Q4 2025 Bank of Montreal Earnings Call

December 4, 2025

Operator: Good morning and welcome to the BMO Financial Group's Q4 2025 earnings release and conference call for 4 December 2025. Your host for today is Christine Viau. Please go ahead.

Speaker #1: Please go

Speaker #1: ahead. Thank you, and good morning.

Christine Viau: Thank you and good morning. We will begin the call today with remarks from Darryl White, BMO CEO, followed by Tayfun Tuzun, our Chief Financial Officer, and Piyush Agrawal, our Chief Risk Officer. Also present to answer questions are our group heads, Mathew Mehrotra from Canadian Personal and Business Banking, Sharon Haward-Laird, Canadian Commercial Banking, Aaron Levine, US Banking, Alan Tannenbaum, BMO Capital Markets, Deland Kamanga, BMO Wealth Management, and Darrel Hackett, BMO US CEO. As our call will end by 9:30 and to give everyone a chance to participate, please limit your questions to one and reques. 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.

Speaker #2: We will begin the call today with remarks from Darryl White, BMO CEO, followed by Tayfun Tuzun, our Chief Financial Officer, and Piyush Agrawal, our Chief Risk Officer.

Speaker #2: Also present to answer questions are our group heads: Matt Mirotra from Canadian Personal and Business Banking, Sharon Hayward Laird from Canadian Commercial Banking, and Aaron Levine from U.S.

Speaker #2: Banking, Alan Tunnenbaum, BMO Capital Markets, Dellen Komenga, BMO Wealth Management, and Darryl Hackett, BMO U.S. CEO. As our call will end by 9:30 and to give everyone a chance to participate, please limit your questions to one and recue.

Speaker #2: As noted on slide 2, 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.

Speaker #2: 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.

Christine Viau: Management measures performance on a reported and adjusted basis and considers both to be useful in assessing underlying business performance. Darryl and Tayfun will be referring to adjusted results in their remarks unless otherwise noted as reported. I will now turn the call over to Darryl.

Management measures performance on a reported and adjusted basis and considers both to be useful in assessing underlying business performance. Darryl and Tayfun will be referring to adjusted results in their remarks unless otherwise noted as reported. I will now turn the call over to Darryl.

Speaker #2: Darryl and Tayfun will be referring to adjusted results in their remarks unless otherwise noted. As reported. I will

Speaker #2: Now, I will turn the call over to Darryl. Thank you.

Darryl White: Thank you, Christine, and good morning, everyone. This morning, we reported adjusted EPS of CAD 3.28 for the fourth quarter and CAD 12.16 for the year. Fiscal 2025 was a strong year for BMO. We made meaningful progress against our financial and strategic commitments, strengthening profitability, delivering for our clients, and supporting the communities we serve. At this time last year, we laid out specific financial commitments and a clear path, and through 2025, we delivered against each of those commitments with disciplined execution. Here are some highlights. Our top imperative is rebuilding our ROE together with profitable earnings growth. These priorities are not mutually exclusive but mutually reinforcing, as we demonstrated in 2025. We increased full-year ROE by 150 basis points from 9.8% to 11.3%, and we exited Q4 with momentum at 11.8%. At the same time, we delivered EPS growth of 26% and record net income of CAD 9.2 billion.

Speaker #3: Christine, and good morning, everyone. This morning, we reported adjusted EPS of $3.28 for the fourth quarter and $12.16 for the year. Fiscal 2025 was a strong year for BMO.

Speaker #3: We made meaningful progress against our financial and strategic commitments, strengthening profitability, delivering for our clients, and supporting the communities we serve. At this time last year, we laid out specific financial commitments and a clear path, and through 2025, we delivered against each of those commitments with disciplined execution.

Speaker #3: Here are some highlights. Our top imperative is rebuilding our ROE together with profitable earnings growth. These priorities are not mutually exclusive, but mutually reinforcing as we demonstrated in 2025.

Speaker #3: We increased full-year ROE by 150 basis points from 9.8% to 11.3%, and we exited Q4 with momentum at 11.8%. At the same time, we delivered EPS growth of 26% and recorded net income of $9.2 billion.

Speaker #3: We made progress across each of our four strategic levers, the most important driver was strong operating performance in each of our businesses, with PPPT up 18% for the year, to 15.8 billion.

Darryl White: We made progress across each of our four strategic levers. The most important driver was strong operating performance in each of our businesses, with PPPT up 18% for the year to CAD 15.8 billion. We met our long-standing commitment to positive operating leverage, achieving 4% for the year. Operating leverage was positive in each segment, driven by disciplined expense management and solid revenue performance. Our efficiency ratio improved by 230 basis points to 56.3%. Strength in risk management remains a core differentiator for BMO. As expected, impaired provisions moderated from the peak in Q4 2024 to 44 basis points this quarter. We built allowances during the first half of the year to account for a slower economy and trade uncertainty, and we are well-reserved for potential risks in the environment. Finally, we're actively optimizing our capital position.

We made progress across each of our four strategic levers. The most important driver was strong operating performance in each of our businesses, with PPPT up 18% for the year to CAD 15.8 billion. We met our long-standing commitment to positive operating leverage, achieving 4% for the year. Operating leverage was positive in each segment, driven by disciplined expense management and solid revenue performance. Our efficiency ratio improved by 230 basis points to 56.3%. Strength in risk management remains a core differentiator for BMO. As expected, impaired provisions moderated from the peak in Q4 2024 to 44 basis points this quarter. We built allowances during the first half of the year to account for a slower economy and trade uncertainty, and we are well-reserved for potential risks in the environment. Finally, we're actively optimizing our capital position.

Speaker #3: We met our longstanding commitment to positive operating leverage, achieving 4% for the year. Operating leverage was positive in each segment, driven by disciplined expense management and solid revenue performance.

Speaker #3: Our efficiency ratio improved by 230 basis points, to 56.3%. Strength in risk management remains a core differentiator for BMO. As expected, impaired provisions moderated from the peak in Q4 '24 to 44 basis points this quarter.

Speaker #3: We built allowances during the first half of the year to account for a slower economy and trade uncertainty, and we are well-reserved for potential risks in the environment.

Speaker #3: Finally, we're actively optimizing our capital position. Over the course of 2025, we returned over $8 billion in capital to our shareholders through buybacks and dividends. Today, we announced a dividend increase of $0.04 to $1.67 per share, up 5% over last year.

Darryl White: Over the course of 2025, we returned over $8 billion in capital to our shareholders through buybacks and dividends, and today we announced a dividend increase of $0.04 to $1.67 per share, up 5% over last year. Our CET1 ratio of 13.3% remains above our target, and we're maintaining steady execution of our share buyback program. Our strategy is clear and consistent, and Team BMO is executing with pace and momentum. Our digital-first AI-powered strategy is reshaping how we operate to serve our clients while putting AI in the hands of everyone. To support this, we recently introduced a leading GenAI productivity tool to all BMO employees, and award-winning learning modules to help them unlock the power of artificial intelligence with over 80% active users.

Over the course of 2025, we returned over $8 billion in capital to our shareholders through buybacks and dividends, and today we announced a dividend increase of $0.04 to $1.67 per share, up 5% over last year. Our CET1 ratio of 13.3% remains above our target, and we're maintaining steady execution of our share buyback program. Our strategy is clear and consistent, and Team BMO is executing with pace and momentum. Our digital-first AI-powered strategy is reshaping how we operate to serve our clients while putting AI in the hands of everyone. To support this, we recently introduced a leading GenAI productivity tool to all BMO employees, and award-winning learning modules to help them unlock the power of artificial intelligence with over 80% active users.

Speaker #3: Our CET1 ratio of 13.3% remains above our target, and we're maintaining steady execution of our share buyback program. Our strategy is clear and consistent, and Team BMO is executing with pace and momentum.

Speaker #3: Our digital-first AI-powered strategy is reshaping how we operate to serve our clients while putting AI in the hands of everyone. To support this, we recently introduced a leading Gen AI productivity tool to all BMO employees, an award-winning learning module to help them unlock the power of artificial intelligence with over 80% active users.

Speaker #3: We're creating value through strategic partnerships and investments we've made in data, risk governance, and talent that are accelerating our AI capabilities to realize even greater efficiencies and business growth.

Darryl White: We're creating value through strategic partnerships and investments we've made in data, risk governance, and talent that are accelerating our AI capabilities to realize even greater efficiencies and business growth. We've executed and captured benefits from GenAI tools like Lumi and Rover, digital assistants that support our frontline employees, enabling faster customer advice and insights. We're the first Canadian bank to access the IBM Quantum Network and are actively using machine and reinforcement learning models in credit and capital markets and across the bank. Turning to highlights in each of our businesses, starting with Wealth Management, our highest ROE business, which had a very strong year with record revenues and net income driven by continued growth in client assets and constructive markets. Clients are rewarding us with more business as we continue to deliver competitive investment returns and innovative solutions to meet their needs.

We're creating value through strategic partnerships and investments we've made in data, risk governance, and talent that are accelerating our AI capabilities to realize even greater efficiencies and business growth. We've executed and captured benefits from GenAI tools like Lumi and Rover, digital assistants that support our frontline employees, enabling faster customer advice and insights. We're the first Canadian bank to access the IBM Quantum Network and are actively using machine and reinforcement learning models in credit and capital markets and across the bank. Turning to highlights in each of our businesses, starting with Wealth Management, our highest ROE business, which had a very strong year with record revenues and net income driven by continued growth in client assets and constructive markets. Clients are rewarding us with more business as we continue to deliver competitive investment returns and innovative solutions to meet their needs.

Speaker #3: We've executed and captured benefits from Gen AI tools like Lumi and Rover, digital assistants that support our frontline employees, enabling faster customer advice and insights.

Speaker #3: For the first Canadian bank to access the IBM Quantum Network, we are actively using machine and reinforcement learning models in credit and capital markets, and across the bank.

Speaker #3: Turning to highlights in each of our businesses, starting with Wealth Management, our highest ROE business, which had a very strong year with record revenues and net income driven by continued growth in client assets and constructive markets.

Speaker #3: Clients are rewarding us with more business as we continue to deliver competitive investment returns and innovative solutions to meet their needs. This quarter, BMO Global Asset Management received 12 Lipper Fund awards, recognizing continued excellence in delivering strong risk-adjusted returns for clients across a diverse range of investment solutions.

Darryl White: This quarter, BMO Global Asset Management received 12 LIPR Fund awards, recognizing continued excellence in delivering strong, risk-adjusted returns for clients across a diverse range of investment solutions. With Burgundy Asset Management joining BMO on 1 November, we're positioned to further expand private wealth solutions for the benefit of our clients. Capital markets is a key contributor to BMO's diversified earnings. PPPT growth for the full year was strong, with each quarter above our expectations. We've strengthened our platform and enhanced client coverage to achieve and advance our position as a leader across priority markets and products, including in our globally leading metals and mining business, while expanding our equity derivatives and US rate businesses. In Canadian investment banking, this year we ranked number one in M&A deals and number two in ECM league tables.

This quarter, BMO Global Asset Management received 12 LIPR Fund awards, recognizing continued excellence in delivering strong, risk-adjusted returns for clients across a diverse range of investment solutions. With Burgundy Asset Management joining BMO on 1 November, we're positioned to further expand private wealth solutions for the benefit of our clients. Capital markets is a key contributor to BMO's diversified earnings. PPPT growth for the full year was strong, with each quarter above our expectations. We've strengthened our platform and enhanced client coverage to achieve and advance our position as a leader across priority markets and products, including in our globally leading metals and mining business, while expanding our equity derivatives and US rate businesses. In Canadian investment banking, this year we ranked number one in M&A deals and number two in ECM league tables.

Speaker #3: And with Burgundy Asset Management joining BMO on November 1st, we're positioned to further expand private wealth solutions for the benefit of our clients. Capital markets is a key contributor to BMO's diversified earnings.

Speaker #3: PPPT growth for the full year was strong, with each quarter above our expectations. We've strengthened our platform and enhanced client coverage to achieve an advanced position as a leader across priority markets and products, including in our globally leading metals and mining business, while expanding our equity derivatives and U.S.

Speaker #3: In Canadian investment banking, this year we ranked number one in M&A deals and number two in ECM league tables. Our flagship Canadian P&C business delivered record revenue this year and strong PPPT growth of 8%, as we're acquiring high-quality accounts and deepening client relationships through market-leading digital sales, engagement, and experience.

Darryl White: Our flagship Canadian P&C business delivered record revenue this year and strong PPPT growth of 8% as we're acquiring high-quality accounts and deepening client relationships through market-leading digital sales, engagement, and experience. We continue to offer innovative solutions to clients to help clients make real financial progress, and this quarter, we launched joint programs with Instacart and Walmart to deliver convenience and savings to Canadians. In Canadian commercial banking, steady client growth supported by increased referrals between commercial, wealth, and capital markets and continued momentum in digital engagement led to good loan growth of 7% and deposit growth of 5% despite a complex environment. A key driver of client and deposit growth is through our leading North American Treasury and Payments Solutions platform, which offers clients a comprehensive product suite including real-time payments, virtual account management, and payment APIs that connect directly to their enterprise resource planning and treasury systems.

Our flagship Canadian P&C business delivered record revenue this year and strong PPPT growth of 8% as we're acquiring high-quality accounts and deepening client relationships through market-leading digital sales, engagement, and experience. We continue to offer innovative solutions to clients to help clients make real financial progress, and this quarter, we launched joint programs with Instacart and Walmart to deliver convenience and savings to Canadians. In Canadian commercial banking, steady client growth supported by increased referrals between commercial, wealth, and capital markets and continued momentum in digital engagement led to good loan growth of 7% and deposit growth of 5% despite a complex environment. A key driver of client and deposit growth is through our leading North American Treasury and Payments Solutions platform, which offers clients a comprehensive product suite including real-time payments, virtual account management, and payment APIs that connect directly to their enterprise resource planning and treasury systems.

Speaker #3: We continue to offer innovative solutions to clients to help them make real financial progress. This quarter, we launched joint programs with Instacart and Walmart to deliver convenience and savings to Canadians.

Speaker #3: In Canadian commercial banking, steady client growth supported by increased referrals between commercial, wealth, and capital markets, and continued momentum in digital engagement led to good loan growth of 7% and deposit growth of 5% despite a complex environment.

Speaker #3: A key driver of client and deposit growth is through our leading North American Treasury and Payment Solutions platform, which offers clients a comprehensive product suite, including real-time payments, virtual account management, and payment APIs that connect directly to their enterprise resource planning and treasury systems.

Speaker #3: Turning to U.S. banking, this is the first quarter reporting under the unified structure, with teams integrated to deliver the full power of BMO to our clients. Momentum is building.

Darryl White: Turning to US Banking, this is the Q1 reporting under the unified structure with teams integrated to deliver the full power of BMO to our clients, and momentum is building. We've made strong progress this year on improving the ROE in our US Banking towards our 12% medium-term target, executing against deliberate action plans to support this priority. Through a disciplined focus on stronger connectivity across our businesses, funding optimization, and redeployment of resources to higher returning relationships, profitability has strengthened across key metrics. Execution of pricing optimization led to increased deposit spreads and margin expansion of 15 basis points from Q4 of last year. To date, we've completed optimization actions for approximately 80% of the loans we identified as non-strategic and below our return targets, and reduced RWA by $4.6 billion US. We continue to expect these activities to be largely completed by Q2.

Turning to US Banking, this is the Q1 reporting under the unified structure with teams integrated to deliver the full power of BMO to our clients, and momentum is building. We've made strong progress this year on improving the ROE in our US Banking towards our 12% medium-term target, executing against deliberate action plans to support this priority. Through a disciplined focus on stronger connectivity across our businesses, funding optimization, and redeployment of resources to higher returning relationships, profitability has strengthened across key metrics. Execution of pricing optimization led to increased deposit spreads and margin expansion of 15 basis points from Q4 of last year. To date, we've completed optimization actions for approximately 80% of the loans we identified as non-strategic and below our return targets, and reduced RWA by $4.6 billion US. We continue to expect these activities to be largely completed by Q2.

Speaker #3: We've made strong progress this year on improving the ROE in our U.S. banking towards our 12% medium-term target, executing against deliberate action plans to support this priority.

Speaker #3: Through a disciplined focus on stronger connectivity across our businesses, funding optimization, and redeployment of resources to higher returning relationships, profitability has strengthened across key metrics.

Speaker #3: Execution of pricing optimization led to increased deposit spreads and margin expansion of 15 basis points from Q4 of last year. To date, we've completed optimization actions for approximately 80% of the loans we identified as non-strategic and below our return targets, and reduced RWA by $4.6 billion U.S.

Speaker #3: We continue to expect these activities to be largely completed by the second quarter. At the same time, we've successfully grown recurring fee revenues up 10% this year, commercial TPS fees grew 23% year over year, and strong growth in net new assets in AUM drove a 12% increase in private wealth fees.

Darryl White: At the same time, we've successfully grown recurring fee revenues up 10% this year. Commercial TPS fees grew 23% year over year, and strong growth in net new assets in AUM drove a 12% increase in private wealth fees. Momentum continues to build in retail banking with 60% higher growth in net new checking accounts year over year. The results are evident in our fiscal 2025 performance. PPPT growth accelerated to 7% with positive operating leverage of 3% and meaningful improvement in PCL, all leading to ROE improvement of 170 basis points to 8.1% for the full year. We recently announced the sale of 138 branches in certain markets where we did not have local scale to compete, and are strategically reinvesting to strengthen our network and densify our presence in key markets where we can achieve local scale and have the greatest opportunity for long-term growth.

At the same time, we've successfully grown recurring fee revenues up 10% this year. Commercial TPS fees grew 23% year over year, and strong growth in net new assets in AUM drove a 12% increase in private wealth fees. Momentum continues to build in retail banking with 60% higher growth in net new checking accounts year over year. The results are evident in our fiscal 2025 performance. PPPT growth accelerated to 7% with positive operating leverage of 3% and meaningful improvement in PCL, all leading to ROE improvement of 170 basis points to 8.1% for the full year. We recently announced the sale of 138 branches in certain markets where we did not have local scale to compete, and are strategically reinvesting to strengthen our network and densify our presence in key markets where we can achieve local scale and have the greatest opportunity for long-term growth.

Speaker #3: Momentum continues to build in retail banking, with 60% higher growth in net new checking accounts year over year. The results are evident in our fiscal 2025 performance.

Speaker #3: PPPT growth accelerated to 7%, with positive operating leverage of 3% and meaningful improvement in PCL, all leading to ROE improvement of 170 basis points to 8.1% for the full year.

Speaker #3: We recently announced the sale of 138 branches in certain markets where we did not have local scale to compete. We are strategically reinvesting to strengthen our network and densify our presence in key markets where we can achieve local scale and have the greatest opportunity for long-term growth.

Speaker #3: We plan to add 150 new branches over the next five years, with a focus on further densifying in California, where we recently opened a newly integrated financial center in Manhattan Beach.

Darryl White: We plan to add 150 new branches over the next five years with a focus on further densifying in California, where we recently opened a newly integrated financial center in Manhattan Beach. We've also invested in key talent positions, adding and promoting over 100 frontline commercial and private bankers in the US, building significant capacity to further accelerate performance. Overall, 2025 was a productive year, realigning our US banking structure and optimizing the portfolio. We're now advancing to the next phase of our strategy, positioning the business for growth, leveraging the strength and scale of all three businesses to drive greater synergies and continued ROE improvement. As we look ahead to 2026, while the economic environment has remained resilient, GDP growth has been modest and is expected to grow 1.8% in the US and 1.4% in Canada.

We plan to add 150 new branches over the next five years with a focus on further densifying in California, where we recently opened a newly integrated financial center in Manhattan Beach. We've also invested in key talent positions, adding and promoting over 100 frontline commercial and private bankers in the US, building significant capacity to further accelerate performance. Overall, 2025 was a productive year, realigning our US banking structure and optimizing the portfolio. We're now advancing to the next phase of our strategy, positioning the business for growth, leveraging the strength and scale of all three businesses to drive greater synergies and continued ROE improvement. As we look ahead to 2026, while the economic environment has remained resilient, GDP growth has been modest and is expected to grow 1.8% in the US and 1.4% in Canada.

Speaker #3: We've also invested in key talent positions, adding and promoting over 100 frontline commercial and private bankers in the U.S. Building significant capacity to further accelerate performance.

Speaker #3: Overall, 2025 was a productive year realigning our U.S. banking structure and optimizing the portfolio. We're now advancing to the next phase of our strategy, positioning the business for growth, leveraging the strength and scale of all three businesses to drive greater synergies and continued ROE improvement.

Speaker #3: As we look ahead to 2026 with the, while the economic environment has remained resilient, GDP growth has been modest and is expected to grow 1.8% in the U.S.

Speaker #3: and 1.4% in Canada. The Canadian unemployment rate is likely to remain above 7% through the middle of next year, presenting some challenges, particularly to consumer credit.

Darryl White: The Canadian unemployment rate is likely to remain above 7% through the middle of next year, presenting some challenges, particularly to consumer credit. While trade uncertainty persists, pending the review of the USMCA Agreement, at the same time, I'm encouraged that initiatives to invest in Canada and diversify trade relationships to strengthen the Canadian economy over the medium term are beginning to move forward. We're well-positioned to benefit from a renewed CapEx cycle, given our advantage position in commercial banking and in capital markets. At BMO, we've set the foundation for continued momentum in 2026 and are moving forward with pace. I'm pleased to announce that we plan to host an All Bank Investor Day on 26 March, where we will share with you more details on our strategy and our progress.

The Canadian unemployment rate is likely to remain above 7% through the middle of next year, presenting some challenges, particularly to consumer credit. While trade uncertainty persists, pending the review of the USMCA Agreement, at the same time, I'm encouraged that initiatives to invest in Canada and diversify trade relationships to strengthen the Canadian economy over the medium term are beginning to move forward. We're well-positioned to benefit from a renewed CapEx cycle, given our advantage position in commercial banking and in capital markets. At BMO, we've set the foundation for continued momentum in 2026 and are moving forward with pace. I'm pleased to announce that we plan to host an All Bank Investor Day on 26 March, where we will share with you more details on our strategy and our progress.

Speaker #3: While trade uncertainty persists, pending the review of the USMCA agreement, at the same time, I'm encouraged that initiatives to invest in Canada and diversify trade relationships to strengthen the Canadian economy over the medium term are beginning to move forward.

Speaker #3: We're well positioned to benefit from a renewed CAPEX cycle, given our advantaged position in commercial banking and in capital markets. At BMO, we've set the foundation for continued momentum in 2026, and are moving forward with pace.

Speaker #3: I'm pleased to announce that we plan to host an all-bank investor day on March 26th, where we will share with you more details on our strategy and our progress.

Speaker #3: In world-class client experiences grounded in one client summary, we're delivering leadership and fostering a high-performing, winning culture to drive progress for our clients and our performance.

Darryl White: In summary, we're delivering world-class client experiences grounded in one-client leadership and fostering a high-performing, winning culture to drive progress for our clients and our performance. We continue to invest and leverage our digital-first AI-powered strategy, reshaping how we operate and serve our clients. Our consistent focus on superior risk management is foundational, and through continued discipline and improving market conditions, we expect PCL to continue to normalize over time. Our number one imperative continues to be our ROE rebuild, and I'm confident in the momentum we've built this year and that it will continue to deliver profitable growth and long-term shareholder value. With that, I'll turn it over to Tayfun. Thank you, Darryl. Good morning, and thank you for joining us. My comments will start on slide 9. On a reported basis, fourth quarter EPS was CAD 2.97 and net income was CAD 2.3 billion.

In summary, we're delivering world-class client experiences grounded in one-client leadership and fostering a high-performing, winning culture to drive progress for our clients and our performance. We continue to invest and leverage our digital-first AI-powered strategy, reshaping how we operate and serve our clients. Our consistent focus on superior risk management is foundational, and through continued discipline and improving market conditions, we expect PCL to continue to normalize over time. Our number one imperative continues to be our ROE rebuild, and I'm confident in the momentum we've built this year and that it will continue to deliver profitable growth and long-term shareholder value. With that, I'll turn it over to Tayfun.

Speaker #3: We continue to invest and leverage our digital-first, AI-powered strategy, reshaping how we operate and serve our clients. Our consistent focus on superior risk management is foundational, and through continued discipline, as market conditions continue to normalize, we expect PCL to stabilize over time.

Speaker #3: Our number one imperative: continues to be our ROE rebuild, and I'm confident in the momentum we've built this year and that it will continue to deliver profitable growth and long-term shareholder value.

Speaker #3: With that, I'll turn it over to

Speaker #3: Tayfun. Thank you, Darryl.

Tayfun Tuzun: Thank you, Darryl. Good morning, and thank you for joining us. My comments will start on slide 9. On a reported basis, fourth quarter EPS was CAD 2.97 and net income was CAD 2.3 billion.

Speaker #2: Good morning, and thank you for joining us. My comments will start on slide nine. On a reported basis, fourth quarter EPS was $2.97, and net income was $2.3 billion.

Speaker #2: Adjusting items are shown on slide 46 and include a goodwill write-down related to the announced sale of certain U.S. branches. The remainder of my comments will focus on adjusted results.

Darryl White: Adjusting items are shown on slide 46 and included a goodwill write-down related to the announced sale of certain US branches. The remainder of my comments will focus on adjusted results. Adjusted EPS of $3.28 was up significantly from $1.90 last year, with net income of $2.5 billion driven by strong PPPT growth of 16% and lower PCLs. Return on equity of 11.8% improved 440 basis points, and return on tangible common equity of 15.4% improved 570 basis points. Revenue increased 12%, with broad-based growth across all businesses, including continued strong fee growth in wealth and capital markets and NIM expansion. Expenses grew 9% or 5%, excluding higher performance-based compensation, and the impact of stronger US dollar, and we delivered positive operating leverage of 3%. Total PCL decreased $768 million from the prior year, with lower impaired and performing provisions. Piyush will speak to this in his remarks.

Adjusting items are shown on slide 46 and included a goodwill write-down related to the announced sale of certain US branches. The remainder of my comments will focus on adjusted results. Adjusted EPS of $3.28 was up significantly from $1.90 last year, with net income of $2.5 billion driven by strong PPPT growth of 16% and lower PCLs. Return on equity of 11.8% improved 440 basis points, and return on tangible common equity of 15.4% improved 570 basis points. Revenue increased 12%, with broad-based growth across all businesses, including continued strong fee growth in wealth and capital markets and NIM expansion. Expenses grew 9% or 5%, excluding higher performance-based compensation, and the impact of stronger US dollar, and we delivered positive operating leverage of 3%. Total PCL decreased $768 million from the prior year, with lower impaired and performing provisions. Piyush will speak to this in his remarks.

Speaker #2: Adjusted EPS of $3.28 was up significantly from $1.90 last year with net income of $2.5 billion driven by strong PPPT growth of 16% and lower PCLs.

Speaker #2: Return on equity of 11.8% improved by 440 basis points, and return on tangible common equity of 15.4% improved by 570 basis points. Revenue increased 12%, with broad-based growth across all businesses, including continued strong fee growth in wealth and capital markets, as well as NIM expansion.

Speaker #2: Expanses grew 9% or 5% excluding higher performance-based compensation and the impact of stronger U.S. dollar, and we delivered positive operating leverage of 3%. Total PCL decreased 768 million dollars from the prior year with lower impaired and performing provisions.

Speaker #2: Piyush Agrawal will speak to this in his remarks. Moving to slide 10, average loans grew 1% year over year, driven by higher residential mortgages and commercial loans in Canada, offset by lower U.S. loans.

Darryl White: Moving to slide 10, average loans grew 1% year over year, driven by higher residential mortgages and commercial loans in Canada, offset by lower US commercial balances, including the impact of optimization actions. Customer deposits were up 1% from last year, with good growth in Canadian everyday banking and commercial operating balances, offset by lower term deposits in both countries. Turning to slide 11, on an ex-trading basis, net interest income was up 10% from the prior year, with good growth in all operating segments, supported by continued margin expansion and balance growth in Canadian P&C and wealth, as well as higher net interest income in corporate services. Net interest margin ex-trading was 206 basis points, up 7 basis points sequentially, reflecting improved deposit margins and contribution from corporate services, including the benefit of higher reinvestment rates.

Moving to slide 10, average loans grew 1% year over year, driven by higher residential mortgages and commercial loans in Canada, offset by lower US commercial balances, including the impact of optimization actions. Customer deposits were up 1% from last year, with good growth in Canadian everyday banking and commercial operating balances, offset by lower term deposits in both countries. Turning to slide 11, on an ex-trading basis, net interest income was up 10% from the prior year, with good growth in all operating segments, supported by continued margin expansion and balance growth in Canadian P&C and wealth, as well as higher net interest income in corporate services. Net interest margin ex-trading was 206 basis points, up 7 basis points sequentially, reflecting improved deposit margins and contribution from corporate services, including the benefit of higher reinvestment rates.

Speaker #2: commercial balances including the impact of optimization actions. Customer deposits were up 1% from last year with good growth in Canadian everyday banking and commercial operating balances offset by lower term deposits in both countries.

Speaker #2: Turning to slide 11, on an ex-trading basis, net interest income was up 10% from the prior year, with good growth in all operating segments supported by continued margin expansion and balance growth in Canadian PNC and Wealth, as well as higher net interest income in Corporate Services.

Speaker #2: Net interest margin for the third quarter was 206 basis points, up 7 basis points sequentially, reflecting improved deposit margins and contribution from corporate services, including the benefit of higher reinvestment rates.

Speaker #2: In Canadian PNC, NIM was stable with higher deposit margins offset by changes in product mix. U.S. banking NIM was up 5 basis points with higher deposit margins partially offset by the impact of lower deposit balances.

Darryl White: In Canadian P&C, NIM was stable with higher deposit margins, offset by changes in product mix. US Banking NIM was up 5 basis points, with higher deposit margins partially offset by the impact of lower deposit balances. Year over year, All Bank NIM widened by 15 basis points, and we expect it to remain relatively stable through next year based on the current rate expectations and continued benefit from latter investments. Turning to slide 12, non-interest revenue was up 9% from the prior year and up 17%, excluding trading, driven by strong wealth management fees and underwriting fees in capital markets, as well as continued growth in deposit fees, reflecting strength in our TPS business. Moving to slide 13, underlying expense growth was up 5%, driven by higher employee-related costs, including investments in talent, as well as higher technology investments.

In Canadian P&C, NIM was stable with higher deposit margins, offset by changes in product mix. US Banking NIM was up 5 basis points, with higher deposit margins partially offset by the impact of lower deposit balances. Year over year, All Bank NIM widened by 15 basis points, and we expect it to remain relatively stable through next year based on the current rate expectations and continued benefit from latter investments. Turning to slide 12, non-interest revenue was up 9% from the prior year and up 17%, excluding trading, driven by strong wealth management fees and underwriting fees in capital markets, as well as continued growth in deposit fees, reflecting strength in our TPS business. Moving to slide 13, underlying expense growth was up 5%, driven by higher employee-related costs, including investments in talent, as well as higher technology investments.

Speaker #2: Year over year, all bank NIM widened by 15 basis points, and we expect it to remain relatively stable through next year based on the current rate expectations and continued benefits from latter investments.

Speaker #2: Turning to slide 12, non-interest revenue was up 9% from the prior year and up 17% excluding trading, driven by strong wealth management fees and underwriting fees in capital markets, as well as continued growth in deposit fees reflecting strength in our TPS business.

Speaker #2: Moving to slide 13, underlying expense growth was up 5%, driven by higher employee-related costs, including investments in talent, as well as higher technology investments.

Speaker #2: For the full year, underlying expense growth of 4% was in line with our mid-single-digit growth guidance given at the beginning of the year and achieved positive operating leverage of 4.3%.

Darryl White: For the full year, underlying expense growth of 4% was in line with our mid-single-digit growth guidance given at the beginning of the year and achieved positive operating leverage of 4.3%. We have a long track record of disciplined expense management through continuous assessment of our expense base balanced against strategic investments for future growth. We believe that we still have room to improve our structural expense base and have identified further efficiencies, mainly in the form of workforce optimization that will require an upfront charge. We are in the process of finalizing the details and currently expect to record a charge of approximately CAD 225 million in the first quarter, which we expect will deliver annualized savings of CAD 250 million when fully executed. We expect to realize about half of the savings in 2026.

For the full year, underlying expense growth of 4% was in line with our mid-single-digit growth guidance given at the beginning of the year and achieved positive operating leverage of 4.3%. We have a long track record of disciplined expense management through continuous assessment of our expense base balanced against strategic investments for future growth. We believe that we still have room to improve our structural expense base and have identified further efficiencies, mainly in the form of workforce optimization that will require an upfront charge. We are in the process of finalizing the details and currently expect to record a charge of approximately CAD 225 million in the first quarter, which we expect will deliver annualized savings of CAD 250 million when fully executed. We expect to realize about half of the savings in 2026.

Speaker #2: We have a long track record of disciplined expense management through continuous assessment of our expense base balanced against strategic investments for future growth. We believe that we still have room to improve our structural expense base and have identified further efficiencies, mainly in the form of workforce optimization, that will require an upfront charge.

Speaker #2: We are in the process of finalizing the details and currently expect to record a charge of approximately $225 million per quarter, which we expect will deliver $250 million in annualized savings when fully executed.

Speaker #2: We expect to realize about half of the savings in 2026. We expect core expense growth to be in the mid-single-digit range in 2026, including the upfront charge and our growing investments in talent, technology, and automation, with a particular focus on our U.S.

Darryl White: We expect core expense growth to be in the mid-single-digit range in 2026, including the upfront charge, and our growing investments in talent, technology, and automation, with a particular focus on our US banking and wealth businesses. We expect to still achieve positive operating leverage for the year, including the impact of the first quarter charge. A reminder that, similar to previous years, Q1 will include seasonally higher benefits, and impact of stock-based compensation for employees eligible to retire, which we project to be in the range of CAD 250 to 270 million. Turning to slide 14, our CET1 ratio is strong at 13.3% and remains above management target. The ratio declined 20 basis points from last quarter, with continued good internal capital generation more than offset by share repurchases and moderate growth in source currency RWA.

We expect core expense growth to be in the mid-single-digit range in 2026, including the upfront charge, and our growing investments in talent, technology, and automation, with a particular focus on our US banking and wealth businesses. We expect to still achieve positive operating leverage for the year, including the impact of the first quarter charge. A reminder that, similar to previous years, Q1 will include seasonally higher benefits, and impact of stock-based compensation for employees eligible to retire, which we project to be in the range of CAD 250 to 270 million. Turning to slide 14, our CET1 ratio is strong at 13.3% and remains above management target. The ratio declined 20 basis points from last quarter, with continued good internal capital generation more than offset by share repurchases and moderate growth in source currency RWA.

Speaker #2: Banking and wealth businesses. We expect to still achieve positive operating leverage for the year, including the impact of the first quarter charge. A reminder that, similar to previous years, Q1 will include seasonally higher benefits and the impact of stock-based compensation for employees eligible to retire, which we project to be in the range of $250 million to $270 million.

Speaker #2: Turning to slide 14, our CET1 ratio is strong at 13.3% and remains above management target. The ratio declined 20 basis points from last quarter with continued good internal capital generation more than offset by share repurchases and moderate growth in source currency RWA.

Speaker #2: We completed $8 million in share repurchases during the quarter and $22.2 million in total during fiscal 2025. In 2026, we expect to continue buying back our shares while supporting business growth opportunities and maintaining a strong capital position.

Darryl White: We completed 8 million share repurchases during the quarter and 22.2 million shares in total during fiscal 2025. In 2026, we expect to continue buying back our shares while supporting business growth opportunities and maintaining a strong capital position. Our CET1 management target remains 12.5%. Moving to the operating segments and starting on slide 15, Canadian P&C net income was up 5% year over year as good PPPT growth of 7% was partly offset by an increase in impaired and performing PCLs. Revenue of CAD 3.1 billion was up 7%, driven by higher net interest income, reflecting both balance growth and higher margins. Higher non-interest revenue reflected good growth in mutual fund fees, deposit fees, and net investment gains in our commercial business. Expense growth of 6% reflected higher technology and employee-related costs. Canadian P&C again delivered positive operating leverage for the full year, with the efficiency ratio improving to 43.1%.

We completed 8 million share repurchases during the quarter and 22.2 million shares in total during fiscal 2025. In 2026, we expect to continue buying back our shares while supporting business growth opportunities and maintaining a strong capital position. Our CET1 management target remains 12.5%. Moving to the operating segments and starting on slide 15, Canadian P&C net income was up 5% year over year as good PPPT growth of 7% was partly offset by an increase in impaired and performing PCLs. Revenue of CAD 3.1 billion was up 7%, driven by higher net interest income, reflecting both balance growth and higher margins. Higher non-interest revenue reflected good growth in mutual fund fees, deposit fees, and net investment gains in our commercial business. Expense growth of 6% reflected higher technology and employee-related costs. Canadian P&C again delivered positive operating leverage for the full year, with the efficiency ratio improving to 43.1%.

Speaker #2: Our CET1 management target remains 12.5%. Moving to the operating segments, and starting on slide 15, Canadian PNC net income was up 5% year over year as good PPPT growth of 7% was partly offset by an increase in impaired and performing PCLs.

Speaker #2: Revenue of $3.1 billion was up 7%, driven by higher net interest income reflecting both balance growth and higher margins. Higher non-interest revenue reflected good growth in mutual fund fees, deposit fees, and net investment gains in our commercial business.

Speaker #2: Expense growth of 6% reflected higher technology and employee-related costs. Canadian PNC again delivered positive operating leverage for the full year, with the efficiency ratio improving to 43.1%.

Speaker #2: Moving to U.S. banking on slide 16, my comments here will speak to the U.S. dollar performance and reflect the change to our organizational structure, combining the U.S.

Darryl White: Moving to US banking on slide 16, my comments here will speak to the US dollar performance and reflect a change to our organizational structure, combining the US wealth business with our US personal and commercial businesses. Net income was $627 million, up from $262 million a year ago, reflecting good PPPT growth of 8%, positive operating leverage of 3.6%, and lower PCLs. Revenue growth was driven by higher deposit margins, more than offsetting lower deposit and loan balances, and improving non-interest revenue driven by strong TPS fees and net asset growth in wealth. Expenses were flat compared with the prior year as lower technology and other operating expenses were offset by higher employee-related costs.

Moving to US banking on slide 16, my comments here will speak to the US dollar performance and reflect a change to our organizational structure, combining the US wealth business with our US personal and commercial businesses. Net income was $627 million, up from $262 million a year ago, reflecting good PPPT growth of 8%, positive operating leverage of 3.6%, and lower PCLs. Revenue growth was driven by higher deposit margins, more than offsetting lower deposit and loan balances, and improving non-interest revenue driven by strong TPS fees and net asset growth in wealth. Expenses were flat compared with the prior year as lower technology and other operating expenses were offset by higher employee-related costs.

Speaker #2: Wealth business with our U.S. personal and commercial businesses. Net income was $627 million, up from $262 million a year ago, reflecting good PPPT growth of 8%, positive operating leverage of 3.6%, and lower PCLs.

Speaker #2: Revenue growth was driven by higher deposit margins more than offsetting lower deposit and loan balances and improving non-interest revenue driven by strong TPS fees and net asset growth in wealth.

Speaker #2: Expenses were flat compared with the prior year as lower technology and other operating expenses were offset by higher employee-related costs. Moving to slide 17, wealth management net income was up 28% from last year driven by strong revenue performance in wealth and asset management up 14% reflecting higher markets and continued growth in net sales strong balance sheet growth and higher brokerage transactions.

Darryl White: Moving to slide 17, Wealth Management net income was up 28% from last year, driven by strong revenue performance in Wealth and Asset Management, up 14%, reflecting higher markets and continued growth in net sales, strong balance sheet growth, and higher brokerage transactions. Insurance revenue increased due to underlying business growth and favorable market movements. Expense growth of 11% was driven by employee-related expenses, including higher revenue-based costs. In Q1, our first quarter results will include a full quarter of results from Burgundy Asset Management. Moving to slide 18, Capital Markets net income was CAD 532 million compared with CAD 270 million last year, reflecting strong PPPT performance of CAD 712 million, up 32%, and lower PCLs. Revenue was up 14%, reflecting 10% growth in Global Markets, driven by higher debt and equity issuances and higher equities trading revenue, partially offset by lower interest rate trading.

Moving to slide 17, Wealth Management net income was up 28% from last year, driven by strong revenue performance in Wealth and Asset Management, up 14%, reflecting higher markets and continued growth in net sales, strong balance sheet growth, and higher brokerage transactions. Insurance revenue increased due to underlying business growth and favorable market movements. Expense growth of 11% was driven by employee-related expenses, including higher revenue-based costs. In Q1, our first quarter results will include a full quarter of results from Burgundy Asset Management. Moving to slide 18, Capital Markets net income was CAD 532 million compared with CAD 270 million last year, reflecting strong PPPT performance of CAD 712 million, up 32%, and lower PCLs. Revenue was up 14%, reflecting 10% growth in Global Markets, driven by higher debt and equity issuances and higher equities trading revenue, partially offset by lower interest rate trading.

Speaker #2: Insurance revenue increased due to underlying business growth and favorable market movements. Expense growth of 11% was driven by employee-related expenses, including higher revenue-based costs. Q1 results will include a full quarter of results from Burgundy Asset Management.

Speaker #2: Moving to slide 18, capital markets net income was $532 million compared with $270 million last year reflecting strong PPPT performance of $712 million up 32% and lower PCLs.

Speaker #2: Revenue was up 14%, reflecting 10% growth in global markets driven by higher debt and equity insurances and higher equities trading revenue, partially offset by lower interest rate trading.

Speaker #2: Investment and corporate banking revenue increased 18%, driven by higher debt and equity underwriting fees, as we saw strong client activity during the quarter. Expenses were up 4%, mainly driven by higher performance-based compensation.

Darryl White: Investment and Corporate Banking revenue increased 18%, driven by higher debt and equity underwriting fees, as we saw strong client activity during the quarter. Expenses were up 4%, mainly driven by higher performance-based compensation. Turning now to slide 19, corporate services net loss was CAD 73 million, reflecting above-trend revenue in the quarter. We expect corporate services net loss in 2026 to average a similar range as the current year, with the first quarter net loss expected to be the high point, including seasonal items. In summary, in 2025, we delivered strong performance with record revenue, PPPT, and net income, and met our commitments on positive operating leverage while investing in the business. We've made strong progress in ROE improvement at both the total bank and US Banking levels, with strategies in place to drive further improvement.

Investment and Corporate Banking revenue increased 18%, driven by higher debt and equity underwriting fees, as we saw strong client activity during the quarter. Expenses were up 4%, mainly driven by higher performance-based compensation. Turning now to slide 19, corporate services net loss was CAD 73 million, reflecting above-trend revenue in the quarter. We expect corporate services net loss in 2026 to average a similar range as the current year, with the first quarter net loss expected to be the high point, including seasonal items. In summary, in 2025, we delivered strong performance with record revenue, PPPT, and net income, and met our commitments on positive operating leverage while investing in the business. We've made strong progress in ROE improvement at both the total bank and US Banking levels, with strategies in place to drive further improvement.

Speaker #2: Turning now to slide 19, corporate services net loss was $73 million, reflecting above-trend revenue in the quarter. We expect corporate services net loss in 2026 to average a similar range as the current year, with the first quarter net loss expected to be the high point, including seasonal items.

Speaker #2: In summary, in 2025, we delivered strong performance with record revenue, PPPT, and net income, and met our commitments on positive operating leverage while investing in the business.

Speaker #2: We've made strong progress in ROE improvement at both the total bank and U.S. banking levels, with strategies in place to drive further improvement. As we look ahead towards 2026, in Canada, we expect low single-digit loan growth as challenges in the macroeconomic environment continue to impact personal and commercial demand.

Darryl White: As we look ahead toward 2026, in Canada, we expect low single-digit loan growth as challenges in the macroeconomic environment continue to impact personal and commercial demand. Despite the muted environment, we are well-positioned to generate continued market share gains in our businesses and anticipate improving conditions during the year from fiscal initiatives, in addition to further policy rate easing and lower borrowing costs. In the US, we expect to benefit from the improved economic backdrop and focus on allocating resources to areas of competitive strength and higher returns. We expect to largely complete our balance sheet optimization in the early part of the year and expect year-over-year loan growth to strengthen and reach mid-single digits by the end of the year. Assuming markets remain constructive, we expect capital markets and wealth management to maintain their strong performance in 2026.

As we look ahead toward 2026, in Canada, we expect low single-digit loan growth as challenges in the macroeconomic environment continue to impact personal and commercial demand. Despite the muted environment, we are well-positioned to generate continued market share gains in our businesses and anticipate improving conditions during the year from fiscal initiatives, in addition to further policy rate easing and lower borrowing costs. In the US, we expect to benefit from the improved economic backdrop and focus on allocating resources to areas of competitive strength and higher returns. We expect to largely complete our balance sheet optimization in the early part of the year and expect year-over-year loan growth to strengthen and reach mid-single digits by the end of the year. Assuming markets remain constructive, we expect capital markets and wealth management to maintain their strong performance in 2026.

Speaker #2: Despite the muted environment, we are well-positioned to generate continued market share gains in our businesses and anticipate improving conditions during the year from fiscal initiatives, in addition to further policy rate easing and lower borrowing costs.

Speaker #2: In the U.S., we expect to benefit from the improved economic backdrop and focus on allocating resources to areas of competitive strength and higher returns.

Speaker #2: We expect to largely complete our balance sheet optimization in the early part of the year and anticipate year-over-year loan growth to strengthen, reaching mid-single digits by the end of the year.

Speaker #2: Assuming markets remain constructive, we expect capital markets and wealth management to maintain their strong performance in 2026. And lastly, we expect our effective tax rate in the range of 25% to 26%.

Darryl White: And lastly, we expect an effective tax rate in the range of 25% to 26%. Overall, we are focused on building on our current earnings momentum and deliver continued progress towards our medium-term ROE targets. Across all of our businesses, resource deployment decisions today are predominantly driven by this ambition, and we're confident that the strength of our franchise on both sides of the border will help accelerate our performance. I will now turn it over to Piyush. Thank you, Tayfun, and good morning, everyone. My remarks start on slide 21. Our credit performance this year was in line with our expectations. Impaired provision for credit losses was 46 basis points for the fiscal year at the lower end of the guidance of high 40s. Through fiscal 2025, performance improved in US banking.

And lastly, we expect an effective tax rate in the range of 25% to 26%. Overall, we are focused on building on our current earnings momentum and deliver continued progress towards our medium-term ROE targets. Across all of our businesses, resource deployment decisions today are predominantly driven by this ambition, and we're confident that the strength of our franchise on both sides of the border will help accelerate our performance. I will now turn it over to Piyush.

Speaker #2: Overall, we are focused on building on our current earnings momentum and delivering continued progress towards our medium-term ROE targets. Across all of our businesses, resource deployment decisions today are predominantly driven by this ambition, and we're confident that the strength of our franchise on both sides of the border will help accelerate our performance.

Speaker #2: I will now turn it over to Piyush. Thank you, Tayfun, and good morning, everyone. My remarks start on slide 21. Our credit performance this year was in line with our expectations.

Piyush Agrawal: Thank you, Tayfun, and good morning, everyone. My remarks start on slide 21. Our credit performance this year was in line with our expectations. Impaired provision for credit losses was 46 basis points for the fiscal year at the lower end of the guidance of high 40s. Through fiscal 2025, performance improved in US banking.

Speaker #2: Impaired provision for credit losses was 46 basis points for the fiscal year, at the lower end of the guidance of high 40s. Through fiscal 2025, performance improved in the U.S.

Speaker #2: banking. At the same time, softness in the Canadian economy, including rising unemployment and trade.

Darryl White: At the same time, softness in the Canadian economy, including rising unemployment and trade uncertainty, resulted in higher losses in our Canadian personal and commercial business. Now, turning to the fourth quarter, total provision for credit losses was $755 million, or 44 basis points, with impaired provision of $750 million, down $23 million, or 1 basis point, from prior quarter, primarily due to lower losses in US banking, with relatively stable losses in Canadian personal and commercial banking, and capital markets, which increased $7 million and $4 million, respectively. Turning to slide 22, the performing provision for the quarter was $5 million, with a build in Canadian personal and commercial, largely offset by a release in US banking, consistent with the risks in the economy and credit trends in our portfolios.

At the same time, softness in the Canadian economy, including rising unemployment and trade uncertainty, resulted in higher losses in our Canadian personal and commercial business. Now, turning to the fourth quarter, total provision for credit losses was $755 million, or 44 basis points, with impaired provision of $750 million, down $23 million, or 1 basis point, from prior quarter, primarily due to lower losses in US banking, with relatively stable losses in Canadian personal and commercial banking, and capital markets, which increased $7 million and $4 million, respectively. Turning to slide 22, the performing provision for the quarter was $5 million, with a build in Canadian personal and commercial, largely offset by a release in US banking, consistent with the risks in the economy and credit trends in our portfolios.

Speaker #1: A quarter total provision for credit losses was $755 million , or 44 basis points , with impaired provision of 750 million , down 23 million or 1 basis point from prior quarter , primarily due to lower losses in US banking with relatively losses in stable Canadian personal and banking and capital commercial markets , which increased $7,000,004 million , respectively .

Speaker #1: Turning to slide 22, the performing provision for the quarter was $5 million, with a build in Canadian personal and commercial, largely released, offset by a decline in U.S. banking.

Speaker #1: Consistent with the risks in the economy and trends in our credit portfolios overall , the provision this quarter reflected an improvement in the macroeconomic scenarios and lower balances in certain portfolios , which were offset by the uncertainty in credit conditions .

Darryl White: Overall, the provision this quarter reflected an improvement in the macroeconomic scenarios and lower balances in certain portfolios, which were offset by the uncertainty in credit conditions. The performing allowance of CAD 4.7 billion provides robust coverage of 70 basis points over performing loans, and we remain well-reserved. Turning to slide 23, impaired formations were stable at CAD 1.8 billion this quarter. The increase in the consumer segment came largely from mortgages, which are well-secured with low LTVs, and we do not expect to see significant losses. Wholesale formations have come down since last year and have been relatively stable over the last three quarters. Gross impaired loans increased to CAD 7.1 billion, or 104 basis points, up 2 basis points from last quarter.

Overall, the provision this quarter reflected an improvement in the macroeconomic scenarios and lower balances in certain portfolios, which were offset by the uncertainty in credit conditions. The performing allowance of CAD 4.7 billion provides robust coverage of 70 basis points over performing loans, and we remain well-reserved. Turning to slide 23, impaired formations were stable at CAD 1.8 billion this quarter. The increase in the consumer segment came largely from mortgages, which are well-secured with low LTVs, and we do not expect to see significant losses. Wholesale formations have come down since last year and have been relatively stable over the last three quarters. Gross impaired loans increased to CAD 7.1 billion, or 104 basis points, up 2 basis points from last quarter.

Speaker #1: The performing allowance of $4.7 billion provides robust coverage of 70 basis points over performing loans , remain and we well preserved . Turning to slide 23 .

Speaker #1: Impaired formations were stable at $1.8 billion this quarter . The increase in the consumer segment came largely from mortgages , which are well secured with low ltvs .

Speaker #1: And we do not expect to see significant losses. Wholesale have come formations since last down year and have been relatively stable over the last three quarters.

Speaker #1: Gross impaired loans increased to $7.1 billion , or 104 basis points , up two basis points from last quarter . While it takes time to work through impaired files , we have seen a steady decline in new watch list formations and expect that this will lead to lower impaired balances over time .

Darryl White: While it takes time to work through impaired files, we have seen a steady decline in new watchlist formations and expect that this will lead to lower impaired balances over time. This quarter, we included in the appendix additional details on the Non-Bank Financial Institutions, or NBFI, portfolio. This portfolio is well-diversified across products, clients, and collateral pools. It is well-structured, generally secured, and managed through specialized teams and differentiated underwriting criteria. 50% of this portfolio relates to equity subscription loans, which has a very strong risk profile, with no losses over 30-year history of this business. In closing, while downside risks remain, the impaired PCL ratio has improved 22 basis points since the end of last year. As we look to 2026, we anticipate a softer economic environment in Canada during H1, with trade uncertainty and subdued consumer sentiment continuing to weigh on the economy.

While it takes time to work through impaired files, we have seen a steady decline in new watchlist formations and expect that this will lead to lower impaired balances over time. This quarter, we included in the appendix additional details on the Non-Bank Financial Institutions, or NBFI, portfolio. This portfolio is well-diversified across products, clients, and collateral pools. It is well-structured, generally secured, and managed through specialized teams and differentiated underwriting criteria. 50% of this portfolio relates to equity subscription loans, which has a very strong risk profile, with no losses over 30-year history of this business. In closing, while downside risks remain, the impaired PCL ratio has improved 22 basis points since the end of last year. As we look to 2026, we anticipate a softer economic environment in Canada during H1, with trade uncertainty and subdued consumer sentiment continuing to weigh on the economy.

Speaker #1: This quarter, we included in the appendix additional details on the non-bank financial institutions, or NBFCs, portfolio. This portfolio is well diversified across products, clients, and collateral pools.

Speaker #1: It is well-structured, generally secure, and managed through specialized teams and differentiated underwriting criteria. Fifty percent of this portfolio relates to equity subscription loans, which have a very strong risk profile with no losses over a 30-year history of this business.

Speaker #1: In closing , while downside risks remain , the impaired PCL ratio has improved 22 basis points since the end of last year . As we look to 2026 , we anticipate a softer economic environment in Canada first half with during the trade uncertainty and subdued consumer sentiment continuing to weigh on the economy .

Speaker #1: At the same time , expansionary , expansionary fiscal policies and growth initiatives , as well as support from monetary policy should lead to stronger growth as we go through the year .

Darryl White: At the same time, expansionary fiscal policies and growth initiatives, as well as support from monetary policy, should lead to stronger growth as we go through the year. Assuming the consensus macroeconomic outlook plays out, we expect impaired provision to remain in the mid-40 basis points range with quarterly variability. In conclusion, our performance continues to be supported by the diversification of our portfolio and risk management capabilities, underscored by a strong risk culture. The robust allowance coverage, strong capital, and liquidity not only equip us to navigate any challenges in the environment. They position the bank to capture opportunities as market conditions evolve. I will now turn the call back to the operator for the Q&A portion of this call. Thank you. To ask a question, please press star, followed by the number one on your telephone keypad.

At the same time, expansionary fiscal policies and growth initiatives, as well as support from monetary policy, should lead to stronger growth as we go through the year. Assuming the consensus macroeconomic outlook plays out, we expect impaired provision to remain in the mid-40 basis points range with quarterly variability. In conclusion, our performance continues to be supported by the diversification of our portfolio and risk management capabilities, underscored by a strong risk culture. The robust allowance coverage, strong capital, and liquidity not only equip us to navigate any challenges in the environment. They position the bank to capture opportunities as market conditions evolve. I will now turn the call back to the operator for the Q&A portion of this call.

Speaker #1: Assuming the consensus macroeconomic outlook plays out . We expect impaired provision to remain in the mid 40 basis points range , with quarterly variability in conclusion , our performance continues to be supported by the diversification of our portfolio and risk management capabilities , underscored by a strong risk culture .

Speaker #1: The robust allowance coverage, strong capital, and liquidity not only equip us to navigate any challenges in the environment; they position the bank to capture opportunities as market conditions evolve.

Speaker #1: I will now turn the call back to the operator for the Q&A portion of this call.

Speaker #2: Thank you . To ask a question , please press star followed by the number one on your telephone keypad . In the interest of time , we ask that analysts please limit themselves to one question and to please rejoin the queue for any additional questions .

Operator: Thank you. To ask a question, please press star, followed by the number one on your telephone keypad.

Speaker #2: Thank you. Our first question comes from Paul Holden from CIBC. Please go ahead. Your line is open.

Darryl White: In the interest of time, we ask that analysts please limit themselves to one question and to please rejoin the queue for any additional questions. Thank you. Our first question comes from Paul Holden from CIBC. Please go ahead. Your line is open. Yeah, thank you. Good morning. Question on ROE. Now, given the 11.3% in 2025, we wouldn't expect you to increase the target at this point. That's for sure. But just wondering, in terms of that 15% target, do you think it's realistic that you could achieve that in 2027, given the pace at which you're executing against your strategy? Is it a realistic objective, or are we going to have to wait a little bit longer? Hey, Paul, it's Darryl. So the 15 is still absolutely the target. Thank you for the question.

In the interest of time, we ask that analysts please limit themselves to one question and to please rejoin the queue for any additional questions. Thank you. Our first question comes from Paul Holden from CIBC. Please go ahead. Your line is open.

Speaker #3: Yeah . Thank you . Good morning . Question on ROE . Now given the 11.3% in 25 when expected to increase the target at this point , that's for sure .

Paul Holden: Yeah, thank you. Good morning. Question on ROE. Now, given the 11.3% in 2025, we wouldn't expect you to increase the target at this point. That's for sure. But just wondering, in terms of that 15% target, do you think it's realistic that you could achieve that in 2027, given the pace at which you're executing against your strategy? Is it a realistic objective, or are we going to have to wait a little bit longer?

Speaker #3: But just wondering, in terms of the 15% target, do you think it's realistic that you could achieve that in 2027, given the pace at which you're executing against your strategy?

Speaker #3: Is it a realistic objective, or are we going to have to wait a little bit longer?

Speaker #4: Hey Paul , it's Daryl . So the 15 is still absolutely the target . Thank you for the question . In terms of the timeline , we're pretty clear to say that that's our medium term target , which we sort of think about as 3 to 5 years .

Darryl White: Hey, Paul, it's Darryl. So the 15 is still absolutely the target. Thank you for the question.

Darryl White: In terms of the timeline, we're pretty clear to say that that's our medium-term target, which we sort of think about as three to five years. And we started to establish that language pretty clearly through the course of this year. So it's difficult for me to put a particular date on when we hit the 15 for you right now, but we also have said, and I stand by it, that assuming constructive environments, we hope to get there by the early part of this range. Okay. I'll leave that as my one question. Thank you. Our next question comes from John Aiken from Jefferies. Please go ahead. Your line is open. Good morning. Tayfun, you reiterated your, I guess, your preference for a CET1 ratio getting closer to 12.5%. You guys are actually a little bit more aggressive in that regard.

In terms of the timeline, we're pretty clear to say that that's our medium-term target, which we sort of think about as three to five years. And we started to establish that language pretty clearly through the course of this year. So it's difficult for me to put a particular date on when we hit the 15 for you right now, but we also have said, and I stand by it, that assuming constructive environments, we hope to get there by the early part of this range.

Speaker #4: And you know , we started to establish that that language pretty clearly through the course of this year . So difficult for put a me to it's particular on date when we hit the 15 for you right now .

Speaker #4: But we also have said, and I stand by it, that assuming constructive environments, we hope to get there by the early part of this range.

Speaker #3: Okay. I'll leave that as my one thank you question.

Speaker #2: Our next question comes from John Aiken from Jefferies. Please go ahead. Your line is open.

Paul Holden: Okay. I'll leave that as my one question.

Operator: Thank you. Our next question comes from John Aiken from Jefferies. Please go ahead. Your line is open.

Speaker #5: morning . Good Typhoon , you reiterated your your preference for a ct1 ratio getting close to 12.5% . You guys are actually a little bit more aggressive in that regard .

John Aiken: Good morning. Tayfun, you reiterated your, I guess, your preference for a CET1 ratio getting closer to 12.5%. You guys are actually a little bit more aggressive in that regard.

Speaker #5: I'll preface this question by saying that I do agree that 13% is still a little bit too high for the 'for you' and the 'but' group. How comfortable do you believe that you and BMO are in terms of breaking ranks with the peer group?

Darryl White: I'll preface this question by saying that I do agree that 13% is still a little bit too high for you and the group. But how comfortable do you believe that you and BMO are in terms of breaking ranks with the peer group if you drop below 13% before anybody else does? So, John, good question. I will reiterate how we think about our approach to capital management. There are three factors that we've been very public about this. One is obviously the regulatory minimums. The second one is the economic macroeconomic backdrop and our own performance within that macroeconomic backdrop. And the third one is the peer group distribution. So when we arrived at 12.5% management target, we considered all these three points, and we're quite comfortable that at 12.5%, this is a very sound approach to managing our capital ratio.

I'll preface this question by saying that I do agree that 13% is still a little bit too high for you and the group. But how comfortable do you believe that you and BMO are in terms of breaking ranks with the peer group if you drop below 13% before anybody else does?

Speaker #5: If you drop below 13% before anybody else does.

Speaker #6: So .

Speaker #6: good . John , question . I will reiterate how we think about our approach to capital management . are There three factors that we've been very public about this .

Tayfun Tuzun: So, John, good question. I will reiterate how we think about our approach to capital management. There are three factors that we've been very public about this. One is obviously the regulatory minimums. The second one is the economic macroeconomic backdrop and our own performance within that macroeconomic backdrop. And the third one is the peer group distribution. So when we arrived at 12.5% management target, we considered all these three points, and we're quite comfortable that at 12.5%, this is a very sound approach to managing our capital ratio.

Speaker #6: One is obviously the regulatory minimums . The second one is the economic macroeconomic backdrop . And , you know , our own performance within that macroeconomic backdrop .

Speaker #6: And the third one is the peer group distribution. So when we arrived at the 12.5% management target, we considered all these three points.

Speaker #6: And we're quite comfortable that at 12.5%, this is a very sound approach to managing our capital ratio. Thus, we've been very public about that for a while now.

Speaker #5: Great . Thank you very much . I appreciate that .

Darryl White: And thus, we've been very public about that for a while now. Great. Thank you very much. I appreciate that. Our next question comes from Ibrahim Punawalla from Bank of America. Please go ahead. Your line is open. Hey, good morning. I guess just two questions. One or two-part question, since we can only ask one. I guess when we think about the commercial loan growth outlook, ex-year optimization action, I understand that's going to mitigate growth in the near term. But when we look at the US, there are obviously mixed signals around what's happening with the economy. Are you actually seeing signs that the tax bill is having an impact in how businesses are behaving around investments and hiring? And when you look at the first-half loan growth in the US, one, do you see a pickup, or do you see risks of downside given the tariff uncertainties?

And thus, we've been very public about that for a while now.

Speaker #2: Next question comes from Our Ebrahim from Bank Poonawala America. Please go ahead. Your line is open.

John Aiken: Great. Thank you very much. I appreciate that.

Operator: Our next question comes from Ibrahim Punawalla from Bank of America. Please go ahead. Your line is open. Hey, good morning.

Speaker #7: Hey . Good morning . I guess just two questions . 1 or 2 part question . Since we can only ask one , I guess when we think about the commercial loan growth outlook ex your optimization actions .

Ebrahim Punawalla: I guess just two questions. One or two-part question, since we can only ask one. I guess when we think about the commercial loan growth outlook, ex-year optimization action, I understand that's going to mitigate growth in the near term. But when we look at the US, there are obviously mixed signals around what's happening with the economy. Are you actually seeing signs that the tax bill is having an impact in how businesses are behaving around investments and hiring? And when you look at the first-half loan growth in the US, one, do you see a pickup, or do you see risks of downside given the tariff uncertainties?

Speaker #7: I understand that's going to mitigate growth in the near . But when we look at the US there are obviously mixed signals around what's happening with the economy .

Speaker #7: Are you actually seeing signs that the tax bill is having impact in how businesses are an behaving around investments and hiring ? And when you look at the first half , loan growth in the US , one , like do you see a pickup or do you risks of see downside given the tariff uncertainties ?

Speaker #7: And similarly , in Canada , what needs to happen to really lift the macro overhang if we don't get some clarity on Kuzma , maybe until the back half of 26 ?

Darryl White: And similarly, in Canada, what needs to happen to really lift the macro overhang if we don't get some clarity on CUSMA, maybe until the back half of 2026? Thank you. Hey, Ebrahim. Thanks for the question. It's Aaron. So in terms of the US, we're hearing from clients general optimism. Obviously, there's cautious, and there's always the questions as you're asking. But generally, we're seeing pickup in activity. We're seeing pipelines grow. We're having good conversations with clients that are feeling generally a level of optimism. For us, in particular, as we think about this inflection point that we're hitting with moving out of optimization towards growth, right, the strength of our commercial relationships that really came through with the fee growth that we showed. Second, as Darrel mentioned, hiring over 100 commercial bankers and private advisors over the last 12 months, they're just effectively getting going.

And similarly, in Canada, what needs to happen to really lift the macro overhang if we don't get some clarity on CUSMA, maybe until the back half of 2026? Thank you.

Speaker #7: Thank you .

Speaker #8: Hey thanks for the question . It's Aaron . So in terms of the US you know we're hearing from clients . You know general Obviously there's and there's optimism .

Aaron Levine: Hey, Ebrahim. Thanks for the question. It's Aaron. So in terms of the US, we're hearing from clients general optimism. Obviously, there's cautious, and there's always the questions as you're asking. But generally, we're seeing pickup in activity. We're seeing pipelines grow. We're having good conversations with clients that are feeling generally a level of optimism. For us, in particular, as we think about this inflection point that we're hitting with moving out of optimization towards growth, right, the strength of our commercial relationships that really came through with the fee growth that we showed. Second, as Darrel mentioned, hiring over 100 commercial bankers and private advisors over the last 12 months, they're just effectively getting going.

Speaker #8: always the as questions you're asking . But but generally we're seeing pickup in activity . We're pipelines grow or having good seeing conversations with clients that are feeling generally a level of optimism us in for particular , you know , as we think about this inflection point that we're hitting with moving out of optimization towards growth , right ?

Speaker #8: The strength of our commercial relationships that really came through with the fee growth that we showed . Second , as Daryl mentioned , hiring over 100 commercial bankers and private advisors over the last 12 months .

Speaker #8: There just effectively getting going . So you're going to see that benefit us over the next 12 months . And then , of course , our continued investment in both client facing and internal technology as we get more efficient , make it easier to do business .

Darryl White: So you're going to see that benefit us over the next 12 months. And then, of course, our continued investment in both client-facing and internal technology as we get more efficient and make it easier to do business. So for all of those reasons, I feel very confident that we'll start to see the loan growth, as Darrel mentioned, as we get into the second quarter, third quarter of 2026. Again, assuming some of the optimism stays and the US economy stays as we think it will. Got it. Any questions on Canada? Yep. Thank you. Yes. Yeah. Here it comes. Sorry. Here it comes. It's Sharon. Thanks for the question. I'd say similar to Aaron, I've been out talking to clients, and we would describe the tone as cautiously optimistic. There's obviously a lot of pent-up demand, and pipelines are very strong.

So you're going to see that benefit us over the next 12 months. And then, of course, our continued investment in both client-facing and internal technology as we get more efficient and make it easier to do business. So for all of those reasons, I feel very confident that we'll start to see the loan growth, as Darrel mentioned, as we get into the second quarter, third quarter of 2026. Again, assuming some of the optimism stays and the US economy stays as we think it will.

Speaker #8: So for all of those reasons , I feel very confident that we'll start to see the loan growth as as Daryl mentioned , as we get into the second quarter .

Speaker #8: Third quarter of 2026 , again , assuming some of the optimism stays and and the US economy stays as we think it will .

Speaker #7: Got it. Perspective on Canada. You. Thank you.

Speaker #4: Yes . Here it

Speaker #4: comes . Sorry .

Speaker #9: Here it comes . It's Sharon . Thanks for the question . I'd say similar to Aaron . You know , out I've been talking to clients , and .

[crosstalk] Got it. Any questions on Canada? Yep. Thank you. Yes. Yeah. Here it comes. Sorry. Here it comes. It's Sharon. Thanks for the question.

Speaker #9: And we would describe the tone as cautiously optimistic. There's obviously a lot of pent-up demand, and pipelines are very strong.

Christine Viau: I'd say similar to Aaron, I've been out talking to clients, and we would describe the tone as cautiously optimistic. There's obviously a lot of pent-up demand, and pipelines are very strong.

Speaker #9: We did see that the end of the fourth quarter was stronger than the beginning of the fourth quarter. So, you know, we're seeing good momentum going into this coming year.

Darryl White: We did see the end of the fourth quarter was stronger than the beginning of the fourth quarter. So we're seeing good momentum going into this coming year. But we're also really focused on deposit growth. And you see we've taken a lot of market share in operating deposits, and our TPS business has had high double-digit growth this year as well. So we've had very strong commercial revenue growth, and we're ready for the CapEx. On your question of what has to happen, I think at some point we are starting to see, especially in the middle market, more clients moving and starting to draw down. But utilization rates are still low, so there's room there as well. Obviously, any more certainty will be a positive contributor to things moving. But whenever things pick up, we think we'll be in a good position to take share. Good. Good call.

We did see the end of the fourth quarter was stronger than the beginning of the fourth quarter. So we're seeing good momentum going into this coming year. But we're also really focused on deposit growth. And you see we've taken a lot of market share in operating deposits, and our TPS business has had high double-digit growth this year as well. So we've had very strong commercial revenue growth, and we're ready for the CapEx. On your question of what has to happen, I think at some point we are starting to see, especially in the middle market, more clients moving and starting to draw down. But utilization rates are still low, so there's room there as well. Obviously, any more certainty will be a positive contributor to things moving. But whenever things pick up, we think we'll be in a good position to take share. Good. Good call.

Speaker #9: But we're also really focused on deposit growth . And you we've taken a lot of market share in operating deposits . And our TPS business double has had digit high double digit this growth year as well .

Speaker #9: So you know , we've had very strong commercial revenue growth . And we're we're ready for the CapEx . On your question of what what has to happen , you know , I think at some point we are starting to see , especially in the middle market , more clients moving and starting to to draw But down .

Speaker #9: utilization rates are still low . So there's room there as well . Obviously , any more certainty will be a positive contributor to things moving .

Speaker #9: But whenever things pick up , we think we'll be in a good position to take , take , share .

Speaker #7: Good , good color . Thank you both .

Speaker #2: Our next question comes from Gabriel Chen from National Bank financial . Please go ahead . Your line is open .

Darryl White: Thank you both. Our next question comes from Gabriel Dechaine from National Bank Financial. Please go ahead. Your line is open. Hi. Good morning. I want to add, I know the impaired PCL discussion over the past while has focused on the US, but I want to ask about the Canadian credit card book. We're seeing the delinquency rates there rise above the peer average. We're seeing the balances shrink over the course of the year. And I'm wondering what I should take away from that data. Did it grow too fast at a certain point in time? Are we maybe going to see a blip in the post-Christmas period credit metrics? And then I'll throw this one in there while I'm at it. For Darrel, M&A, would you be willing to issue stock to do a deal, or are you looking at more tuck-in type things? Thanks.

Operator: Thank you both. Our next question comes from Gabriel Dechaine from National Bank Financial. Please go ahead. Your line is open.

Speaker #10: Hi . Good morning . I want to I know the PCL impaired discussion over the past , while I was focused on the US , but to ask about I want the Canadian credit card book .

Gabriel Dechainev: Hi. Good morning. I want to add, I know the impaired PCL discussion over the past while has focused on the US, but I want to ask about the Canadian credit card book. We're seeing the delinquency rates there rise above the peer average. We're seeing the balances shrink over the course of the year. And I'm wondering what I should take away from that data. Did it grow too fast at a certain point in time? Are we maybe going to see a blip in the post-Christmas period credit metrics? And then I'll throw this one in there while I'm at it. For Darrel, M&A, would you be willing to issue stock to do a deal, or are you looking at more tuck-in type things? Thanks.

Speaker #10: We're seeing the delinquency rates there rise . You know , above above the peer average . We're seeing the balances shrink over the course of the year .

Speaker #10: I'm And wondering , you know , what I should take away from that data ? Are you did he grow too fast ? At a certain point in time , maybe going to see a blip in post-Christmas period ?

Speaker #10: credit Are And then I'll throw this one in there while I'm at it ? For , M&A Daryl , would you be willing to issue stock to do a deal , or are you , you know , looking at more tuck in type things ?

Speaker #10: Thanks .

Speaker #4: Thanks for .

Speaker #11: The question , Gabe . It's it's Matt speaking . I'll just go back to the comments at the beginning call on the of the macro economy that the overall conditions are definitely affecting mass consumers and particularly the of the credit lower end spectrum .

Darryl White: Thanks for the question, Gabe. It's Matt speaking. I'll just go back to the comments at the beginning of the call on the macroeconomy. The overall conditions are definitely affecting mass consumers, and particularly the lower end of the credit spectrum. Not surprisingly, unemployment and solvency is up. Those stresses are more visible for us given our portfolio composition. We tend to have a smaller premium book. Think about sort of large airline co-brand hasn't been a big part of our business up until recently with Porter. We've made adjustments to manage our exposure to that segment. And equally, on the flip side, are seeing good growth with Porter and sort of our premium segment overall. 16,000 accounts acquired since launch. They have a deep active collector base. So overall, we're looking ahead towards that top end of the market.

[Analyst]: Thanks for the question, Gabe. It's Matt speaking. I'll just go back to the comments at the beginning of the call on the macroeconomy. The overall conditions are definitely affecting mass consumers, and particularly the lower end of the credit spectrum. Not surprisingly, unemployment and solvency is up. Those stresses are more visible for us given our portfolio composition. We tend to have a smaller premium book. Think about sort of large airline co-brand hasn't been a big part of our business up until recently with Porter. We've made adjustments to manage our exposure to that segment. And equally, on the flip side, are seeing good growth with Porter and sort of our premium segment overall. 16,000 accounts acquired since launch. They have a deep active collector base. So overall, we're looking ahead towards that top end of the market.

Speaker #11: Not surprisingly, unemployment and insolvency are up. Those stresses are more visible for us given our portfolio composition. We tend to have a smaller premium book.

Speaker #11: Think about , you know , sort of large airline Co-brand hasn't been a big part of our business up until recently with Porter , we've made adjustments to manage our exposure to that segment , and equally , on the flip side , are seeing growth with good Porter and sort of our premium segment overall , 16,000 accounts acquired since launch .

Speaker #11: a deep active They have collector base . So so overall we're we're we're looking ahead towards that towards that top end of the .

Speaker #11: But I mean, the market, with obviously the macro conditions as they are, the impact on that lower segment is visible for us, and we're waiting for that improvement.

Darryl White: But I mean, obviously, with the macro conditions as they are, the impact on that lower segment is visible for us, and we're waiting for that improvement. Got it. Our next question comes from Mario Mendonca from TD Securities. Please go ahead. Your line is open. Good morning. Sort of similar question to what Gabe just asked on acquisition. There's plenty of speculation that BMO is actively looking to make an acquisition in US banking. And I know it's difficult for you to comment on that speculation because that's what it is, speculation. But perhaps you could speak to this. If BMO were to do a deal in the US, would you sacrifice that ROE target of 12% at least for a few years for the benefit of that increased scale? Yeah. Okay. So I'll say it's Darryl, Mario. Thanks, Gabe, for the question as well.

But I mean, obviously, with the macro conditions as they are, the impact on that lower segment is visible for us, and we're waiting for that improvement.

Speaker #10: Got it .

Speaker #2: next Our question comes from Mario Mendonca from TD securities . Please go ahead . Your line is open .

Gabriel Dechainev: Got it.

Operator: Our next question comes from Mario Mendonca from TD Securities. Please go ahead. Your line is open.

Speaker #12: Good morning . Sort of similar questions . What Gabe just asked on on acquisition . There's there's plenty of speculation that BMO is actively looking to make an acquisition .

Mario Mendonca: Good morning. Sort of similar question to what Gabe just asked on acquisition. There's plenty of speculation that BMO is actively looking to make an acquisition in US banking. And I know it's difficult for you to comment on that speculation because that's what it is, speculation. But perhaps you could speak to this. If BMO were to do a deal in the US, would you sacrifice that ROE target of 12% at least for a few years for the benefit of that increased scale?

Speaker #12: US banking and I know it's difficult comment on that speculation because for you to that's what it is speculation . But perhaps you could speak to this if you were to do it .

Speaker #12: Where to do it ? In the US , would you sacrifice that Roe target of 12% , at for a few least years , that increased benefit of for the ?

Speaker #12: Where to do it ? In the US , would you sacrifice that Roe target of 12% , at for a few least years , that increased benefit of for the scale

Speaker #4: Okay . So I'll Daryl it's . Mario . Thanks , Gabe , for question as the well . We rolled into the next one pretty quickly , so it's fine .

Speaker #4: I'll pair them together . The short answer to Mario's question is no . And absolutely no . And me step back and give you a little bit of color behind that .

Darryl White: Yeah. Okay. So I'll say it's Darryl, Mario. Thanks, Gabe, for the question as well.

Darryl White: We rolled into the next one pretty quickly, so it's fine. I'll pair them together. The short answer to Mario's question is no and absolutely no. And so let me step back and give you a little bit of color behind that. I think we've been pretty clear about how we think about capital deployment and achieving the ROE targets is the top imperative across the bank and in US banking. So every decision that we make is evaluated through that lens. Will it support the ROE improvement and sustainable profitable growth or not? That applies to an organic growth decision, and it applies to M&A decisions as well. I've also said before, good management teams always have their M&A antenna up. But equally, you got to be really disciplined. And we would only take a hard look at anything that met both the strategic and the ROE objectives.

We rolled into the next one pretty quickly, so it's fine. I'll pair them together. The short answer to Mario's question is no and absolutely no. And so let me step back and give you a little bit of color behind that. I think we've been pretty clear about how we think about capital deployment and achieving the ROE targets is the top imperative across the bank and in US banking. So every decision that we make is evaluated through that lens. Will it support the ROE improvement and sustainable profitable growth or not? That applies to an organic growth decision, and it applies to M&A decisions as well. I've also said before, good management teams always have their M&A antenna up. But equally, you got to be really disciplined. And we would only take a hard look at anything that met both the strategic and the ROE objectives.

Speaker #4: I think we've been pretty clear about how we think about capital deployment and achieving the ROE targets . Is the top imperative across the bank .

Speaker #4: And and in US banking . every So decision that we make is evaluated through that lens . Will it support the ROE improvement and sustainable profitable growth or not .

Speaker #4: That applies to an organic growth decision and it applies to M&A decisions as well . I've also said before , good management teams always have their M&A antenna up .

Speaker #4: But equally you got to be really disciplined . And we would only take a hard look at anything that met both the strategic and the ROE objectives .

Speaker #4: We've discussed a lot about how we're optimizing the redeployment in the United States . You saw it in my comments . saw it in You our new slide .

Speaker #4: I heard from Aaron just now. The reinvestment is targeted at densifying local scale in markets where we think we're positioned to compete and win.

Darryl White: We've discussed a lot about how we're optimizing the redeployment in the United States. You saw it in my comments. You saw it in our new slide. You heard from Aaron just now. The reinvestment is targeted at densifying and building local scale in markets where we think we're positioned to compete and win. So that's a really important point when you think about your question. Is there a tuck-in opportunity in those markets that would enable us to continue our ROE journey and not slow it down? In fact, if it would accelerate it, might we look at it? Sure. But if it doesn't meet those criteria, both strategically and financially, we're not on. Our number one priority is to grow organically, and we're confident we could do that and reach those objectives with or without M&A. Okay. I need one quick clarification on the restructuring.

We've discussed a lot about how we're optimizing the redeployment in the United States. You saw it in my comments. You saw it in our new slide. You heard from Aaron just now. The reinvestment is targeted at densifying and building local scale in markets where we think we're positioned to compete and win. So that's a really important point when you think about your question. Is there a tuck-in opportunity in those markets that would enable us to continue our ROE journey and not slow it down? In fact, if it would accelerate it, might we look at it? Sure. But if it doesn't meet those criteria, both strategically and financially, we're not on. Our number one priority is to grow organically, and we're confident we could do that and reach those objectives with or without M&A.

Speaker #4: So that's a really important point . When you think about your question , you know , is there a tuck in opportunity in those markets that would to enable us continue our ROE journey and not slow it down ?

Speaker #4: In fact , if it would accelerate it , might we look at it ? Sure . But if it doesn't those meet criteria , both strategically and financially , we're not number one priority is to grow on our And we're organically .

Speaker #4: Could do that and reach those objectives with or without M&A.

Speaker #12: Okay , I need one quick clarification on the restructuring is that a number you're leaving in the core number , or are you going to take that out and adjust out for it ?

Mario Mendonca: Okay. I need one quick clarification on the restructuring.

Speaker #12: Sounds like you're leaving it in , but some clarification there .

Speaker #6: Yes , we are leaving it in . We've always left . Well yeah we've our our record is that we typically leave it in .

Darryl White: Is that a number you're leaving in the core number, or are you going to take that out and adjust that for it? Sounds like you're leaving it in, but some clarification there. Yes. We are leaving it in. We've always left our record is that we typically leave it in. Okay. Thanks. Our last question comes from Darko Mihelic from RBC. Please go ahead. Your line is open. Hi. Thank you. I have a two-part question. Just the first part of this is just a clarification on the corporate segment. Can you just speak to what it was that you did in the quarter that had this segment do much better than the typical loss? And importantly for me is just whatever was done in there, it doesn't seem like it has any kind of impact on the tracking or anything like that.

Is that a number you're leaving in the core number, or are you going to take that out and adjust that for it? Sounds like you're leaving it in, but some clarification there.

Darryl White: Yes. We are leaving it in. We've always left our record is that we typically leave it in.

Speaker #12: Okay . Thanks .

Speaker #2: Our last question comes from DeMarco Mihelic from RBC . Please go ahead . Your line is open .

Mario Mendonca: Okay.

Operator: Thanks. Our last question comes from Darko Mihelic from RBC. Please go ahead. Your line is open.

Speaker #12: Hi . Thank you . I have a two part question . Just the first part of this is just a clarification on the corporate segment .

Darko Mihelic: Hi. Thank you. I have a two-part question. Just the first part of this is just a clarification on the corporate segment. Can you just speak to what it was that you did in the quarter that had this segment do much better than the typical loss? And importantly for me is just whatever was done in there, it doesn't seem like it has any kind of impact on the tracking or anything like that.

Speaker #12: you just speak to what it was that you did in the Can quarter that had this segment do much better than the typical loss ?

Speaker #12: And importantly for me , is just whatever was there . done in It doesn't seem like it has any kind of impact on the track or anything like that .

Speaker #12: just the That's most important part of the answer to that . And the second part of my question is completely unrelated to with the with the , the disclosure you provided .

Darryl White: That's just the most important part of the answer to that. The second part of my question is completely unrelated, to do with the disclosure you provided to you. One of the things that I on NBFI, one of the things I just want to confirm with you is you mentioned in your remarks that there was no losses, so to speak, in a significant part of this book. I guess where I'm going with that is, were there losses in the other parts of the book? Specifically, Piyush, I'm very interested in understanding if any part of this NBFI lending contributed to the higher losses we saw in 2024 and to some extent 2025. Thank you. So I'll begin with the first question, Darko. We have not done anything unique this quarter.

That's just the most important part of the answer to that. The second part of my question is completely unrelated, to do with the disclosure you provided to you. One of the things that I on NBFI, one of the things I just want to confirm with you is you mentioned in your remarks that there was no losses, so to speak, in a significant part of this book. I guess where I'm going with that is, were there losses in the other parts of the book? Specifically, Piyush, I'm very interested in understanding if any part of this NBFI lending contributed to the higher losses we saw in 2024 and to some extent 2025. Thank you.

Speaker #12: And one of the things that I on NFI , one of the things I just want to confirm with you is mentioned in you your remarks that the you know , there was no losses , so to speak .

Speaker #12: In a significant part of this book, and I guess where I'm going with that is, were there losses in the other parts of the book and specifically Piyush?

Speaker #12: I'm very interested in understanding if, and if any, any part of this NFI lending contributed to the higher losses we saw in Q4 2025 and to some extent, Q1 2025.

Speaker #12: Thank you . .

Speaker #6: I'll So begin with the first question , Darko , we have not done anything unique this quarter . So if you're asking like , have you triggered on your something latter investments etc.

Darryl White: So I'll begin with the first question, Darko. We have not done anything unique this quarter.

Speaker #6: , that resulted in outperformance ? No , I think sometimes we will have quarters when we may have some gains in that go to corporate services .

Darryl White: So if you're asking, have you triggered something on your latter investments, etc., that resulted in outperformance? No. I think sometimes we will have quarters when we may have some gains that go to corporate services. We are doing a very good job in managing the overall liquidity and the low-yielding asset balances, which typically contributes to revenues in corporate services. And it's reflected in our margin improvement as well. As you can see, I mean, we've done a very good job in managing the margin. But there is nothing unique to the quarter. In some quarters, it happens to be higher. Some quarters, it tends to be lower. But there's nothing that we triggered caused this outcome. Okay. Darko, Piyush, let me talk to the NBFI. So the NBFI sector, we've disclosed information, as you saw in the appendix. It's a big part of our business.

So if you're asking, have you triggered something on your latter investments, etc., that resulted in outperformance? No. I think sometimes we will have quarters when we may have some gains that go to corporate services. We are doing a very good job in managing the overall liquidity and the low-yielding asset balances, which typically contributes to revenues in corporate services. And it's reflected in our margin improvement as well. As you can see, I mean, we've done a very good job in managing the margin. But there is nothing unique to the quarter. In some quarters, it happens to be higher. Some quarters, it tends to be lower. But there's nothing that we triggered caused this outcome.

Speaker #6: We are doing a very good job in managing the overall liquidity and the low asset yielding balances , which typically contributes to revenues in corporate services .

Speaker #6: it's And reflected in our margin improvement as well . As you can see . I mean , we've done a very good job in managing the margin , but there is nothing unique to the quarter .

Speaker #6: In some quarters . It happens to be higher , some quarters it tends to be lower . But there's nothing that we triggered this outcome cause .

Speaker #1: Okay . Let me . Darko . Piyush , let me talk to the Nbfis . So the NFI sector , we've disclosed information as you saw in the appendix .

Piyush Agrawal: Okay. Darko, Piyush, let me talk to the NBFI. So the NBFI sector, we've disclosed information, as you saw in the appendix. It's a big part of our business.

Speaker #1: It's a big part of our business . It's a very profitable part of our business . Very high returns . The big you saw , piece , as is our equity subscription lines .

Speaker #1: 50% of it . We've been in this for a long time . I think you understand this business well over 99% . Almost as investment grade .

Darryl White: It's a very profitable part of our business, very high returns. The big piece, as you saw, is our equity subscription lines, 50% of it. We've been in this for a long time. I think you understand this business well. Over 99% almost is investment grade. And it's at the epicenter of our one-client business of how we take this exposure and have multi-product relationships across TPS, across wealth, across capital markets. In the other pieces, again, it's an amalgamation of many forms of clients, but it's well-secured, well-structured. Over 10 years, I would tell you the loss rate is one basis point. And some of that came from what we've disclosed two years ago in the insurance sector. It's not a typical NBFI segment, but depending on how the nomenclature is, we have included insurance as well. So it's a high-performing, high-investment grade, very, very low-growth impaired loans.

It's a very profitable part of our business, very high returns. The big piece, as you saw, is our equity subscription lines, 50% of it. We've been in this for a long time. I think you understand this business well. Over 99% almost is investment grade. And it's at the epicenter of our one-client business of how we take this exposure and have multi-product relationships across TPS, across wealth, across capital markets. In the other pieces, again, it's an amalgamation of many forms of clients, but it's well-secured, well-structured. Over 10 years, I would tell you the loss rate is one basis point. And some of that came from what we've disclosed two years ago in the insurance sector. It's not a typical NBFI segment, but depending on how the nomenclature is, we have included insurance as well. So it's a high-performing, high-investment grade, very, very low-growth impaired loans.

Speaker #1: it's at the And epicenter of a of how we this take exposure and have multi-product relationships across TPS , across wealth , across capital markets .

Speaker #1: In the other pieces . Again , it's an amalgamation of many forms of clients , but it's well secured , well structured ten years .

Speaker #1: would tell . Over you the loss I rate is one basis point , and some of that came from what we've disclosed two years ago in the insurance sector .

Speaker #1: It's not a typical NFI segment , but how the depending on nomenclature is , we have insurance as well . included So it's it's a high performing , high investment grade , very , very low gross impaired loans .

Speaker #1: So, what I would leave you with is well secured, well structured, managed by dedicated and specialized underwriting criteria teams.

Darryl White: So what I would leave you with is well-secured, well-structured, managed by dedicated teams, and specialized underwriting criteria. Okay. Thank you for the color. Appreciate it. Our next question comes from Ibrahim Punawalla from Bank of America. Please go ahead. Your line is open. Hey. Thank you. So I guess Tayfun, for you, as we think about the regulatory changes in the US, the SLR change, etc., does any of that actually impact how you think about the capital levels within BMO's US bank or the holding company? Could any of that change? And I'm just wondering, as we think about the path to the 12% ROE, is there an element of capital flex that we may be underappreciating, especially in light of what seems like we could have a pretty busy period of rulemaking in the US around some of the capital requirements? Thanks. Yes. Good question.

So what I would leave you with is well-secured, well-structured, managed by dedicated teams, and specialized underwriting criteria.

Speaker #12: Okay . Thank you for the color . Appreciate it .

Speaker #2: Our next question comes from Poonawala Ibrahim from Bank of America . Please go ahead . Your line is open .

Darko Mihelic: Okay. Thank you for the color. Appreciate it. Our next question comes from Ibrahim Punawalla from Bank of America. Please go ahead. Your line is open.

Speaker #7: Hey . you Thank . So I guess typhoon for you , as we think about the regulatory changes in the US , the SLR change , etc.

Ebrahim Punawalla: Hey. Thank you. So I guess Tayfun, for you, as we think about the regulatory changes in the US, the SLR change, etc., does any of that actually impact how you think about the capital levels within BMO's US bank or the holding company? Could any of that change? And I'm just wondering, as we think about the path to the 12% ROE, is there an element of capital flex that we may be underappreciating, especially in light of what seems like we could have a pretty busy period of rulemaking in the US around some of the capital requirements? Thanks.

Speaker #7: , does any of that that actually impact how you think about the levels within Bmo's ? US Bank or the holding company ? They could any of that change and I'm just wondering as we think about the path to the 12% , ROE , is there an element of capital flex that we may be under appreciating , especially in light of what seems like we could have a pretty busy period of rule making in the US around some of the capital Thanks requirements .

Speaker #7: .

Speaker #6: , good Yes question . Our capital position in the US today and in the coming quarters , we'll continue to be above our peers .

Piyush Agrawal: Yes. Good question.

Darryl White: Our capital position in the US today and in the coming quarters will continue to be above our peers. So today, BMO has 13.75% CET1 capital. The bank has 14.73% capital. So those are very strong levels. And given our income accretion, they are expected to go up. There is nothing in our ROE outlook that would be achieved by a lower capital position in the US. We're currently continuing to keep that accretion. So any changes from a regulatory perspective potentially could give us more flexibility, but we're not baking that into our ROE outlook. Our desire is to continue to utilize that capital supporting our balance sheet growth. Got it.

Our capital position in the US today and in the coming quarters will continue to be above our peers. So today, BMO has 13.75% CET1 capital. The bank has 14.73% capital. So those are very strong levels. And given our income accretion, they are expected to go up. There is nothing in our ROE outlook that would be achieved by a lower capital position in the US. We're currently continuing to keep that accretion. So any changes from a regulatory perspective potentially could give us more flexibility, but we're not baking that into our ROE outlook. Our desire is to continue to utilize that capital supporting our balance sheet growth. Got it.

Speaker #6: So today we have C has 13.75% Q1 capital . The bank has 14.73% capital . So those are very strong levels . And given our income excretion , they are expected to go up .

Speaker #6: There is nothing in our ROE outlook that would be achieved by a lower capital position in the U.S. We're currently continuing to keep that accretion.

Speaker #6: So , you know , any changes from a regulatory perspective potentially us could give more flexibility , but we're not baking that in to our ROE outlook .

Speaker #6: Our desire is to continue to utilize that capital , supporting our balance sheet growth

Speaker #7: it . And if I could

Speaker #7: follow up , maybe Darryl , for . Got given just how frequently bank M&A comes up with any conversation on BMO , one , why would you not want to do a deal in a world where the regulatory backdrop is wide open ?

Darryl White: If I could follow up, maybe, Darrel, for you, given just how frequently bank M&A comes up with any conversation on BMO, one, why would you not want to do a deal in a world with a regulatory backdrop that's wide open? You have excess capital. I'm assuming you could deploy some of that US capital in a deal. I get it needs to meet the financial hurdles, but wouldn't scale and scale be the way to go when you think about density, regional scale are priorities for you? Thanks. Okay. Ibrahim, thanks for the question. Look, the first thing is we don't think about M&A timing, regulatory environment timing windows. You've seen us do deals in different administrations, and you've seen us do it through different macro environments as well. It's all about whether we have something that fits both strategically and financially.

Ebrahim Punawalla: If I could follow up, maybe, Darrel, for you, given just how frequently bank M&A comes up with any conversation on BMO, one, why would you not want to do a deal in a world with a regulatory backdrop that's wide open? You have excess capital. I'm assuming you could deploy some of that US capital in a deal. I get it needs to meet the financial hurdles, but wouldn't scale and scale be the way to go when you think about density, regional scale are priorities for you? Thanks.

Speaker #7: You have excess capital . I'm assuming you could deploy some of US that capital in a deal . I get it needs to meet the financial hurdles , but wouldn't scale and scale be the way to go .

Speaker #7: When you think about density , regional scale or priority for you . Thanks .

Speaker #4: Abraham . Okay , Thanks . Thanks for the question . Look , the first thing is we don't we don't think about M&A timing , regulatory environment , timing , windows .

Darryl White: Okay. Ibrahim, thanks for the question. Look, the first thing is we don't think about M&A timing, regulatory environment timing windows. You've seen us do deals in different administrations, and you've seen us do it through different macro environments as well. It's all about whether we have something that fits both strategically and financially.

Speaker #4: You've seen us do deals in different administrations and you've do it seen us through through different macro environments as well . It's all about whether we have something that fits both strategically and financially .

Speaker #4: And I've re-emphasized on this call the discipline that we're applying to that. And so I'll just come back to my question.

Speaker #4: My answer earlier when I say that the focus is on densification and regional scale and markets where we can win , we have a really good strategy that Aaron is leading in terms of making sure we have the highest probability of climbing up that ROE curve fast as possible as .

Darryl White: I've reemphasized on this call the discipline that we're applying to that. So I'll just come back to my answer earlier when I say that the focus is on densification, regional scale, and markets where we can win. We have a really good strategy that Aaron is leading in terms of making sure we have the highest probability of climbing up that ROE curve as fast as possible in the US organically. And right now, that's job one. If something comes along that fits in the tuck-in category where we can accelerate that and not slow it down, yeah, we'll have a good look. Otherwise, we've got other things to do. Got it. Thank you very much. We have no further questions. I would like to turn the call back over to Darryl White for closing remarks. Okay. Thanks, everyone, for your questions this morning.

I've reemphasized on this call the discipline that we're applying to that. So I'll just come back to my answer earlier when I say that the focus is on densification, regional scale, and markets where we can win. We have a really good strategy that Aaron is leading in terms of making sure we have the highest probability of climbing up that ROE curve as fast as possible in the US organically. And right now, that's job one. If something comes along that fits in the tuck-in category where we can accelerate that and not slow it down, yeah, we'll have a good look. Otherwise, we've got other things to do.

Speaker #4: In the US organically . And right now that's job one . If something comes along that fits in the tuck in category where we can accelerate that and not slow it down , yeah , we'll have a good look .

Speaker #4: Otherwise we've got other things to do .

Speaker #7: Got it. Thank you very much.

Speaker #2: We have no further questions . I would like to turn the call back over to Darryl White for closing remarks .

Darko Mihelic: Got it. Thank you very much.

Operator: We have no further questions. I would like to turn the call back over to Darryl White for closing remarks. Okay. Thanks, everyone, for your questions this morning.

Speaker #4: Okay . Thanks , everyone , for your questions this morning . I'll just wrap up by saying really we had a strong 2025 and we're well positioned for the year ahead .

Speaker #4: As I think about call , today's I'm reminding all of us that we're we're laser focused on achieving our ROE imperative as quickly as possible .

Darryl White: I'll just wrap up by saying we had a really strong 2025, and we're well-positioned for the year ahead. As I think about today's call, I'm reminding all of us that we're laser-focused on achieving our ROE imperative as quickly as possible and delivering earnings growth at the same time. We'll share more on those plans and our outcomes at our investor day in March. Before closing the call, I want to acknowledge the contributions of our CFO, Tayfun, on his last quarterly call before retiring at the end of the year. Over the course of the last five years, he has served as an exceptional CFO, executive committee member, and trusted advisor, and he has had tremendous impact on BMO's growth trajectory, strategy, and ambition to win. He's taken significant personal initiative to develop the next generation of leaders and strengthen the future of the bank.

Speaker #4: And delivering earnings growth at the same time . And we'll share more on those plans and our outcomes at our Investor Day in March .

Speaker #4: Before closing the call , I want acknowledge the to contributions of our CFO typhoon , on his last quarterly call before retiring at the end of the year .

Speaker #4: Over the course of the last five years , he has served as an exceptional CFO , executive committee member and trusted advisor , and he has had tremendous impact on Bmo's growth trajectory , strategy and ambition to win .

Speaker #4: He's taken significant personal initiative to develop the next generation of leaders and strengthen the future of the bank . Typhoon . Thank you for your leadership .

Speaker #4: with that , I wish And everybody a happy holiday season and look forward to speaking to you again in the New Year .

Darryl White: Tayfun, thank you for your leadership. With that, I wish everybody a happy holiday season and look forward to speaking to you again in the new year. This concludes the BMO Financial Group's Q4 2025 earnings release and conference call. Thank you for your participation. You may now disconnect.

Tayfun, thank you for your leadership. With that, I wish everybody a happy holiday season and look forward to speaking to you again in the new year.

Speaker #2: This concludes the BMO Financial Group 2020 Earnings Release and Q4 Conference call . Thank you for your participation . You may now disconnect .

Operator: This concludes the BMO Financial Group's Q4 2025 earnings release and conference call. Thank you for your participation. You may now disconnect.

Q4 2025 Bank of Montreal Earnings Call

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