Q1 2025 Bank of Montreal Earnings Call

February 25, 2025

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Your host for today's Christian Dior. Please go ahead.

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Darryl White: Thank you and good morning, we will begin the call with remarks from Darryl White Bmo's CEO, followed by Typhoon <unk>, Our Chief Financial Officer, <unk> <unk>, our chief risk Officer also present to take questions. Today are Ernie Johansen head of BMO, North American personal and business banking and <unk> head of BMO commercial banking, Alan Tennenbaum head of.

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Speaker Change: BMO capital markets <unk> manga ahead of BMO wealth management, and Darryl Hackett BMO U S. CEO I would ask participants to limit to one question during the Q&A to give everyone a chance to participate 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 may.

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Speaker Change: May differ materially from these statements 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 typhoon, we will be referring to adjusted results in their remarks, unless otherwise noted as reported and I will now turn the <unk>.

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Darryl White: All over to Darryl.

Darryl White: Thank you Christina and good morning, everyone.

Darryl White: We began the year with a very strong start with first quarter adjusted net income of $2 3 billion.

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Darryl White: And earnings per share of $3 and <unk>.

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Darryl White: Pre provision pretax earnings of 4 billion increased 32% from last year.

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Darryl White: Revenue growth was broad based up 18%, which drove strong all bank operating leverage of eight 9% and positive in each of our operating groups.

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Darryl White: Provisions for credit losses declined from the prior quarter as expected and we continue to review and pressure test our portfolio in light of geopolitical uncertainty.

Darryl White: Our CET one ratio remained strong at 13, 6%, providing ample opportunity for organic growth and investments while returning capital to shareholders. We began executing our share buyback program as planned after receiving regulatory approval repurchasing one 2 million shares this quarter and a total of three.

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All participants please continue to standby the conference will begin momentarily. Once again. Please continue to standby we thank you for your patience.

Darryl White: One 2 million shares as of today.

Return on equity improved to 11, 3% our top priority is rebuilding return on equity to achieve our target of 15% over the medium term at.

Speaker Change: Some of them will walk us healthy duckenfield they'd be taught superb people pretty old to be honest, we work with all of us get it because I don't know he owns the best healthy.

Darryl White: At the end of last year, we laid out a path to our goal and today typhoon will expand on the steps we are taking within our U S business.

Darryl White: Looking at the economic backdrop.

Darryl White: While widespread widespread tariffs between the U S and Canada have been deferred the challenge has been put plainly before us and client conversations throughout the past few weeks. There comments on recent events have been clear trade wars introduced uncertainty and disrupt the efficient allocation of capital to that and we are seeing some.

You or I carry

Darryl White: Clients on both sides of the border adopt a more cautious posture around capital deployment.

Darryl White: At the same time, we are closely monitoring the implications of potential tariffs on our portfolio and working proactively to support client needs millions of customers rely on us everyday, but particularly in days of uncertainty we've been helping our clients grow and our communities thrive for over 200 years, and we've helped our clients navigate their way through all <unk>.

Speaker Change: [noise].

Darryl White: <unk> environments.

Darryl White: We have a strong balance sheet robust capital and liquidity and a well diversified business model built to deliver resilient performance through cycles. Our strategies are aimed at providing trusted advice to clients across our north American franchise positioning us well to compete and grow in today's dynamic operating environment.

Speaker Change: [laughter].

Darryl White: Turning to the businesses each operating group delivered good <unk> growth this quarter and positive operating leverage in Canadian P&C Ppt was up 13% with record revenues of $3 billion, driven by customer and balance sheet growth.

Speaker Change: [noise] all participants please continue to standby the conference will begin momentarily. Once again. Please continue to standby we thank you for your patience.

Darryl White: Our innovative products and client focused advice are driving engagement, we've opened more than $1 million savings amplifier accounts since launch and customers have set more than $1 7 million financial goals empowering them to make real financial progress through informed financial decisions.

Speaker Change: Well in the field that we walk the silty duckenfield they'd be taught soup.

Speaker Change: Are you able to be everywhere at all of them.

Speaker Change: Get it because that's the one that he owns the best healthy.

Speaker Change: Yeah.

Darryl White: We recently announced the new BMO VIP Porter travel rewards credit card suite in partnership with Porter Airlines, and Mastercard, providing customers with enhanced travel benefits. We now have more than 20000 customers already on a waiting list and we're excited to announce the details of these innovative products to Canadians shortly.

Speaker Change: Yeah.

Speaker Change: This conference is being recorded.

Speaker Change: I'll say hope it's always you see.

Speaker Change: All participants please stand by your meeting is ready to begin good morning, and welcome to BMO financial group's Q1, 'twenty 'twenty five.

Speaker Change: And the conference call for February 25th.

Darryl White: In Canadian commercial banking strong revenue growth was driven by continued solid loan and deposit growth as we continue to expand and deepen client relationships, including with our award winning treasury and payments solutions.

Speaker Change: 'twenty 'twenty funds.

Speaker Change: I'll start today's Christian Please go ahead.

Speaker Change: Thank you and good morning, we will begin the call with remarks from Darryl White Bmo's CEO, followed by Typhoons. You then our chief financial Officer and P. S. Shangri La our Chief risk Officer also present to take questions. Today are Ernie Johansen head of below North American personal and business banking and beam Hershey head of BMO commercial banking Alan Tennenbaum head of.

Darryl White: This quarter.

Darryl White: We launched BMO sink in Canada, and innovative solution that integrates BMO online banking for business services directly into resource planning and accounting systems, boosting automation and efficiency for our clients.

Speaker Change: BMO capital markets Donlin, Kananga head of wealth management, and Darryl Hackett BMO U S. C O I would ask participants to limit to one question during the Q&A to give everyone a chance to participate.

Darryl White: Obviously available only in the U S and it's an example of how our North American platform brings industry, leading technologies and capabilities to clients on both sides of the border.

Speaker Change: Noted on slide two forward looking statements may be made during this call, which involve assumptions and have inherent risks and uncertainties. Actual results may differ materially from these statements 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 and stuff.

Darryl White: U S. P&C grew <unk>, 6% with revenue growth and good expense management, we're seeing continued momentum in core customer growth and digital adoption, including a 14% increase in checking account acquisition in the new west markets and overall strong performance in the Midwest.

Speaker Change: The underlying business performance Geralyn types, they are and will be referring to adjusted results in their remarks, unless otherwise noted as reported and I will now turn the call over to Dan.

Darryl White: And U S commercial banking consistent with the industry loan growth remains subdued however client engagement is strong.

Darryl White: We're making progress on our one client strategy growing connected relationships with strong referral growth between commercial banking capital markets and wealth and we're continuing to add top talent, particularly in the California market, we're well positioned for growth as the market improves.

Dan: Thank you Christina and good morning, everyone.

Dan: We began the year with a very strong start with first quarter adjusted net income of $2 3 billion and earnings per share of $3 <unk>.

Dan: Pre provision pretax earnings of $4 billion increased 32% from last year.

Darryl White: And BMO wealth management, <unk> was up 48% with strong revenue growth in wealth and asset management, reflecting market appreciation and net new assets as well as a strong quarter for insurance as we took advantage of investment opportunities in the market.

Dan: Revenue growth was broad based up 18%, which drove strong all bank operating leverage of eight 9% and positive in each of our operating groups.

Dan: Provisions for credit losses declined from the prior quarter as expected and we continue to review and pressure test our portfolio in light of geopolitical uncertainty.

Darryl White: This quarter was the highest quarter of mutual funds sales since 2015, and ETF flows continue to be strong.

Dan: Our CET one ratio remained strong at 13, 6%, providing ample opportunity for organic growth and investment while returning capital to shareholders. We began executing our share buyback program as planned after receiving regulatory approval repurchasing one 2 million shares this quarter and a total of three.

Darryl White: Our industry, leading ETF offerings were recognized with 22 fund great a plus awards across several categories. The most of any financial organization for 2024.

Darryl White: We've also launched new and innovative products, helping Canadians expand their investment options across global markets.

Dan: Point 2 million shares as of today.

Darryl White: BMO capital markets grew <unk> by 67% driven by a strong global markets trading performance across all products and strong client flows and our U S business.

Dan: Return on equity improved to 11, 3% our top priority is rebuilding return on equity to achieve our target of 15% over the medium term.

Darryl White: Investment in corporate banking had a good quarter with higher client activity in corporate banking and underwriting.

Dan: At the end of last year, we laid out a path to our goal and today typhoon will expand on the steps we are taking within our U S business.

Darryl White: Our results this quarter also reflect the broad based and differentiated capabilities in our metals and mining business.

Dan: Looking at the economic backdrop.

Dan: While widespread widespread tariffs between the U S and Canada have been deferred the challenge has been put plainly before us and client conversations throughout the past few weeks. There comments on recent events have been clear trade wars introduced uncertainty and disrupt the efficient allocation of capital to that and we are seeing some.

Darryl White: BMO is a global leader and a trusted advisor across the industry and this week, we're proud to be hosting our 34th annual global metals mining and critical minerals conference.

Darryl White: Our strong performance this quarter reflects ongoing investments we've made in talent and technology. This quarter, we took a bold step forward in advancing our digital first agenda and joined the IBM quantum network, which will enable us to develop and deploy quantum powered solutions across our operations and deliver progress and.

Dan: Clients on both sides of the border adopt a more cautious posture around capital deployment.

Dan: At the same time, we are closely monitoring the implications of potential tariffs on our portfolio and working proactively to support client needs millions of customers rely on us everyday, but particularly in days of uncertainty we've been helping our clients grow and our communities thrive for over 200 years, and we've helped our clients navigate their way through all economic.

Darryl White: Outcomes at scale by emerging human experience with cutting edge technology <unk>.

Darryl White: Investments like this support our commitment to driving new revenue opportunities and improving efficiency supporting stronger returns over the long term.

Dan: <unk> environments.

Darryl White: Before I end I want to recognize the profound impact of the recent wildfires fires in Los Angeles have had on countless individuals and families. Our thoughts are with those who have lost their homes businesses and neighborhoods in the wake of these devastating events for our employees and customers who were impacted we're providing ongoing relief.

Dan: I have a strong balance sheet robust capital and liquidity and a well diversified business model built to deliver a resilient performance through cycles. Our strategies are aimed at providing trusted advice to clients across our north American franchise positioning us well to compete and grow in today's dynamic operating environment.

Tiffany: And financial assistance, and we pledged $3 million to local charities to support recovery and rebuilding efforts I believe that California, and the L. A area will emerge even stronger out of this difficult period with that I will turn it over to Tiffany. Thank.

Dan: Turning to the businesses each operating group delivered good PPG growth this quarter and positive operating leverage.

Dan: Canadian P&C PPP tea was up 13% with record revenues of $3 billion, driven by customer and balance sheet growth.

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

Dan: Our innovative products and client focused advice are driving engagement, we've opened more than 1 million savings amplifier accounts since launch and customers have set more than $1 7 million financial goals empowering them to make real financial progress through informed financial decisions.

First quarter reported EPS was $2 83, and net income was $2 $1 billion <unk>.

Tiffany: Adjusting items are shown on slide 39.

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

Dan: We recently announced the new BMO VIP Porter travel rewards credit card suite in partnership with Porter Airlines, and Mastercard, providing customers with enhanced travel benefits. We now have more than 20000 customers already on a waiting list and we're excited to announce the details of these innovative products to Canadians shortly.

Tiffany: Adjusted EPS was $3 <unk> up from $2 56 last year and net income was $2 $3 billion up 21%.

Tiffany: Our OE up 11, 3% improved 70 basis points.

Tiffany: BMO delivered record ppt of $4 billion this quarter, an increase of 32% from last year, driven by strong performance across our businesses.

Dan: In Canadian commercial banking strong revenue growth was driven by continued solid loan and deposit growth as we continue to expand and deepen client relationships, including with our award winning treasury and payments solutions.

Tiffany: Revenue increased 18%, while expenses grew 9% delivering positive operating leverage of eight 9% and improving our efficiency ratio to 56, 3%.

Dan: This quarter we.

Dan: We launched BMO sink in Canada, and innovative solution that integrates BMO online banking for business services directly into resource planning and accounting systems, boosting automation and efficiency for our clients.

Tiffany: On a constant currency basis revenue increased 14% expenses increased 6% and <unk> was up 28%.

Dan: Previously available only in the U S and it's an example of how our North American platform brings industry, leading technologies and capabilities to clients on both sides of the border.

Tiffany: These sales increased $384 million from the prior year and declined $512 million from last quarter.

Dan: U S. P&C grew <unk>, 6% with revenue growth and good expense management.

Tiffany: We use will speak to this in his remarks.

Tiffany: The effective tax rate increased to 24, 5%, including the implementation of the global minimum tax in the current quarter.

Dan: Continued momentum in core customer growth and digital adoption, including a 14% increase in checking account acquisition in the new west markets and overall strong performance in the Midwest.

Tiffany: Moving to slide nine at.

Tiffany: At the end of last year, we shared with you the execution priorities to achieve our medium term ROE target of 15% for BMO.

Dan: And U S commercial banking consistent with the industry loan growth remains subdued. However client engagement is strong we're making progress on our one client strategy growing connected relationships with strong referral growth between commercial banking capital markets and wealth and we're continuing to add top talent, particularly.

Tiffany: We expect our performance improvement in the U S to be a key contributor to achieve those targets.

Tiffany: The themes on this slide closely correlate with the broader BMO priorities.

Tiffany: Convergent credit performance to our historical averages and continued disciplined commitment to positive operating leverage are two of the building blocks very similar to our BMO wide targets.

Dan: In the California market, we're well positioned for growth as the market improves.

Dan: BMO wealth management P. PBT was up 48% with strong revenue growth in wealth and asset management, reflecting market appreciation and net new assets as well as a strong quarter for insurance as we took advantage of investment opportunities in the market.

Tiffany: In addition to these operational business performance targets. The third component is the full capture of the bank of the west revenue synergies, which as we have discussed previously have been slower to develop due to the muted business environment that has lasted longer than anticipated and.

Dan: This quarter was the highest quarter of mutual fund sales since 2015, and ETF flows continue to be strong.

Tiffany: And is now expected to be more constructive.

Dan: Our industry, leading ETF offerings were recognized with 22 fund great a plus awards across several categories. The most of any financial organization for 2024.

Tiffany: The final component is portfolio optimization, which encompasses both sides of the balance sheet.

Tiffany: On the asset side, we intend to improve our allocation of capital across the businesses and portfolios focusing on recycling and redeploying capital to higher return opportunities.

Dan: We've also launched new and innovative products, helping Canadians expand their investment options across global markets.

Dan: BMO capital markets grew PPP G by 67% driven by a strong global markets trading performance across all products and strong client flows and our U S business.

Tiffany: On the liability side, we have identified meaningful opportunities to improve our funding costs and deposit mix.

Tiffany: Our medium term ROE target in the U S is 12% or more and we expect that will continue to improve over the longer term.

Dan: Investment in corporate banking had a good quarter with higher client activity in corporate banking and underwriting.

Dan: Our results this quarter also reflect the broad based and differentiated capabilities in our metals and mining business.

We have built action plans across all of these priorities and are in the early stages of execution.

Dan: BMO is a global leader and a trusted advisor across the industry and this week, we're proud to be hosting our 34th annual global metals mining and critical minerals conference.

Tiffany: We plan to continue to report on progress against these initiatives to enable you to track our improvements along the way.

Tiffany: Okay.

Tiffany: Moving to slide 10 average loans grew 4% year over year on a constant currency basis, excluding the impact of the RV loan portfolio sale and the wind down of the indirect auto book driven by good growth in residential mortgages and commercial loans in Canadian P&C.

Our strong performance this quarter reflects ongoing investments we've made in talent and technology. This quarter, we took a bold step forward in advancing our digital first agenda and joined the IBM quantum network, which will enable us to develop and deploy quantum powered solutions across our operations and deliver progress.

Tiffany: Strong growth in customer deposits continued with average balances up 8% from last year, excluding the impact of the stronger U S. Dollar.

Dan: And outcomes at scale by emerging human experience with cutting edge technology.

Dan: Investments like this support our commitment to driving new revenue opportunities and improving efficiency supporting stronger returns over the long term.

Tiffany: Sequentially Canadian deposits reflected good growth in everyday banking and commercial operating accounts and decreases in term deposits.

Dan: Before I end I want to recognize the profound impact of the recent wildfires fires in Los Angeles I've had on countless individuals and families. Our thoughts are with those who have lost their homes businesses and neighborhoods in the wake of these devastating events for our employees and customers who were impacted we're providing ongoing relief.

Tiffany: In the U S. Total deposits were up 5% from last year and 1% sequentially.

Turning to slide 11 on an ex trading basis net interest income was up 11% from the prior year and 5% sequentially.

Tiffany: Compared with last quarter NIM ex trading was up two basis points benefiting from the rolling Reinvestments at higher rates.

Tiffany: And improving deposit mix.

Tiffany: In Canadian P&C, NIM increased five basis points, reflecting higher loan and deposit margins in the quarter.

Tiffany: Thank you Darryl good morning, and thank you for joining US my comments will start on slide <unk>.

Tiffany: U S. P&C NIM increased seven basis points also due to higher loan and deposit margins as well as from deposits growing faster than loans.

Tiffany: First quarter reported EPS was $2.83 and net income was $2 $1 billion <unk>.

Tiffany: Adjusting items are shown on slide 39.

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

Tiffany: At the all bank level, we are still projecting margin stability at this higher level.

Tiffany: Adjusted EPS was $3.04 up from $2.56 last year, and net income was $2 $3 billion up 21%.

Tiffany: Assuming we maintain the benefits of higher long rates.

In our P&C businesses, we continue to expect a stable NIM environments.

Tiffany: Our OE up 11, 3% improved 70 basis points.

Tiffany: Turning to slide 12, noninterest revenue was up 24% from the prior year and 15% excluding trading trading with increases across most categories and particularly in brokerage investment management and custodial fees.

Tiffany: BMO delivered record P. P. P T a $4 billion this quarter, an increase of 32% from last year, driven by strong performance across our businesses.

Tiffany: Revenue increased 18%, while expenses grew 9% delivering positive operating leverage of eight 9% and improving our efficiency ratio to 56, 3%.

Tiffany: Banking and services fees increased 4% with lending deposit and card fees, partially offset by the shift of D. A fees to net interest income.

Tiffany: On a constant currency basis revenue increased 14% expenses increased 6% and P. P. P. T was up 28%.

Tiffany: Moving to slide 13.

Tiffany: Expenses were up 9% from the prior year or 6%, excluding the stronger U S dollar driven mainly by higher performance based compensation.

Tiffany: These sales increased $384 million from the prior year and declined $512 million from last quarter.

Tiffany: And the impact from the consolidation of certain U S retirement benefit plans in the prior year.

Tiffany: We use will speak to this in his remarks.

Tiffany: Sequentially expenses were up 5% in constant currency, reflecting stock based compensation for employees eligible to retire and seasonality of benefits that are recognized in the first quarter of each year, which had a combined impact of $245 million.

Speaker Change: The effective tax rate increased to 24, 5%, including the implementation of the global minimum tax in the current quarter.

Tiffany: Moving to slide nine at.

Tiffany: At the end of last year, we shared with you the execution priorities to achieve our medium term ROE target of 15% for BMO.

Tiffany: As we look forward to the rest of the fiscal 'twenty five we maintain our guidance of year over year expense growth expected to be in the mid single digit range on a constant currency basis, excluding higher performance based compensation and still deliver positive operating leverage as we continue to maintain investments.

Tiffany: We expect our performance improvement in the U S to be a key contributor to achieve this target.

Tiffany: The themes on this slide closely correlate with the broader BMO priorities.

Tiffany: Converging credit performance to our historical averages and continued disciplined commitment to positive operating leverage are two of the building blocks very similar to our BMO wide targets.

Tiffany: Growth.

Tiffany: Turning to slide 14, our CET one ratio of 13, 6% remained flat to last quarter as good internal capital generation was largely offset by higher source currency <unk> W E and the.

Tiffany: In addition to these operational business performance targets. The third component is the full capture of the bank over the west revenue synergies, which as we have discussed previously have been slower to develop due to the music business environment that has lasted longer than anticipated.

Tiffany: <unk> of $1 2 million shares repurchased through the previously announced normal course issuer bid, which received regulatory approval in mid January.

Tiffany: We repurchased an additional 2 million shares in February and expect to continue buybacks in line with expected convergence to our management target of 12, 5% CET one.

Tiffany: And is now expected to be more constructive.

Tiffany: The final component is portfolio optimization, which encompasses both sides of the balance sheet.

Tiffany: On the asset side, we intend to improve our allocation of capital across the businesses and portfolios focusing on recycling and redeploying capital to higher return opportunities.

Tiffany: Moving to the operating groups and starting on slide 15.

Tiffany: Canadian P&C net income was down 3% year over year with strong <unk> growth of 13% offset by higher Pls Pcl's.

Tiffany: On the liability side, we have identified meaningful opportunities to improve our funding costs and deposit mix.

Tiffany: Record revenue of $3 $1 billion was up 10% driven by higher net interest income, reflecting higher margins and solid balance sheet growth with deposits up 9% and loans up 6% and higher noninterest revenue.

Tiffany: Our medium term ROE target in the U S is 12% or more and we expect that will continue to improve over the longer term.

Tiffany: We have built action plans across all of these priorities and are in the early stages of execution.

Tiffany: Expenses were up 7%, reflecting higher employee related and technology costs and operating leverage was strong at three 6%.

Tiffany: We plan to continue to report on progress against these initiatives to enable you to track our improvements along the way.

Tiffany: Okay.

Tiffany: Moving to U S P&C on slide 16.

Tiffany: Comments here will speak to the U S dollar performance.

Tiffany: Net income was down 4% due to higher <unk>.

Tiffany: <unk> growth and operating leverage were strong at 6% and three 1% respectively.

Tiffany: Strong growth in customer deposits continues with average balances up 8% from last year, excluding the impact of the stronger U S. Dollar.

Tiffany: Revenue growth of 2% was driven by increases in noninterest revenue from higher lending and deposit fees, while net interest income remained flat.

Tiffany: Sequentially Canadian deposits reflected good growth in everyday banking and commercial operating accounts and decreases in term deposits.

Tiffany: Expenses declined 1% driven by cost synergies and operational efficiencies, partially offset by higher technology costs.

Tiffany: In the U S. Total deposits were up 5% from last year and 1% sequentially.

Tiffany: Deposits were up 5% and loans were up 2%, excluding the impact of the RV loan portfolio sale in the prior year, reflecting growth in consumer loans offset by still muted commercial lending demands.

Tiffany: Turning to slide 11 on an ex trading basis net interest income was up 11% from the prior year and 5% sequentially.

Tiffany: Moving to slide 17, BMO wealth management net income was up 53% from last year.

Tiffany: Compared with last quarter NIM ex trading was up two basis points benefiting from the rolling Reinvestments at higher rates.

Tiffany: Wealth and asset management revenue was up 16% driven by stronger global markets and net sales higher transaction revenue from increased customer activity and balanced growth across loans and deposits.

Tiffany: And improving deposit mix.

Tiffany: In Canadian P&C, NIM increased five basis points, reflecting higher loan and deposit margins in the quarter.

Tiffany: U S. P&C NIM increased seven basis points also due to higher loan and deposit margins as well as from deposits growing faster than loans.

Tiffany: Insurance revenue was up 64%, reflecting favorable market movements in the third in the quarter, including stronger equity markets and steeper yield curve.

Tiffany: Expenses were up 10% driven by higher employee related expenses, including higher revenue based costs and investments in talent.

Tiffany: At the all bank level, we are still projecting margin stability at this higher level.

Assuming we maintain the benefits of higher long rates.

Tiffany: In our P&C businesses, we continue to expect a stable NIM environments.

Tiffany: Moving to slide 18, BMO capital markets delivered very strong results in the quarter with year over year net income growth of 45% and ppt of $823 million up 67%.

Tiffany: Record revenue of $2 $1 billion was up 30%, reflecting particularly strong results in global markets driven by client activity across all trading products.

Tiffany: Banking and services fees increased 4% with lending deposit and card fees, partially offset by the shift of D. A fees to net interest income.

Tiffany: Investment in corporate banking revenue also increased reflecting higher corporate banking and debt underwriting revenue.

Tiffany: Expenses were up 14%, mainly driven by higher performance based compensation technology costs and the impact of the stronger U S. Dollar.

Tiffany: Moving to slide 13.

Tiffany: Expenses were up 9% from the prior year or 6%, excluding the stronger U S dollar driven mainly by higher performance based compensation.

Tiffany: Turning now to slide 19, corporate services net loss was $220 million compared with $316 million in the prior year as higher revenue more than offset an increase in retained expenses.

Tiffany: And the impact from the consolidation of certain U S retirement benefit plans in the prior year.

Tiffany: To conclude our first quarter results effectively displayed the strength of our franchise.

Tiffany: While the market environment supported strong revenue performance in capital markets. We have also seen continued expansion in our Canadian P&C business and very strong results in wealth management.

Tiffany: In the U S. We are optimistic that the economic environment will be more conducive for loan growth and improved customer activity in our P&C business during the second half of the year.

Tiffany: Growth.

Tiffany: Our overall operating performance during the remainder of the year will be impacted by the outcome of the ongoing tariff negotiations in North America.

Tiffany: Turning to slide 14, our CET one ratio of 13, 6% remained flat to last quarter as good internal capital generation was largely offset by higher source currency. Our W. E and the impact of $1 2 million shares repurchased through the previously announced normal course.

Tiffany: And the market environment that impacts client activity in our market facing businesses.

Tiffany: These uncertainties could lead to variability in the coming quarters.

Tiffany: They show a bit which received regulatory approval in mid January.

Tiffany: We will continue to manage dynamically to achieve positive operating leverage and are committed to delivering improved returns over the medium term.

Tiffany: We repurchased an additional 2 million shares in February and expect to continue buybacks in line with expected convergence to our management target of 12, 5%. So you do you want.

Paresh: I will now turn it over to Paresh.

Paresh: Thank you diaphone and good morning, everyone.

Paresh: My comments will start on slide 21.

Paresh: Credit performance this quarter was in line with our expectation.

Tiffany: Moving to the operating groups and starting on slide 15.

Paresh: With the work we've been doing embedded losses in our corporate and commercial portfolios have moderated from last quarter.

Tiffany: But Adrian P&C net income was down 3% year over year with strong P. P. P T growth of 13% offset by higher P. L. P. C L.

Paresh: At the same time loss rates remain above our historical averages.

Paresh: Selecting the prolonged higher rate environment accumulated inflation and higher unemployment in Canada.

Paresh: The total provision for credit losses was $1 billion or 58 basis points.

Paresh: Embed provisions for the quarter was $859 million of 50 basis points down 16 basis points from prior quarter, reflecting lower losses in our capital markets and U S commercial businesses, partially offset by higher provisions in Canadian unsecured consumer lending.

Tiffany: Expenses were up 7%, reflecting higher employee related and technology costs and operating leverage was strong at three 6%.

Tiffany: Moving to U S P&C on slide 16.

Tiffany: Here, we will speak to the U S dollar performance.

Paresh: Yeah.

Paresh: Canadian personal and business banking embedded losses were $324 million up $49 million and U S retail embedded losses about $86 million up 13 million from prior quarter.

Tiffany: Net income was down 4% due to a higher P. CLS.

Tiffany: While the P. P P T growth and operating leverage were strong at 6% and three 1% respectively.

Paresh: Consumer loan losses in both Canada, and the U S reflect higher delinquencies and credit cards and other unsecured personal loans.

Tiffany: Revenue growth of 2% was driven by increases in noninterest revenue from higher lending and deposit fees, while net interest income remained flat.

Paresh: With persistently high consumer insolvencies and unemployment continuing to inch up in Canada, we expect weakness in unsecured credit to continue through 2025.

Expenses declined 1% driven by cost synergies and operational efficiencies, partially offset by higher technology costs.

Paresh: In our residential lending portfolio renewal risk has decreased given rate cuts over the last year.

Tiffany: Deposits were up 5% and loans were up 2%, excluding the impact of the RV bond portfolio sale in the prior year, reflecting growth in consumer logs offsets by still muted commercial lending demands.

Paresh: Variable rate mortgages and negative amortization have declined to just $2 9 billion and monthly mortgage payment increases have been moderating our renewing customers and.

Tiffany: Moving to slide 17, BMO wealth management net income was up 53% from last year.

Paresh: In fact over 30% of renewing customers this quarter experienced a decrease in the monthly payments.

Tiffany: Wealth and asset management revenue was up 16% driven by stronger global markets net sales higher transaction revenue from increased customer activity and balanced growth across loans and deposits.

Paresh: Canadian commercial impaired loan provisions of $167 million relatively flat from last quarter, while the U S. Commercial embed provisions of $226 million were down $136 million and the capital markets embedded losses of $35 million were down.

Tiffany: Insurance revenue was up 64%.

Tiffany: Collecting favorable market movements in the third quarter, including stronger equity markets and steeper yield curve.

Paresh: <unk> hundred $68 million from prior quarter.

Tiffany: Expenses were up 10% driven by higher employee related expenses, including higher revenue based costs and investments in talent.

Paresh: While improved from prior quarter embedded losses are still elevated in the commercial businesses, reflecting challenges for some clients, whose business models have been strained by the restrictive monetary policy and changing consumer preferences. However.

Tiffany: Moving to slide 18, BMO capital markets delivered very strong results in the quarter with year over year net income growth of 45% and P. P. P T of $823 million up 67%.

Paresh: However across the wholesale portfolios, we are seeing the pace of migration to watch this slowing.

Paresh: Moving to slide 22, the performing provision for credit losses was $152 million.

Tiffany: Record revenue of $2 $1 billion was up 30%, reflecting particularly strong results in global markets driven by client activity across all trading products.

Paresh: The macroeconomic forecasts in our scenarios at the end of Q1 did not include the impact of that is announced after January 31.

Tiffany: Investment in corporate banking revenue also increased reflecting higher corporate banking and debt underwriting revenue.

Paresh: In determining the allowance.

Paresh: We applied experienced credit judgment to reflect the impact of the uncertain environment, including the potential introduction of data on future credit conditions.

Tiffany: Expenses were up 14%, mainly driven by higher performance based compensation technology costs and the impact of the stronger U S. Dollar.

Tiffany: Turning now to slide 19, corporate services' net loss was $220 million compared with $316 million in the prior year as higher revenue more than offset an increase in retained expenses.

Paresh: The performing provision also included the impact of downward credit migration in the quarter.

Paresh: Our current allowance of $4 5 billion provides a good coverage of 65 basis points, while the performing zones, given the credit profile of our portfolio and our forecast for impaired losses.

Tiffany: To conclude our first quarter results effectively displayed to the strength of our franchise.

Paresh: In the event that the outcome of trade negotiations changes the economic outlook. This will lead to future adjustments to the salons.

Paresh: Turning to slide 23.

Paresh: And begged formations with $2 4 billion.

Paresh: Gross impaired loans increased to $7 billion or 1% due to higher impaired loans in U S commercial consistent with prior period migrations to watch this.

Tiffany: In the U S. We are optimistic that the economic environment will be more conducive for loan growth and improved customer activity in our P&C business during the second half of the year.

Paresh: A large proportion of formations of fully are substantially collateralized, reducing risk of loss.

Tiffany: Our overall operating performance during the remainder of the year will be impacted by the outcome of the ongoing tariff negotiations in North America.

Paresh: In conclusion based on our current economic outlook, which does not include the impact of broad based status I continue to expect impaired losses to average in the high 40 basis points for the year with quarter to quarter variability.

Tiffany: And the market environment that impacts client activity.

Tiffany: Our market facing businesses.

Tiffany: These uncertainties could lead to variability in the coming quarters.

Paresh: The macro outlook is increasingly uncertain in light of shifting create and fiscal policy pronouncements.

Tiffany: We will continue to manage dynamically to achieve positive operating leverage and are committed to delivering improved returns over the medium term.

Paresh: We are monitoring these developments closely and taking action to proactively manage these emerging risks.

Peter: I will now turn it over to Peter.

Peter: Thank you typhoon and good morning, everyone.

Paresh: Over the last couple of quarters, we have conducted extensive work on several data scenarios.

Peter: My comments will start on slide 21.

Peter: Credit performance this quarter was in line with our expectation.

Paresh: Given the diversification of the portfolio between Canada, and the U S. Our strong capital and liquidity levels. We are in a good position to both manage these risks for the bank and help our customers.

Peter: With the work we've been doing embedded losses in our corporate and commercial portfolios have moderated from last quarter.

Peter: At the same time loss rates remain above our historical averages, reflecting the prolonged higher rate environment accumulated inflation and higher unemployment in Canada.

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

Thank you we will now take questions from the telephone lines. If you ask a question. Please press star one.

Peter: The total provision for credit losses was $1 billion or 58 basis points.

Speaker Change: We can solve your question that's anytime by pressing star two.

Peter: Embed provisions for the quarter of about $859 million of 50 basis points down 16 basis points from prior quarter, reflecting lower losses in our capital markets and U S commercial businesses, partially offset by higher provisions in Canadian unsecured consumer lending.

Speaker Change: I guess my Star one at this time, if you have a question on the.

Speaker Change: The first question is from Ebrahim <unk> from Bank of America. Please go ahead.

Ebrahim: Good morning.

Speaker Change: Maybe a question for you that I think theres a lot of focus obviously on <unk> and.

Peter: Yeah.

Ebrahim: And no one knows what's going to happen.

Peter: Canadian personal and business banking embedded losses were $324 million up $49 million and U S retail embedded losses about $86 million up 13 million from prior quarter.

Ebrahim: I think you have a very unique perspective, given just the mix of your business just talk to us over the last few weeks.

Ebrahim: You observed any difference between U S commercial client base versus the Canadian commercial client base.

Peter: Consumer loan losses in both Canada, and the U S reflect higher delinquencies and credit cards and other unsecured personal loans.

Ebrahim: How does that if headlines have read on those two groups and whats your view on how this plays itself out again, knowing that no one knows but does that mean that if scenario for the Canadian economy feels like it's sort of a session. So I.

Persistently high consumer insolvencies and unemployment continuing to inch up in Canada, we expect weakness in unsecured credit to continue through 2025.

Peter: In our residential lending portfolio the new at risk has decreased given rate cuts over the last year.

Ebrahim: I don't think that has done a debate that but yes, I would love your perspective.

Speaker Change: Yes, Thanks Abraham it's.

Ebrahim: It's a really good question and I'll give you my sense.

Peter: Variable rate mortgages and negative amortization have declined to just $2 9 billion and monthly mortgage payment increases have been moderating our renewing customers in fact, all the 30% of renewing customers this quarter experienced a decrease in the monthly payments.

Speaker Change: And then I might invite nadeem to come in because he's talking to the commercial clients on both sides of the border as I am.

Ebrahim: Look.

Ebrahim: I realize it's it's frustrating for a lot of people. It's frustrating for you guys and it's frustrating for our clients to try to predict where this all lands I would.

Ebrahim: Start out by saying that I think it's premature believe it or not two to front run and predict specific outcomes with high degrees of confidence because I do in my conversations to your question with clients I am.

Peter: Canadian commercial impaired loan provisions of $167 million relatively flat from last quarter, while the U S commercial impact provisions of $226 million down $136 million and the capital markets and bag losses of $35 million were down 100.

Ebrahim: I'm reminded and they remind me the 24 days ago.

Ebrahim: This wasn't on the horizon. So we're only 24 days into this and the shelf life of any prediction within those 24 days has been worth about 24 hours. So it's difficult to figure out where all this lands in the meantime, you did hear me say in my prepared remarks that we're seeing some clients.

Peter: $68 million from prior quarter.

Peter: While improved from prior quarter embedded losses are still elevated in the commercial businesses, reflecting challenges for some clients, whose business models have been strained by the restrictive monetary policy and changing consumer preferences. However.

Ebrahim: <unk>.

Ebrahim: Effectively.

Peter: However across the wholesale portfolios, we are seeing the pace of migration to watch this slowing.

Ebrahim: Hit the pause button on some of their commercial activity waiting for clarity capital seeks clarity as you all know.

Ebrahim: And there is some uncertainty overshadowing that I think you asked me to juxtapose a little bit.

Peter: Moving to slide 22, the performing provision for credit losses was $152 million.

Ebrahim: Canada versus the U S. I think the anxiety levels are a little bit higher than in Canada than they are in the U S. But that's not to say that there arent anxiety levels in the U S as well with folks who also look for a certainty to the extent that they're trading outside of the U S borders, which is applicable to a lot of our clients in our case.

Peter: The macroeconomic forecast in our scenarios at the end of Q1 did not include the impact of tariffs announced after January 31.

Peter: In determining the allowance.

Peter: We applied experienced credit judgment to reflect the impact of the uncertain environment, including the potential introduction of data on future credit conditions.

Ebrahim: We're working through we're working through a very various we're working through various scenarios I should say with our clients.

Ebrahim: Our focus has been to control what we can I think you saw that in the quarter with some pretty disciplined operating performance across our businesses with the build of capital and liquidity.

Peter: The performing provision also included the impact of downward credit migration in the quarter.

Peter: Our current allowance of $4 $5 billion provides a good coverage of 65 basis points, although performing zones, given the credit profile of our portfolio and our forecast for embedded losses in.

Ebrahim: And it is the case that net our presence on both sides of the border with 40% of our earnings plus coming from the U S.

Ebrahim: Is probably relatively beneficial, but that's not to say that there isn't pressure.

Peter: In the event that the outcome of trade negotiations changes the economic outlook. This will lead to future adjustments do this alone.

Speaker Change: On each side Nadeem would you would you complement that from what you're saying yeah absolutely.

Thanks for the question Abraham the increased uncertainty that Daryl talked about in business sentiment is playing on both sides of the border, but I agree there.

Peter: Turning to slide 23.

Peter: And begged formations with $2 $4 billion.

Peter: Gross impaired loans increased to $7 billion or 1% due to higher impaired loans in U S commercial consistent with prior period migrations to watch this.

Speaker Change: There is more encouraging optimism in the U S. Then, particularly right now in Canada. So we are seeing some slowdown in investment plans and M&A activity. Our relationship managers managers are working very closely with our clients on both sides of the border and I Gotta Tiger Abraham our clients are not standing still here.

Peter: A large proportion of formations are fully are substantially collateralize, reducing risk of loss.

Speaker Change: There's lots of work going on and looking at business models, creating contingency plans looking at inventory management and supply chain and utilizing tools like currency or interest rate hedging and frankly, thats, how we can add value to our clients during a dynamic and uncertain environment, but.

Peter: In conclusion based on our current economic outlook, which does not include the impact of broad based status I continue to expect impaired losses to average in the high 40 basis points for the year with quarter to quarter variability.

I also agree with Daryl we are a very diversified client base in Canada and in the commercial bank, we have over 50% of our book in the U S and not everyone is going to be impacted equally but again until we have more clarity I do expect loan demand to slow, but I do believe our north American footprint will be advantageous.

Peter: The macro outlook is increasingly uncertain in light of shifting create and fiscal policy pronouncements the.

Peter: We are monitoring these developments closely and taking action to proactively manage these emerging risks.

Over the last couple of quarters, we have conducted extensive work on several data scenarios.

Speaker Change: To us and we'll be continuing in the market for growth in a tactical way.

Peter: Given the diversification of the portfolio between Canada, and the U S. Our strong capital and liquidity levels. We are in a good position to both manage these risks for the bank and help our customers.

Speaker Change: Thanks for that and just a quick follow up <unk> 13, six good place to be like do we see the pace of buybacks pick up premier or do you expect youll kamus capitalization potentially building.

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

Speaker Change: Maybe closer to 14% over the coming months and quarters.

Peter: Thank you we will now.

Speaker Change: I'll take questions from the telephone lines. If you have a question. Please press star one.

Speaker Change: I'd be surprised if it were the ladder.

Speaker Change: Abraham I mean, I think that we've got.

Peter: Against all of your question that anytime by pricing start to crest.

Speaker Change: Some benefit and the flexibility that I talked about in my prepared remarks at 13, six we've got the ability to hear to watch the environment and to play according to the environment, but our intent generally speaking over the course of the coming in coming quarters would be to continue with the buyback.

Speaker Change: Crestar one at this time if your other question.

Goodbye: The first question is from Goodbye in Pune, one off from Bank of America. Please go ahead.

Speaker Change: Good morning.

Speaker Change: I guess, maybe a question for you that doesn't mean, they think there's a lot of focus obviously on tennis.

Speaker Change: Thank you.

Speaker Change: Thank you next question is from Matthew Li from Canaccord Genuity Kids go ahead.

Speaker Change: And no one knows what's going to happen.

Speaker Change: I think you have a very unique perspective, given just how the mix of your business just talk to us over the last few weeks.

Speaker Change: Hi, Thanks for taking my question I liked him one of your earlier slides in the deck is the U S. P&C ROE you waterfall.

Speaker Change: You observed any difference between EU and U S commercial client base versus the Canadian commercial client base.

Speaker Change: I just didn't want to touch on the improvements, particularly in relation to bank of the west. It does sound like there's a little bit more juice to squeeze out of that business can you just talk about what kind of revenue synergies you're looking for there and maybe overall in the U S business, what kind of operating performance improvements youre expecting that make up the 200 300 basis points of.

Speaker Change: How does that if headlines I read on those two groups.

Speaker Change: And what what's your view on how this means it says it's al again, knowing that no one knows but does that mean that if scenario for the Canadian economy feels like it's a session. So let me tell you I don't think there's a ton of debate that but yeah I would love your perspective.

Speaker Change: Improvement not related to credit and balance sheet there.

Speaker Change: Thanks for the question.

Speaker Change:

Speaker Change: Yeah. Thanks, Abraham it's it's.

Speaker Change: Two years ago, I think when we first started talking about maybe it was two and a half years ago, our revenue synergies expected related to our bank of the West acquisition, we quantified it as sort of a $450 million to $500 million of revenue pick up starting with our commercial business closely fall.

Abraham: It's a really good question and I'll give you my sense, and then I might invite nadeem to come in because he's talking to the commercial clients on both sides of the border as I am.

Abraham: Look I I realize its a its frustrating for a lot of people. It's frustrating for you guys. It's frustrating for our clients to try to predict.

Speaker Change: Those are our P M B b business and wealth management and capital markets that stands still.

Abraham: Where the salt lands I I would you know.

Abraham: Start out by saying that I think it's premature believe it or not two to front run and predict specific outcomes with high degrees of confidence because you know I do in my conversations to your question with clients I am reminded of ne remind me the 24 days ago.

Speaker Change: As the target that we have.

Speaker Change: What changed since then was just the timing of capturing those revenue synergies the muted.

Speaker Change: Market environment in the U S. Unfortunately did not give us the opportunity to.

Speaker Change: Too early on.

Abraham: This wasn't on the horizon. So we're only 24 days into this and the shelf life of any prediction within those 24 days, it's been worth about 24 hours. So it's difficult to figure out what where all this lands in the meantime, you did hear me say in my prepared remarks that we're seeing some clients.

Speaker Change: Get on that path.

Speaker Change: And about a year ago, or so we said that we expect to achieve that target.

Speaker Change: It's sort of the exit run rate in 2026, So we would expect to hit that number in 2007, and our full year financial results. So that clearly is as you can see here one of the four cornerstones of our OE build.

Abraham: Effectively.

Abraham: Hit the pause button on some of their commercial activity are waiting for clarity capital seeks clarity as you all know and Theres. Some uncertainty overshadowing that I think he asked me to juxtapose a little bit.

Speaker Change: And today.

Speaker Change: We are on our way there is a path to achieve those targets and we are on that path and as the improvements in markets enable us to speed that up you know we expect to see those results showing up in our financials. In addition to sort of the other elements here, including.

Abraham: Canada versus the U S.

Abraham: The anxiety levels are a little bit higher than in Canada than they are in the U S. But that's not to say that there aren't anxiety levels in the U S. As well with folks who also look for a certainty to the extent that there are trading outside of the U S borders, which is applicable to a lot of our clients in our case.

Speaker Change: The balance sheet optimization, which captures.

Abraham:

Speaker Change: <unk> ability improvements both on the deposit side of the balance sheet as well as the loan side.

Abraham: We're working through we're working through a very various we're working through various scenarios I should say with our clients and our focus has been to control. What we can I think you saw that in the quarter with some pretty disciplined operating performance across our businesses with the build of capital and liquidity.

Speaker Change: Happy to get into those details about since you all they are supporting the revenue pick up I'll just stop there.

Speaker Change: Have you captured any of the synergies in your view yet yes. We are currently in our run rates slowly progressing on that I wouldn't say that we captured.

Abraham: And it is the case that you know net our presence on both sides of the border with 40% of our earnings plus coming from the U S. A.

Abraham: As is probably relatively beneficial, but that's not to say that there isn't pressure.

Speaker Change: A large portion of that because theres a path, there's a timeline associated with it. That's why we are guiding to sort of exit run rates exiting fiscal year 2006.

Speaker Change: On each side Nadeem could you would you complement that from what you're saying yeah absolutely.

Speaker Change: Thanks for the question Nate, perhaps the increased uncertainty that Daryl talked about in business sentiment is playing on both sides of the border, but I agree.

Speaker Change: Okay. That's helpful. Thanks.

Gabriel: Thank you next question is from Gabriel <unk> National Bank Financial. Please go ahead hi.

Speaker Change: There's more encouraging optimism in the U S, particularly right now in Canada. So we are seeing some slowdown in investment plans and M&A activity. Our relationship Americas managers are working very closely with our clients on both sides of the border and I Gotta Tiger Abraham our clients are not standing still here.

Gabriel: If you could clarify some of the.

Speaker Change: The statements you made around the performing ACO.

Speaker Change: It sounded that you didn't decline any specific assumptions for terrorists, but then you use some sort of expert judgment to.

Speaker Change: There's lots of work going on and looking at business bottles, creating contingency plans looking at inventory management and supply chain and utilizing tools like currency or interest rate hedging and frankly, that's how we can add value to our clients during a dynamic.

Speaker Change: Yeah, Seth are performing you sold this quarter just the.

Speaker Change: I Misheard I'm sure can you could you maybe expand on that and what sort of assumptions, you're making if any.

Speaker Change: Hi, Gabe it's piyush. So just on the performing PCL, we added $152 million build and I think it might be helpful. If I just take a step back to talk about the performing provision through the presenters.

Speaker Change: Uncertain environment, but.

Speaker Change: I also agree with Daryl we are a very diversified client base in Canada and in the commercial bank, we have over 50% of our book in the U S and not everyone is going to be impacted equally but again until we have more clarity I do expect loan demand to slow, but I do believe our north American footprint will be advantageous to us.

Speaker Change: There is a very rigorous process around the performing loans.

Speaker Change: Consider both portfolio dynamics and macro variables, but under accounting principles at the point of time assessment.

Speaker Change: And we'll be continuing in the market for growth in a tactical way.

Speaker Change: Thanks for that and just a quick follow up CET 113, six good place to be like do we see the pace of buybacks pick up from here or do you expect are you all came as cannibalization potentially building beyond maybe closer to 14% over the coming months and quarters, Yeah, I don't I'd I'd be surprised if it were the law.

Speaker Change: As we close the quarter on Jan 31, the executive orders wont announce and therefore, our macroeconomic forecast did not have an inclusion for data.

Speaker Change: So our base case in our different scenarios, but without that if implications. However, given the pronouncements coming out of the U S administration, we felt it was prudent to consider the sensitivities in the environment as a result of the status of threats. So we've taken the overlay based on other variables.

Speaker Change: Later, Abraham I mean, I think that we've got.

Speaker Change: Some benefit and the flexibility that I talked about in my prepared remarks at 13, six you know we've got the ability to hear to watch the environment and to play according to the environment, but our intent generally speaking over the course of the coming in coming quarters would be to continue with the buyback.

Speaker Change: We ran.

Speaker Change: Get a feel for what it might be even in the interim bridge that Ifs has status, we're going to get announced.

Speaker Change: Thank you.

Matthew: Thank you next question is from Matthew <unk> from Canaccord Genuity Kids go ahead.

Speaker Change: W is if that <unk> implemented as announced and remain in place for a prolonged period all else being equal we would expect that deterioration in the economic outlook to then become part of our economic assumptions in maybe the second quarter or whenever that gets implemented but as of now.

Matthew: Hi, Yeah, they've seen my question I liked him one of your earlier slides in the deck is the U S. P&C Oh you waterfall.

Matthew: I just didn't want to touch on the improvements, particularly English to bank of the blast. It does sound like there's a little bit more juice to be squeezed out of that business can you just talk about what kind of revenue synergies you're looking for there and maybe overall in the U S business, what kind of operating performance improvements youre expecting that they've got to you know 200 300 basis points.

Speaker Change: It's very good about where we landed where we ended the quarter.

Speaker Change: Given just the prudent allowance coverage, we have a 65 basis points. Okay. Great. That's helpful. And then I don't know.

Yeah.

Speaker Change: I don't know if you can handicap this.

Matthew: The improvement not related to credit and balance sheet there.

Speaker Change: [noise], a moving target of course, but let's say the tariffs are you know March 4th looks like the 25% is gonna be a flipped on us.

Matthew: Ah Thanks for the question Matthew.

Two years ago, I think when we first started talking about maybe it was two and a half years ago, our revenue synergies expected related to our back of the West acquisition, we quantified it as sort of a $450 million to $500 million of revenue pick up starting with our commercial business closely.

Speaker Change: You got a 10 basis point performing PCL this quarter with a double triple and I wouldn't expect it to be like pandemic level stuff because you have to factor in government support programs and all that but just trying to get a sense of.

Speaker Change: How how much change we could see in the bottom line item.

Matthew: Those are our P M B D business and wealth management and capital markets that stands still as the target that we have.

Speaker Change: Yeah look I understand this is this is hard but let me say, there's so many unknowns in the scatter a scenario we don't know the duration. We don't know what percentages would be we don't know, which industries you might get excluded we don't know what monetary fiscal policy actions the government might take here to mitigate some of the impact.

Matthew: What changed since then was just the timing of capturing those revenue synergies the muted market.

Matthew: The market environment in the U S. Unfortunately did not give us the opportunity.

Matthew: Too early on.

Speaker Change: And then it's also as we've looked at our own individual borrowers not everybody gets impacted the same way. So it's very difficult right now without clarity to give you that perspective, but like we've done every quarter, we come back and provide you better guidance. Once those are implemented and they are sick right now things.

Matthew: Get on that path.

Matthew: And about a year ago or so we said that we expect to achieve that targets are at sort of the exit run rate in 2026. So we would expect to hit that number in 27, and our full year financial results. So that clearly is as you can see.

Speaker Change: Our fluid and moving around so it's hard to give you a number directionally you heard from me and others that it is expected to go up because it will result in some weakness in the economy, but we just have to figure out the extent of that when you come back and speak to you again.

Matthew: One of the four cornerstones of our Aro rebuilds.

Matthew: And today you know we are on our way there is a path to achieve those targets and we are on that path and as the improvements in markets enable us to speed that up you know we expect to see those results showing up in our financials. In addition to sort of the other elements.

Speaker Change: Got it I could go on but we're tight on time. Thanks.

Speaker Change: Your next question from many Grundman Scotiabank. Please go ahead.

Speaker Change: Hi, good morning.

Matthew: Here, including the balance sheet optimization, which captures our profitability improvements both on the deposit side of the balance sheet as well as the loan side and.

Speaker Change: Question for Darryl and it's really about your your 15% ROIC target and really it came.

Speaker Change: Can it survive a tariff scenario and if so how is it.

Speaker Change: And I'm really looking for levers that you have in particular in the U S to maybe offset some of the weakness in Canada.

Matthew: And happy to get into those details about since you all the I suppose the revenue pick up I'll just stop there.

Matthew: Have you captured any of the synergies in your view yet yes. We are currently in our run rates slowly progressing on that I wouldn't say that.

Speaker Change: Yes, it's a good question Manny thanks for it.

Speaker Change: Look I'll remind us that the 15% ROE target in the medium term target and so the impact of whatever may come with respect to this matter.

Matthew: We captured.

Matthew: A large portion of that because theres a path, there's a timeline associated with it. That's why we are guiding to sort of exit run rate exiting fiscal year 'twenty six.

Speaker Change: The tariff question.

Is one that we and others would have to work through over the course of those.

Speaker Change: Here's not not not.

Speaker Change: Quarters or months as the as it pertains to the 15% medium term target.

Matthew: Okay. That's helpful. Thanks.

Gabriel: Thank you next question is from Gabriel <unk> National Bank Financial. Please go ahead hi.

Speaker Change: I would also say that when I step back from this we're obviously.

Gabriel: I'd Love, if you could clarify some of the.

Speaker Change: Omni present as the tariffs conversation here, but when I look at the global economy.

The statements you made around the performing ACL are sound.

Gabriel: It sounded like you didn't deploy any specific assumptions for terrorists book than you use some sort of expert judgment to.

Speaker Change: And I step back and look at the North American opportunity I think there's a huge advantage here in North America broadly speaking.

Gabriel: Yeah, Seth performing you sold this quarter, just I misheard I'm sure it could be it could you maybe expand on that and what sort of assumptions, you're making there for me.

Speaker Change: And with that we're not optimists I am and our net optimist on the North American opportunity over the course of time is it possible that in the near term if we got an extreme scenario on tariffs that that.

Gabriel: I gave it piyush right. So just on the performing PCL, if he had the $152 million better and I think it might be helpful. If I just take a step back to talk about the performing provision through the different benches.

Speaker Change: That would have.

Speaker Change: Negative impact on Canadian GDP for example, which is what <unk> was just referring to a moment ago sure, but it's also possible that it would have a lesser impact on U S. GDP and it's also possible that within the.

Gabriel: There is a very rigorous process around the performing loans, we considered both portfolio dynamics and macro variables, but under accounting principles at the point of time assessment.

Speaker Change: Of course, a time 2345 years.

Speaker Change: We will end up in a place that round trips to where we are today. So I'm not about to tell you that theres going to have that we're confident that it'll have a negative impact on our ROE passed because there's just too much variability and too much of a timeline against it right now, but those are the types of scenarios that we test against it.

Gabriel: As we close the quarter on January 31, the executive orders Wanda announced and therefore, our macroeconomic forecast did not have an inclusion for status. So our base case in our different scenarios, but without that if I'm vacations.

Speaker Change: And just as a follow up I was just wondering if theres anything about your U S book that would make it either less susceptible are more susceptible to tariffs versus the broader U S economy, No I don't think Theres any I mean, the U S book is pretty diversified many as you know so.

Gabriel: However, given the pronouncements coming out of the U S administration, we felt it was prudent to consider the sensitivities in the environment as a result of this out of threats.

Speaker Change: So I don't think that there's anything.

Gabriel: We've taken the overlay based on the variables we ran.

Speaker Change: That would cause it to skew on either side of whatever the general outcomes ought to be.

Gabriel: Get a feel for what it might be even in the interim pre that Ifs has status, we're gonna get announced but I can tell you is if that is implemented as announced and remain in place for a prolonged period all else being equal we would expect that deterioration in the economic outlook.

Marco: Thanks Marco.

Speaker Change: Thank you next question from Doug Young does open capital markets. Please go ahead. Your line is open.

Doug Young: Hi, Good morning. Thank you I mean, just yes, we can go back to that slide nine the U S. Our ROE improvement and I'm actually curious about the balance sheet optimization more on the liability side and can you remind us what set one ratio you're assuming within this whole evolution.

Gabriel: <unk> become part of our economic assumptions in maybe the second quarter or whenever that gets implemented but as of now I feel very good about babies and didn't have you've ended the quarter.

Speaker Change: Doug.

Gabriel: Given just the prudent allowance coverage, we have a 65 basis points yeah. Okay. Great. That's helpful. And then I don't know.

Doug Young: So there are two let me start with where we are with <unk> in the U S.

Gabriel: I don't know if you can handicap this uh huh.

Speaker Change: It is.

Speaker Change: Currently.

Speaker Change: Because of the nature of the U S entity and also related to some of the dynamics of the bank of the West transaction that ratio has been growing quite fast and it's secreting and it will probably continue to accrete.

Moving target of course, but let's say the tariffs or you know what March 4th looks like the 25% is gonna be a flipped on us.

Gabriel: You got a 10 basis point performing PCL this quarter with a double triple and I wouldn't expect it to be like pandemic level stuff because you have to factor in government support programs and all that but just trying to get a sense of.

Speaker Change: But at this point.

Gabriel: How how much change, we could see them up but by line item.

Speaker Change: We are basically assuming that accretion will be redeployed into business growth.

Gabriel: Yeah look I understand this is this is hard but let me say, there's so many unknowns in this status scenario there'd be doing another deal duration, we don't know what percentage of it would be we don't know which industries might get excluded we don't know what one or two fiscal policy actions the government might take yeah to mitigate some of the impact.

Speaker Change: And we will not will not be an impediment to achieve the 12% ROE target. So I think I would if I were you I thought you were modeling our financial in the U S. I would roughly use a similar capital ratio that we are using.

Gabriel: And then it's also you know as we've looked at our own individual borrowers not everybody gets impacted the same way. So it's very difficult right now without clarity to give you that perspective I'd like we've done every quarter, we come back and provide you better guidance. Once those are implemented and just say right now things are.

Speaker Change: For our BMO enterprise level, so that 12, and a half to a 13% is probably the right number.

Speaker Change: Okay, and then the balance sheet optimization.

Speaker Change: On the balance sheet optimization side as I mentioned it encompasses loans and deposits. We do know today compared to the peers, we have a higher cost of funds that relates to the nature of the composition of our deposit book, we have more commercial deposits than our peers and we have with.

Gabriel: Fluid and moving around so it's hard to give you a number directionally you heard from me and others that he didn't expect it to go up because it will result in some weakness in the economy, but we just have to figure out the extent of that and when you come back and speak to you again.

Speaker Change: Bank of the West and continuing improvements in our retail franchise, we intend to increase our consumer deposits within the deposit book in each business. There is always opportunities to reduce our dependence on higher cost.

Gabriel: Got it I could go on but we're tight on time. Thanks. Thank.

Gabriel: Thank you next question from many Grubhub.

Speaker Change: Scotiabank. Please go ahead.

Speaker Change: Hi, good morning.

Speaker Change: Deposit so that is underway you know both businesses are already executing those and we will make improvements on the asset side. There are three layers. We look at this at a relationship level is the relationship in the long term going to hit our return targets at the portfolio level is it a portfolio that is suited to achieve.

Speaker Change: Question for Darryl and it's really about your your 15% ROIC target and really it's not.

Speaker Change: Survive a tariff scenario and if so how is it.

Speaker Change: And I'm really looking for levers that you have in particular in the U S to maybe offset some of the weakness.

Speaker Change: Canada.

Speaker Change: Yeah, It's a good question Manny thanks for it.

Speaker Change: The return targets and at the business level.

Speaker Change: Look I'll remind us that the 15% ROE target as a medium term target and so the impact of whatever may come with respect to this matter.

Speaker Change: And.

Speaker Change: Those efforts are also analytically as well as from an execution perspective are underway, we intend to improve the recycling and reallocation of capital across all three layers.

Speaker Change: The tariff question.

Speaker Change: <unk> is one that we and others would have to work through over the course of those years, not not a quarters or months as the as it pertains to the 15% medium term target.

Speaker Change: As you can see it has a meaningful impact that shows up in this four for four sort of boxes and I think it's we're not going to stop that even beyond 2000, 2017, I'm sorry 2027.

Speaker Change: I would also say that you know what.

Speaker Change: I step back from this where we're obviously.

Speaker Change: Hum.

Speaker Change: These efforts will continue and help us achieve the 12% target.

Speaker Change: Omni present as the tariffs our conversation here, but when I look at the global economy.

Speaker Change: Just to finish off on it's like so 12% is the medium term target and I get it but what's the ultimate goal that U S business I assume it's above 12% like where do you think you can take that.

Speaker Change: And I step back and look at the North American opportunity I think there's a huge advantage here in North America broadly speaking.

Speaker Change: So.

Speaker Change: And with that you know, we're not optimists I am and our net optimist on the North American opportunity over the course of time is it possible that in the near term. If we got an extreme scenario on tariffs that that would have a negative impact on Canadian GDP. For example, which is what <unk> was just referring to a moment ago.

Speaker Change: If you go back to pre bank of the West.

Speaker Change: At times and acknowledging that those were very mild credit periods with really no PCL build.

Speaker Change: Our Aro and the business was 15 15 plus percent.

Speaker Change: With the efficiency improvement that we made in the business over the years. So today, we acknowledge that we're sitting on goodwill and that is going to have an impact on auto in the U S. But 12% is still 3% away from that 15% number pre bank of the west So.

Speaker Change: Sure.

Speaker Change: But it's also possible that it would have a lesser impact on U S. GDP and it's also possible that within the.

Speaker Change: Of course, a time 2345 years.

Speaker Change: We'll end up in a place that round trips to where we are today. So I'm not about to tell you that there's going to have a that we were confident that it will have a negative impact on our ROE V pass because there's just too much variability and too much of a timeline against it right now, but those are the types of scenarios that we test against it.

Speaker Change: We believe that over sort of a five year plus period, we can get closer to 15% with continued optimization of the balance sheet and continued execution of the beer business priorities.

Speaker Change: I appreciate the color. Thank you.

Speaker Change: Thank you. The next question is from Mario Mendonca TD Securities. Please go ahead.

Speaker Change: I don't think there's any I mean, the U S book is pretty diversified many as you know.

Mario Mendonca: If you could just sort of sticking with that slide.

Speaker Change: So I don't think that there's anything.

Mario Mendonca: 6% to 12% it sounded like you were you were suggesting that capital will be recycled so theres not going to be new capital being allocated to the U S to grow earnings. So if we assume for a moment that capital allocated to the U S is just steady constant lets call it.

Speaker Change: That would cause it to skew on either side of whatever that the general outcomes ought to be.

Speaker Change: Thanks, Michael.

Doug Young: Thank you next question from Doug Young Digital Bank kept some buckets. Please go ahead. Your line is open.

Mario Mendonca: Is the message then.

Speaker Change: Hi, Good morning type you're only just so we can go back to that slide nine U S. Early improvement in I'm actually curious about the balance sheet optimization more on the liability side.

Mario Mendonca: You can double earnings more than double earnings in the U S. Does it says 12 plus more than double earnings in the U S. Over the next three to five years is that is that the message.

Doug Young: And can you remind us what's set one ratio you're assuming within this whole evolution.

Speaker Change: I think the numbers probably aren't close I don't have yet I don't know here in front of me exactly what earnings levels that we already producing but the math works that way, but you can see here where that like some of these are very discrete numbers like normalized PCL moving that.

Doug Young: Yeah, Doug so.

Speaker Change: So there are two let me start with where we are with a C. T. One in the U S.

Doug Young: It is.

Doug Young: Currently you know because of the nature of the U S entity and also related to some of the dynamics of the bank of the west transaction that ratio.

Speaker Change: To sort of the mid thirties.

Speaker Change: And we don't expect that to take years, we expect that to get there you know in a couple of years longest time. So those are very discrete numbers.

Doug Young: Has been growing quite fast and it's accretive and it will probably continue to accrete.

Speaker Change: That are going to have a large impact on bottom line revenues and then the $500 million revenue synergy that I. Just mentioned that also is a big contributor to this and then if you sort of compound the operating performance that we've been able to achieve at the enterprise level. There is no really big impediments towards that goal.

Doug Young: But at this point you know we are basically assuming that accretion will be redeployed into business growth.

Doug Young: And we will not we will not be an impediment to achieve the 12% ROE target. So I think I would if I were you I thought you were modeling our financial in the U S. I would roughly use a similar capital ratio that you are using for our BMO enterprise level, so that 12 and a half.

Speaker Change: And <unk> and then also just a reminder.

Speaker Change: That slide as U S. P&C, it's not necessarily like our full segment, our full segment, obviously as wealth management capital markets and.

Speaker Change: Those financials as well, okay. So slightly different question trading revenue.

Doug Young: 13% is probably the right number.

Speaker Change: Arguably 400 $500 million higher this quarter than an average over the long term.

Doug Young: Okay, and then the balance sheet optimization.

Doug Young: On the balance sheet optimization side as I mentioned it encompasses loans and deposits. We do know today compared to the peers, we have a higher cost of funds that it relates to the nature of the composition of our deposit book, we have more commercial deposits than our peers and you know we have with.

Speaker Change: I know that Q1s are special because they include a particular trade involving.

Speaker Change: Involving U S. Bank's Q4, what I'm interested in is.

Speaker Change: Of that four or $500 million benefit this quarter could you assign a particular portion of that specifically to the Q1 seasonality benefits like what I'm really trying to get at is how abruptly does trading return to normal or is there something more sustainable than that.

Doug Young: Bank of the West and continuing improvements in our retail franchise, we intend to increase our consumer deposits within the deposit book in each business, there's always opportunities to reduce our dependence on higher cost.

Alan: This is Alan I'll take that.

Alan: Clearly as you are aware, we do experience over a year and a consistent trade, but this again is a feature that we experience every year and some years are little better than others.

Doug Young: Deposit so that is underway you know both businesses are already executing those and we will make improvements on the asset side. There are three layers. We look at this at a relationship level is the relationship in the long term going to hit our return targets at the portfolio level is it a portfolio that is suited to achieve.

Alan: But again, it's something that will show up every Q1 for us what.

Alan: What we saw across our business, where there were other parts of the business specifically, our metals trading business had an outstanding quarter, where I would focus in addition to some of those outperformers, which again.

Doug Young: The return targets and at the business level and those efforts are also analytically as well as from an execution perspective are underway, we intend to improve the recycling and reallocation of capital across all three layers and as you can see it is is it a meaningful impact that shows up into <unk>.

Alan: Some would be expected we had much more consistent.

Alan: Performance across all of our businesses for the quarter when we look across each of our operating businesses. They were ahead of our expectations. So when we think about this type of quarterly performance. It's more a function of consistency as opposed to any one business outperforming and our objective is to deliver that type of performance on a regular basis.

Doug Young: Sure quite you know four four it sort of boxes are and I think it's we're not going to stop that even beyond 2000, 2017, I'm sorry, 2027 of those efforts will continue and help us achieve the 12% target.

Alan: So I may just to put a final point on this and you suggest that $1 $1 billion or so of trading revenue quarterly has been most new run rate for trading no not at all what I want to suggest is that when.

Doug Young: Just to finish off on it's like so 12% is the medium term target and I get it but what's the ultimate goal that U S business I assume it's about 12%, but where do you think you can take that.

Alan: When we see opportunities in the market, we're well positioned and we've invested in businesses to be able to take advantage of them when there's volatility in the global macro environment as we have seen over the past quarter.

Doug Young:

Doug Young: If you go back to pre bankruptcy, the west times and acknowledging that those were very mild credit periods are with really no PCL build.

Alan: We expect our teams to take advantage of that we.

Alan: We do not expect that that level of volatility and opportunity will be consistent throughout the year. So.

Doug Young: Our Aro and the business was you know 50, 50 plus percent, where the efficiency improvement that we've made in the business over the years.

Alan: We do see businesses above trend right, but the performance we saw particularly in November and December we do not expect that high level of performance on an ongoing basis. That's clear. Thank you.

Doug Young: So today, we acknowledge that we're sitting on goodwill and that is going to have an impact on auto in the U S. But 12% is still 3% away from that 15% number pre bank of the west. So we believe that over sort of a five year plus period.

Speaker Change: Thank you. The next question is from Paul <unk> from CIBC. Please go ahead. Thank.

Speaker Change: Thank you and good morning.

Speaker Change: Two questions for you first one is.

Mario Mendonca: Theres a bit of a narrowed over a question I've heard regarding bmo's loan composition that suggest despite your geographic advantage, having a large proportion of U S. Maybe there's something in your C&I book, because that would suggest your loan portfolio might be more susceptible to higher credit losses under a tariff.

Doug Young: We can get closer to 15% with continued optimization of the balance sheet and continued execution of the V. A U a business priorities.

Doug Young: I appreciate the color. Thank you.

Mario Mendonca: Scenario. So wondering if you can address that if you can provide any data on how much or what percentage of your customers have sort of cross border business that'd be helpful.

Mario Mendonca: The next question is from Mario Mendonca TD Securities. Please go ahead.

Mario Mendonca: Okay. So if you could just sort of sticking with that slide from one.

Mario Mendonca: Six to 12 per cent. It sounded like you were you were suggesting that capital will be recycled so there's not going to be new capital being allocated to the U S to grow earnings. So if we assume for a moment that capital allocated to the U S is just steady it's constant lets call it.

Mario Mendonca: Well, it's bearish, let me try and take a stab at that I mean, the question is about the broader data, but on the C&I book.

Mario Mendonca: We've done a lot of work as we have through 2024, given some of the performance that we've talked about.

Speaker Change: Is the message then that.

Speaker Change: You can double earnings more than double earnings in the U S. But it's that's 12 plus more than double earnings in the U S. Over the next three to five years is that is that the message.

Mario Mendonca: And in addition to looking at our broad sector diversification. We've also looked at individual files that we believe that as more export dependency.

Hum.

Mario Mendonca: Net net.

Speaker Change: I think the numbers probably aren't close I don't have yet I don't know exactly what earnings levels that we already do see him, but the math works that way, but you can see here, where you are with that.

Mario Mendonca: <unk>, obviously dynamically managing our industrial <unk>, our single borrower limits.

Mario Mendonca: Got it does get of many other things in the playbook ready to go but I wouldn't call out.

Mario Mendonca: Zone at a sector, that's more vulnerable for us specifically at BMO in fact, I think the diversification has added benefits.

Speaker Change: Like some of these are very discrete numbers like normalized P. C L moving that to sort of the mid thirties.

Mario Mendonca: And given our.

Speaker Change: And we don't expect that to take years, we expect that to get there you know what a couple of years.

Mario Mendonca: Performance and the experience and training 24, I think you know going into the data of cycle.

The longest time, so those are very discrete numbers.

Mario Mendonca: Better position, because we are tracking a wash. This way you can always leave your tracking of formation is very closely so I am not.

Speaker Change: That are going to have a large impact on bottom line revenue and then the $500 million revenue synergy that I. Just mentioned that also is a big contributor to this and then if you sort of compound the operating performance that we've been able to achieve at the enterprise level. There is no really big impediments towards that goal.

Mario Mendonca: Sure. If there was something else on your mind, but I feel pretty good about the work we have done in our prepared notes that we have I don't know nadeem if.

Mario Mendonca: You want to share anything else no I think our peers I think you covered that very well kitchen I work side by side I'm looking at the portfolio.

Speaker Change: And Ah and then also just a reminder that.

Speaker Change: That slide is U S. P N C. It's not necessarily like our full segment. Our full segment, obviously has wealth management capital markets and in those financials as well.

Mario Mendonca: Many many times to make sure that as we grow it we grow it in a diversified way so I would not characterize that we have.

Mario Mendonca: Our portfolio in our C&I or anything else that creates any sort of.

Speaker Change: Slightly different question trading revenue arguably 400 $500 million higher this quarter than an average over the long term.

Mario Mendonca: Higher tariff.

Mario Mendonca: <unk>, if you will and beyond that we also have the benefit of a north south diversification. So not only do we have.

I know that Q1s are special because they include a particular trade.

Mario Mendonca: The business diversification, but we have good geographic diversification.

Speaker Change: Involving U S. Bank's Q4, what I'm interested in is.

Mario Mendonca: Got it.

Mario Mendonca: And then second question is just related to the improvement in net interest margins in the U S. P&C business you highlighted a number of drivers. There just wondering if you give us sort of afford I walk or those drivers.

Speaker Change: Of that four or $500 million benefit this quarter could you assign a particular portion of that specifically to the Q1, the seasonality benefits like what I'm really trying to get out is how are properly does trading return to normal or is there something more sustainable level.

Mario Mendonca: Sustainable Ie, while we continue to see NIM expansion in the near term to the same doctors.

Alan: This is Alan I'll take that.

Mario Mendonca: I'll comment on on U S. P&C NIM and then I'll just briefly comment on the broader BMO NIM.

Alan: Clearly as you are aware, we do experience over a year and a consistent trade, but this again is a feature that we experience every year and some years are little better than others.

Mario Mendonca: In the U S.

Mario Mendonca: And loan margins are holding up I think they they helped obviously.

Alan: But again, it's something that will show up every Q1 for us what.

Mario Mendonca: This quarter.

Mario Mendonca: And you know this phenomenon of.

Mario Mendonca: Higher deposits faster deposit growth relative to loan growth also helps within the business units.

Alan: What we saw across our business, whether there were other parts of the business specifically, our metals trading business had an outstanding quarter, where I would focus in addition to some of those outperformers, which again are some would be expected we had much more consistent.

Mario Mendonca: And as we look forward.

Mario Mendonca: I think in general we expect those margins to hold up pretty well.

Mario Mendonca: Pending up you know as we see it today in the market. Some of these efforts that both businesses are now pursuing on the.

Mario Mendonca: Deposit side also should be helpful.

Mario Mendonca: But we're not we also anticipate as we said the loan growth in the second half of the year potentially.

Mario Mendonca: Start actually exceeding deposit growth, that's a negative for the overall U S P&C as well as it is for Canadian P&C, that's a mathematical equation.

Alan: So I may just to put a final point on this and you should get about $1.1 billion or so of trading revenue quarterly as be most new run rate for trading no not at all what I want to suggest is that when.

Mario Mendonca: So therefore, we are still guiding for stability, we're guiding for stability in both businesses Canadian P&C in the U S. P&C and then for BMO.

When we see opportunities in the market, we're well positioned and we've invested in businesses to be able to take advantage of them when there's volatility in the global macro environment as we have seen over the past quarter, we expect our teams to take advantage of that.

Mario Mendonca: Long standing guidance has been one of stability, but we always put a footnote and said there is upsides to that starting last year. At this time, we captured 10 basis points in the second and the last two quarters. So.

Alan: We do not expect that that level of volatility and opportunity will be consistent throughout the year. So we do see businesses above trend right, but the performance we saw particularly in November and December we do not expect that high level of performance on an ongoing basis. That's clear. Thank you.

Mario Mendonca: Our prediction came through.

Mario Mendonca: And the upside is not infinite. So therefore once again, we are guiding for margin stability going forward.

Speaker Change: I don't know it already or Nadeem. If you guys want to comment on anything that youre seeing in your businesses.

Speaker Change: Yes, Tony I would just add to your comments to say our focus is on growing core deposits in our U S business. That's checking accounts you heard Daryl speak to the fact that were up 14% just in our western markets. That's been a core objective is to shift that mix and ensure we have a stable core deposit.

Speaker Change: Thank you. The next question is from Paul Oldham from CIBC. Please go ahead. Thank.

Paul Oldham: Thank you and good morning.

Paul Oldham: Two questions for you first one is.

Speaker Change: There's a bit of a narrative or a question I've heard regarding bmo's loan composition that suggests despite your geographic advantage, having a large proportion of U S. Maybe there's something in your C&I book, because that would suggest your loan portfolio might be more susceptible to higher credit losses under tariffs.

Speaker Change: Growth with checking and savings accounts up overall, and that's that that's our job and that we've been seeing that shift and take place over the past couple of quarters and will continue throughout this year. So that's been the only other comment I'd add.

Speaker Change: Scenario. So wondering if you can address that if you can provide any data on how much of what percentage of your customers have sort of cross border business that'd be helpful.

Speaker Change: Yeah.

Speaker Change: But gross I'm, sorry, just the growth from our core deposits checking checking accounts demand deposits, especially I mean that will be additive for them correct.

Speaker Change: Sorry that would be I missed out on accretive accretive accretive gap definitely shifting that mix is accretive overall to our objectives on the ROE agenda right got it I'll leave it there. Thank you. Thank.

Speaker Change: Oh, the Spanish let me try and take a stab at that I mean, the question is about the broader data, but on the C&I book.

Speaker Change: We've done a lot of work as we have through 'twenty 'twenty four given some of the performance that we've talked about.

Speaker Change: Thank you. The next question is from Lamar peso.

And in addition to looking at a broad sector diversification. We've also looked at individual files that we believe that as more export dependency.

Speaker Change: Please go ahead.

Speaker Change: Yeah, Thanks, maybe for Alan on the capital markets business, and just building along <unk> line of questioning obviously exceptional capital markets results. It looks like it's going to be a key key theme of of Q1 can you talk about the outlook heading into Q2, and then also what would be helpful. Is if you could remind us of what a more normalized level of earnings.

Speaker Change: Net net.

Speaker Change: <unk>, obviously dynamically managing our industry they met our single borrower that merits.

Speaker Change: You've got it there were many other things and the playbook ready to go but I wouldn't call out.

Because that was the one at a sector that's more vulnerable, but I specifically at BMO in fact, I think the diversification has added benefits.

<unk> or P. TPP growth is appropriate for the capital markets business.

Speaker Change: Thanks, Lamar and just to reiterate.

Speaker Change: And given our.

Speaker Change: The experience that we had in the first quarter really reflected outperformance of a couple of businesses, but strength across all of our businesses, which really was a result of the volatility in the marketplace that presented some excellent opportunities that we were able to take advantage of them, but also reflective of the investments that we've made when I.

Speaker Change: Performance and the experience in 'twenty 'twenty four.

Speaker Change: Thank you know going into the data of cycle, we are better position because we are tracking a wash. This way you can always leave your tracking of formations very closely.

Speaker Change: So I'm not.

Sure. If there was something else on your mind, but I feel pretty good about the work we had done enough battered in us and we have I don't know Nadeem if you.

Darryl White: You mentioned something like our metals business and Daryl touched on this that we have our mining conference. This week in order to really take advantage of that market opportunity you have to have all the pieces. We've got deep connectivity with the producers we can help them with their hedging programs. We've got the ability to store and transport the metal and then work with the buyer so the <unk>.

Speaker Change: You want to share anything else no I think you should think of you you've covered that very well our pitch and I worked side by side I'm looking at the portfolio.

Speaker Change: Many many times to make sure that as we grow it we grow within that diversified way. So I would not characterize that we have a portfolio with our C&I or anything else that creates any sort of.

Speaker Change: <unk> that we've made across that spectrum.

Speaker Change: Can really be monetized when we see a market opportunity like this at the same time, it's not necessarily reflective of consistent activities in the market and as a counterpoint we have seen that the higher levels of volatility they will have a negative impact on some of our investment bank.

Speaker Change:

Speaker Change: Higher tariffs.

Speaker Change: For community, if you will and beyond that we also have the benefit of a north south diversification. So not only do we have the.

Speaker Change: The business diversification, but we have good geographic diversification.

Speaker Change: Right.

Speaker Change: And then second question is just related to the improvement in net interest margins in the U S. P&C business you highlighted a number of drivers. There just wondering if you give us sort of afford for those drivers.

Speaker Change: <unk> opportunities and we are starting to see some of the great M&A opportunities that we've been exploring slow down a little bit. So there is some balance to that business and as we think about our business overall, while we're obviously pleased with the quarter it would be premature for us to recalibrate on.

Speaker Change: Sustainable I E, where we continue to see a NIM expansion in the near term to the same factors.

I'll comment on and on the U S. We haven't seen them and then I'll just briefly comment on the broader BMO NIM in.

Speaker Change: What our long term expectations are we have communicated previously an expectation of 625 P. P P T and above.

Speaker Change: In the U S. You know the deposit and loan market margins are holding up I think they are they they helped obviously this quarter and you know this phenomenon of.

Speaker Change: And when we see more consistent performance at a higher level, we can revisit that but at the moment.

Speaker Change: See that as a baseline for us to continue to focus on.

Speaker Change: Higher deposits passenger deposit growth relative to loan growth also helps within the business units.

Speaker Change: And then one of them or a more near term, but what about Q2 do you think some of this strength is kind of bleeding into Q2 based on what Youre seeing today.

Speaker Change: And as we look forward you know I think in general we expect those margins to hold up pretty well as you know.

Speaker Change: Depending up you know as we see it today in the market. Some of these efforts that both businesses are now pursuing on the.

Speaker Change: I would describe our markets business as above trend line, but not as strong as what they experienced in November and December.

Speaker Change: Deposit side also should be helpful.

Speaker Change: Okay I appreciate the time thank you.

Speaker Change: But we're not you know we also anticipate as we said the loan growth in the second half of the year potentially.

Thank you. The last question is from Darko <unk>.

Speaker Change: RBC capital markets. Please go ahead.

Speaker Change: <unk> actually exceeding deposit growth, that's a negative for the overall U S P&C as well as it is for Canadian P&C, that's a mathematical equation.

Speaker Change: Thank you and my last question was just asked and answered. So we're good to go thank you very much.

Speaker Change: So therefore, we are still guiding for stability, we're guiding towards stability in both businesses Canadian P&C in the U S. P&C and then for BMO.

Speaker Change: Thank you.

Speaker Change: There are no further questions I would just thought at this time I would now like to turn the meeting over to Mr. Wright. Please go ahead alright. Thank you.

Speaker Change: Long standing guidance has been one of stability, but we always put a footnote and said there is upsides to that starting last year. This time recaptured 10 basis points in the second in the last two quarters. So.

Speaker Change: Darko and everyone else for your questions. This morning, we had a strong first quarter as I began the call in 2025, we feel here in this room like we built our businesses to achieve consistent and enduring performance and that positions us well to manage through a dynamic environment and that's what we have is a dynamic environment Ive got.

Speaker Change: Our prediction came through.

Speaker Change: And the upside is not infinite. So therefore once again, we are guiding for margin stability going forward.

Speaker Change: Every confidence in our strategy and the team's ability to deliver on the superior client experiences that we've talked about and improved returns and we look forward to speaking to you all again in may Thank you very much.

Speaker Change: I don't know it already or Nadeem. If you guys want to comment on anything that you're seeing in your businesses.

Speaker Change: Yes, Tony I think I would just add to your comments to say our focus is on growing core deposits and argue as business. That's checking accounts you heard Daryl speak to the fact that we're at 14% just in our in our Western markets. That's been a core objective is to shift that mix and ensure we have a stable core deposit.

Speaker Change: Thank you the complaints of Melinda. Please disconnect your lines at this time and we thank you for your participation.

Speaker Change: Growth with checking and savings accounts up overall, and that's that that's our job and that we've been seeing that shift and take place over the past couple of quarters and they'll continue throughout this year. So that's the only other comment I'd add.

Speaker Change: Yeah.

Speaker Change: But the gross I'm sorry, just the growth in the core deposits checking in checking accounts demand deposits et cetera, I mean that will be additive for name correct.

Speaker Change: Sorry that would be I missed it accretive accretive accretive yeah, yeah definitely shifting that mix is accretive overall to our objectives on the ROE V agenda, Okay got it.

Speaker Change: I'll leave it there. Thank you thank.

Speaker Change: Thank you. The next question is from Lamar peso.

Speaker Change: Please go ahead.

Speaker Change: Yeah. Thanks, maybe for Alan Let me talk in the markets business in just building along <unk> line of questioning obviously exceptional capital markets results looks like it's gonna be a key key theme of of Q1 can you talk about the outlook heading into Q2, and then also what would be helpful. Is if you could remind us of what a more normalized level of earnings.

Speaker Change: Or P. T. P. P grosses are appropriate for the capital markets business.

Thanks, Omar and just to reiterate.

Speaker Change: Mentioned, something like our metals business and Daryl touched on this that we have our mining conference. This week in order to really take advantage of that market opportunity you have to have all the pieces. We've got deep connectivity with the producers we can help them with their hedging programs. We've got the ability to store and transport the metal and then work with the buyer so the <unk>.

Speaker Change: <unk> that we've made across that spectrum.

Speaker Change: Can really be monetized when we see a market opportunity like this at the same time, it's not necessarily reflective of consistent activities in the market and as a counterpoint to we have seen that the higher levels of volatility they will have a negative impact on some of our investment bank.

Speaker Change: What our long term expectations are we have communicated previously an expectation of 625 P. P P T and above.

Speaker Change: And when we see more consistent performance at a higher level, we can revisit that but at the moment see that as a baseline for us to continue to focus on.

Speaker Change: And then one of them or a more near term, but what about Q2 do you think some of the strength is kind of bleeding into Q2 based on what Youre seeing today.

Speaker Change: I.

Speaker Change: I would describe our markets business as above trend line, but not as strong as what they experienced in November and December.

Speaker Change: Okay I appreciate the time thank you.

Speaker Change: Thank you. The last question is from Darko Mahalik RBC capital markets. Please go ahead.

Speaker Change: Thank you and my last question was just asked and answered. So we're good to go thank you very much.

Speaker Change: Thank you.

Speaker Change: There are no further questions at this time I would now like to turn the meeting over to Mr. Wright. Please go ahead.

Mr. Wright: Thank you Darko.

Mr. Wright: Darko and everyone else for your questions. This morning, we had a strong first quarter as I began the call in 2025.

Mr. Wright: We feel here in this room like rebuilt our businesses to achieve consistent and enduring performance and that positions us well to manage through a dynamic environment and that's what we have is a dynamic environment I've got every confidence in our strategy and the team's ability to deliver on the superior client experiences that we've talked about and improved returns and we look forward.

Mr. Wright: To speaking to you all again in May Thank you very much.

Mr. Wright: Thank you the complaint says Melinda. Please disconnect your lines at this time and we thank you for your participation. This conference is no longer being recorded sits closer homelessness.

Mr. Wright: Hi.

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