Q4 2025 Bank of Montreal Earnings Call

December 4, 2025

Speaker #1: Good morning and welcome to the BMO

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.

Operator: Good morning and welcome to the BMO Financial Group's Q4 2025 Earnings Release and Conference Call for 4th December 2025. Your host for today is Christine Viau. Please go ahead.

Speaker #1: Financial Group's Q4 2025 earnings and release and conference call for December 4th, 2025. Your host for today is Christine Viau. Please go ahead.

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

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 Erman Mehrotra from Canadian Personal and Business Banking, Sharon Haward-Laird, Canadian Commercial Banking, Ernie Johannson, 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 re-queue 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.

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, Aron 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 re-queue 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: Also present to answer questions are our group heads: Matt Marotra 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 Darrell 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 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.

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: Darrell and Tayfun will be referring to adjusted results in their remarks unless otherwise noted. As reported. I

Speaker #2: will now turn the call over to Darrell.

Speaker #3: Thank

Speaker #3: you, 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.

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.

Darryl White: Thank you, Christine, and good morning, everyone. This morning, we reported Adjusted EPS of CAD 3.28 for the fourth quarter and $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 $9.2 billion.

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 record 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 $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, and 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 CAD 8 billion in capital to our shareholders through buybacks and dividends, and today we announced a dividend increase of CAD 0.04 to CAD 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.

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.

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.

Darryl White: 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, 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.

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, 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.

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.

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 and are actively using machine and reinforcement learning models in credit and capital markets and across the bank.

Darryl White: 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. 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.

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. 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.

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 and 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: 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. 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.

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.

With Burgundy Asset Management joining BMO on 1st 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. 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.

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: rate businesses. 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.

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.

Darryl White: 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 and 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 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.

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 and 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 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: 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, and momentum is building.

Darryl White: Turning to US Banking, this is the first quarter 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. We continue to expect these activities to be largely completed by the second quarter.

Turning to US Banking, this is the first quarter 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. We continue to expect these activities to be largely completed by the second quarter.

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.

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, 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, and our 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.

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.

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.

Darryl White: 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.

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.

Speaker #3: 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 U.S.

Darryl White: 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. 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 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.

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. 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 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: 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.

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.

Darryl White: 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. 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 credit 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.

I'm pleased to announce that we plan to host an All Bank Investor Day on 26th March where we will share with you more details on our strategy and our progress. 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 credit 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: 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.

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 and improving credit market conditions, we expect PCL to continue to normalize 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: With that, I'll turn it over to Tayfun. Thank you, Darrell.

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 $2.97, and net income was $2.3 billion. 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.

Tayfun Tuzun: Thank you, Darryl. 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. 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.

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.

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 by 12%, with broad-based growth across all businesses, including continued strong fee growth in wealth and capital markets, and NIM expansion.

Tayfun Tuzun: 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 CAD 768 million from the prior year with lower impaired and performing provisions. Piyush 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 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.

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. 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.

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 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.

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 extrading 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.

Tayfun Tuzun: 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 balanced growth in Canadian PNC 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.

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 balanced growth in Canadian PNC 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: Net interest margin for trading was 206 basis points, up 7 basis points sequentially, reflecting improved deposit margins and contributions 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.

Tayfun Tuzun: 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.

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, noninterest revenue was up 9% from the prior year and up 17% excluding trading driven by strong wealth management fees, underwriting fees in capital markets, as well as continued growth in deposit fees reflecting strength in our TPS business.

Tayfun Tuzun: 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.

Speaker #2: Year-over-year, all bank NIM widened by 15 basis points and we expected to remain relatively stable through next year based on the current rate expectations and continued benefit 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 and capital markets as well as continued growth in deposit fees reflecting strength in our TPS business.

Tayfun Tuzun: Turning to slide 12, noninterest revenue was up 9% from the prior year and up 17% excluding trading driven by strong wealth management fees, 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.

Tayfun Tuzun: 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 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%.

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 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%.

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%.

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.

Tayfun Tuzun: 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 Q1, which we expect will deliver annualized savings of CAD 250 million. When fully executed, we expect to realize about 1/2 of the savings in 2026.

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 $225 million in Q1, which we expect will deliver annualized savings of $250 million. When fully executed, we expect to realize about 1/2 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 US banking and wealth businesses.

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

Tayfun Tuzun: 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.

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 include seasonally higher benefits and previous years, Q1 will reminder that similar to employees eligible to retire which we project to be in the range of impact of stock-based compensation for $250 to $270 million.

Tayfun Tuzun: We expect to still achieve positive operating leverage for the year including the impact of the first quarter charge.

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 $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 completed eight 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%.

Tayfun Tuzun: 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.

Speaker #2: Turning to slide 14, our CET1 ratio is strong at 13.3% and remains above the 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.

Tayfun Tuzun: 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 completed eight 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%.

Speaker #2: 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.

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.

Tayfun Tuzun: 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.

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 $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%. Moving to US banking on slide 16. My comments here will speak to the US dollar performance and reflect the change to our organizational structure, combining the US wealth business with our US personal and commercial businesses.

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.

Tayfun Tuzun: 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.

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%.

Tayfun Tuzun: 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%.

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.

Tayfun Tuzun: Moving to US banking on slide 16. My comments here will speak to the US dollar performance and reflect the change to our organizational structure, combining the US wealth business with our US personal and commercial businesses.

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.

Tayfun Tuzun: 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 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.

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 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.

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, which was up 14%, reflecting higher markets and continued growth in net sales, strong balance sheet growth, and higher brokerage transactions.

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. In Q1, our first quarter results will include a full quarter of results from Burgundy Asset Management.

Tayfun Tuzun: Expense growth of 11% was driven by employee-related expenses, including higher revenue-based costs and Q1. Our first quarter results will include a full quarter of results from Burgundy Asset Management.

Expense growth of 11% was driven by employee-related expenses, including higher revenue-based costs and 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 $532 million, compared with $270 million last year, reflecting strong PPPT performance of $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. 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 $73 million, reflecting above trend revenue in the quarter.

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.

Tayfun Tuzun: 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.

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.

Tayfun Tuzun: 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. 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.

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.

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 average a similar range as the point including seasonal in 2026 to loss expected to be the high current year with the first quarter net items.

Tayfun Tuzun: Turning now to slide 19. Corporate Services net loss was CAD 73 million, reflecting above trend revenue in the quarter.

Tayfun Tuzun: 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 as we look ahead towards 2026. In Canada, we expect low single digit loan growth as challenges in the macroeconomic environment continues 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.

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 as we look ahead towards 2026. In Canada, we expect low single digit loan growth as challenges in the macroeconomic environment continues 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.

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

Speaker #2: We've made 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 environment continue to impact personal continued market share gains in our challenges in the macroeconomic environment, we are well positioned to generate demand. and commercial Despite the muted businesses and anticipate improving conditions during the year addition to further policy rate from fiscal initiatives in easing and lower borrowing costs.

Tayfun Tuzun: 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.

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. Lastly, we expect an effective tax rate in the range of 25% to 26.

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 that optimization in the early part of the year will largely complete our balance sheet, and we anticipate that year-over-year loan growth will strengthen and reach 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. Lastly, we expect our effective tax rate to be in the range of 25% to 26%.

Tayfun Tuzun: Lastly, we expect an effective tax rate in the range of 25% to 26%.

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.

Tayfun Tuzun: 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.

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: 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. At the same time, softness in the Canadian economy, including rising unemployment, 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 points 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.

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 uncertainty resulted in higher losses in our Canadian personal and commercial business.

Speaker #2: 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 one basis point from the prior quarter, primarily due to lower losses in the U.S.

Speaker #2: 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 U.S.

Piyush Agrawal: 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 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 $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 $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.

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 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 $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 $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.

Speaker #2: Banking consistent with the risks in the economy and credit trends in our 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.

Speaker #2: The performing allowance of $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 $1.8 billion this quarter.

Speaker #2: 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.

Speaker #2: Wholesale formations have come down since last year, and have been relatively stable over the last three quarters. Gross impaired loans increased to 7.1 billion dollars or 104 basis points up two basis points from last quarter.

Piyush Agrawal: Gross impaired loans increased to CAD 7.1 billion or 104 basis points, up 2 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 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.

Gross impaired loans increased to $7.1 billion or 104 basis points, up 2 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 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.

Speaker #2: 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.

Speaker #2: This quarter, we included in the appendix additional details on the non-bank financial institutions (NBFI) portfolio. This portfolio is well diversified across products, clients, and collateral pools.

Speaker #2: It is well structured, generally secured, 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 the 30-year history of this business.

Speaker #2: 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 the first half, with trade uncertainty and subdued consumer sentiment continuing to weigh on the economy.

Piyush Agrawal: As we look to 2026, we anticipate a softer economic environment in Canada during the first half with trade uncertainty and subdued consumer sentiment continuing to weigh on the economy. 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.

As we look to 2026, we anticipate a softer economic environment in Canada during the first half with trade uncertainty and subdued consumer sentiment continuing to weigh on the economy. 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.

Speaker #2: 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.

Speaker #2: 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 our strong risk culture.

Speaker #2: 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 #2: I will now turn the call back to the operator for the Q&A portion of this call.

Piyush Agrawal: I will now turn the call back to the operator for the Q and A portion of this call.

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

Speaker #3: 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. 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: Thank you. Our first question comes from Paul Holden from CIBC. Please go ahead; your line is open.

Speaker #4: Yeah, thank you. Good morning. Question on ROE. Now, given the 11.3% in '25, we wouldn't expect you to increase the target at this point, that's for sure.

Darryl White: Yeah, thank you. Good morning.

Paul Holden: Yeah, thank you. Good morning. Question on ROE. Now, given the 11.3% and 25%, wouldn't expect you to increase the target at this point, that's for sure. 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?

Paul Holden: Question on ROE. Now, given the 11.3% and 25%, 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.

Speaker #4: 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?

Darryl White: That you could achieve that?

Paul Holden: 2027, given the pace at which you're executing against your strategy, is it?

Speaker #4: Is it a realistic objective, or are we going to have to wait a little bit longer?

Darryl White: A realistic objective or are we going?

Paul Holden: To have to wait a little bit longer?

Darryl White: Hey, Paul. It's Darryl. 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 three to five years. And you know, 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.

Speaker #5: Hey, Paul, it's Darrell. 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 three to five years. We started to establish that language pretty clearly through the course of this year.

Speaker #5: 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.

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

Speaker #4: Okay. I'll leave that as my one question. Thank you.

Paul Holden: Thank you.

Darryl White: Thank you.

Speaker #3: Our next question comes from John Aiken from Jefferies. Please go ahead. Your line is open.

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

Speaker #3: open. Good morning.

Ebrahim Poonawala: Good morning, Tayfun.

John Aiken: Good morning, Tayfun. You reiterated your preference for a CET1 ratio getting closer to 12.5%. You guys aren't actually a little bit more aggressive in that regard. 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 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 #6: Typhoon Yu reiterated your, I guess, your preference for a CT1 ratio getting closer to 12.5%. You guys are actually a little bit more aggressive in that regard.

Paul Holden: You reiterated your preference for a CET1 ratio getting closer to 12.5%. You guys aren't actually a little bit more aggressive in that regard. 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 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 #6: I'll press this question by saying that I do agree that 13% is still a little bit too high for the Yu and the group.

Speaker #6: But how comfortable do you believe that Yu and BMO are in terms of breaking ranks with the peer group if you drop below 13% before anybody else does?

Speaker #7: 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.

Tayfun Tuzun: So, John, good question. I will reiterate how we think about.

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

Tayfun Tuzun: 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, you know, 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. And thus we've been very public about that for a while now.

Speaker #7: 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.

Speaker #7: 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 and thus we've been very public about that for a while now.

Paul Holden: Great, thank you very much. I appreciate that.

John Aiken: Great, thank you very much. I appreciate that.

Speaker #6: Great. Thank you very much. I appreciate it.

Speaker #6: that. Our next

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

Operator: Our next question comes from Ebrahim Poonawala from Bank of America. Please go ahead. Your line is open.

Speaker #3: Question comes from Ibrahim Punawalla from Bank of America. Please go ahead. Your line is open.

Speaker #3: open. Hey, good

Ebrahim Poonawala: 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 your optimization action, and I understand that's going to mitigate growth in the near term. 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 in hiring? 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 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 #8: 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 your optimization actions, I understand that's going to mitigate growth in the near term.

Speaker #8: But when we look at the U.S., 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 on how businesses are behaving around investments and hiring?

Ebrahim Poonawala: 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 in 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 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 #8: 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 #8: 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?

Speaker #8: Thank

Speaker #8: you.

Darryl White: Hey Bram, 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 Darryl mentioned, hiring over 100 commercial bankers and private advisors over the last 12 months, they're just effectively getting going. So you're going to see that benefit us over the next 12 months.

Aron Levine: Hey Ebrahim, thanks for the question. It's Aron. 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 Darryl mentioned, hiring over 100 commercial bankers and private advisors over the last 12 months, they're just effectively getting going. So you're going to see that benefit us over the next 12 months.

Speaker #5: Hey, Ibrahim.

Speaker #5: Thanks for the question. It's Aaron. In terms of the U.S., we're hearing from clients general optimism. Obviously, there's caution, and there are always questions, as you're asking.

Speaker #5: 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.

Speaker #5: For us in particular, as we think about this inflection point that we're hitting with moving out of optimization towards growth, the strength of our commercial relationships that really came through with the fee growth that we showed.

Speaker #5: Second, as Darrell mentioned, hiring over 100 commercial bankers and private advisors over the last 12 months, they're just effectively getting going. So you're going to see that benefit us over the next 12 months.

Speaker #5: 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. So for all of those reasons, I feel very confident that we'll start to see the loan growth, as Darrell mentioned, as we get into the second quarter, third quarter of 2026.

Darryl White: 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. So for all of those reasons, I feel very confident that we'll start to see the loan growth. As Darryl mentioned, as we get into Q2, Q3 of 2026 again, assuming some of the optimism stays and the US economy stays as we think it will.

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. So for all of those reasons, I feel very confident that we'll start to see the loan growth. As Darryl mentioned, as we get into Q2, Q3 of 2026 again, assuming some of the optimism stays and the US economy stays as we think it will.

Speaker #5: Again, assuming some of the optimism stays and the U.S. economy stays as we think it will.

Ebrahim Poonawala: Go ahead.

Speaker #8: Got Got it. Thank you, Canada. Yep. Thank you.

Sharon Haward-Laird: Yep.

Ebrahim Poonawala: Thank you.

Darryl White: Yes, here it comes.

Speaker #3: Yes. 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.

Sharon Haward-Laird: Sorry, here it comes. It's Sharon. Thanks for the question. I'd say similar to Erin, you know, 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. 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 double-digit, high double-digit growth this year as well. So you know, we've had very strong commercial revenue growth and we're ready for the CapEx on your question of what has to happen.

Sharon Haward-Laird: Sorry, here it comes. It's Sharon. Thanks for the question. I'd say similar to Aron, you know, 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. 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 double-digit, high double-digit growth this year as well. So you know, we've had very strong commercial revenue growth and we're ready for the CapEx on your question of what has to happen.

Speaker #3: There's obviously a lot of pent-up demand and pipelines are very strong. We did see the end of the fourth quarter with stronger than the beginning of the fourth quarter.

Speaker #3: 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. Our TPS business has had double-digit, high double-digit growth this year as well.

Speaker #3: 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.

Sharon Haward-Laird: You know, 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.

You know, 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.

Speaker #3: 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.

Speaker #3: But whenever things pick up, we think we'll be in a good position to take

Speaker #3: share. Got it.

Ebrahim Poonawala: Good caller, thank you both.

Speaker #8: Good color. Thank you both.

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

Speaker #3: Our next question comes from Gabriel Deshenne from National Bank Financial. Please go ahead. Your line is open.

Gabriel Dechaine: Hi, good morning. I know the impaired PCL discussion over the past while it's 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. I'm wondering what I should take away from that data. Did you grow too fast at a certain point in time? Are we maybe going to see a blip in post-Christmas period.

Speaker #9: Hi. Good morning. I know the impaired PCL discussion over the past while has focused on the U.S., but I want to ask about the Canadian credit card book.

Speaker #9: We're seeing the delinquency rates 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.

Speaker #9: Are you did you grow too fast at a certain point in time? Are we maybe going to see a blip in post-Christmas period credit metrics?

Gabriel Dechaine: Credit metrics? And then I'll throw this one in there while I'm at it for Darryl, 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 #9: And then I'll throw this one in there while I'm at it. For Darrell, M&A, would you be willing to issue stock to do a deal?

Speaker #9: Or are you looking at more tuck-in type things? Thanks.

Speaker #5: 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, particularly those at the lower end of the credit 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 macro economy.

Darryl White: The overall conditions are definitely affecting mass consumers and particularly the lower end of the credit spectrum. Not surprisingly, unemployment insolvency 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. 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.

The overall conditions are definitely affecting mass consumers and particularly the lower end of the credit spectrum. Not surprisingly, unemployment insolvency 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. 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 #5: 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.

Speaker #5: 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.

Speaker #5: They have a deep active collector base. So overall, we're looking ahead towards that top end of the market. 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.

Gabriel Dechaine: Got it.

Speaker #9: Got Got it.

Speaker #3: Our next question comes from Mario Mendonca from TD Securities. Please go ahead.

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

Speaker #3: Your line is open.

Speaker #10: Good

Speaker #10: 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 the US banking.

Paul Holden: 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 US Banking. I know it's difficult for you to comment on that speculation because that's what is speculation. But perhaps you could speak to this.

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 US Banking. I know it's difficult for you to comment on that speculation because that's what is speculation. But perhaps you could speak to this.

Speaker #10: And I know it's difficult for you to comment on that speculation because that's what the 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

Ebrahim Poonawala: If.

Darryl White: If.

Paul Holden: Were we 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?

Mario Mendonca: Were we 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 #5: Yeah, okay. So, scale? I'll sit still, Mario. Thanks, Gabe, for the question as well. We rolled into the next one pretty quickly, so it's fine.

Darryl White: Yeah. Okay, so it's Darryl, Mario. Thanks, Gabe, for the question as well. 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. 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.

Speaker #5: 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.

Speaker #5: 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 U.S. banking.

Speaker #5: 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.

Speaker #5: I've also said before, good management teams always have their M&A antenna up. But equally, you gotta be really disciplined, and we would only take a hard look at anything that met both the strategic and the ROE objectives.

Darryl White: We would only take a hard look at anything that met both the strategic and the ROE objectives. 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 Ernie 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. You know, 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.

We would only take a hard look at anything that met both the strategic and the ROE objectives. 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 Ernie 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. You know, 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.

Speaker #5: 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.

Speaker #5: 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.

Speaker #5: 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?

Speaker #5: 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.

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 #5: 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.

Darryl White: 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.

Paul Holden: Okay, and 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 that for it? Sounds like you're leaving it in. But some clarification.

Mario Mendonca: Okay, and 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 that for it? Sounds like you're leaving it in. But some clarification.

Speaker #10: Okay. And I need one quick clarification on the restructuring. Is that a number you're leaving in the core number? Are you going to take that out and adjust that for it?

Speaker #10: It sounds like you're leaving it in, but some

Speaker #10: clarification there. Yes.

Tayfun Tuzun: Yes, we are leaving it in. We've always left.

Tayfun Tuzun: Yes, we are leaving it in. We've always left our record is that we typically leave it in.

Speaker #5: We are leaving it in. We've always left. Yeah. Our record is that we typically leave it

Tayfun Tuzun: Our record is that we typically leave it in.

Paul Holden: Okay, thanks.

Speaker #10: Okay. Thanks.

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

Speaker #3: Our last question comes from Darko Mihalik from RBC. Please go ahead. Your line is open.

Paul Holden: 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 factoring or anything like that. That's just the most important part of the answer to that. And the second part of my question is completely unrelated to do with.

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 factoring or anything like that. 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, Piyush. One of the things I just want to confirm with you is you mentioned in your remarks that there's no losses, so to speak in a significant part of this book.

Speaker #9: 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?

Speaker #9: And importantly for me is just whatever was done in there, it doesn't seem like it has any kind of impact on the tractoring or anything like that.

Speaker #9: That's just the most important part of the answer to that. And the second part of my question is completely unrelated. It has to do with the disclosure you provided, Piyush, and one of the things that on NBFI, one of the things I just want to confirm with you is you mentioned in your remarks that the there was no losses, so to speak, in the in a significant part of this book.

Paul Holden: The disclosure you provided, Piyush. One of the things I just want to confirm with you is you mentioned in your remarks that.

Paul Holden: There's no losses, so to speak.

Paul Holden: 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, and 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 #9: And I guess where I'm going with that is were there losses in the other parts of the book? And specifically, Piyush, I'm very interested in understanding if any part of this NBFI lending contributed to the higher losses we saw in '24 and to some extent '25.

I guess where I'm going with that is were there losses in the other parts of the book, and 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 #9: Thank

Speaker #9: you. So I'll begin with the first

Tayfun Tuzun: So I'll begin with the first question. Darko. We have not done anything unique this quarter. So if you're asking like have you triggered something on your ladder, investments, et cetera 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. Some quarters it happens to be higher, some quarters it tends to be lower, but there's nothing that we triggered caused this outcome.

Tayfun Tuzun: So I'll begin with the first question. Darko. We have not done anything unique this quarter. So if you're asking like have you triggered something on your ladder, investments, et cetera 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. 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. 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 #5: Question, Darko. We have not done anything unique this quarter. So, if you're asking whether you have triggered something on your latter investments, etc., that resulted in outperformance?

Speaker #5: No. I think sometimes we will have quarters when we may have some gains in 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.

Speaker #5: 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.

Speaker #5: Some quarters, it happens to be higher. Some quarters, it tends to be lower. But there's nothing that we triggered caused this

Speaker #5: outcome. Okay.

Piyush Agrawal: Okay, let me, 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. 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% are almost as investment grade, and it's at the epicenter of a 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.

Speaker #10: Let me, Darko Piyush, talk to the NBFI. The NBFI sector, we've disclosed information, as you saw in the appendix. It's a big part of our business.

Speaker #10: 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.

Speaker #10: I think you understand this business well. Over 99%, almost, is investment grade. And it's at the epicenter of a one-client business of how we take this exposure and have multi-product relationships across TPS, across wealth, across capital markets.

Speaker #10: 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.

Piyush Agrawal: 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 gross impaired loans. So what I would leave you with is well secured, well structured, managed by dedicated teams, and specialized underwriting criteria.

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

Speaker #10: 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.

Speaker #10: So, it's a high-performing, high-investment grade, very, very low growth, impaired loans. So, what I would leave you with is well-secured, well-structured, managed by dedicated teams.

Speaker #10: And specialized underwriting criteria. Okay. Thank you for the caller. Appreciate it.

Paul Holden: Okay, thank you for the caller. Appreciate it.

Darko Mihelic: Okay, thank you for the caller. Appreciate it.

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

Operator: Our next question comes from Ebrahim Poonawala from Bank of America, please go ahead. Your line is open.

Speaker #3: Our next question comes from Ibrahim Punawalla from Bank of America. Please go ahead. Your line is open.

Ebrahim Poonawala: 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 under appreciating, especially in light of what seems like we could have a pretty.

Speaker #11: Hey, thank you. So I guess Typhoon for you, as we think about the regulatory changes in the US, the SLR change, etc., does that any of that actually impact how you think about the capital levels within BMO's US bank or the holding company?

Speaker #11: 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?

Speaker #11: 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.

Ebrahim Poonawala: Busy period of rulemaking in the US around some of the capital requirements?

Speaker #11: Thanks.

Darryl White: Thanks.

Speaker #5: Yes. Good question. Our capital position in the US today and in the coming quarters will continue to be above our peers. So today, BFC has 13.75% CT1 capital.

Tayfun Tuzun: Yes, good question. Our capital position in the US today and in the coming quarters will continue to be above our peers. So, today BFC 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 in to our ROE outlook. Our desire is to continue to utilize that capital supporting our balance sheet growth.

Speaker #5: The bank has 14.73% capital, so those are very strong levels. Given our income accretion, they...

Speaker #1: Achieved by lower a capital position in the US . We're currently continuing to keep that accretion . So , you know , any changes from a regulatory perspective potentially could give us more But we're not flexibility .

Speaker #1: making that in to our ROE outlook . Our desire is to continue to utilize that capital , supporting our balance sheet growth .

Speaker #2: And if I could follow up , Got it . maybe Darryl , 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 where the regulatory backdrop is wide open , you have excess capital .

Ebrahim Poonawala: Got it. And if I could follow up, maybe Darryl for you. Given just how frequently M&A comes up with any conversation on BMO, why would you not want to do a deal in a world where the regulatory backdrop is 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 a priority for you? Thanks.

Ebrahim Poonawala: Got it. If I could follow up, maybe Darryl for you. Given just how frequently M&A comes up with any conversation on BMO, why would you not want to do a deal in a world where the regulatory backdrop is 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 a priority for you? Thanks.

Speaker #2: I'm assuming you could deploy some of that US capital a in deal . I get it needs to meet the financial hurdles , but wouldn't scale and scale be the go .

Speaker #2: think way to When you about density , regional scale or priority for you ? Thanks .

Speaker #3: Okay , Abraham . Thanks . Thanks for the question . Look , the first thing is we don't we don't think about M&A timing environment , , regulatory 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. I've re-emphasized on this call the discipline that we're applying to that. So, you know, I'll just come back to my question or my answer earlier when I say that the focus is on densification and regional scale in markets where we can win. We have a really good strategy that Ernie 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. Right now that's job one.

Darryl White: Okay, Ebrahim, 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. I've re-emphasized on this call the discipline that we're applying to that. So, you know, I'll just come back to my question or my answer earlier when I say that the focus is on densification and regional scale in markets where we can win. We have a really good strategy that Ernie 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. Right now that's job one.

Speaker #3: 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 #3: And I've re-emphasized on this call . The discipline that we're applying to that . And so , you know , I'll just come back to my question .

Speaker #3: My answer earlier, when I said 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 as fast as possible in the U.S. organically.

Speaker #3: 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 .

Darryl White: 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.

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

Speaker #2: Got it. Thank you very much.

Speaker #4: We have no further questions . I would like to turn the call back over to Darryl White for closing remarks .

Ebrahim Poonawala: Good. Thank you very much.

Speaker #3: Okay . Thanks , everyone , for your questions this morning . I'll just wrap up by saying we had a really strong 2025 and we're positioned well for the year ahead .

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

Darryl White: Okay, thanks everyone for your questions this morning. 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, and 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.

Speaker #3: As I think today's call , about I'm reminding all of us that we're we're laser focused on achieving our ROE imperative as quickly as possible and delivering earnings growth at time .

Speaker #3: the same And we'll share more on those our plans and outcomes at our Investor Day in March . Before closing the call , I want to acknowledge the contributions of our CFO typhoon , on his last quarterly call before retiring at the end of the year .

Speaker #3: 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 #3: He's taken significant personal initiative to develop the next generation of leaders and strengthen the future of the bank. Tayfun, thank you for your leadership.

Darryl White: He's taken significant personal initiative to develop the next generation of leaders and strengthen the future of the bank, Tayfun. Thank you for your leadership and with that, I wish everybody a happy holiday season and look forward to speaking to you again in the new year.

He's taken significant personal initiative to develop the next generation of leaders and strengthen the future of the bank, Tayfun. Thank you for your leadership and with that, I wish everybody a happy holiday season and look forward to speaking to you again in the new year.

Speaker #3: And with that , I wish everybody a happy holiday season and look forward to speaking to you again in the New Year .

Speaker #4: This concludes the BMO financial Group Q4 2020 Earnings Release and 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.

Operator: This concludes the BMO Financial Group's Q4 2025 Earnings Release and Conference Call. Thank you for your participation. You may now disconnect.

Darryl White: Sa.

Q4 2025 Bank of Montreal Earnings Call

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