Q2 2025 Bank of Montreal Earnings Call
Some of them, yes, we want the silty duckenfield they'd be taught super duper pretty old to be everywhere.
Her daughter, again, because I don't want to see on the specialty.
[laughter].
This conference is being recorded so it's closer to home as it always is.
Hi.
All participants please standby your conference is.
Speaker Change: Good morning, and welcome to the BMO Financial group's Q2, 2020 earnings release and conference call for May 28, 2025. Your host for today is Christine please.
Speaker Change: Please go ahead.
Speaker Change: Thank you and good morning, we will begin today's call with remarks from Darryl White Bmo's CEO, followed by Typhoon to then our Chief Financial Officer and P. S. Agri, while our chief risk Officer also present to take questions. This morning are any johansen head of BMO, North American personal business banking and Jim Hershey head of BMO commercial banking.
Speaker Change: Alan Tennenbaum head of BMO capital markets that one can manga ahead of BMO wealth management, and Darryl Hackett BMO U S. C. O I would ask you to limit to one question during the Q&A to give everyone a chance to participate.
Speaker Change: As noted on slide two forward looking statements may be made during this call, which involve assumptions that have inherent risks and uncertainties actual results could differ materially from these statements I would also remind listeners that the bank uses non-GAAP financial measures to arrive at adjusted results management measures performance on a reported and adjusted basis and considers both useful.
Speaker Change: The underlying business performance guarantees soon we'll be referring to adjusted results in their remarks, unless otherwise noted as reported and I will now turn the call over to Darren. Thank you Christina and good morning, everyone. Today, we delivered another good quarter supporting year to date momentum across key performance metrics.
Speaker Change: Yes, good revenue in P to P G growth with strength in each of our diversified businesses.
Speaker Change: Actively managing for risks and uncertainties in the current environment and executing against a consistent strategy to deliver continued positive operating leverage and ROE improvement.
Speaker Change: In the quarter adjusted net income and earnings per share increased 1% from last year to $2 billion and $2.62, respectively with PBT growth of 12%.
Speaker Change: Impaired provisions continue to moderate as expected and we bolstered our pro forming out allowance over the last three quarters, we've added more than $850 million to our performing provision, giving us appropriate coverage for the environment and reflecting our disciplined and proactive.
Speaker Change: Approach to risk management.
Speaker Change: Our capital position remains robust with a CET one ratio of 13, 5% as we continue to support clients invest for growth and return capital to shareholders, including through share buybacks and dividend increases. We've now completed 50% of the NCI program and today, we announced an increase in our dividend of <unk>.
Speaker Change: Up 5% from last year.
Speaker Change: For the first half of the year EPS grew 10% driven by year to date revenue growth of 13% pre provision pre tax earnings of $7 8 billion were up 22% with all bank operating leverage of five 7% having met our commitment to positive operating leverage for five.
Speaker Change: Consecutive quarters.
Speaker Change: Our ROE improved to 10, 6% year to date <unk>.
Speaker Change: Rebuilding return on equity is our number one imperative and we're executing against our plan typhoon today will provide more details on our progress in his remarks.
Speaker Change: Turning to the businesses each of our operating groups delivered solid results and P. P. P. T growth as we continue to focus on enhanced customer experience deeper one client relationships and trusted advice.
Speaker Change: In Canadian personal banking, we continued to see good customer growth and deeper engagement through the first half of the year driven by product and digital innovation.
Speaker Change: For example, we've added over 10000, new by Puerto loyalty cards in the first six weeks since the launch of our partnership with Canada's fastest growing airline.
Speaker Change: Our differentiated savings amplifier account recently surpassed $10 billion in deposits over half representing new customers to BMO.
Speaker Change: Our award winning digital offerings are making it easier for customers to bank with us including <unk>.
Speaker Change: Access to detailed merchant data for debit and credit card purchases the ability to convert transactions two installments, while also implementing enhanced security features.
Speaker Change: And U S. P&C, we continue to have good momentum in core customer acquisition across our markets, including 7% year over year growth in checking account acquisition, and our worst markets, where branch productivity and digital engagement continues to improve.
Speaker Change: We continue to invest in core markets, including in the sugar in Chicago, and the Midwest, where we're market leaders and in our expanded west markets, where we're growing regional scale.
Speaker Change: California's economy is now the fourth largest in the world and growing at a faster rate than the U S. Overall, we're well positioned to capture opportunities to grow share in this attractive market.
Speaker Change: In commercial banking business activity and loan demand in both countries is reflecting the impact from trade uncertainty and businesses are being cautious around the deployment of capital at the same time, our ability to attract retain and deepen one client relationships and diversify our revenue streams towards fee generating income is reflected in the fact that more than.
Speaker Change: 90% of our commercial borrowers chose us for additional services.
Speaker Change: At BMO, we take pride in delivering best in class Treasury and payment solutions across corporate commercial and small business clients. TPS provides award winning product solutions, seamless and leading cross border capabilities and trusted advice to power's efficiency and growth for our clients.
Speaker Change: Yes, there is a significant contributor to BMO is revenue growing 20% year over year. It fuels Corp commercial.
Speaker Change: Core deposit growth and represents an important expansion initiatives to drive higher Roe.
Speaker Change: BMO wealth management continues to perform well with a return on equity of 29% year to date up from 24% a year ago.
Speaker Change: Growing this business is another key element in our overall ROE we rebuild strategy net new asset growth. This quarter was the second highest on record, including a strong contribution from the U S and market share gains in Canada, and Canadian mutual funds, reflecting strategic investments we've made in these businesses.
Speaker Change: We continue to innovate and expand our product offering with new solutions, such as Bmo's Canadian depositary receipt lineup, enabling Canadian investors to gain exposure to international companies and enhance their portfolio diversification.
Speaker Change: We continue to add to our leading ETF offerings and ranked first in ETF flows for the quarter building on our number two position in the market.
Speaker Change: The launch of the new <unk> workplace solutions savings platform gives employers a one stop digital solution to help their employees achieved their savings and retirement goals are first among Canadian financial institutions.
Speaker Change: Our commitment to meeting the unique needs of private wealth clients was recognized at the 2025 year old money Global private banking Awards, where BMO was named Canada's best private bank for Ultra high net worth clients and for philanthropic advisory services.
Speaker Change: Moving to BMO capital markets P. Ppt of $684 million was above our guidance. We had strong trading revenue led by a record quarter in commodities and continued strength in securitization.
Speaker Change: Our leadership and strength as a trusted adviser drove resilient performance in key sectors and products, notably global metals and mining and Canadian M&A.
Speaker Change: Our capital markets team is also leading the way in leveraging data driven AI insights and tools to enable our bankers and traders enhance client interactions and relationships and provide unmatched value while supporting client growth.
Speaker Change: Yeah.
Speaker Change: The economic backdrop in North America continues to be challenged by the uncertain environment and GDP growth is now expected to slow to 1% in Canada and one 3% in the U S. In 2025 in Canada. The recent outcome of the federal election is a renewed government with an aggressive economic growth agenda.
Speaker Change: <unk> seen promising early results by the federal and several provincial governments in support of eliminating barriers to enter provincial trade. We encourage a positive resolution in support of our stronger overall Canadian economy.
Speaker Change: Finally.
Speaker Change: As more plans are put into motion for infrastructure investment to boost economic capacity and Canadian productivity. Our teams are here to help governments companies small businesses and families with access to financial services and advice to fuel that growth and continue to strengthen the communities we serve.
Speaker Change: While macro uncertainties drive levels of customer and market activity, there low lower than expected at the beginning of this year, we're focused on continuing to execute on our strict strategic priorities and strong risk management practices to enhance shareholder returns and with that I'll turn it over to him.
Speaker Change: You Darryl and good morning, and thank you for joining US my comments will start on slide eight second quarter reported EPS was $2 50.
Speaker Change: And net income was $2 billion adjusting items are shown on slide 39.
Speaker Change: The remainder of my comments will focus on adjusted results.
Speaker Change: Adjusted EPS was $2.62 up from $2.59 last year, and net income was $2 billion up 1% as strong PPC growth growth of 12% was offset by higher performing PCL as well as a loss of 51 million.
Speaker Change: On the sale of our U S. Non relationship credit card portfolio related to our balance sheet optimization strategy to achieve the Roe targets.
Speaker Change: Revenues.
Speaker Change: <unk> increased 9% with good growth across all our businesses NIM expansion and strong trading and wealth revenue.
Speaker Change: This was partially offset by markdowns in capital markets, reflecting market conditions.
Speaker Change: Expenses grew 6% and we delivered positive operating leverage of two 7%.
Speaker Change: Total <unk> sales increased $349 million from the prior year and $43 million from last quarter.
Speaker Change: Piyush will speak to this in his remarks.
Speaker Change: Moving to slide nine.
Speaker Change: Over the last two quarters, we shared with you our medium term ROE target for BMO at 15% and 12% for U S P&C and the priorities to achieve them.
Speaker Change: Over the course of the first half of fiscal 2025, we have been executing against our action plans that have resulted in improvements in our year to date, our O N E.
Speaker Change: I would note that excluding performing PCL in the first half of the year, which had been elevated year to date ROE would be approaching 11, 5%.
Speaker Change: In line with our commitments focused expense management has resulted in year to date positive operating leverage of five 7%.
Speaker Change: Impaired PCL have improved as expected since the fourth quarter.
Speaker Change: And while the timing of further normalization will depend on the macro environment. It remains a key driver of ROE improvement overtime.
Speaker Change: We have made early progress on balance sheet optimization initiatives on both sides of the balance sheet.
Speaker Change: As mentioned earlier in the U S. We executed the sale of a non relationship credit card portfolio to support the recycling of capital to higher return opportunities.
Speaker Change: And exited our franchise loan portfolio that did not meet our return expectations with minimal impact on net income.
Speaker Change: On the deposit side, given our current strong balance sheet liquidity, we have been executing a more disciplined deposit pricing strategy and made progress in our deposit mix improvements with reductions in higher cost funding.
Speaker Change: Overall, we are pleased with the year to date ROE improvements and we will continue to report against these and other initiatives.
Speaker Change: Moving to slide 10.
Speaker Change: Average loans grew 3% year over year on a constant currency basis, driven by good growth in residential mortgages and commercial loans in Canadian P&C.
Speaker Change: Sequentially loans were down 1%, primarily from lower business and government dialysis and U S P&C on capital markets.
Speaker Change: Customer deposit balances were up 5% from last year, excluding the impact of the stronger U S dollar with growth across all businesses.
Speaker Change: Sequentially balances were down 1% in Canada, we saw good growth in everyday banking and commercial deposits from commercial operating accounts offset by decreases in term deposits.
Speaker Change: And in the U S deposit optimization activity and disciplined pricing resulted in lower Cds and non core customer deposits.
Speaker Change: Macro uncertainties in both countries have kept demands muted across our client segments. So far this year.
Speaker Change: We expect these conditions to begin to normalize as we get more clarity on the changes to the global tariff regime.
Speaker Change: In the meantime, we will continue to leverage our balance sheet liquidity to further optimize our funding profile in line with our ROE targets.
Speaker Change: Turning to slide 11.
Speaker Change: On an ex trading basis net interest income was up 11% from the prior year and down 2% sequentially due to the impact of fewer days in the quarter.
Speaker Change: Compared with last quarter NIM ex trading was up four basis points benefiting from the rolling Reinvestments at higher rates and disciplined deposit pricing as well as lower low yielding assets and capital markets and corporate services.
Speaker Change: In Canadian P&C, NIM increased four basis points, reflecting higher loan and deposit margins, partially offset by loan growth exceeding deposit growth.
Speaker Change: U S. P&C NIM increased five basis points as our deposit optimization activity led to higher margins that more than offset the impact of lower deposit balances.
Speaker Change: Since the second quarter of 'twenty 'twenty four we have had four consecutive quarters with margin expansion for a total of 15 basis points.
Speaker Change: Based on the current market expectations, we expect a stable margin at the all bank level as well as in our P&C businesses during the remainder of this fiscal year.
Speaker Change: Turning to slide 12.
Speaker Change: Noninterest revenue was up 4% from the prior year.
Speaker Change: Growth in wealth management, and trading and advisory fees and capital markets were offset by the shift of Easter net interest income.
Speaker Change: As well as the markdowns lower does that securities gains and loss on the sale of the card portfolio.
Speaker Change: We are also benefiting from good growth in deposit fees as we continue to expand TPS penetration with our corporate and commercial clients.
Speaker Change: Moving to slide 13.
Speaker Change: Expenses were up 6% from the prior year or 2%, excluding the stronger U S dollar and performance based compensation.
Speaker Change: Driven mainly by higher employee and technology costs.
Speaker Change: The expense levels in corporate services during the quarter were below trend, which we do not expect to repeat.
Speaker Change: We maintained our full year or full year year over year mid single digit expense growth expectation on a constant currency basis, excluding higher performance based compensation and expect the second half growth to be higher than the first half.
Speaker Change: We still plan to deliver positive operating leverage as we maintain a disciplined approach on managing our expenses in line with revenues.
Speaker Change: Turning to slide 14, our CET one ratio of 13, 5% was down 10 basis points from last quarter as good internal capital generation was offset by share repurchases and higher source currency <unk>.
Speaker Change: With the additional 2 million share repurchases in May we have executed at 50% of our buyback program since announcement earlier this year.
Speaker Change: Given our strong capital position, we plan to continue executing the remaining buybacks at a similar pace during the second half of the year.
Speaker Change: Moving to the operating groups and starting on slide 15.
Speaker Change: Canadian P&C net income was down 10% year over year as higher P sales offset good P. P. P G growth of 5%.
Speaker Change: Revenue of 3 billion was up 6% driven by higher net interest income, reflecting higher margins and balance sheet growth with loans up 6% and deposits up 4%, partially offset by lower noninterest revenue.
Speaker Change: Expense growth of 6% reflected higher technology and employee related costs.
Speaker Change: Moving to U S P&C on slide 16.
Speaker Change: My comments here will speak to the U S dollar performance.
Speaker Change: Excluding the loss on the sale of the card portfolio net income increased by 3% with PPD growth of 8% and positive operating leverage.
Speaker Change: Revenue growth was driven by higher margins as balances were relatively stable year over year and higher deposit fees were offset by lower commercial M&A advisory fees expense.
Speaker Change: Expenses were relatively unchanged year over year with higher employee costs offset by lower operating expenses.
Speaker Change: Moving to slide 17.
Speaker Change: BMO wealth management net income was up 13% from last year with positive operating leverage of three 5%.
Speaker Change: Revenue in wealth and asset management was up 11% driven by stronger global markets and strong net sales and balanced growth across loans and deposits.
Speaker Change: Insurance revenue was down 6%, reflecting unfavorable market movements in the current quarter.
Speaker Change: Expense growth of 7% was driven by higher employee related expenses, including higher revenue based costs and continued investment in talents.
Speaker Change: Moving to slide 18.
Speaker Change: BMO capital markets net income was down 7% with PPD growth of 6% offset by higher P. CLS rep.
Speaker Change: Revenue of $1 $8 billion was up 7%, reflecting good performance in global markets, driven by strong client activity, particularly in commodities trading.
Speaker Change: Investment in corporate banking revenue was down due to the impact of markdowns and lower net securities gains, partially offset by higher advisory fees and corporate banking revenue.
Speaker Change: Expenses were up 8%, mainly driven by higher employee related expenses and the impact of stronger U S. Dollar.
Speaker Change: For the second consecutive quarter, our capital markets performance has exceeded the guidance that we gave at the beginning of the year, especially with strong results in the global markets business.
Speaker Change: We remain aligned with our previous guidance of achieving quarterly P. P. P T of above $625 million during the remainder of the year.
Speaker Change: Our expectations reflect the strength of our model, while recognizing the broader market uncertainties on the muted level of client activity in investment and corporate banking.
Speaker Change: Turning now to slide 19, corporate Services' net loss was $155 million due to the low point and retained expenses in the current quarter, mainly due to timing.
Speaker Change: We expect the third quarter net income in our corporate segment to be similar to last year's third quarter.
Speaker Change: In closing.
Speaker Change: Our results this quarter reflect solid execution and financial discipline.
Speaker Change: With strong performance, helping our progress towards achieving our targets.
Speaker Change: Revenue growth was supported by all business segments, which together with disciplined expense management helped us sustain positive operating leverage and as we expected we continue to make progress in reducing our impaired PCL.
Speaker Change: Our balance sheet remains a point of strength with healthy capital ratios sound liquidity and a well managed risk profile as we look for more clarity in the macro environment in coming quarters.
Speaker Change: Outcomes reflect the resilience and the balance of our underlying business model.
Paresh: And position us well against our strategic priorities I will now turn it over to Paresh. Thank you Diphone and good morning, everyone.
Paresh: In line with our prior guidance embed provisions for credit losses continued to improve this quarter at.
Speaker Change: At the same time, we remain cautious given the ongoing uncertainty and volatility in the economic and vitamin related to create policies.
Speaker Change: The outlook for the Canadian economy has weakened with rising unemployment and declining GDP growth.
Speaker Change: The U S market has shown resilience, but momentum has softened.
Speaker Change: This weaker macroeconomic outlook relative to Q1 is now incorporated into our base case, driving performing PCL of $289 million for the quarter.
Speaker Change: On slide 21, performing allowance stands at $4 $7 billion, providing good coverage of 69 basis points, although performing zones, given the credit profile of the portfolio and our forecast for embedded losses, we continue to monitor because obviously the outcome of trade negotiations and will end.
Speaker Change: Corporate changes to the outlook in the allowance assessment in future quarters.
Speaker Change: Turning to slide 22, but an overview of dota than impact provisions.
Speaker Change: The total provision for credit losses was $1 1 billion.
Speaker Change: 63 basis points.
Speaker Change: And bad provision for the quarter was $765 million or 46 basis points down four basis points from prior quarter and down 20 basis points from Q4.
Speaker Change: The quarter over quarter improvement was primarily due to lower losses in our U S commercial business.
Speaker Change: Personal and business banking embedded losses were $318 million in Canada, and $67 million in the U S down $6 million and $19 million respectively.
Speaker Change: Delinquencies are continuing to trend up in our Canadian consumer portfolios in line with rising unemployment. We expect these trends to result in more dessert to the higher losses in the unsecured portfolios and we have expanded customer engagement to help manage these risks.
Speaker Change: In our commercial businesses embedded on provisions of $158 million in Canada, and $118 million in the U S down, 9% and $46 million respectively.
Speaker Change: The market's embedded losses of $28 million was down $7 million from prior quarter.
Speaker Change: The pace of credit migration across the wholesale portfolio has been flowing in in bag formations that degrees $601 million over the prior quarter as shown on slide 23.
Speaker Change: Gross impaired loans were relatively stable and the G. I L ratio at 99 basis points was down one basis point basis point from last quarter.
Speaker Change: We are encouraged by the positive signs in our credit portfolio, including lower migration to watch this and embed and moderating provisions in our wholesale business at the same time, we are subject to macro and industry risks related to the evolution of trade policies.
Speaker Change: All of which have already had an impact on business and consumer confidence and on economic activity.
Speaker Change: Our embed provisions are trending in line with our previous guidance, but given all of the cat event pronouncements. It is possible that embed provisions may rise modestly from here like remain manageable.
Speaker Change: We're actively managing the data of risks, including cause always monitoring of our portfolios and engaging with clients to help them manage through this uncertainty.
Speaker Change: Given the diversification of our portfolio strong capital and liquidity levels. We are in a good position to manage current and emerging risks.
Speaker Change: I will now turn the call back to the operator for the Q&A portion of this call.
Speaker Change: Thank you we will now take questions from the telephone lines. If you have any question. Please press star one you make answering your question at any time by pushing side.
Speaker Change: <unk> at this time, if you have any questions.
Speaker Change: Was there a brief Baltimore participants so just a question we thank you for your patience.
Gabriel: First question is from Gabriel <unk> from National Bank Financial Please go ahead.
Gabriel: Good morning, I wanted to ask a I guess a twofold question on the AR or are we a story here, which is clearly an emphasis for the bank.
Gabriel: And in my view and I think mathematically heavily contingent on improvement in the U S business.
Gabriel: First we saw loan growth commercial loan growth.
Gabriel: Negative sequentially, what's the outlook there was there any.
Gabriel: And I guess hope that we could see the commercial book turnaround into positive growth over the course of the year and then on the I guess the funding optimization, we saw a drop in the U S deposits sequentially as well.
Gabriel: Getting rid of higher cost deposits.
Gabriel: But as you look.
Gabriel: You seem to emphasize let's get some you know lower cost deposits. How easy is that how are you executing on its easy to say and Potomac really logical, but there's gotta be a cost in AR and.
Gabriel: And an execution challenge there so how long does that take to start seeing a an improved funding mix.
Gabriel: Thanks.
Speaker Change: Yeah, Matt gave its Darryl maybe I'll I'll start the response to your question. There was a lot in your question, Yeah, and I might I might invite given the market dynamics that.
Gabriel: But you correctly allude too right.
Gabriel: Right hernia and Nadeem to comment as well from the retail and commercial perspective.
Gabriel: And in the U S. You're quite right, we're very committed to the ROE you rebuild a lot of that is in the U S. As you've seen and as we talked about in the last couple of quarters.
Gabriel: I would start by saying that the balance sheet dynamism that you're observing for sure. It's been muted for a while that's not just us that's the industry. If I look at loans, we've been in line with market.
Gabriel: For a few quarters now in that flattish world and when I look at deposits.
Gabriel: We had some frankly, we had a lot of opportunity there because our liquidity, which we had lots of and we had built pretty successfully over a couple of years gave us the opportunity to reprice lower value deposits and youre seeing that in our NIM Typhoon mentioned that we're up we're up five basis points on the NIM, which is which is pretty impressive we see more room there.
Gabriel: There as well.
Gabriel: So let me make a couple more comments before we come back to how the balance sheet could move because I I'm I'm quite impressed with the way our teams arent just waiting for a rebound in loan demand like if I look fundamentally at the U S. Pnc's P. P. P T delivery despite.
Gabriel: Little movement in loan demand in the marketplace, it's up 5% year to date, it's up 7% year to date, if you exclude the card loss that typhoon described earlier and 8% in the quarter. So it's even accelerating quarterly route relative to the year to date.
Gabriel: Why is that it's because of the pricing and the balance sheet optimization that we've been talking about and we do expect that to continue and we expect to diversify into more fee generating revenues. So the teams have done a really good job on that and cycling at round trip back to the early journey when I look back to the $6, 2% number that we had in 2020 for that.
Gabriel: 7% already in 2025 year to date. So we're on we're on the journey, we're making these.
Gabriel: Moves out and are executing pretty well against them and that's before an uptick in loan demand, which I've been saying this for some time, but it will come one day, but that would be that would be in addition to everything I've. Just said listen why don't we have Ernie can you get a couple of comments from your perspective, and then they place yeah. Thanks, Darren Thanks, Gabriel for the question. So two parts to this.
Speaker Change: Strategy in the retail bank and in the U S. One.
Speaker Change: Darrell has already spoken to and I think as well as round, we're changing our funding mix and we are fundamentally looking at building deeper relationships and core deposits. So we're gonna change that finally makes me see that today coming through in the NIM improvement of five basis points quarter over quarter, but you.
Speaker Change: That's 14 basis points year over year and that shift is really critical in our or withheld at the same time, we're not giving up on our new customer acquisition, which is really focused on those core checking savings accounts money market accounts in our U S business and that performance is based on driving new customers into our franchise and deepening.
Speaker Change: The relationship with the existing just to give you a perspective, our checking account acquisition in the west or in California is up 9%, whereas whereabout seven overall, so you see the Californian market picking up for us in particular, and then lastly, I would say the effectiveness of our analytics and our marketing is really driving more.
Speaker Change: Let's see with our existing customers and driving also the productivity of our Salesforce. So while you see us reducing those out those.
Speaker Change: High cost deposits, we're bringing in new customers and new relationships on checking savings and money market accounts, so with that I'll turn it over to Nadeem to talk specifically about the loan side on the commercial okay. Thanks Arnie.
Nadeem: As Gerald mentioned the borrowing demand in the U S has been largely muted as we've seen in recent quarters. That's in line with industry peers. So our results are very similar at the same time I think we've mentioned, we're focusing on acquiring strong RV loans with appropriate risk return and full banking relationships, which means we're also optimizing capital away from deals or portfolios that you got.
Speaker Change: Our long term return thresholds.
Gabriel: But I will tell you Gabriel our pipelines are healthy.
Speaker Change: Execution has obviously been delayed due to uncertainty in the market. However, I will say also that in my recent conversations with client sentiment is actually improving and as we get more clarity on the economic environment as Daryl mentioned, we do expect loan growth to be positive in the back half of the year and I'll also say that we've seen the month of April showed some positive.
Speaker Change: He was already in the meantime, we're executing on our fee generating strategic initiatives. So as as Daryl mentioned in his opening remarks, our GPS in treasury revenues outpacing our expectations with double digit growth. This is a significant part of our OE rebuilt.
Speaker Change: Rebuild journey and our one client effort, so referrals between capital markets commercial and wealth continued to accelerate again, a key part of our ROE we rebuilt journey.
Speaker Change: The second part of your question Gabe was that on the deposit side. So very similar to what we talked about in commercial as we optimize loans. We're also optimizing the entire balance sheet, including deposits. Our pipeline is actually very healthy on our deposit side. Good core operating deposits. So what we are doing it in a balanced way as we get new car.
Speaker Change: The acquisition, which we are each and every day and it is healthy we are missing deposits that in for example in Q2, what Youre seeing is the effect of exiting large dollar low liquidity value high cost deposits and in favor of that we brought in good core operating deposits and as you saw we were.
Speaker Change: Our deposit margins are showing about a five basis point improvement already again part of the hourly rebuilt.
Speaker Change: Okay, well in the interest of time, I'll say banks and.
Speaker Change: Good day.
Speaker Change: Yeah.
Speaker Change: Thank you.
Speaker Change: Following question is from John Aiken from Jefferies. Please go ahead.
John Aiken: Good morning, Thanks in terms of the balance sheet restructuring going on in the U S are obviously good to see the movements in near the.
Speaker Change: So all of the credit card portfolio.
Speaker Change: Assuming though that there are other opportunities that youre exploring is there any way that you're able to scale or quantify what these potential opportunities are moving forward of course with the condition that I'm not going to hold you to give an exact number.
Speaker Change: Look we.
Speaker Change: We have an ambitious plan to improve our OE them within a very reasonable timeframe and that.
Speaker Change: It means that we have to look at all of our businesses and the entirety of our balance sheet and we're doing that.
Speaker Change: I don't have any specific news to share with you today as we identify them and as we make the decisions we'll share those decisions with you.
Speaker Change: Just hoping you can we can we expect periodic announcements.
Speaker Change: The period of time, where you're trying to improve your we granted not expecting everything every quarter, but is this something well this.
Speaker Change: The second quarter's experience be representative of what we might be able to expect moving forward.
Speaker Change: It's reasonable to assume given again the plans that we have that there will be other decisions that we will make along the way I can't comment on the timing of those decisions, but I think it is reasonable to assume that there will be more.
Richard: Understood. Thank you Richard.
Richard: Thank you.
Speaker Change: Following question is from Matthew Li from Canaccord Genuity. Please go ahead.
Matthew Li: Hi, guys. Thanks, taking my question. So I didn't have last year, you did a lot of work walking through the U S commercial portfolio.
Speaker Change: Really trying to determine areas of risk and let's say, maybe it's paying off here with Tcl is dropping this quarter.
Speaker Change: Can you talk about what you're hearing from your U S commercial customers, it's getting even more comfortable with your current allowances.
Mike: Mike can you just repeat the question you said this in the U S.
Speaker Change: Our U S. Commercial book, just what are you hearing from commercial customers right now that you're comfortable with the credit situation that youre seeing in that space.
Speaker Change: Our customers are.
Speaker Change: There'll be independent untouched in fact via here is it really is.
Speaker Change: Shebang, Florida customers. So the credit situation is more and done as we managed through that and you can see the sequential improvement across the enterprise.
Speaker Change: But from a customer perspective, it's growing the book is very healthy I would say in general about the offer nadeem the opportunity to talk about the U S commercial book.
Nadeem: Yep. Thanks, Krish I would say you know what I think about our conversations with customers and how they are feeling with.
Nadeem: With the environment that we're under as I mentioned earlier, you know the sentiment continues to improve them and getting more and more positive the customers are navigating quite well in the environment that we're focusing on cost discipline and working capital management, finding new markets strategizing about evolution of their business models and what.
Nadeem: Fiscal policy settles in the market so.
Nadeem: So far we're feeling good about the commercial book customers are feeling better and we do expect like I said, some rebound coming in the back half of the year, including some likely rebound in the M&A markets as well.
Nadeem: So I guess you are pretty comfortable with the idea that you know assuming there's no further tariff impacts PCR contingents had trend away that you suggested it was 10 in Q4.
Nadeem: Yeah, I would say you know the data of impact.
Nadeem: Short answer is even without any tariff impact that is a little bit prolonged uncertainty, which is obviously slowing the environment that has an impact on some of the funds that are already being worked through.
Nadeem: But it's moderate so if everything works out the way, we expect I don't see any significant shift in what we've guided to.
Speaker Change: Okay, and then I might have missed this but what what's the tariffs that are kind of baked into your base case expectations in your credit model right now.
Nadeem: So in Q2.
Nadeem: We took into account.
Nadeem: What had been announced and of course. These are stop go that'd be here every week, but our Q2 economic forecast base case.
Nadeem: So a significant deterioration.
Nadeem: You'll see some of this in our disclosure.
Nadeem: I would just point you to a couple of metrics that you think about Canadian GDP.
Nadeem: Six months ago, we were projecting about a 1.82%.
Speaker Change: And in Q2 that was zero to negative point doing a base case in the next 12 months.
Speaker Change: Even more significantly I would point you to is that Canadian unemployment unemployment has a big driver to our P. CLS across six months ago, we talked unemployment should be improving from 70% down to maybe six and a half.
Speaker Change: Now if you've got a deteriorating outlook, but unemployment.
Speaker Change: <unk> seven.
Speaker Change: 7% going up to 8% so you'll see more of these details in our disclosure, which really drove the embed up of funding P. C. As in the second quarter.
Speaker Change: Okay. Thanks, that's helpful.
Speaker Change: Thank you.
Speaker Change: The following question is from him about him Panella from Bank of America. Please go ahead.
Speaker Change: Okay.
Speaker Change: Hey, good morning.
Speaker Change: I guess, maybe following up on the U S auto discussion.
Speaker Change: Does if there's anything from a capital standpoint that we should be mindful off and on capital allocation to the U S. We have the <unk>.
Speaker Change: This is that is coming out which did have an impact on the stock last year or so.
Speaker Change: Any kind of expectation I realize it's a big process, but how you are approaching this test test anything coming out of that to me that could.
Speaker Change: Inform your capital allocation decisions.
Speaker Change: How much capital you hold in the U S Bank.
Speaker Change: The short answer is no you know some aspects of our capital situation in the U S really.
Speaker Change: Are related to the strength of the capital position, both with respect to our historical levels as well as with respect to the peers and it's creating quite fast.
Speaker Change: <unk>, which is just fine.
Speaker Change: And that's we expect that that I think we shared that with you I know at the end of last year that our expectation is still.
Speaker Change: Strong accretion in the U S. We are quite happy with that I don't expect this year's CCAR exercise to have any meaningful impact on how we manage capital.
Speaker Change: Got it and then if I could follow up on the on the margin discussion earlier, one I think last quarter, you talked about stable margin outlook, you had a decent expansion this quarter.
Speaker Change: If you don't mind spending some time on the puts and takes how do you on the deposit mix optimization, but when I look at the U S margin of 3.9, it seems to be best in class. So one do you see that $2 nine margin improve materially from here and if that is the bias on the balance sheet is it.
Speaker Change: Asset sensitive liability sensitive just how should we think about that.
Speaker Change: So the principle that we have applied in the way we manage.
Speaker Change: Our interest rate risk in the way, we manage our balance sheet is one of stability and we've been on that for a number of years now.
Speaker Change: We try to let the businesses drive.
Speaker Change: Our margins are with with credit spreads as they move and also with discrete balance sheet actions such as the ones that already have Nadeem mentioned.
Speaker Change: As I look ahead.
Speaker Change: I do expect those actions as they will remain in place for the duration of our journey.
Speaker Change: To continue to impact our margins.
Speaker Change: As I sit here I expect them to be positive.
Speaker Change: Coming quarters.
Speaker Change: We're not changing our.
Speaker Change: <unk> targets in terms of managing our margin and I'm not expecting a significant improvement in those margins.
Speaker Change: But probably.
Speaker Change: As I had commented on this a couple of quarters ago, I expect a stable margin with some upside, but I want to be cautious about that outside because it tends to be impacted by the movement in market interest rates. So my message is the same as before.
Speaker Change: Thank you.
Doug Young: Thank you I was wondering question is from Doug Young from Desjardins capital markets.
Speaker Change: Please go ahead.
Doug Young: Hi, Good morning, maybe just.
Speaker Change: I just wanted to go back to your comment that you might be impaired PCL was up moderately from Europe, but to remain manageable and so just trying to understand.
Speaker Change: If you can kind of flesh out what's what's the range that you've given what we hear from team and just your kind of seems to be a little bit more cautiously optimistic outlook.
Speaker Change: And can you define up modestly from here and your T cells have been quite volatile in the last year or so can you give us kind of a sense of what by moderately yeah.
Speaker Change: Yeah.
Doug: Sure Doug.
Doug Young: So this should give you a sense of the forward trajectory.
Doug: Is that step back in the last two quarters, you've seen sequential improvement from us down from 66 basis points to 46.
Doug: That's significant progress and it shows you.
Doug: The amount of work the teams have been putting in into our credit portfolios.
Doug: But in addition to the outcome of what you've seen in the PCL.
Doug: We're also seeing key portfolio metrics like watch this and embed formations at its lowest level in the last five quarters. At these this backdrop gives us comfort around the guidance. We had given you in the high forties and there will be intra quarter variability you have always mentioned that because of.
Doug: Sometimes the lumpiness of large files.
Speaker Change: But as you look forward, we're just mindful of the headwinds in the outlook. So the evolving U S. Trade policies has created uncertainty and volatility and no matter what gets resolved this uncertainty and volatility itself has taken a door than consumer and business sentiment.
Speaker Change: And the way you should think about this is the run different scenarios. If I were to give you the scenario reminding the last three or four months and said they were north at US then we would exactly be in the trend of our guidance.
Speaker Change: If you take the scenario things will get resolved.
Speaker Change: But it will take some time, that's a couple of basis points. So we've given you guidance of high Forty's and add a few basis points, just because of the time factor of that resolution.
Speaker Change: And if things don't get resolved then the tariff wars pick up and that's a much more adverse scenario that would put us and everybody else is probably out of guidance.
Speaker Change: That's no that's helpful and if I can just one quick one.
Speaker Change: Your net interest revenue lower in Canada, and the U S and just wanted to confirm in the U S that includes the loss related to.
Speaker Change: The sale of that portfolio.
Speaker Change: And then just trying to understand like lower noninterest revenues in Canada and licenses anything drivers behind that.
Speaker Change: No I think yes, the the loss on the sale of the credit card portfolio is included in our numbers in the U S.
Speaker Change: There are a couple of items in Canada.
Speaker Change: Have impacted the trends, including the VA. She got a fee shifting to net interest income in Canada and also just keep in mind that Q2 is a has three less days in the quarter, which tends to impact them.
Speaker Change: Fees, as well and especially in our P MBP business and our wealth management business.
Speaker Change: Okay. So it's just really in the U S is okay. I appreciate that color. Thank you.
Speaker Change: Thank you.
Speaker Change: Following question is from Paul Holden from CIBC. Please go ahead.
Speaker Change: Thanks, Good morning.
Speaker Change: Unless you can provide similar commentary on what Canadian commercial customers are saying, if the message or sentiments any different than what you're hearing from the U S. So there's a little bit more caution.
Speaker Change: Yeah.
Speaker Change: Yeah. Thanks for the question.
Speaker Change: Obviously something on.
Speaker Change: On everyone's mind.
Speaker Change: Talking to clients I would say its still similar to the U S. It's cautious optimism that this will get resolved in a timely fashion and when it does there'll be some sort of terrorist, but it'll be manageable and reasonable and that our clients feel comfortable that they'll be able to work around it.
Speaker Change: Most of our Canadian clients, there's a I would call a wait and see or a watch mode a little bit of cautiousness. We saw good loan growth in Canada going into the year Q1 was good Q2 held up pretty well as well.
Speaker Change: But we are seeing some moderation as expected they were going to see some moderation.
Speaker Change: Downloads on the loan growth for the remainder of the year in Canada, but I still expect our loan growth to be positive so clients are cautious.
Speaker Change: But there's still activity.
Speaker Change: But at a decelerating pace.
Speaker Change: Okay.
Speaker Change: And then maybe one question on <unk>.
Speaker Change: Capital markets between like one of your earlier questions on the U S as prospect for more M&A in the second half of the year. So maybe a refresh of what the capital markets pipeline looks like if you may have a similar read in terms of potential for more activity in the back half of the year, particularly in the sort of that mid market private equity space.
Speaker Change: Or will it be mountain really has a good.
Speaker Change: A good market position.
Speaker Change: Thanks, Paul and I. Appreciate the question and you know I'd be remiss, if I didn't just take a second and highlight some of the strength that we've had.
Speaker Change: In our M&A practice, particularly in Canada around our metals and mining business energy and most recently around.
Speaker Change: Our real estate, so what you're really seeing is a mixed picture around the M&A market and as you pointed out the U S.
Speaker Change: Has been weaker.
Speaker Change: And that's certainly the experience post the geopolitical dynamics are around the tariff.
Speaker Change: <unk>, we are starting to see a pickup in the pace of meetings and pitches and engagement, but as you would anticipate a number of transactions were deferred and delayed.
Speaker Change: As a result of the market terminals. So we are more confident in what we're seeing in terms of the pipeline, but as you know for that market.
Speaker Change: Meetings are.
Speaker Change: Mandates turning into revenue can take a little bit of time, so I would describe it as cautiously optimistic.
Speaker Change: Okay. That's helpful. That's it for me thank you.
Speaker Change: Thank you. Our following question is from Darko <unk> from RBC capital markets. Please go ahead.
Darko: Hi, Thank you a question for Piyush are sort of two fold in nature I guess, one is can you describe.
Speaker Change: Your exposure.
Speaker Change: Two tariff related industries, and just out of curiosity why not.
Speaker Change: Provide that detail in your deck.
Speaker Change: So we've got disclosure on the loan portfolio in the deck.
Speaker Change: And as you know, it's a very diversified portfolio across sectors. We've obviously been doing a lot of scenario analysis and stress test well before the U S elections.
Speaker Change: And continue with all of the data of changes.
Speaker Change: You know from a macro perspective, I think we are seeing the softness in consumer demand and business sentiment that has an impact overall to the broader economy, but more directly to your question we have analyzed the sectors.
Speaker Change: And the way we've done this is if you've looked at are sectors that are higher risk medium Joel and I would call those higher risk sectors, the ones, you're reading about agriculture auto manufacturing lumber.
Speaker Change: And when you add those up those are about 6% of our portfolio into higher risk, but I'd be remiss. If I said, that's all high res because really the risk is an individual files. So we've spent a lot of time with the teams reviewing our individual funds and like US many of our clients I'd also.
Speaker Change: Safe guarding that interests us financial flexibility.
Speaker Change: People are changing their supply chains getting ready for what's coming so I would actually say that the higher risk files within those high risk industries, it's probably around 1% of our total exposure.
Speaker Change: And is it fair to say, that's mostly Canada.
Speaker Change: It's a mix. It's you know there are clients that are going to be affected every word of it what's going on so there are some in the U S and there are some in Canada.
Speaker Change: Okay, and what's the biggest industry in that 1% for for your particular.
Speaker Change: Portfolio.
Speaker Change: The biggest piece is really manufacturing because it's the manufacturing sector that is going to see the brunt of that if these are low margin.
Speaker Change: Industries very stable and so when you see it that if that had been announced if they came through you'll see the biggest impact there because it impacts various pieces of their supply chain.
Speaker Change: Okay.
Speaker Change: Okay, great. Thank you.
Speaker Change: Thank you. Our following question is from Mario Mendonca from TD Securities. Please go ahead, good morning slipped slightly different type of question, but it relates to the same themes switches.
Speaker Change: Yes.
Speaker Change: [noise] friendly regime in the U S political climate in the U S now I'm referring to the.
Speaker Change: They're still going through Congress that would.
Speaker Change: Impose materially higher taxes on.
Speaker Change: Residents.
Speaker Change: In the U S individuals and corporates and it relates to this digital tax that Canada has.
Speaker Change: On U S Tech companies now it's entirely possible that this thing dies on the floor of Congress, but it's a meaningful risk and it matters to banks like BMO.
Speaker Change: Other institutions with a large U S operations.
Speaker Change: What I'm asking here is this does BMO have a house view on how this plays out does this go away or how do you address it if in fact.
Speaker Change: The U S doesn't pose materially higher tax rates on Canadian corporations.
Mario Mendonca: So Mario.
Mario Mendonca: Just like you we are watching the developments and and uncertainties are quite high on this topic.
Speaker Change: And as you know the U S process does not get finalized until the very last moment and we just need to continue to watch.
Speaker Change: The outcomes are.
Speaker Change: I'm not certain to us enough to.
Speaker Change: To have a view today.
Speaker Change: As to what it may mean for BMO.
Speaker Change: And.
Speaker Change: When it's finalized we obviously will form our perspective.
Speaker Change: And what we need to do internally at BMO, but at this point I don't have a good answer for you because of all these uncertainties I.
Speaker Change: How do I one.
Speaker Change: The other sort of follow up question to Doug's question.
Speaker Change: Doug was asking about.
Speaker Change: What manageable means in terms of higher PCL.
Speaker Change: Same sort of thing I was I'm interested in.
Speaker Change: What does manageable mean to BMO does it mean that.
Speaker Change: But the bank can continue to grow earnings even though.
Speaker Change: Higher pcl's emerge because of tariffs or is.
Speaker Change: It certainly means that it wouldnt affect the bank's capital strength that I can I I treat as a given but does manageable means you can continue to grow through something like that but help me understand what Nashville means.
Speaker Change: Yeah. So the short answer is yes, we can continue to grow our capital ratios are healthy our client relationships our client pipelines that had to do so theres nothing that changes that story. The manageable was to give you a perspective of the uncertainties in the environment and so if we land.
Speaker Change: Exactly where we are today with a pause the rest of Brooklyn tariff.
Speaker Change: And come in at a much lower number than announced.
Speaker Change: That would because of the delay of the resolution and the softness in the economy and the interim B a couple of basis points higher.
Speaker Change: So whether it's one or two or three that's the range. We're thinking about we're not going back to what you saw in 2024. The only difference that I've continued to caveat is if nothing gets resolved and we got into this high uncertain environment and back to any papers second kind of announcement date.
Speaker Change: Of course, you can see in our base case forecast has a significant impact on Canadian and U S economies.
Speaker Change: Thank you.
Speaker Change: Thank you.
Speaker Change: Our following question is from Nomura Pesade from Congress Securities. Please go ahead.
Speaker Change: Hey, So I wanted to I'm wondering if we could kind of look through the impacts of the trade war because the messaging from your bank and peers seems one as you know.
Speaker Change: Our cautious optimism that we could be moving past.
Speaker Change: The trade war. So if you had to guess does it feel like this recovery recovery would be.
Speaker Change: Led by consumer or commercial clients, it's something I'm spending some time thinking about because it does feel like consumers would be exiting this period of trade uncertainty in terms of a much weaker stayed then we saw a post COVID-19.
Speaker Change: So any thoughts on that.
Speaker Change: It's a tough it's Darryl.
Speaker Change: It's Darryl Lamar I, it's actually a tough call you're asking a very good question.
Speaker Change: I think when you look across Canada, you heard Peter should talk earlier about the outlook at the consumer level, we are seeing upticks.
Speaker Change: In unemployment, we do expect to continue to see upticks on unemployment and.
Speaker Change: And that puts a certain challenge on the household.
Speaker Change: <unk> switch.
Speaker Change: Can persist you don't wave a magic wand over that situation and say trade wars are over and then all of a sudden everything's. Okay. And then you see a quick.
Speaker Change: Rebound.
Speaker Change: Because some damages done and it can persist so we're watching that very carefully.
Speaker Change: On the commercial side, it's actually a little bit mix right. So you'll have we talked about it in this call and in other places you'll have some businesses that are impacted.
Speaker Change: In some cases could be severely but they are in the minority and those folks won't rebound quickly at all as you and I know, but there are a whole bunch that will and they are building capacity right now and waiting for demand to come back. So if I had to guess what you'll end up seeing in that environment that you're hypothesizing around Lamar.
Speaker Change: As youll see some of the the consumer businesses come back quickly, but some of them want and Youll see the same thing on the consumer side, you'll see a big sort of.
Speaker Change: The rebound of demand on the pardon me on the commercial side.
Speaker Change: Those that were particularly impacted in targeted will take a long time and that's probably not.
Speaker Change: What you are hoping for in terms of me, telling you its ones and zeros on your answer but you have to decompose each of the portfolios and look at them individually.
Speaker Change: No no that's helpful and then.
Paul: Then if I may just tack on to Paul's question there.
Paul: How do you feel about the loan growth prospects of Canada versus the U S and I'm trying to take this a step further I'm talking about actual BMO loan growth here, because it really feels like given the timing of the closing of the bank of the West deal, we never really got to fully appreciate the strength of the combined franchise.
Paul: No.
Paul: What I'm asking is like if you had to look through.
Paul: Period of recovery is that possible and plausible to expect.
Paul: Stronger loan growth in the U S just given that.
Paul: Kind of set up between the timing of the closing of the bank of the West deal.
Paul: U S loan growth should outperform Canada yeah.
Paul: Possible plausible of course it is if we if you kind of read through some of the things you've heard from my colleagues today, you can imagine a scenario, where both economies kind of muddle through here for the next couple of quarters I think what you're really asking is what is 'twenty six 'twenty seven end up looking like from a balance sheet dynamic perspective.
Paul: You know I don't think the U S market freezes forever and so there will be a release there and when there's a release, we've said time and time again, we intend to fully participate in that release in our positioning.
Paul: It's very good for that relative to most.
Speaker Change: I wouldn't go so far though lamar to say that that will come out of stark juxtaposition to what might happen in Canada, because there are different dynamics in Canada. At this time with the you know as I mentioned in my remarks, maybe we'll have a resolution on Intraregional trade barriers, maybe we will have a pretty significant.
Paul: Build Canada infrastructure spend I think those things will take time to evidenced commercial activity underneath it but they could come so as I pushed myself out through 'twenty six 'twenty seven different factors could produce loan growth in Canada as well.
Paul: I appreciate it.
Paul: Thank you.
Speaker Change: Our last question is from Mike <unk> from Scotiabank. Please go ahead.
Speaker Change: Good morning, first one just a quick one for typhoon on the NII or and just if we could dig a bit deeper here. So the sequential decline was almost $300 million.
Speaker Change: And I are overall on an adjusted basis and correct me, if I'm wrong, but I think the card the non non relationship card portfolio was only a small fraction of that so in terms of where Q1 level was at <unk>.
Speaker Change: Are you expecting that you sort of see this week linked back to Q1 levels or is Q1, a bit of an anomaly in terms of how strong it was and maybe you just sort of trend at the Q2 level for the second half of the year I'm just trying to get some more granularity you can provide it.
Speaker Change: Yes, I do expect.
Speaker Change: The second half of the year to actually be stronger than you know, how you would interpret the quarter over quarter decline quarter over quarter decline does have.
Speaker Change: Certain elements, including.
Speaker Change: Some of the items in capital markets as well as.
Speaker Change: So the items that we just mentioned, including the credit card sale and also a lesser number of days. That's an important one that's an accurate it's not a small one our total revenue decline solely tied to Dave's, it's over $200 million not too old and noninterest.
Speaker Change: Noninterest income, obviously, but you know a decent portion of that so I would expect our noninterest income.
Speaker Change: To go higher from here into Q3 as well as into Q4.
Speaker Change: Okay. That's helpful. And then just one quick one for Ernie just on the on the mortgage growth a little bit weaker sequentially I think about half a percent higher anything youre seeing in the broker channel. We did have one of your peers that reported earlier suggest that there was a bit of spread pressure on that distribution channel are you seeing the same thing.
Paul: And if so is this part of the reason why you're maybe pulling back a bit on the Russell.
Speaker Change: Yeah. Thanks for the question overall on reservoir.
Speaker Change: It will vary quarter over quarter or about 1% up and in year over year were 6%. So we're seeing some strong growth. It's the market that I think is.
Paul: As your file aware of it has really slowed down.
Paul: Our broker channel still are performing as expected and bringing in that quality customer that is new to the housing market. So we're not seeing anything unusual there is the market overall more competitive it's a competitive marketplace and we're primarily our first job is renewals are second job is acquiring new customers.
Paul: That are in the mortgage market and particularly young profile that are in their first time homebuyers. So I would say overall pleased with the growth in and think and hopefully as things get more constructive we'll see a return back to some normality, but the prices are down and our sales there are down and that's been consecutive for five five months. So.
Paul: We think it'll turn and I'm not in any great announcements for the back half of this year, but some slight performance and were seeing that even as we speak in the past couple of weeks, we're lifting so more to come but pleased with the work with the broker channel overall.
Speaker Change: Okay. So you wouldnt flag any spread compression in that channel though.
Paul: There's always a competitive market across all the channels. So I don't think there's anything even more so than the broker market. Then I would say just in general whether it be direct digital or in a branch channel.
Speaker Change: Got it thanks for the insights.
Speaker Change: Thank you we have no further questions at this time I would now like to turn the meeting back over to David White.
David White: Well. Thank you operator, and thank you all for your questions. This morning, I think you saw today that our results for the quarter continue to position us well for the current dynamic environment and for growth going into 2026 in the meantime, we're continuing to build a strong resilient organization that is well equipped to meet both.
Paul: The challenges and the opportunities of the future and our focus is unchanged. It's an effective risk management on digital transformation and client centric innovation to drive our success and with that we look forward to speaking with you again in August thanks, everyone.
Paul: Thank you.
Paul: Conference has now ended.
Paul: Please go ahead your lines at this time.
Paul: Thank you for your participation.
Paul: This conference is no longer being recorded so it goes.
Speaker Change: So there's always this thing.