is from Nigel D'Souza from Veritas Investment Research. Please go ahead.

Thank you.

Following question is from Nigel D'souza from Veritas investment research. Please go ahead.

Speaker 13: Thank you. Good morning. I just wanted to drill down a little bit more on the trends you're seeing on the deposit side in your US business. Any color on what you're seeing for non-interests bearing deposits? How much of that remains in terms of deposits and mix? What you're seeing on an uninsured deposit? And this is different since flows or deposits for the bank of a West franchise versus the BMO US franchise.

Thank you good morning, I, just wanted to drill down a little bit more on the trends youre seeing on the deposit side in your U S business any color on what youre seeing or noninterest bearing deposits how much of that remains in terms of positive mix.

But uninsured deposits and there's a difference in flows.

Unknown Executive: And we've even observed early days, even before our pretty substantial marketing push, which will begin in about 10 days from now, a real activation at the branch level with the digital platforms as well. I don't know, Ernie, would you compliment that with some specificity? Yeah, definitely. As Darryl pointed out, we have not launched all the capabilities of tools, financial planning, et cetera, in the market. Yet, nor are big brand campaign or major offers that we're going to introduce over the next couple of weeks.

Darryl Hackett: And we've even observed early days, even before our pretty substantial marketing push, which will begin in about 10 days from now, a real activation at the branch level with the digital platforms as well. I don't know, Ernie, would you would you compliment that with some specificity? Yeah, definitely. As Darryl pointed out, we have not launched all the capabilities of tools, financial planning, et cetera in the market yet, nor are big brand campaign or major offers that we're going to introduce over the next couple of weeks.

Deposits for the bank of the West franchise versus a.

But BMO U S franchise.

Speaker 8: Yeah, Theraniel, I'll take that one. So what we're seeing in terms of the US, we're still seeing the pre-pandemic or through the pandemic surge deposits still existing to some degree in the franchise. They're slowly running off. We would anticipate that that to take place.

Yeah.

I'll take that one so what we're seeing in terms of the U S. We're still seeing the pre pandemic right through the pandemic surge deposits still existing to some degree in the franchise are there slowly running off we would anticipate that that to take place probably in the first half of next year to be fully out there still.

Speaker 8: Probably in the first half of next year to be fully out, they're still elevated in our checking and our savings account. We are seeing again that migration to term, which is expected as it continue to be in a market where the rates are attractive to our customer base, as well on the bank of the West Side, as I mentioned.

Elevated.

Checking and savings accounts.

Are seeing again that migration to determine which is expected as it continues to be.

Unknown Executive: Having said that, those, the performance of our branch network, just being allowed to be able to have different offers and campaigns, we're already seeing a, you know, lift overall about 20% overall in terms of performance. And that's a function of them reaching out to customers and having great conversations. So the colleagues are ready and the customers are extremely open to these conversations and receptive to what we have to offer. And we haven't brought the full products week as we mentioned earlier to them as well.

Darryl Hackett: Having said that, those the performance of our branch network, just being allowed to be able to have different offers and campaigns, we're already seeing a lift overall about 20% overall in terms of performance. And that's a function of them reaching out to customers and having great conversations. So the colleagues are ready and the customers are extremely open to these conversations and receptive to what we have to offer. And we haven't brought the full products week as we mentioned earlier to them, as well as digital capabilities are performing.

In a market where the rates are attractive to our customer base as well on the bank of the west side as I mentioned, we're seeing stability in terms of our ability to retain deposits and are now seeing growth.

Speaker 8: stability in terms of our ability to retain deposits and are now seeing growth. That's a function of our introduction of better pricing, optimization of the portfolio itself and expect that to move forward. And then on our digital deposit taking, we're seeing strong outcomes as well in terms of what we're seeing being driven through the digital channels across the 50 states.

As a function of our our introduction of better pricing optimization of the portfolio itself and expect that to move forward and then on our digital deposit taking we're seeing strong outcomes as well in terms of what we're seeing being driven through through the digital channels across the 50 states.

Unknown Executive: Our digital capabilities are performing, you know, we've taken the bank of the West digital capabilities out of the market and put beams in. And they're actually performing at parity, which says, even without the brand advertising, we were able to deliver the same sorts of lists. So these are all promising indicators of the future ahead after we get through the next week. Thank you so much. Thank you.

Darryl Hackett: You know, we've we've taken the bank of the West digital capabilities out of the market and put demos in and they're actually performing at parity, which says, even without the brand advertising, we were able to deliver the same sorts of lists.

Speaker 8: So overall, I'd say those are the trends. We believe that there's lots of opportunity in the franchise itself, a bank of the West, given the market itself is very attractive. And so as we go through our campaign season, et cetera, we'll anticipate to be able to grow at market in those particular markets. I'm not sure in a Dean if you have any other thoughts. So I'll be very similar, but I would say if you were asking trends.

So overall I'd say those are the trends.

Operator: So we asked that please you limit yourself to one question and one follow up.

We believe that there is lots of opportunity in the franchise itself with bank of the west given the market itself is very attractive and so as we go through our campaign season et cetera will anticipate to be able to grow at market in those particular market I'm not sure Nadeem. If you have any other thoughts.

Darryl Hackett: So these are all promising indicators of the future ahead after we get through the next week.

Operator: Thank you so much.

Operator: Thank you.

Operator: So we asked that please you limit yourself to one question and one follow up.

So it would be very similar but I would say if you were asking trends.

The shift in mix that we've seen.

Gabriel Dechaine: Following question is some Gabriel Dechaine from National Bank Financial please go ahead. Yeah, I want to continue on that line of questioning and just you know all of my words you can tell me if I have it right or not but the sense I'm getting is maybe there's some you know revenue shortfall versus expectation related to the Bank of the West Acquisition because of margins, maybe the loan book and deposit book are both smaller but you still sound pretty confident in your accretion targets and I'm reading through the into the expense management commentary that you might find some additional cost savings to you know keep you on track.

Gabriel Dechaine: Following question is some Gabriel Dechaine from National Bank Financial please go ahead. Yeah I want to continue on that line of questioning and just you know all of my words you can tell me if I have it right or not but the sense I'm getting is maybe there's some you know revenue shortfall versus expectation related to the Bank of the West Acquisition because of margins maybe the loan book and deposit book are both smaller but you still sound pretty confident in your accretion targets and I'm reading through the into the expense management commentary that you might find some additional cost savings to you know keep you on track.

Speaker 11: going from non-interest to interest bearing, has slowed down and is stabilizing. So I think I won't think it's going to shift back anytime soon, but I do think that it has stabilized in terms of the ship ship. Yeah, just last point on this, I think Nigel, you're also asking that whether there's a juxtaposition between the Bank of the West franchise and the Legacy BMO franchise. I would say we're pretty much at the point where that's converging. Converging, I should say, pardon me, because...

Going from non interest to interest bearing has slowed down and it is stabilizing so.

I don't think its going to shift back anytime soon but I do think that it has stabilized in terms of the ship just last point on this I think Nigel you're also asking that whether there's a juxtaposition between the bank of the west franchise in the legacy BMO franchise I would say, we're pretty much at the point, where that's converging converging I should say pardon me because you'll see that as.

Speaker 5: You'll see that as we go through Q4, we have our conversion weekend, literally coming ahead of us. And the franchise values start to integrate and blend together almost completely. So the benefit.

As we go through Q4, we have our our conversion weekend literally coming ahead of us and the franchise value starts to integrate and blend together almost completely so the benefit that we bring with the scale and the capabilities and the technology is infiltrated into the bank of the West system and so as time has gone on we've seen.

Speaker 5: that we bring with the scale and the capabilities and the technology is infiltrated into the Bank of the West system. And so as time has gone on, we've seen a convergence of the performance on deposits and that's what we'd expect to see on a blended basis going forward.

Gabriel Dechaine: Is that is that a fair interpretation or well first of all I don't think that we're stepping back you know from our overall revenue synergy expectations I don't think that we're necessarily changing that you know Ernie mentioned some of the more promising signs of you know how we are getting there you know again as I said once we finalize our expense saving as some you know targets which we expect to be higher than what we shared with you before we will also update the accretion numbers but as I said overall we believe we are still you know we've intact with largely intact with our expectations that we shared with you earlier in the year.

Unknown Executive: Is that is that a fair interpretation or Well, first of all, I don't think that we're stepping back you know from our overall revenue synergy expectations. I don't think that we're necessarily changing that you know Ernie mentioned some of the more promising signs of you know how we are getting there. You know, again, as I said, once we finalize our expense saving as some you know targets which we expect to be higher than what we shared with you before we will also update the accretion numbers but as I said overall we believe we are still you know we've been tacked with largely intact with our expectations that we shared with you earlier in the year.

The convergence of the performance on deposits and that's what we would expect to see on a blended basis going forward.

Speaker 13: Great, and just a quick follow-up with Piocian. They're quite a lost outlook. I think he's paying no for a PCL, some of the low 20 basis points range. That actually puts you above and that's not impaired, but that puts you above the run rate for PCL.

Great and just a quick follow up for Sean the credit loss outlook I think he's signal for T cell b somewhere in the.

Low 20 basis point range that actually puts you above and Thats unimpaired, but that's the type of run.

The run rate for T cells in 2019, so I'm just wondering if you could comment on are you seeing interest rates way.

Speaker 13: Now, I'm team to just wondering if you could comment on are you seeing interest rates way on commercial side or retail side and do you expect those for business to remain elevated in any pathway for one that could fall.

Commercial side or retail side and do you expect those provisions to remain elevated in any pathway for one.

Unknown Executive: Okay, so one question one follow-up I think that's the work. I just appears to comment you made a customer renewing at higher rate in the mortgage book or they're absorbing it or adapting well. Can you you know quantify that I mean I don't know what I know what the logic is mean but you know what does that mean from your perspective. Sure, so I think the Canadian residential secured book remains high quality because again the customer base has an average five of seven ninety.

Piyush Agrawal: Okay so one question one follow-up I think that's over. I just appreciate the comment you made a customer's renewing at higher rate in the mortgage book or they're absorbing it or adapting well can you you know quantify that I mean I don't know what I know the logic is mean but you know what does that mean from your perspective. Sure so I think the Canadian residential secured book remains high quality because again the customer base has an average five co of 790 when you've got about 10% renewals a year and if I go back to the last four quarter data we've had significant success in those renewals they are at about 10 to 20% increase as they come up for renewal and all of them have successfully renewed and the performance has been stellar in addition I'll give you the fact that for those that are even not due today you've got programs underway to reach out to customers you reach out to about 40% of the customers and we're getting very good positive feedback so voluntarily customers have come up and either top tough payments if they're a negative M or increase their payments as they're going forward.

20 basis points.

20 basis points.

Speaker 6: Sure, yeah, so I think on the impaired piece, I think that's the one you're referring to, the guidance we're giving is consistent, low 20s.

Sure, Yes, so I think on the embedded piece I think that's the one you're referring to the guidance Youre, giving is consistent low twenties can make twenties of course interest rates a big part of the environment. It's a very natural evolution for our borrowing customers to adjust their performance to a 500 basis point increase in a very short period of time.

Speaker 6: to mid-20s. Of course, interest rates are a big part of the environment. It's a very natural with the evolution for a borrowing customers to adjust their performance.

Speaker 4: to a 500 basis point increase in a very short period of time.

Speaker 4: That's what you see coming through. So I would say

That's what you're seeing coming through.

Speaker 4: take that for the next quarter and you sort of average it out for the entire year. We are well below 20 on an average basis, but again within the realm of normalization that I think all of you and all of us have been expecting for the industry.

I would say if you take that for the next quarter and your sort of average it out for the entire year.

Below 20 on an average basis, but again within the realm of normalization that I think all of you and all of US had been expecting for the industry.

Unknown Executive: When you've got about 10% renewals a year and if I go back to the last four quarter data we've had significant success in those renewals. They are at about 10 to 20% increase as they come up for renewal and all of them have successfully renewed and the performance has been stellar in addition I'll give you the fact that for those that are even not due today you've got programs underway to reach out to customers you reach out about 40% of the customers and we're getting very good positive feedback.

Speaker 4: So I don't have anything else to sort of add over there. I think the bank of the West portfolio performs very well converging as we view as a term with the BMO-US portfolio. And the trends are similar, weaker and unsecured a little bit, but strong secured portfolio and then risk-rating changes on the whole cell portfolio. So overall,

So I don't have anything else to sort of add or was that I think the bank of the west portfolio performs very valid converging as viewers of them with the BMO U S portfolio and the trends are similar weaker in unsecured debt, but strong secured portfolio and then risk rating changes on the wholesale portfolio. So overall.

Speaker 4: position of strength from where we are starting and a very strong risk appetite.

This position of strength from where we're starting and a very strong risk appetite.

That's it for me thank you.

Thank you.

Speaker 2: Last question is from Jew Hokem from Credit Suits. Please go ahead.

Unknown Executive: So voluntarily customers have come up and either top top payments if they're a negative M or increase their payments as they're going forward. So even though the back book the big majorities are 2526 the early success you see from anecdotal data of four quarters and our expectations because of the strength of the Canadian customer in the secured portfolio gives us a very high level of confidence.

Our last question is from <unk> Kim from Credit Suisse. Please go ahead.

Speaker 13: Hi, good morning. So, the stunt expenses, there are a lot of things we're doing in this show.

Hi, good morning.

<unk> expenses.

Piyush Agrawal: So even though the back book the big majorities are 2526 the early success you see from anecdotal data of four quarters and our expectations because of the strength of the Canadian customer in the secured portfolio gives us a very high level of confidence.

Alright.

This is hugh.

Speaker 13: and builds the optimization and back-end for matters published and beneficial before, but you speak those benefits as well as your extended opportunities. Sorry, Juho, sorry to interrupt you. You're coming in a bit choppy, if you could... Oh, sorry. I'll start from the beginning. I just had a question just on the expenses there. Can you hear us? Can you guys hear me okay?

It was this quarter.

And real estate optimization work.

And it was published.

Before but do you see those and it says will you expect.

Operator: All right thank you.

Operator: All right, thank you.

Yes.

Oh, sorry to interrupt you youre coming in a bit choppy, if you could tell I'm sorry.

Operator: Thank you.

Doug Young: Thank you. A following question is from Doug Young from the Jordan Capital Market. Please go ahead.

Doug Young: Our following question is from Doug Young from the Jordan Capital Market please go ahead. Hi, good morning. Just maybe the drill down on the US commercial loan book, obviously down sequentially. It seems then you can crack me if I'm wrong. Maybe it's down a little bit more than what we would have seen some of your peers. I'm just trying to understand a little bit more and I understand the economic side of it.

Unknown Executive: Hi, good morning. Just maybe the drill down on the US commercial loan book, obviously down sequentially. It seems, and you can crack me if I'm wrong, that maybe it's down a little bit more than what we would have seen some of your peers. I'm just trying to understand a little bit more and I understand the economic side of it. Is there any particular part of the book that's contracting more or where you're seeing less retention, just hoping to get a little bit more color?

I'll start from the beginning I just had a question just on the expenses there can.

Can you hear me can you guys hear me okay.

Speaker 6: Yep, that's better. Okay, on expenses, there are a lot of moving pieces. I'm just trying to get a sense of how you see your efficiency ratio evolving in 2024. And I'm trying to get a better idea if there's a pathway to get back to the mid-50s in efficiency ratio that year, or if that's more of a story beyond 2024.

Yes, that's better.

Hey.

On expenses there are a lot of moving pieces I'm, just trying to get a sense of how you see your efficiency ratio evolving in 2024.

I'm trying to get a better idea of if theres a pathway to get back to the mid fifties inefficiency ratio that year or if that's more of a story.

Doug Young: Is there any particular part of the book that's contracting more or where you're seeing less retention just hoping to get a little bit more color? And then maybe just kind of weaving that in to the NIM discussion, is the loan balance movement have a positive negative impact on your NIMs and your NIMs look? So in terms of segments, I would say that when you look at segments that are more reliant on M&A activity, we're seeing more software, loan growth in those areas versus our general diversified businesses.

Beyond 2024.

Speaker 5: Yeah, look, I mean, I think we are just as we signaled earlier in this year. We significantly curtailed expense growth at the beginning of this year and predicted that our year over year expense growth would start coming down and our quarter over quarter expense growth would start reflecting that. And that happened this quarter that has happened over the past couple of quarters. As we look forward,

Yeah look I mean, I think we are just as we signaled earlier in this year we see.

Unknown Executive: And then maybe just kind of weaving that in to the NIM discussion is, you know, the loan balance movement, have a positive negative impact on your NIMs and your NIMs. Look. So in terms of segments, I would say that when you look at segments that are more reliant on M&A activity, we're seeing more software, loan growth in those areas versus our general diversified businesses, private equity, of course, has slowed down real estate has of course slowed down quite drastically.

Significantly curtailed expense growth at the beginning of this year and predicted that our year over year expense growth would start coming down on a quarter over quarter expense growth would start reflecting that.

And that's happened this quarter that has happened over the past couple of quarters. As we look forward now we are truly still committing to positive operating leverage both with the contribution that's coming from bank of the west as well as from our own operations. So we will update.

Speaker 5: We are truly still committing to positive operating leverage, both with a contribution that's coming from back of the West, as well as from our own operations. So, we will Living in California.

Doug Young: Private equity, of course, has slowed down real estate has of course slowed down quite drastically. So those would be the segments that would have the biggest effects. But, you know, what we're looking at right now is is demand starting to increase. We're seeing pipelines increasing as we move into Q4. So I expect that we'll see better growth in the US franchise as we go into fiscal 24, but we can't deny the macroeconomic background that we're under.

Unknown Executive: So those would be the segments that would have the biggest effects. But, you know, what we're looking at right now is demand starting to increase. We're seeing pipelines increasing as we move into Q4. So I expect that we'll see better growth in the US franchise as we go into fiscal 24. But we can't deny the macroeconomic background that we're under. So when we look at deploying our capital, we are laser focused on not just volume growth, but rather how do we optimize return for our shareholders?

Speaker 5: our expectations for 24 when we get to the end of Q4, but the primary driver of our actions clearly is that firm commitment to positive operating leverage. The efficiency ratio is going to be an outcome of that. We would expect improvements in our efficiency ratio, and we hope that we will be able to update you with that when we get to the end of.

Our expectations for 'twenty for when you get to the end of Q4, but the primary driver of our actions clearly is that.

Firm commitment to positive operating leverage the efficiency ratio is going to be an outcome of that we would expect improvements in artificial <unk> ratio.

Doug Young: So when we look at deploying our capital, we are laser focused on not just volume growth. But rather, how do we optimize return for our shareholders? How do we go after soil bank relationships or left lead where we get the treasury and payment services revenue, the cash management fee revenue? And how do we also get sure of wallet and make sure that we're getting the trading products and one client referrals to our wealth and capital markets colleagues?

And we hope that we will be able to update you with that when we get to the end of next quarter, operator, I've got my eye on the clock here and I'm cognizant that our guests have another call to get to so I'll bring us I'll bring us to a close with that as I understand is the last question in the queue.

Unknown Executive: How do we go after soil bank relationships or less lead where we get the treasury and payment services revenue, the cash management fee revenue? And how do we also get sure of wallet and make sure that we're getting the trading products and one client referrals to our wealth and capital markets colleagues. So we're not going after volume, we're going after quality because it's these relationships, both existing and new that add the most significant shareholder value.

Speaker 16: And operator, I've got my eye on the clock here and I'm cognizant that our guests have another call to get to. So I'll bring us to a close with that as I understand is the last question in the queue. So I want to thank everybody for their questions.

So I want to thank everybody for their questions and leave you with the following thought guided by the purpose driven strategy that I've talked about and the winning culture that I've talked about.

Doug Young: So we're not going after volume, we're going after quality because it's these relationships both existing and new that add the most significant shareholder value. And when the commercial banking demand does come back, we are on both sides of the board are extremely well positioned to meet or probably beat what the market will be at at that time, especially when we see the M&A activity increasing. And even you think about M&A activity, if I look at our mid market M&A groups pipeline right now, it's probably the biggest pipeline that I've seen in two to maybe three years.

Speaker 16: and leave you with the following thought guided by the purpose driven strategy that I've talked about and the winning culture that I've talked about. I think you can take a way that we're proactively addressing the period of volatility that we're into, deliver consistent.

Unknown Executive: And when the commercial banking demand does come back, we are on both sides of the board are extremely well positioned to meet or probably beat what the market will be at at that time. And especially when we see the M&A activity increasing and think about M&A activity, if I look at our mid market M&A groups pipeline right now, it's probably the biggest pipeline that I've seen in two to maybe three years. So we're definitely starting to see the term coming. But as always, when it comes to Q4, we'll update you on growth numbers at that time.

I think you can take away that we are proactively addressing the period of volatility that we're in to deliver consistent and sustained performance, we're doing that by dynamically managing our business to continue strengthening the already robust foundation and invest in our businesses for growth and with the full integration of the.

Speaker 16: and sustained performance. We're doing that by dynamically managing our business to continue strengthening the already robust foundation and invest in our businesses for growth. And with the full integration of the Bank of the West ahead of us, the strength and the size and the stability of our balance sheet and our superior risk and liquidity capital management, are built really to outperform in any environment.

Bank of the West ahead of us the strength and the size and the stability of our balance sheet and our superior risk and liquidity capital management are built really to outperform in any environment.

Doug Young: So we're definitely starting to see the term coming. But as always, when I come to Q4, we'll update you on growth numbers at that time. Yeah, I just, I mean, I compliment that. It's Darrell speaking. The, you know, when I look at the quarter or quarter quarter sequential commercial growth that you referred to in the US, you know, on the surface, you might come to the conclusion that it's a little bit below market, but I'm not fussed by it.

Unknown Executive: Yeah, I just, I mean, I compliment that gets Darryl speaking, the, you know, when I look at the quarter or quarter quarter sequential commercial growth that you referred to in the US. You know, on the surface, you might come to the conclusion that it's a little bit below market, but I'm not fussed by it and I'll tell you why some of that is and by the way, when I say a little bit, like a very little bit.

Speaker 16: And with that, I want to thank everybody for participating and we look forward of course to speaking to all of you through the fall and again formally in December . Thank you. Thank you.

Doug Young: And I'll tell you why some of that is and, and by the way, when I say a little bit like a very little bit, some of that is explained by mix, which, which Nadine was just into. And some of it is actually explained by the fact that we have July in our quarter and the US banks don't. And I think when you just for those two things, you'll see that we're pretty much right on market is my hypothesis.

And with that I want to thank everybody for participating and we look forward of course to speaking to all of you through the fall and again formally in December. Thank you.

Unknown Executive: Some of that is explained by mix, which, which Nadine was just into and some of us actually explained by the fact that we have July in our quarter in the US banks don't. And I think when you adjust for those two things, you'll see that we're pretty much right on market is my hypothesis. And more importantly, the point Nadine made just now when, when the sun comes out on the industry and it will one day, we've shown time and time again that when it does we can perform better than market.

Thank you <unk>.

<unk> has now ended.

Speaker 2: Please disconnect your lines at this time, and we thank you for your participation.

Please disconnect your lines at this time and we.

Thank you for your participation.

Doug Young: And more importantly, the point Nadine made just now when, when the sun comes out on the industry and it will one day, we've shown time and time again that when it does we can perform better than market in commercial banking with the fourth largest book on the continent. And we expect that we'll be able to do that again. And, and the great news about that is that we will also simultaneously have the flow through of the efficiency of the program that we announced today as well as the full flow through of the efficiency of the bank of the West Synergies.

Unknown Executive: In commercial banking with the fourth largest book on the continent and we expect that we'll be able to do that again. And, and the great news about that is that we will also simultaneously have the flow through of the efficiency of the program that we announced today as well as the full flow through of the efficiency of the bank of the West Synergy's and when you put all of those things together for us.

Doug Young: And when you put all of those things together for us, that's what to me gets me excited because it's a pretty differentiated outcome for our banks. And on your NIM question, you know, in quarters when deposit growth exceeds long growth, you know, we see a positive impact of that on our NIM, this past quarter in Q3, our long growth exceeded deposit growth so therefore that had a negative impact on our NIM, next quarter, we are predicting a stable loan environment and potentially a better deposit environment, which should be, you know, marginally helpful for our NIM in Q4. Appreciate it, thank you.

Unknown Executive: That's what, to me, gets me excited because it's a pretty differentiated outcome for our bank. And on your name question, you know, in quarters when deposit growth exceeds long growth, you know, we see a positive impact of that on our name. The past quarter and Q3 are long growth exceeded deposit growth so therefore that had a negative impact on our name next quarter, we are predicting a stable loan environment and potentially a better deposit environment, which should be marginally helpful for our name and Q4.

Operator: Appreciate it, thank you.

Paul Holden: Thank you, a following question is from Paul Holden from CIBC, please go ahead. Thank you, good morning.

Paul Holden: Thank you, a following question is from Paul Holden from CIBC, please go ahead. Thank you, good morning. A quick question on capital management, just wondering the process behind the drip discount and when that might come off, given you are seeing, you know, a build in the CT or you should be seeing a build in the CT, one I think on our organic basis, given the slow, long growth environment and then obviously with the operating efficiency improvements, expected that will also help organic capital generation and then you've provided some pretty neutral slash positive outlook for FRTP and, and basil three impacts.

Unknown Executive: A quick question on capital management, just wondering the process behind the drip discount and when that might come off, given you are seeing, you know, a build in the CT or you should be seeing a build in the CT one I think on our organic basis given the slow, long growth environment and then obviously with the operating efficiency improvements expected, that will also help organic capital generation and then you've provided some pretty neutral slash positive outlook for FRTP and and basil 3 impacts. Yes, so good question.

Tayfun Tuzun: Yes, so good question. We will be finalizing our FRTP analysis over to this quarter, this, which will give us more clarity. As I said, we are, you know, pretty confident that it will have a, you know, a modest impact on our capital.

Unknown Executive: We will be finalizing our FRTP analysis over to this quarter, which will give us more clarity. As I said, we are, you know, pretty confident that it will have a, you know, a modest impact on our capital. Look, I mean, when we started the year, we said that the assessment on drip is a quarterly process that management and will and the board will go through together. We are maintaining our 12 plus percent CT one ratio targets across the bank and depending upon, you know, what we see in the environment with respect to our WA growth and the regulatory decisions that, you know, are still coming in, you know, in the US obviously we've seen it, which as Darrell said, does not impact us much. The more clarity we have on the environment, both macro as well as regulatory, the closer we will get to a decision on drip.

Tayfun Tuzun: Look, I mean, when we started the year, we said that the assessment on drip is a quarterly process that management and the board will go through together. We are maintaining our 12 plus percent CT one ratio targets across the bank and depending upon, you know, what we see in the environment with respect to our W.A, growth and the regulatory decisions that, you know, are still coming in, you know, in the US, obviously, we've seen it, which, as Darrell said, does not impact us much. The more clarity we have on the environment, both macro as well as regulatory, the closer we will get to a decision on drip.

Unknown Executive: And then I guess my follow up on that point would be kind of can you give us a sense of what you're operating target range is for the CT one. We've heard some other banks sort of talk about maybe getting up to 12 and a half plus. Are you sort of thinking the same thing over time? I think a reasonable range is between 12 and 12 and a half percent and then the current environment.

Tayfun Tuzun: And then I guess my follow up on that point would be kind of, can you give us a sense of what you're operating target range is for the CT one we've heard some other banks sort of talk about maybe getting up to 12 and a half plus. Are you sort of thinking the same thing over time? I think a reasonable range is between 12 and 12 and a half percent and then the current environment.

Unknown Executive: And as I said before, the target level capital is impacted by multiple factors, including the environment and the regulatory regime and the peers. So we will be very sensitive to all of those three. I think that the range is still 12 to 12 and a half under the current Aussie regime and potentially closer to that 12 and a half point. Thank you for that. Thank you.

Tayfun Tuzun: And as I said before, the target level capital is impacted by multiple factors, including the environment and the regulatory regime and the peers. So we will be very sensitive to all of those three. I think that the range is still 12 to 12 and a half under the current Aussie regime and potentially closer to that 12 and a half point.

Tayfun Tuzun: Thank you for that.

Operator: Thank you.

Lemar Persaud: I'll follow in question if I'm Lamar Persaud from former executies. Please go ahead. Hi, maybe for a typhoon. Should we think about the severance charges as being a one quarter phenomenon or are there further charges coming down the pipeline? It is a one-quarter phenomenon, and that's the reason why we noted the severance this quarter. We expect continued focus on expense savings as our commitment to positive operating remains firm, but the severance charge is this quarter.

Lemar Persaud: I'll follow in question if I'm Lamar Persaud from former executies. Please go ahead.

Tayfun Tuzun: Hi, maybe for a typhoon. Should we think about the severance charges as being a one quarter phenomenon or are there further charges coming down the pipeline? It is a one-quarter phenomenon, and that's the reason why we noted the severance of this quarter. We expect continued focus on expense savings as our commitment to positive operating remains firm, but the severance charge is this quarter.

Operator: Okay, perfect.

Unknown Executive: Okay, perfect. And then could you remind us what the conditions are for just for legal provision? I guess you guys call that higher legal. There are a lot of legal expenses and a lot of the reasons for elevated expenses, but just looking at your adjustments, we have seen legal provisions that are adjusted for us. So I guess how do you draw the line in the stands for what you adjust for and what you leave in your in your core expense numbers?

Tayfun Tuzun: And then could you remind us what the conditions are for just for legal provision? I guess you guys call that higher legal provision. Legal expenses are one of the reasons for elevated expenses, but just looking at your adjustments, we have seen legal provisions that are adjusted for us. So I guess how do you draw the line in the stands for what you adjust for and what you leave in your in your core expense numbers?

Unknown Executive: We tend not to adjust for legal provisions in our normal business. We always have legal proceedings, and we believe that if there is a reason for us to take reserves, that they should be included in our financials on a non-adjusted basis as part of the operating performance. You might ask, and Lamar, why did we call it out this quarter? I think it really is your question because you're right. Normally, we don't adjust.

Tayfun Tuzun: We tend not to adjust for legal provisions in our normal business. We always have legal proceedings, and we believe that if there is a reason for us to take reserves that they should be included in our financials on a non-adjusted basis as part of the operating performance.

Tayfun Tuzun: You might ask then, Lamar, why did we call it out this quarter? I think it really is your question, because you're right, normally we don't adjust. And the reason we've called it out this quarter is because it's unusually high. We don't expect that level in the normal course, so we want to do all to know. We want to do all to know that. And that's linked to the severance. Is that what it's related to? No, it's not linked to the severance. It's separate from the severance. And it does include the off-channel communication settlements that is very public obviously.

Operator: Okay, perfect. Thanks again. Thank you.

Unknown Executive: And the reason we call it out this quarter is because it's unusually high. We don't expect that level in the normal course, so we want to do all to know. We want to do all to know that. And that's linked to the severance. Is that what it's related to? No, it's not linked to the severance. It's separate from the severance. And it does include the off-channel communication settlements that is very public obviously.

Operator: Okay, perfect. Thanks again.

Operator: Thank you.

Nigel D'Souza: The following question is from Nigel D'Souza from Veritas Investment Research. Please go ahead. Thank you.

Nigel D'Souza: The following question is from Nigel D'Souza from Veritas Investment Research. Please go ahead. Thank you.

Nigel D'Souza: Good morning. I just wanted to drill down a little bit more on the trends you're seeing on the deposit side in your US business. Any color on what you're seeing for non-intersparing deposits? How much of that remains in terms of deposit mix? What you're seeing on an uninsured deposit? And if there's a difference in flows or deposits or the bank of a West franchise versus the BMO US franchise? Yeah, Theraniel, I'll take that one.

Nadim Hirji: Good morning. I just wanted to drill down a little bit more on the trends you're seeing on the deposit side in your US business. Any color on what you're seeing for non-intersparing deposits? How much of that remains in terms of deposit mix? What you're seeing on an uninsured deposit? And if there's a difference in flows or deposits, or the bank of a West franchise versus the BMO US franchise? Yeah, Theraniel. I'll take that one.

Nadim Hirji: So what we're seeing in terms of the US, we're still seeing the pre-pandemic or through the pandemic surge deposits still existing to some degree in the franchise. There's slowly running off. We would anticipate that that to take place probably in the first half of next year to be fully out. They're still elevated in our checking and our savings account. We are seeing again that migration to term, which is expected as it continue to be in a market where the rates are attractive to our customer base.

Nigel D'Souza: So what we're seeing in terms of the US, we're still seeing the pre-pandemic or through the pandemic surge deposits still existing to some degree in the franchise. There's slowly running off. We would anticipate that that to take place probably in the first half of next year to be fully out. They're still elevated in our checking and our savings account. We are seeing again that migration to term, which is expected as it continue to be in a market where the rates are attractive to our customer base.

Nigel D'Souza: As well on the bank of the West side, as I mentioned, we're seeing stability in terms of our ability to retain deposits and our now seeing growth. That's a function of our introduction of better pricing, optimization of the portfolio itself, and expect that to move forward. And then on our digital deposit taking, we're seeing strong outcomes as well in terms of what we're seeing being driven through the digital channels across the 50 states.

Nadim Hirji: As well on the Bank of the West side, as I mentioned, we're seeing stability in terms of our ability to retain deposits and our now seeing growth. That's a function of our introduction, of better pricing, optimization of the portfolio itself, and expect that to move forward. And then on our digital deposit taking, we're seeing strong outcomes as well in terms of what we're seeing being driven through the digital channels across the 50 states.

Nigel D'Souza: So overall, I'd say those are the trends. We believe that there's lots of opportunity in the franchise itself of Bank of the West given the market itself is very attractive. And so as we go through our campaign season, et cetera, we'll anticipate to be able to grow at market in those particular markets. I'm not sure in a team if you have any other thoughts. So, I'll be very similar, but I would say if you were asking trends, the shift makes that we've seen going from non-interest to interest bearing has slowed down and is stabilizing.

Nadim Hirji: So overall, I'd say those are the trends. We believe that there's lots of opportunity in the franchise itself of Bank of the West given the market itself is very attractive. And so as we go through our campaign season, et cetera, we'll anticipate to be able to grow at market in those particular markets. I'm not sure in a team if you have any other thoughts. So, I'll be very similar, but I would say if you were asking trends, the shift makes that we've seen going from non-interest to interest bearing has slowed down and is stabilizing.

Nigel D'Souza: So, I think I won't think it's going to shift back anytime soon, but I do think that it has stabilized in terms of the shift. Yeah, just last point on this, I think Nigel, you're also asking whether there's a juxtaposition between the Bank of the West franchise and the legacy BMO franchise. I would say we're pretty much at the point where that's converging. Converging, I should say, pardon me, because you'll see that as we go through Q4, we have our conversion weekend, literally coming ahead of us.

Nadim Hirji: So, I think I won't think it's going to shift back anytime soon, but I do think that it has stabilized in terms of the shift. Yeah, just last point on this, I think Nigel, you're also asking whether there's a juxtaposition between the Bank of the West franchise and the Legacy Bimo franchise. I would say we're pretty much at the point where that's converging. Converging I should say pardon me, because you'll see that as we go through Q4, we have our conversion weekend literally coming ahead of us.

Nigel D'Souza: And the franchise values start to integrate and blend together almost completely. So, the benefit that we bring with the scale and the capabilities and the technology is infiltrated into the Bank of the West system. And so, as time has gone on, we've seen a convergence of the performance on deposits, and that's what we'd expect to see on a blended basis going forward.

Nadim Hirji: And the franchise values start to integrate and blend together almost completely. So, the benefit that we bring with the scale and the capabilities and the technology is infiltrated into the Bank of the West system. And so, as time has gone on, we've seen a convergence of the performance on deposits, and that's what we'd expect to see on a blended basis going forward.

Piyush Agrawal: Great, and just a quick follow-up with Piocian, to quite a lost outlook, I think he's paying no for PCLs to be somewhere in the low 20 basis points range. That actually puts you above enough on a pair, but that puts you above the run rate for PCLs in 2019. So, just wondering if you could comment on, are you seeing interest rates way on commercial side or retail side and the expected revisions to remain elevated in any pathway for one that could fall below 20 basis?

Piyush Agrawal: Great, and just a quick follow-up with Piocian. They're quite a lost outlook. I think he's picking up for PCLs to be somewhere in the low 20 basis points range. That actually puts you above enough on a pair, but that puts you above the run rate for PCLs in 2019. So, just wondering if you could comment on, are you seeing interest rates way on commercial side or retail side, and do you expect those revisions to remain elevated in any pathway for when that could fall back?

Piyush Agrawal: Sure, yeah. So, I think on the impaired piece, I think that's the one you're referring to. The guidance we're giving is consistent low 20s to mid 20s. Of course, interest rates are a big part of the environment. It's a very natural evolution for our borrowing customers to adjust their performance to a 500 basis point increase in a very short period of time. That's what you're seeing coming through. So, I would say, if you take that for the next quarter and you sort of average it out for the entire year, we are well below 20 on an average basis.

Piyush Agrawal: Sure, yeah. So, I think on the impaired piece, I think that's the one you're referring to, the guidance we're giving is consistent, low 20s to mid 20s. Of course, interest rates are a big part of the environment. It's a very natural evolution for our borrowing customers to adjust their performance to a 500 basis point increase in a very short period of time. That's what you're seeing coming through. So, I would say if you take that for the next quarter and you sort of average it out for the entire year, we are well below 20 on an average basis, but again within the realm of normalization that I think all of you and all of us have been expecting for the industry.

Piyush Agrawal: But again, within the realm of normalization that I think all of you and all of us have been expecting for the industry. So, I don't have anything else to sort of add over there. I think the bank of the West portfolio performs very well converging as we've used the term with the BMO US portfolio. And the trends are similar weaker and unsecured a little bit, but strong secured portfolio and then risk creating changes on the whole cell portfolio. So, overall position of strength from where we are starting and a very strong risk appetite. That's it for me.

Piyush Agrawal: So, I don't have anything else to sort of add over there. I think the bank of the West portfolio performs very well, converging as we've used the term with the BMO US portfolio and the trends are similar weaker and unsecured a little bit, but strong secured portfolio and then risk creating changes on the whole cell portfolio. So, overall position of strength from where we are starting and a very strong risk appetite.

Operator: Thank you.

Operator: That's it for me.

Operator: Thank you.

Juho Kim: The last question is from Juho Kim from Credit Suisse.

Operator: The last question is from Juho Kim from Credit Suisse. Please go ahead. Good morning. The sun extended. There are a lot of issues here. The service was quarter and it's built down from the day to the next quarter. And there's how those should benefit forward, but do you speak those? And it's a little bit that I said it's nerfies. Sorry to interrupt you. You're coming in a bit choppy if you could. Sorry.

Juho Kim: Please go ahead.

Operator: Good morning. The sun extended. There are a lot of issues here. And it's built up in the nation. And there's how those should benefit forward. But do you speak those? And it's a little bit that I said it's nerfies. Sorry, Juho, sorry to interrupt you. You're coming in a bit choppy if you could. Oh, sorry.

Operator: I'll start from the beginning. I just had a question just on the expenses there. Can you hear me? Can you guys hear me? Okay. Yep, that's better. Okay. On expenses, there are a lot of moving pieces. I'm just trying to get a sense of how you see your efficiency ratio evolving in 2024. And I'm trying to get a better idea if there's a pathway to get back to the mid-50s in efficiency ratio that year or if that's more of a story beyond 2024.

Operator: I'll start from the beginning. I just had a question just on the expenses there. Can you hear me? Can you guys hear me? Okay. Yep, that's better. Okay. On expenses, there are a lot of moving pieces. I'm just trying to get a sense of how you see your efficiency ratio evolving in 2024. And I'm trying to get a better idea if there's a pathway to get back to the mid-50s in efficiency ratio that year or if that's more of a story beyond 2024.

Operator: I mean, I think we are just as we signaled earlier in this year, we significantly curtailed expense growth at the beginning of this year and predicted that our year over year expense growth would start coming down and our quarter over quarter expense growth would start reflecting that. And that happened this quarter that has happened over the past couple of quarters. As we look forward now, we are truly still committing to positive operating leverage.

Operator: Yeah, look, I mean, I think we are just as we signaled earlier in this year. We significantly curtailed expense growth at the beginning of this year and predicted that our year over year expense growth would start coming down and our quarter over quarter expense growth would start reflecting that and that happened this quarter that has happened over the past couple of quarters. As we look forward now, we are truly still committing to positive operating leverage.

Operator: Both with a contribution that's coming from back of the West, as well as from our own operations. So we will update our expectations for 24 when we get to the end of Q4, but the primary driver of our actions clearly is that firm commitment to positive operating leverage the efficiency ratio is going to be an outcome of that you know we would expect improvements in our efficiency ratio.

Operator: Both with the contribution that's coming from Bank of the West, as well as from our own operations. So we will update our expectations for 24 when we get to the end of Q4, but the primary driver of our actions clearly is that firm commitment to positive operating leverage the efficiency ratio is going to be an outcome of that. But, you know, we would expect improvements in our efficiency ratio. And we hope that we will be able to update you with that when we get to the end of next quarter.

Darryl White: And we hope that we will be able to update you with that when we get to the end of next quarter an operator, I've got my eye on the clock here and I'm cognizant that our guests have another call to get to so I'll bring us I'll bring us to a close with that as I understand is the last question in the queue. So I want to thank everybody for their questions and leave you with the following thought guided by the purpose driven strategy that I've talked about and the winning culture that I've talked about.

Darryl Hackett: And operator, I've got my eye on the clock here and I'm cognizant that our guests have another call to get to so I'll bring us, I'll bring us to a close with that as I understand is the last question in the queue.

Darryl Hackett: So I want to thank everybody for their questions and leave you with the following thought guided by the purpose driven strategy that I've talked about and the winning culture that I've talked about. I think you can take away that we're proactively addressing the period of volatility that we're into deliver consistent and sustained performance. We're doing that by dynamically managing our business to continue strengthening the already robust foundation and invest in our businesses for growth.

Darryl White: I think you can take away that we're proactively addressing the period of volatility that we're into deliver consistent and sustained performance. We're doing that by dynamically managing our business to continue strengthening the already robust foundation and invest in our businesses for growth and with the full integration of the Bank of the West ahead of us to strengthen the size and the stability of our balance sheet and our superior risk and liquidity capital management are built really to outperform in any environment. And with that I want to thank everybody for participating and we look forward of course to speaking to all of you through the fall and again formally in December. Thank you.

Operator: The conference has now ended.

Darryl Hackett: And with the full integration of the Bank of the West ahead of us, the strength and the size and the stability of our balance sheet and our superior risk and liquidity capital management are built really to outperform in any environment.

Operator: And with that, I want to thank everybody for participating and we look forward of course to speaking to all of you through the fall and again formally in December. Thank you.

Operator: The conference has now ended.

Operator: Please disconnect your lines at this time and we thank you for your part.

Please disconnect your lines at this time and we thank you for your part.