Q3 2026 Bank of Montreal Earnings Call

August 25, 2026

Speaker #1: Good morning, and welcome to the BMO Financial Group's Q3 2026 earnings release and conference call for August 25, 2026. Your host for today is Christine Viau.

Operator: Good morning, and welcome to the BMO Financial Group's Q3 2026 earnings release and conference call for 25 August 2026. Your host for today is Christine Viau.

Speaker #1: Please go ahead.

Speaker #2: Thank you. Good morning, everyone. We will begin today with remarks from Darryl White, BMO CEO, followed by Rahul Nagarkar, our Chief Financial Officer, and Piyush Agrawal, our Chief Risk Officer.

Christine Viau: Thank you. Good morning, everyone. We will begin today with remarks from Darryl White, BMO CEO, followed by Rahul Nalgirkar, our Chief Financial Officer, and Piyush Agrawal, our Chief Risk Officer. Also present to answer questions are our group heads, Mathew Mehrotra, Canadian Personal and Business Banking, Sharon Haward-Laird, Canadian Commercial Banking, Aron Levine, US Banking, Alan Tannenbaum, BMO Capital Markets, Deland Kamanga, Wealth Management, and Darrel Hackett, BMO US CEO. A reminder that our call will end at 8:15 AM this morning. As noted on slide 2, forward-looking statements may be made during this call, which involve assumptions that have inherent risks and uncertainties. Actual results could differ materially from these statements. 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.

Speaker #2: Also present to answer questions are our group heads: Matt Morotra, Canadian Personal and Business Banking; Sharon Hayward-Layard, Canadian Commercial Banking; Aaron Levine, U.S. Banking; Alan Tunnenbaum, BMO Capital Markets; Dellan Kamenga, Wealth Management; and Darryl Hackett, BMO U.S. CEO.

Speaker #2: A reminder that our call will end at 8:15 this morning. As noted on slide 2, forward-looking statements may be made during this call, which involve assumptions that have inherent risks and uncertainties. Actual results could differ materially from these statements.

Christine Viau: Actual results could differ materially from these statements. I would also remind listeners that the bank uses non-GAAP financial measures to arrive at adjusted results. Management measures performance on a reported and adjusted basis and considers both to be useful in assessing underlying business performance. Darryl and Rahul will be referring to adjusted results in their remarks unless otherwise noted as reported. With that, I'll turn the call over to Darryl.

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.

Speaker #2: Darryl and Rahul will be referring to adjusted results in their remarks, unless otherwise noted as reported. With that, I'll turn the call over to Darryl.

Christine Viau: Darryl and Rahul will be referring to adjusted results in their remarks unless otherwise noted as reported. With that, I'll turn the call over to Darryl.

Speaker #3: Thank you, Christine, and good morning, everyone. This morning, we reported another quarter of strong operating performance with EPS of $3.96, up 22% year over year, and pre-provision, pre-tax earnings of $4.5 billion.

Darryl White: Thank you, Christine, and good morning, everyone. This morning, we reported another quarter of strong operating performance with EPS of CAD 3.96, up 22% year over year, and pre-provision, pre-tax earnings of CAD 4.5 billion, up 13%. These results reflect our ongoing focused execution on the strategy we outlined at our Investor Day in March to elevate returns and accelerate growth. Every business segment delivered record pre-provision, pre-tax earnings with sustained momentum in Capital Markets and Wealth and continued commercial loan growth in both Canada and the US as we deepen one client relationships across our franchise. We delivered double-digit revenue growth and positive operating leverage of 1.6%, managing expenses in line with revenue and continuing to reinvest for growth. We continue to make meaningful progress against our ROE targets.

Speaker #3: Up 13%. These results reflect our ongoing, focused execution on the strategy we outlined at our Investor Day in March to elevate returns and accelerate growth.

Speaker #3: Every business segment delivered record pre-provision, pre-tax earnings, with sustained momentum in Capital Markets and Wealth, and continued commercial loan growth in both Canada and the U.S., as we deepened one-client relationships across our franchise.

Speaker #3: We delivered double-digit revenue growth and positive operating leverage of 1.6%, managing expenses in line with revenue and continuing to reinvest for growth. We continue to make meaningful progress against our ROE targets. Return on equity improved again this quarter to 14%, up 200 basis points from last year, and extending the momentum we have built over the last seven quarters.

Darryl White: Return on equity improved again this quarter to 14%, up 200 basis points from last year and extending the momentum we built over the last seven quarters. The strength of our core operating performance this quarter reinforces our confidence in delivering a sustainable 15% ROE exiting fiscal 2027. Since outlining our path to higher returns, we've consistently demonstrated that diversified revenue growth, disciplined expense management, strong risk management, and proactive capital management delivers tangible and sustainable results. Our progress continues to be supported by each of the key drivers we identified at our Investor Day. We're seeing continued client growth, healthy fee-based revenue, and improved productivity across the enterprise. Credit performance improved with impaired provisions at the lowest level in the last 10 quarters, a result of proactive risk management and our well-diversified portfolio. Our capital position remains strong with a CET1 ratio of 13%.

Speaker #3: The strength of our core operating performance this quarter reinforces our confidence in delivering a sustainable 15% ROE exiting fiscal 2027. Since outlining our path to higher returns, we've consistently demonstrated that diversified revenue growth, disciplined expense management, strong risk management, and proactive capital management deliver tangible, sustainable results.

Speaker #3: These are the key drivers we identified at our investor day. We're seeing continued client growth, healthy fee-based revenue, and improved productivity across the enterprise. Credit performance improved, with impaired provisions at the lowest level in the last 10 quarters—a result of proactive risk management and our well-diversified portfolio.

Speaker #3: Our capital position remains strong, with a CET-1 ratio of 13%. The impact of our announced divestitures closing, which Rahul will cover in his remarks, is expected to contribute an additional 50 basis points of capital and support returns through reallocation to areas where we have attractive, higher-return, and longer-term growth opportunities.

Darryl White: The impact of our announced divestitures closing, which Rahul will cover in his remarks, is expected to contribute an additional 50 basis points of capital and support returns through reallocation to areas where we have attractive, higher return, and longer-term growth opportunities. These strong capital levels are providing ongoing flexibility to support client needs, invest for growth, and return capital to shareholders through a combination of dividends and share buybacks. Turning now to our businesses where, as I highlighted, each business delivered record PPPT this quarter. In Canadian P&C, our deposit-led growth strategy continues to drive performance, with operating deposits up 7% year over year as clients are choosing BMO for trusted advice, innovative digital capabilities, and personalized solutions. At the same time, clients are consolidating more of their financial relationships with BMO.

Speaker #3: These strong capital levels are providing ongoing flexibility to support client needs, invest for growth, and return capital to shareholders through a combination of dividends and share buybacks.

Speaker #3: Turning now to our businesses, where, as I highlighted, each business delivered record PPPT this quarter. In Canadian P&C, our deposit-led growth strategy continues to drive performance, with operating deposits up 7% year over year, as clients are choosing BMO for trusted advice, innovative digital capabilities, and personalized solutions.

Speaker #3: At the same time, clients are consolidating more of their financial relationships with BMO. Mutual fund sales through our financial centers were up 33% over last year, with strong market share gains driving a higher penetration of investment products in our retail client base.

Darryl White: Mutual fund sales through our financial centers were up 33% over last year, with strong market share gains driving a higher penetration of investment products in our retail client base. We're building deeper client loyalty, including strong early engagement following the launch of BMO Blue Rewards, with a 65% increase in weekly enrollments since launch and strong engagement with partner offers that help clients make real financial progress. Canadian Commercial Banking continues to perform, with good lending momentum up 3% and strong TPS fee growth up 13% from last year. Year to date, new client acquisition is healthy and 20% higher than last year, with particular strength in mid-market.

Speaker #3: We're building deeper client loyalty, including strong early engagement following the launch of BMO Blue Rewards, with a 65% increase in weekly enrollments since launch and strong engagement with partner offers that help clients make real financial progress.

Speaker #3: Canadian Commercial Banking continues to perform, with good lending momentum—up 3%—and strong TPS fee growth, up 13% from last year. Year to date, new client acquisition is healthy and 20% higher than last year, with particular strength in mid-market.

Speaker #3: As the official and exclusive financial services partner to Canada Soccer, we're proud to continue our decades-long legacy of growing the game—from the grassroots to the most global of events—including our support of the men's national team through the World Cup this summer and looking ahead to the Women's World Cup in 2027.

Darryl White: As the official and exclusive financial services partner to Canada Soccer, we are proud to continue our decades-long legacy of growing the game from the grassroots to the most global of events, including our support of the men's national team through the World Cup this summer and looking ahead to the FIFA Women's World Cup 2027. Our integrated marketing campaign around this year's World Cup reached 30 million Canadians and contributed to a 40% lift in bmo.com visits, contributing to our strongest net client growth quarter of the year. Our US banking business continues to build momentum with ROE of 9.8% and up 90 basis points year over year and ROTCE of 17.3%. Investments in talent, technology, and integrated market strategies are leading to good progress in net client growth.

Speaker #3: Our integrated marketing campaign around this year's World Cup reached 30 million Canadians, and contributed to a 40% lift in BMO.com visits, contributing to our strongest net client growth quarter of the year.

Speaker #3: Our U.S. banking business continues to build momentum, with ROE of 9.8%, up 90 basis points year over year, and ROTCE of 17.3%. Investments in talent, technology, and integrated market strategies are leading to good progress in net client growth.

Speaker #3: We continue to see positive commercial lending activity, with the first quarter of annual commercial loan growth since completing our optimization efforts in Q2. Loan balances were up 4% sequentially, with record TPS revenues up 15% from last year.

Darryl White: We continue to see positive commercial lending activity with the first quarter of annual commercial loan growth since completing our optimization efforts in Q2. Loan balances were up 4% sequentially, with record TPS revenues up 15% from last year. In US retail banking, core customer deposits were up 2% over last year across the franchise, led by 3% growth in California. We are seeing good progress on our mass affluent strategy with investment flows up 17% over last year. In US banking, we have now made the transition from optimization to an inflection point where we can drive an acceleration in profitable growth. Wealth management delivered another strong quarter with record net income driven by broad-based growth across the franchise, including higher private banking penetration among affluent households and sustained growth in net new assets.

Speaker #3: In US retail banking, core customer deposits were up 2% over last year across the franchise, led by 3% growth in California. And we're seeing good progress on our mass affluence strategy, with investment flows up 17% over last year.

Speaker #3: In U.S. banking, we've now made the transition from optimization to an inflection point, where we can drive an acceleration in profitable growth. Wealth Management delivered another strong quarter, with record net income driven by broad-based growth across the franchise, including higher private banking penetration among affluent households and sustained growth in net new assets.

Speaker #3: Our differentiated lineup of ETFs and mutual funds continues to attract client assets and strengthen our position as one of Canada's leading investment managers. Long-term mutual fund gross sales and ETF flows are both up 19% from the prior year, reflecting strong fund performance and innovative offerings.

Darryl White: Our differentiated lineup of ETFs and mutual funds continues to attract client assets and strengthen our position as one of Canada's leading investment managers. Long-term mutual fund growth sales and ETF flows are both up 19% from the prior year, reflecting strong fund performance and innovative offerings. In Capital Markets, performance remains strong with record PPPT of CAD 903 million, reflecting the benefits of our diversified franchise and leading sector expertise. We had strong contributions across Global Markets and Investment and Corporate Banking, with strong equity trading and debt underwriting results driven by our franchise strength and one client connectivity. The results this quarter reinforce the earnings capacity of our Capital Markets business. As demand for critical minerals, energy infrastructure, and resource investment continues to grow, BMO is helping clients execute transformative transactions that strengthen the economy and support long-term economic growth.

Speaker #3: In Capital Markets, performance remains strong, with record PPPT of $903 million reflecting the benefits of our diversified franchise and leading sector expertise. We had strong contributions across Global Markets and Investment and Corporate Banking, with strong equity trading and debt underwriting results driven by our franchise strength and client connectivity.

Speaker #3: The results this quarter reinforced the earnings capacity of our capital markets business. As demand for critical minerals, energy infrastructure, and resource investment continues to grow, BMO is helping clients execute transformative transactions that strengthen the economy and support long-term economic growth.

Speaker #3: We also recently announced an agreement to acquire the capital markets business of Euroz Hartleys Group, combining BMO's globally leading metals and mining franchise with one of Australia's premier investment banking and equity distribution platforms, to create a truly integrated global capability for our clients.

Darryl White: We also recently announced an agreement to acquire the Capital Markets business of Euroz Hartleys Group, combining BMO's globally leading metals and mining franchise with one of Australia's premier investment banking and equity distribution platforms to create a truly integrated global capability for our clients. Across all our businesses, the power of our One Client strategy is creating measurable value. Increased referrals, stronger connectivity across business lines, and higher level of client engagement are generating sustainable growth opportunities across the enterprise. At our Investor Day, we highlighted the many ways that AI is already creating significant business value for our clients and our teams by personalizing client experiences, augmenting our teams, and automating processes to drive business value. We continue to advance and integrate these important initiatives. This quarter, BMO Insurance launched another AI-powered platform, SmartDecision.

Speaker #3: Across all our businesses, the power of our one-client strategy is creating measurable value. Increased referrals, stronger connectivity across business lines, and a higher level of client engagement are generating sustainable growth opportunities across the enterprise.

Speaker #3: At our Investor Day, we highlighted the many ways that AI is already creating significant business value for our clients and our teams—by personalizing client experiences, augmenting our teams, and automating processes to drive business value.

Speaker #3: We continue to advance and integrate these important initiatives. This quarter, BMO Insurance launched another AI-powered platform, Smart Decision. It uses predictive modeling to deliver underwriting decisions in as little as 10 seconds.

Darryl White: It uses predictive modeling to deliver underwriting decisions in as little as 10 seconds, compared with an industry average of 28 business days or more. Our Lumi Assistant frontline chatbot brings speed and efficiency to a new level, simplifying access to policy information across Canadian Personal and Business Banking, increasing productivity amongst new employees by 17%. Lumi Assistant is being extended and scaled to support client conversations, starting with mortgage renewals. We are now taking the next step in our evolution, further enhancing our operating model, scale our efforts across the organization, and accelerate value creation. On the trade front, the Canada-US relationship is going through a period of adjustment, and the uncertainty that brings represents a headwind in both countries for trade-related sectors and domestic affordability more broadly.

Speaker #3: Compared with an industry average of 28 business days or more, our Lumi frontline chatbox brings speed and efficiency to a new level, simplifying access to policy information across Canadian personal and business banking, and increasing productivity among new employees by 17%.

Speaker #3: Lumi is being extended and scaled to support client conversations, starting with mortgage renewals. We're now taking the next step in our evolution, further enhancing our operating model to scale our efforts across the organization and accelerate value creation.

Speaker #3: On the trade front, the Canada-U.S. relationship is going through a period of adjustment, and the uncertainty that brings represents a headwind in both countries for trade-related sectors and domestic affordability more broadly.

Speaker #3: The relationship will remain an extraordinarily important one to both countries, but some of the assumptions that businesses have relied on for decades—particularly around the predictability of trade policy—have been tested in the last year and a half.

Darryl White: The relationship will remain an extraordinarily important one to both countries, but some of the assumptions that businesses have relied on for decades, particularly around the predictability of trade policy, have been tested in the last year and a half. For the bank, there are two implications. First, we are closely monitoring the effect on our clients and our portfolios, and we are working with them on liquidity, investment decisions, supply chain adjustments, and market diversifications. I can report today that they are adjusting very well. Second, our competitive position in Canada and the United States is a strategic advantage for our clients. Our businesses operate across a diversified North American platform, and we can help our clients navigate in both markets. Canada and the United States are deeply connected, and North America remains one of the most attractive economic regions in the world.

Speaker #3: For the bank, there are two implications. First, we're closely monitoring the effect on our clients and our portfolios, and we're working with them on liquidity, investment decisions, supply chain adjustments, and market diversifications.

Speaker #3: And I can report today that they are adjusting very well. Second, our competitive position in Canada and the United States is a strategic advantage for our clients.

Speaker #3: Our businesses operate across a diversified North American platform, and we can help our clients navigate both markets. Canada and the United States are deeply connected, and North America remains one of the most attractive economic regions in the world.

Speaker #3: We're disciplined on risk, staying close to our clients, and are ready to support them as government policy and the environment evolve. Against that backdrop, the world is looking for places that can deliver long-term growth and support resiliency in an increasingly uncertain environment, and Canada has real advantages.

Darryl White: We are disciplined on risk, staying close to our clients, and are ready to support them as government policy and the environment evolves. Against that backdrop, the world is looking for places that can deliver long-term growth and support resiliency in an increasingly uncertain environment, and Canada has real advantages. A stable financial system, abundant resources, world-class talent, and a platform to export globally through the world's most comprehensive set of free trade agreements. The upcoming investment summit is a good example of Canada putting those strengths in front of investors to compete for capital on the global stage. BMO is uniquely positioned to capture growth opportunities in this environment. Our premium commercial banking franchise was once again recognized by World Finance Magazine as the best commercial bank in Canada and in the US.

Speaker #3: A stable financial system, abundant resources, world-class talent, and a platform to export globally through the world’s most comprehensive set of free trade agreements. The upcoming investment summit is a good example of Canada putting those strengths in front of investors to compete for capital on the global stage.

Speaker #3: And BMO is uniquely positioned to capture growth opportunities in this environment. Our premium commercial banking franchise was once again recognized by World Finance Magazine as the best commercial bank in Canada and in the US.

Speaker #3: Our leadership in TPS was recognized by Global Finance as the best bank for transaction banking in North America, for continued innovation across automation, real-time payments, data, and AI capabilities.

Darryl White: Our leadership in TPS was recognized by Global Finance as the best bank for transaction banking in North America, for continued innovation across automation, real-time payments, data, and AI capabilities. Our differentiated Capital Markets expertise, particularly in metals and mining, energy and infrastructure, play to this market opportunity. All of which is supported by a growing wealth platform and strong deposit foundation, providing significant opportunities to continue expanding client relationships and generate sustainable earnings growth. Most importantly, we remain focused on our number one imperative of delivering and sustaining a 15% ROE as we exit fiscal 2027 by executing on the commitments we made at our Investor Day. Stronger returns, faster earnings growth, and a more resilient franchise, all anchored in growing and deepening client relationships, innovating for business value, and optimizing performance. I want to thank all employees of the BMO team.

Speaker #3: Our differentiated capital markets expertise, particularly in metals and mining, energy, and infrastructure, plays to this market opportunity. All of this is supported by a growing wealth platform and a strong deposit foundation, providing significant opportunities to continue expanding client relationships and generate sustainable earnings growth.

Speaker #3: Most importantly, we remain focused on our number one imperative of delivering and sustaining a 15% ROE as we exit fiscal 2027 by executing on the commitments we made at our Investor Day.

Speaker #3: Stronger returns, faster earnings growth, and a more resilient franchise—all anchored in growing and deepening client relationships, innovating for business value, and optimizing performance.

Darryl White: Stronger returns, faster earnings growth, and a more resilient franchise, all anchored in growing and deepening client relationships, innovating for business value, and optimizing performance. I want to thank all employees of the BMO team. It's their commitment to our clients and communities that powers our combined success, my confidence in continuing to deliver long-term value for our shareholders. With that, I'll turn it over to Rahul.

Speaker #3: I want to thank all employees of the BMO team; it's their commitment to our clients and communities that powers our combined success, and my confidence in continuing to deliver long-term value for our shareholders.

Darryl White: It's their commitment to our clients and communities that powers our combined success, my confidence in continuing to deliver long-term value for our shareholders. With that, I'll turn it over to Rahul.

Speaker #3: And with that, I'll turn it over to Rahul.

Speaker #2: Thank you, Darryl. Good morning, everyone. My comments will start on slide 10. Third quarter reported EPS was $2.38, and net income was $1.8 billion.

Rahul Nalgirkar: Thank you, Darryl. Good morning, everyone. My comments will start on slide 10. Q3 reported EPS was $2.38, net income was $1.8 billion. Adjusting items are on slide 45, included a $973 million charge, largely related to goodwill on the announced sale of the transportation finance and vendor finance businesses. The remainder of my comments will focus on adjusted results. EPS was $3.96, up 22% from last year on record net income of $2.9 billion. ROE of 14% increased 200 basis points year over year. ROTCE of 18% increased 240 basis points, ROA was 72 basis points. These results demonstrate strong execution of our strategic priorities and core operating performance across all our businesses while continuing to optimize the portfolio and invest for future growth.

Speaker #2: Adjusting items are on slide 45 and include a $973 million charge, largely related to goodwill on the announced sale of the transportation finance and vendor finance businesses.

Speaker #2: The remainder of my comments will focus on adjusted results. EPS was $3.96, up 22% from last year on record net income of $2.9 billion.

Speaker #2: ROE of 14% increased 200 basis points year over year, ROTCE of 18% increased 240 basis points, and ROA was 72 basis points. These results demonstrate strong execution of our strategic priorities and core operating performance across all our businesses, while continuing to optimize the portfolio and invest for future growth.

Speaker #2: PPPT grew 13% year over year to $4.5 billion, with record PPPT in all four operating segments and positive operating leverage of 1.6%. Revenue growth of 11% was broad-based, reflecting the benefits of our diversified business mix.

Rahul Nalgirkar: PPPT grew 13% year over year to $4.5 billion, with record PPPT in all four operating segments and positive operating leverage of 1.6%. Revenue growth of 11% was broad-based, reflecting the benefits of our diversified business mix. Wealth management and Capital Markets continued to generate strong fee growth, while Canadian P&C and U.S. Banking benefited from NIM expansion and balance sheet growth. Total PCL decreased to $722 million, with lower impaired and performing provisions, Piyush will speak to this in his remarks. As Darryl mentioned, we have announced three strategic transactions that optimize our business portfolios, including the sale of 138 U.S. branches outside our core footprint, the transportation and vendor finance businesses, and Moneris, Canada. While these businesses contributed modestly to the current quarter revenue and earnings, they did not meet our long-term growth and ROE objectives.

Speaker #2: Wealth management and capital markets continue to generate strong fee growth, while Canadian P&C and U.S. banking benefited from NIM expansion and balance sheet growth.

Speaker #2: Total PCL decreased to $722 million, with lower impaired and performing provisions, and Piyush will speak to this in his remarks. As Darryl mentioned, we have announced three strategic transactions that optimize our business portfolios, including the sale of 138 U.S. branches outside our core footprint, the transportation and vendor finance businesses, and Moneris Canada.

Speaker #2: While these businesses contributed modestly to current quarter revenue and earnings, they did not meet our long-term growth and ROE objectives. We expect these transactions to add 50 basis points to our CET1 ratio on closing, be overall accretive to ROE, and position us well to deliver our Investor Day growth and return targets as we deploy capital and resources to opportunities which meet our growth and return expectations.

Rahul Nalgirkar: We expect these transactions to add 50 basis points to our CET1 ratio on closing, be overall accretive to ROE, and position us to well deliver our investor day growth and return targets as we deploy capital and resources to opportunities which meet our growth and return expectations. Turning to the balance sheet on slide 11, we are seeing loan growth momentum on both Canada and the U.S., positioning us to deliver ongoing NII growth. Average loans were up 3% year over year and up 2% sequentially. With balance sheet optimization actions complete, year over year, U.S. commercial loan growth turned positive this quarter and was up 4% sequentially. Canadian commercial loans were up 3% year over year and up 2% sequentially. Canadian consumer loans had modest growth across all lending products. Average deposit balances were flat both year over year and sequentially.

Speaker #2: Turning to the balance sheet on slide 11, we are seeing loan growth momentum in both Canada and the U.S., positioning us to deliver ongoing NII growth.

Speaker #2: Average loans were up 3% year over year and up 2% sequentially. With balance sheet optimization actions complete, year over year, U.S. commercial loan growth turned positive this quarter and was up 4% sequentially.

Speaker #2: Canadian commercial loans were up 3% year over year and up 2% sequentially. Canadian consumer loans had modest growth across all lending products. Average deposit balances were flat, both year over year and sequentially.

Speaker #2: Core operating deposits grew 8% year over year, offset by a deliberate reduction in term deposits in both countries. Deposit mix improvement remains an important source of our margin resilience.

Rahul Nalgirkar: Core operating deposits grew 8% year over year and offset by deliberate reduction in term deposits in both the countries. Deposit mix improvement remains an important source of our margin resilience. Turning to slide 12, NII ex markets was up 5% year over year, driven primarily by margin expansion and loan growth in Canadian P&C and US banking, partly offset by lower NII in corporate. NIM ex markets was 226 basis points, up 5 basis points year over year, reflecting continued deposit margin expansion from higher ladder reinvestment rates and improved deposit mix. NIM ex markets declined 3 basis points sequentially, with higher operating segment margins more than offset by higher levels of low-yielding liquid assets and lower NII in corporate.

Speaker #2: Turning to slide 12, NII ex-markets was up 5% year over year, driven primarily by margin expansion and loan growth in Canadian P&C and U.S. banking, partly offset by lower NII in Corporate.

Speaker #2: NIM ex-markets was 2.26%, up 5 basis points year over year, reflecting continued deposit margin expansion from higher ladder reinvestment rates and improved deposit mix.

Speaker #2: NIM ex-markets declined 3 basis points sequentially, with higher operating segment margins more than offset by higher levels of low-yielding liquid assets and lower NII in Corporate.

Speaker #2: Our focus on growing core operating deposits and disciplined loan growth is reflected in the stable NIM trends in U.S. Banking and Canadian P&C, notwithstanding the deposit competition and loan mix headwinds.

Rahul Nalgirkar: Our focus on growing core operating deposits and disciplined loan growth is reflected in the stable NIM trends in US banking and Canadian P&C, notwithstanding the deposit competition and loan mix headwinds. In Canadian P&C, NIM was up 2 basis points sequentially, with higher deposit margins offset by lower loan margins. In US banking, NIM decreased 1 basis point sequentially, as higher deposit and loan margins were offset by the impact of loans growing faster than deposits. Looking ahead, we expect core margin trends in Canadian P&C and US banking to remain resilient. In the near term, while the quarterly NIM may fluctuate modestly with prudent liquidity management and divestiture-related balance sheet mix, our underlying NIM performance is supported by the deposit mix improvement, ladder reinvestment, and disciplined pricing. We are focused on growing NII while maintaining NIM stability.

Speaker #2: In Canadian P&C, NIM was up 2 basis points sequentially, with higher deposit margins offset by lower loan margins. In U.S. banking, NIM decreased 1 basis point sequentially, as higher deposit and loan margins were offset by the impact of loans growing faster than deposits.

Speaker #2: Looking ahead, we expect core margin trends in Canadian P&C and U.S. banking to remain resilient. In the near term, while the quarterly NIM may fluctuate modestly, with prudent liquidity management and divestiture-related balance sheet mix, our underlying NIM performance is supported by deposit mix improvement, ladder reinvestment, and disciplined pricing.

Speaker #2: We are focused on growing NII while maintaining NIM stability. Moving to non-interest revenue on slide 13, NIR increased 26% year over year, or 15%, excluding trading.

Rahul Nalgirkar: Moving to non-interest revenue on slide 13, NIR increased 26% year over year or 15% excluding trading, and reflects our ongoing success in deepening client relationships across all our businesses. Growth was driven by higher wealth management fees, debt underwriting fees, TPS fees, and lending fees, which was partly offset by the gain on sale of a non-strategic insurance portfolio in the prior year. Turning to slide 14, expenses grew 9% and were up 6% excluding FX and higher performance-based compensation. We continue to closely manage expenses in line with revenue growth to deliver positive operating leverage. This performance reflects realized benefits from our efficiency program while selectively reinvesting in key growth areas, including talent, technology, and marketing. Our efficiency ratio improved to 54.9% and operating leverage was 1.6%.

Speaker #2: And it reflects our ongoing success in deepening client relationships across all our businesses. Growth was driven by higher wealth management fees, debt underwriting fees, TPS fees, and lending fees, which was partly offset by the gain on sale of a non-strategic insurance portfolio in the prior year.

Speaker #2: Turning to slide 14, expenses grew 9% and were up 6%, excluding FX and higher performance-based compensation. We continue to closely manage expenses in line with revenue growth to deliver positive operating leverage.

Speaker #2: This performance reflects realized benefits from our efficiency program, while selectively reinvesting in key growth areas, including talent, technology, and marketing. Our efficiency ratio improved to 54.9%, and operating leverage was 1.6%.

Speaker #2: We remain on track to deliver against our guidance of mid-single-digit core expense growth and positive operating leverage for the full year. Turning to slide 15, our CET1 ratio remains strong at 13%, unchanged from last quarter, with strong capital generation, net of dividends, of 33 basis points supporting growth and share repurchases.

Rahul Nalgirkar: We remain on track to deliver against our guidance of mid-single-digit core expense growth and positive operating leverage for the full year. Turning to slide 15, our CET1 ratio remains strong at 13%, unchanged from last quarter, with strong capital generation net of dividends of 33 basis points supporting growth and share repurchases. Disciplined capital allocation is foundational to our operating model. Given our strong capital position, today we announced a new normal course issuer bid for up to an additional 25 million shares or approximately 3.6% of shares outstanding beginning in September, pending regulatory approval. Moving to the operating segments and starting on slide 16. Canadian P&C net income was up 15%, reflecting good PPPT growth of 7% and lower PCLs. Revenue was up 6% from higher NII on margin expansion, loan growth, and strong core deposit growth.

Speaker #2: Disciplined capital allocation is foundational to our operating model. Given our strong capital position, today we announced a new normal course issuer bid for up to an additional 25 million shares, or approximately 3.6% of shares outstanding, beginning in September pending regulatory approval.

Speaker #2: Moving to the operating segments, and starting on slide 16. Canadian P&C net income was up 15%, reflecting good PPPT growth of 7% and lower PCLs.

Speaker #2: Revenue was up 6% from higher NII on margin expansion, loan growth, and strong core deposit growth. Non-interest revenue increased 30% driven by higher mutual fund distribution fees, TPS fees, and card revenue, partly offset by the reduction to retail deposit fees.

Rahul Nalgirkar: Non-interest revenue increased 13%, driven by higher mutual fund distribution fees, TPS fees, and card revenue, partly offset by the reduction to retail deposit fees. Expense growth of 4% reflected higher operating costs and technology investments. Efficiency ratio improved to 42.8%, with positive operating leverage of 1.6%. Turning to US banking on slide 17, which speaks to USD performance. Net income was up 9% year over year, with ROE expanding 90 basis points year over year to 9.8% and ROTCE of 17.3%, representing a strong return on marginal capital deployed. This was supported by strong core operating performance, including PPPT of CAD 972 million, up 7% year over year. Revenue was 5% on higher NII from margin expansion and commercial loan growth. NII grew 4%, primarily driven by record TPS fees and higher investment management fees.

Speaker #2: Expense growth of 4% reflected higher operating costs and technology investments. The efficiency ratio improved to 42.8%, with positive operating leverage of 1.6%. Turning to U.S. banking on slide 17, which speaks to U.S. dollar performance.

Speaker #2: Net income was up 9% year over year, with ROE expanding 90 basis points year over year to 9.8%, and ROTCE of 17.3%, representing a strong return on marginal capital deployed.

Speaker #2: This was supported by strong core operating performance, including PPPT of $972 million, up 7% year over year. Revenue was up 5% on higher NII from margin expansion and commercial loan growth.

Speaker #2: NER grew 4%, primarily driven by record TPS fees and higher investment management fees. Expense growth of 3% reflected continued investments in talent and technology, largely funded by efficiency improvements, with positive operating leverage of 1.7%.

Rahul Nalgirkar: Expense growth of 3% reflected continued investments in talent and technology, largely funded by efficiency improvements with positive operating leverage of 1.7%. We are seeing strong momentum across our US franchise to enhance returns and accelerate growth. Moving to slide 18. Wealth Management net income was up 22% year over year. Strong performance was driven by record wealth and asset management revenue up 24% year over year, reflecting stronger markets and continued growth of net new assets, deposits, and loans. Insurance revenue was down due to the gain on sale in the prior year, partially offset by the impact of favorable market movements in the current quarter. Expenses were up 22%, driven by higher employee-related expenses, including higher revenue-based costs. Turning to slide 19. Capital Markets net income was up 45% year over year, driven by record PPPT of CAD 903 million, up 39%.

Speaker #2: We are seeing strong momentum across our U.S. franchise to enhance returns and accelerate growth. Moving to slide 18, wealth management net income was up 22% year over year.

Speaker #2: Strong performance was driven by record wealth and asset management revenue, up 24% year over year, reflecting stronger markets and continued growth of net new assets, deposits, and loans.

Speaker #2: Insurance revenue was down due to the gain on sale in the prior year, partially offset by the impact of favorable market movements in the current quarter.

Speaker #2: Expenses were up 22%, driven by higher employee-related expenses, including higher revenue-based costs. Turning to slide 19, Capital Markets net income was up 45% year over year, driven by record PPPT of $903 million, up 39%.

Speaker #2: Revenue was up 20% year over year, with continued strength in Global Markets revenue, which increased 27% on strong activity in equities trading. Investment and Corporate Banking revenue increased 10%, driven by corporate banking and strong debt underwriting activity.

Rahul Nalgirkar: Revenue was up 20% year over year, with continued strength in Global Markets revenue, which increased 27% on strong activity in equities trading. Investment and Corporate Banking revenue increased 10%, driven by corporate banking and strong debt underwriting activity. Expenses were up 9%, mainly driven by higher employee and technology costs. These results reflect both constructive market conditions and the benefits of our investments in product capabilities, resource deployment, and sector expertise. Turning to slide 20. Corporate Services reflected a net loss of CAD 178 million, compared with CAD 123 million in the prior year, reflecting lower revenues and higher expenses. Our results this quarter demonstrate continued progress towards our Investor Day priorities to elevate returns and accelerate growth. We are advancing multiple BMO specific levers, including stronger US returns, core operating performance, capital efficiency, and disciplined balance sheet growth.

Speaker #2: Expenses were up 9%, mainly driven by higher employee and technology costs. These results reflect both constructive market conditions and the benefits of our investments in product capabilities, resource deployment, and sector expertise.

Speaker #2: Turning to slide 20, Corporate Services reflected a net loss of $178 million compared with $123 million in the prior year, reflecting lower revenues and higher expenses.

Speaker #2: Our results this quarter demonstrate continued progress towards our Investor Day priorities to elevate returns and accelerate growth. We are advancing multiple BMO-specific levers, including stronger U.S. returns, core operating performance, capital efficiency, and disciplined balance sheet growth.

Rahul Nalgirkar: Our results this quarter demonstrate continued progress towards our Investor Day priorities to elevate returns and accelerate growth. We are advancing multiple BMO specific levers, including stronger US returns, core operating performance, capital efficiency, and disciplined balance sheet growth. With adjusted ROE at 14% this quarter, we are confident in achieving our medium-term objective of 15% ROE exiting fiscal 2027. With that, I will now turn it over to Piyush.

Speaker #2: With adjusted ROE at 14% this quarter, we are confident in achieving our medium-term objective of 15% ROE exiting fiscal 2027. And with that, I will now turn it over to Piyush.

Rahul Nalgirkar: With adjusted ROE at 14% this quarter, we are confident in achieving our medium-term objective of 15% ROE exiting fiscal 2027. With that, I will now turn it over to Piyush.

Speaker #3: Thank you, Rahul, and good morning, everyone. The North American economy is continuing to demonstrate resilience. Amid elevated geopolitical risks and an evolving trade landscape, economic growth has resumed in Canada, and growth in the U.S. remains solid, supported by AI-driven expansion.

Piyush Agrawal: Thank you, Rahul, and good morning, everyone. The North American economies continue to demonstrate resilience amid elevated geopolitical risks and evolving trade landscape. Economic growth has resumed in Canada, and growth in the US remains solid, supported by AI-driven expansion. At the same time, Canadian labor markets remain softer than historical norms. Energy-driven inflation has created near-term volatility, and this weekend's announcement of additional tariffs present downside risks. Turning to our performance this quarter, we are seeing the benefits of the actions we have taken over the past several years to strengthen portfolio quality, maintain disciplined underwriting standards, and proactively manage emerging risks. As shown on slide 22, total provision for credit losses were CAD 722 million, down from CAD 739 million in the prior quarter, driven by lower impaired provisions. Impaired losses decreased CAD 26 million to CAD 708 million, or 41 basis points.

Speaker #3: At the same time, Canadian labor markets remain softer than historical norms. Energy-driven inflation has created near-term volatility, and this weakens outlook. Announcement of additional tariffs present downside risks.

Speaker #3: Turning to our performance this quarter, we are seeing the benefits of the actions we have taken over the past several years to strengthen portfolio quality, maintain disciplined underwriting standards, and proactively manage emerging risks.

Speaker #3: As shown on slide 22, total provision for credit losses was $722 million, down from $739 million in the prior quarter, driven by lower impaired provisions.

Speaker #3: Impaired losses decreased $26 million to $708 million, or 41 basis points. By operating segment, Canadian Personal and Commercial impaired losses were $447 million, down $30 million from the prior quarter, driven by lower losses in the unsecured retail portfolios.

Piyush Agrawal: By operating segment, Canadian Personal and Commercial impaired losses were CAD 447 million, down CAD 30 million from the prior quarter, driven by lower losses in the unsecured retail portfolios. While consumer insolvencies remain elevated, we are starting to see some signs of stabilization as a result of proactive risk management actions. We remain vigilant given the uncertainty of ongoing trade policies and continue to actively manage the portfolio through enhanced monitoring and early client engagement. In US Banking, losses were CAD 223 million, down CAD 14 million from the prior quarter, with lower losses in both consumer and commercial segments. And Capital Markets impaired losses were CAD 30 million. Turning to slide 23, our performing allowance position remains a key strength. The CAD 14 million performing provision this quarter was primarily driven by changes in the macroeconomic outlook relating to higher long-term rates, partially offset by improvement in portfolio credit quality.

Speaker #3: While consumer insolvencies remain elevated, we are starting to see some signs of stabilization as a result of proactive risk management actions. We remain vigilant given the uncertainty of ongoing trade policies and continue to actively manage the portfolio through enhanced monitoring and early client engagement.

Speaker #3: In U.S. Banking, losses were $223 million, down $14 million from the prior quarter, with lower losses in both Consumer and Commercial segments. And Capital Markets impaired losses were $30 million.

Speaker #3: Turning to slide 23, our performing allowance position remains a key strength. The $14 million performing provision this quarter was primarily driven by changes in the macroeconomic outlook relating to higher long-term rates.

Piyush Agrawal: Turning to slide 23, our performing allowance position remains a key strength. The CAD 14 million performing provision this quarter was primarily driven by changes in the macroeconomic outlook relating to higher long-term rates, partially offset by improvement in portfolio credit quality. The bank remains well reserved with CAD 4.8 billion of performing allowance and 69 basis points coverage over performing loans. Overall, underlying credit trends improved during the quarter. The wholesale portfolio continued to experience net positive migration, resulting in a further CAD 1 billion decrease in watchlist balances. Gross impaired loans were CAD 6.8 billion, or 97 basis points, down 4 basis points from the prior quarter, as shown on slide 24. Formations were CAD 1.5 billion, stable to prior quarter. Looking ahead, we are encouraged by the positive trends in our portfolios.

Speaker #3: Partially offset by improvement in portfolio credit quality. The bank remains well-reserved with $4.8 billion of performing allowance and 69 basis points coverage over performing loans.

Piyush Agrawal: The bank remains well reserved with CAD 4.8 billion of performing allowance and 69 basis points coverage over performing loans. Overall, underlying credit trends improved during the quarter. The wholesale portfolio continued to experience net positive migration, resulting in a further CAD 1 billion decrease in watchlist balances. Gross impaired loans were CAD 6.8 billion, or 97 basis points, down 4 basis points from the prior quarter, as shown on slide 24. Formations were CAD 1.5 billion, stable to prior quarter. Looking ahead, we are encouraged by the positive trends in our portfolios. Commercial watchlist and impaired loan trends continue to improve, and our portfolio continues to demonstrate strong borrower fundamentals. At the same time, the recent tariff announcement is an important development, and we are watching the potential second-order effects on Canadian growth, employment, and business investment very closely. That said, we do not see this as a broad-based credit event today.

Speaker #3: Overall, underlying credit trends improved during the quarter. The wholesale portfolio continued to experience net positive migration, resulting in a further $1 billion decrease in watchlist balances.

Speaker #3: Gross impaired loans were $6.8 billion, or 97 basis points, down 4 basis points from the prior quarter, as shown on slide 24. Formations were $1.5 billion, stable to the prior quarter.

Speaker #3: Looking ahead, we are encouraged by the positive trends in our portfolios. Commercial watchlist and impaired loan trends continue to improve, and our portfolio continues to demonstrate strong borrower fundamentals.

Piyush Agrawal: Commercial watchlist and impaired loan trends continue to improve, and our portfolio continues to demonstrate strong borrower fundamentals. At the same time, the recent tariff announcement is an important development, and we are watching the potential second-order effects on Canadian growth, employment, and business investment very closely. That said, we do not see this as a broad-based credit event today. Our portfolio is well diversified. We have stress-tested the areas most exposed to trade disruption, and our underwriting remains disciplined. Direct exposure remains manageable at less than 1% of the loan book, and a significant portion is to investment-grade borrowers. The bigger variable for us continues to be broader macroeconomic implications for Canada. We will continue to support our clients as they navigate through these policy changes. We also believe government measures will help lessen the impact on workers and businesses.

Speaker #3: At the same time, the recent tariff announcement is an important development, and we are watching the potential second-order effects on Canadian growth, employment, and business investment very closely.

Speaker #3: That said, we do not see this as a broad-based credit event today. Our portfolio is well-diversified. We've stress-tested the areas most exposed to trade disruption, and our underwriting remains disciplined.

Piyush Agrawal: Our portfolio is well diversified. We have stress-tested the areas most exposed to trade disruption, and our underwriting remains disciplined. Direct exposure remains manageable at less than 1% of the loan book, and a significant portion is to investment-grade borrowers. The bigger variable for us continues to be broader macroeconomic implications for Canada. We will continue to support our clients as they navigate through these policy changes. We also believe government measures will help lessen the impact on workers and businesses. So we are appropriately cautious in the environment and confident in the resilience of our portfolio. Against this backdrop, we expect Q4 impaired PCL to be in line with Q3, with no change to our 2026 guidance.

Speaker #3: Direct exposure remains manageable at less than 1% of the loan book, and a significant portion is to investment-grade borrowers. The bigger variable for us continues to be broader macroeconomic implications for Canada.

Speaker #3: We will continue to support our clients as they navigate through these policy changes. We also believe government measures will help lessen the impact on workers and businesses.

Speaker #3: So, we are appropriately cautious in the environment and confident in the resilience of our portfolio. Against this backdrop, we expect fourth quarter impaired PCL to be in line with the third quarter, with no change to our 2026 guidance.

Piyush Agrawal: So we are appropriately cautious in the environment and confident in the resilience of our portfolio. Against this backdrop, we expect Q4 impaired PCL to be in line with Q3, with no change to our 2026 guidance. To conclude, the bank enters Q4 from a position of strength with robust reserve coverage, diversified exposures, solid borrower fundamentals, and capital and liquidity levels that provide significant flexibility across a range of economic scenarios. We believe these factors position BMO well to continue supporting our customers while prudently managing risk through the cycle. With that, I will now turn the call back to the operator for the Q&A portion of this call.

Speaker #3: To conclude, the bank enters the fourth quarter from a position of strength, with robust reserve coverage, diversified exposures, solid borrower fundamentals, and capital and liquidity levels that provide significant flexibility across a range of economic scenarios.

Piyush Agrawal: To conclude, the bank enters Q4 from a position of strength with robust reserve coverage, diversified exposures, solid borrower fundamentals, and capital and liquidity levels that provide significant flexibility across a range of economic scenarios. We believe these factors position BMO well to continue supporting our customers while prudently managing risk through the cycle. With that, I will now turn the call back to the operator for the Q&A portion of this call.

Speaker #3: We believe these factors position BMO well to continue supporting our customers while prudently managing risk through the cycle. With that, I will now turn the call back to the operator for the Q&A portion of this call.

Speaker #1: Thank you. If you would like to ask a question, please press star followed by the number one on your telephone keypad. To withdraw your question, press star one again.

Operator: Thank you. If you would like to ask a question, please press star followed by the number 1 on your telephone keypad. To withdraw any questions, press star 1 again. Our first question comes from Matthew Lee from Canaccord Genuity. Please go ahead.

Speaker #1: Our first question comes from Matthew Lee from Canaccord Genuity.

Christine Viau: Operator, do we have our first question?

Speaker #4: Operator, do we have our first question?

Matthew Lee: Hi. Good morning. Thanks for taking my question. Maybe one for Aron. US ROE is progressing pretty quickly now in the 10% range. Can you maybe rank the key drivers to go from 10-

Speaker #5: Hi, good morning. Nice to take my question. Maybe one for Aaron. US ROE is progressing pretty quickly now, in the 10% range. Can you maybe rank the key drivers?

Operator: Operator, do we have our first question?

Christine Viau: Operator, do we have our first question?

Speaker #4: Operator, do we have our first question?

Speaker #5: To 12. Whether that’s accelerating core banking loan growth, continued growth in wealth, normalization of credit, or further balance sheet optimization. And has that ranking changed at all since the investor day, just given the progress we’ve made so far?

Matthew Lee: To 12? Whether that is accelerating core banking loan and growth, continued growth and wealth, normalization of credit, or further balance sheet optimization. Has that ranking changed at all since Investor Day, just given the progress you made so far?

Speaker #4: Sorry, just give us a moment here. Operator, are you there?

Operator: Sorry, just give us a moment here. Operator, are you there? Jess, can you hear me? Ladies and gentlemen, we are experiencing technical difficulties on the line. Sorry, we understand there are some difficult- Yes, our first question comes from Matthew Lee from Canaccord Genuity. Please go ahead. Your line is open, sir.

Operator: Sorry, just give us a moment here.

Christine Viau: Operator, are you there?

Speaker #1: Yes, can you hear? Ladies and gentlemen, we're experiencing technical difficulties on the line.

Operator: Yes, can you hear me? Ladies and gentlemen, we are experiencing technical difficulties on the line. Sorry, we understand there are some difficult- Yes, our first question comes from Matthew Lee from Canaccord Genuity. Please go ahead. Your line is open, sir.

Speaker #2: Sorry. We understand there are some difficulties.

Speaker #1: Yes . Our first question comes from Matthew Lee from Canaccord Genuity . Please go ahead . Your line is open , sir .

Speaker #3: Can anyone hear me

Matthew Lee: Hi, can everyone hear me?

Speaker #2: Yeah, we can hear you, Matt. Sorry for the delay.

Operator: Yep, we can hear you, Matt. Sorry for the delay.

Christine Viau: Yep, we can hear you, Matt. Sorry for the delay.

Speaker #3: Yeah . No problem . Just maybe one for Aaron . U.S. Roe is progressing quickly now in the 10% range . Can you maybe rank the key drivers to go from 10 to 12% ?

Matthew Lee: Yeah, no problem. Just maybe one for Aron. US ROE is progressing quickly now in the 10% range. Can you maybe rank the key drivers to go from 10% to 12%, whether that is accelerating core banking loan growth in wealth, credit normalization, or further balance sheet optimization? Just how has that ranking changed at all since Investor Day, just given the progress you made so far? Thanks.

Speaker #3: Whether that's accelerating core banking loan growth , growth in wealth , credit normalization , or further balance sheet optimization , and just how is that ranking changed at all since Investor Day ?

Speaker #3: Just given the progress you've made so far? Thanks.

Christine Viau: Yep.

Aron Levine: Matthew, it is Aron. Can you hear me now?

Speaker #4: Matthew, can you hear me now?

Speaker #3: Hi, Aaron. I can hear you. Yep.

Matthew Lee: Hi, Aron. I can hear you now.

Speaker #5: I can hear you now.

Speaker #4: Okay, great. I'm sorry for the technical challenges. I think I heard your question was related to the path to 12%.

Aron Levine: Okay, great. Sorry for the technical challenges. I think I heard your question was related to the path to 12%, the ROE path. I will answer that, and I think that is what you have. If you remember what we said in Investor Day, and what we have repeated, the way to think about the path is really in a third, a third, a third. A third client balance growth, a third fee income growth, and a third efficiencies and PCL normalization. Across all three of those, we are really seeing some positive trends. We talked about the good loan momentum and commercial loan growth, 4% quarter-over-quarter, and that is after achieving the growth in Q2. We are seeing strong fee income growth, in particular with our TPS, which we grew at 15% year-over-year on top of 23% the prior year.

Speaker #4: The ROE path . So I'll answer that . And I think that's what you asked . So if you remember what we said in Investor Day and we've repeated the way to think about the path is really in a third , a third , a third , right , a third client balanced growth , a third fee income growth , and a third efficiencies and PCL normalization .

Speaker #4: And across all three of those, we are really seeing some positive trends. We talked about the good loan momentum in commercial loan growth, up 4% quarter over quarter.

Speaker #4: And that's after achieving the growth in the second quarter. We're seeing strong fee income growth, in particular with our TPS, which we grew at 15% year over year, on top of 23% the prior year.

Speaker #4: We are seeing a good growth in our consumer business with 3% core consumer operating deposit growth . And then , of course , on our efficiencies and PCL normalization , our efficiencies have improved 90 basis points year over year .

Aron Levine: We are seeing a good growth in our consumer business, with about 3% core consumer operating deposit growth. Then of course, on our efficiencies and PCL normalization, our efficiencies have improved 90 basis points year-over-year, and actually 300 basis points since 2024. Across all of those, it is good progress. There is work to be done. We have to continue to execute the strategy as we have laid out, driving quality loan and deposit growth really work closely as we have been across all of our fee-generating businesses, TPS, Capital Markets, and Wealth.

Speaker #4: And actually 300 basis points since 2024 . So across all of those , it's good progress . There's work to be done . We have to continue to execute the strategy as we've laid out , driving quality loan and deposit growth really working closely as we have been across all of our fee generating businesses , TPS capital markets and wealth , and continue to deliver strong efficiencies through expense management and PCL normalization .

Aron Levine: Continue to deliver strong efficiencies through expense management and PCL normalization, as Piyush pointed out. I will say, critically important, we are investing within that expense management, strong increases in talent. We have delivered more investments in our technology model. So we continue to invest in a long-term growth because this is all about long-term success. With a quarter now at 9.8% ROE and 17.3% ROTCE, we are clearly making progress, and we will continue to work each quarter towards our ultimate goals.

Speaker #4: As you pointed out, I will say it's critically important. We are investing within that expense management, with strong increases in talent. We've delivered more investments in our technology model.

Speaker #4: So we continue to invest in the long term growth because this is all about long term success . And with a quarter now at 9.8% , ROE and 17.3% ROTC , we're clearly making progress .

Speaker #4: And we'll continue to work each quarter towards our ultimate goals.

Speaker #3: All right . That's helpful . So just about one third for each for the next 200 basis points . Okay . I'll pass the line .

Matthew Lee: All right. That is helpful. Just about one-third fee each for the next 200 basis points. Okay, I will pass the line. Thanks.

Speaker #3: Thanks

Speaker #1: Our next question comes from Ebrahim Poonawala 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 #6: Hey , good morning . I guess maybe Daryl and then Aaron and Matthew , if you want to jump in , just give us a mark to market around you .

Ebrahim Poonawala: Good morning. I guess maybe, Darryl, and then if Aron and Mathew, if you want to jump in, just give us a mark to market around. Darryl, you addressed that the tariff impact could be manageable, potentially. But as we think about the momentum, maybe starting with the Canadian economy, it felt like things were picking up steam, commercial growth, housing stabilizing. Just give us a sense of what's your best expectation in light of the tariff uncertainty of what that means for the Canadian economy. On the US side, how much of lending do you think can get influenced or impacted by the AI CapEx cycle, either direct or second-round effects? Thank you.

Speaker #6: Addressed that the tariff impact could be manageable potentially , but as we think about the momentum , maybe starting with the Canadian economy , it felt like things were picking up steam , commercial growth , housing stabilizing .

Speaker #6: Just give us a sense of what’s your best expectation, in light of the tariff uncertainty, of what that means for the Canadian economy?

Speaker #6: And on the U.S. side, how much of lending do you think can get influenced or impacted by the AI CapEx cycle, either direct or second-round effects?

Speaker #6: Thank you

Speaker #7: Hey Ebrahim , it's Daryl . So thanks for the question . Look , you you surmised in your question that we thought that the impact of the recent round of tariffs was manageable .

Darryl White: Hey, Ebrahim, it's Darryl. So thanks for the question. Look, you surmised in your question that we thought that the impact of the recent round of tariffs was manageable. I think I heard comma, "potentially." I think it's absolutely manageable, is the first point I would make. I'll explain to you why. When we step back, I'm going to reinforce the point I made earlier, which is that we're focused on helping our clients navigate change. That's not new. Liberation day was 16 months ago. There's been a lot of change that has been navigated. I will point out to all of us that over the course of that time, as adjustments are being made in supply chains, we've got a growing Canadian economy, in fact, an increase in the growth rate as well as a reduction in the unemployment rate.

Speaker #7: I think I heard comma potentially . I think it's absolutely manageable is the first point . I would make . And I'll explain to you why , you know , when we step back , I'm going to reinforce the point I made earlier , which is that we're focused on helping our clients navigate change .

Speaker #7: That's not New Liberation day was 16 months ago . There's been a lot of change that has been navigated . You know , I will point out to all of us that over the course of that time , as adjustments are being made in supply chains , we've got a growing Canadian economy .

Speaker #7: In fact, an increase in the growth rate as well as a reduction in the unemployment rate. So that sets the backdrop for where we are today.

Darryl White: That sets the backdrop for where we are today. I think it is important to remove the emotion from the topic and have a clinical lens. I won't add to the emotion, I will add to the clinician's work, which is the difference between last week and today, if we bring to a status quo, is the imposition of the Section 338 tariffs, which are acute, but they are at the same time applied to 5% of the exports that go from Canada to the US. Within that 5%, Piyush took you through our position from a lending and risk perspective, which I would say is very manageable. I think we have to recognize that whatever impact this might have, has a very high chance of being mitigated in many ways. Later today, we do expect the Canadian government to announce its support mechanisms.

Speaker #7: I think it is important to remove the emotion from the topic and have a clinical lens, so I won't add to the emotion.

Speaker #7: I will add to the clinicians work , which is the difference between last week and and today . If we bring to a status quo , is the imposition of the 338 tariffs , which which are acute , but they are at the same time applied to 5% of the exports that go from Canada to the US .

Speaker #7: Within that 5% . Piyush took you through our position from a lending and risk perspective , which I would say is is very , very manageable .

Speaker #7: I think we have to recognize that whatever impact this might have has a very high chance of being mitigated in many ways later today.

Speaker #7: We do expect the Canadian government to announce its support mechanisms . There is a lot of fiscal capacity , and I mentioned earlier , Ibrahim , that the clients have adjusted very well and have proven that they can adjust very well .

Darryl White: There is a lot of fiscal capacity. I mentioned earlier, Ebrahim, that the clients have adjusted very well and have proven that they can adjust very well. Last thing I will say on this, I think it is a very interesting point and another helpful catalyst where I will say what I have said before, which is there is an opportunity for the Canadian federal and provincial governments to recognize the moment for what it is and use it to drive transformational policy change around really truly knocking down inter-provincial trade barriers, keeping the pace of project reviews and approval processes up, ensuring Canadian competitiveness on taxation, is real, and not let this moment go to waste. I think when you put it all together, I will come back to where I started. Is it manageable? Of course it is.

Speaker #7: The last thing I'll say on this , I think it's a very a very interesting point . And another helpful catalyst where I will say what I've said before , which is there's an opportunity for the Canadian federal and provincial governments to recognize the moment for what it is .

Speaker #7: And and use it to drive transformational policy change around really , truly knocking down interprovincial trade barriers , keeping the pace of project reviews and approval processes up , ensuring Canadian competitiveness on taxation is real and not let this moment go to waste .

Speaker #7: So I think, when you put it all together, I'll come back to where I started. Is it manageable? Of course it is.

Speaker #7: And in fact , there may be some opportunities in the challenge that that we've got in front of us , on us , on the US side .

Darryl White: In fact, there may be some opportunities in the challenge that we have got in front of us. On the US side, I do not think this really has much impact whatsoever on the US economy, which is mostly geared towards its own drivers, and that includes the downstream effect, of course, from the AI trade and the CapEx cycle, which is real, and we participate in that as many do in various parts of that ecosystem. I hope that helps.

Speaker #7: I don't think this really has much impact whatsoever on on the US economy , which is mostly geared towards its own its own drivers .

Speaker #7: And that includes the downstream effect , of course , from the AI trade and the CapEx cycle , which is real . And we participate .

Speaker #7: We participate in that, as many do in various parts of that ecosystem. I hope that helps.

Speaker #6: That's helpful. Thank you.

Ebrahim Poonawala: That is helpful. Thank you.

Speaker #5: Thank you .

Speaker #1: Our next question comes from Stephen Boland from Raymond James. Please go ahead, your line is open.

Operator: Our next question comes from Stephen Boland from Raymond James. Please go ahead. Your line is open.

Stephen Boland: Morning. Just one question. If you could just talk a little bit about the lowering of the DSB. This is going to obviously drive a little bit more excess capital, hopefully into the loan book. So I am just wondering where your focus is going to be. Is it going to be higher margin, possibly higher risk loans, or are you going to kind of follow the government agenda with focus on defense infrastructure, which may have lower credit risk, but also lower margin? So how is that excess capital going to be deployed in the loan book?

Speaker #8: Just one question. If you could just talk a little bit about the lowering of the DSB. This is obviously going to drive a little bit more excess capital.

Speaker #8: You know , hopefully into the loan book . So I'm just wondering where your focus is going to be . Is it going to be higher margin , possibly higher risk loans , or are you going to kind of follow the government agenda with focus on defence infrastructure , which may have lower credit risk , but also lower margin ?

Speaker #8: So how's that excess capital being deployed in the book?

Speaker #7: Yeah . So thanks for the question . It's Daryl again . I think the short answer to your question is no change . You've seen with the lowering of the DSB , we have not outlined any change in our target capital levels .

Darryl White: Yeah. So thanks for the question. It is Darryl again. I think the short answer to your question is no change. You have seen with the lowering of the DSB, we have not outlined any change in our target capital levels. We had said at our investor day that we intend to operate between 12.5% and 13%, pardon me, CET1. That is unchanged as we sit here today. I think we have demonstrated in the quarter we have got, quarter is actually a great example, the last couple of quarters, where the generative capacity is now at 33 basis points, as you saw, which is if you go back, I am looking at several quarters, that would have been in the high teens, low twenties.

Speaker #7: We had said at our Investor Day that we intend to operate between 12.5 and 13% . ROE , pardon me , CT1 that is unchanged .

Speaker #7: As we sit here today , I think we've demonstrated in the quarter we've got quarters actually a great example . The last couple of quarters where the generative capacity is now at 33 basis points , as you saw , which is if you go back , I'm looking at several quarters that would have been in the high teens , low 20s .

Speaker #7: So that's very helpful in terms of being able to drive a menu that allows us to meet the good client growth, where it is in both countries.

Darryl White: That is very helpful in terms of being able to drive a menu that allows us to meet the good client growth where it is in both countries, first and foremost, and at the same time invest in our growth agenda, which you saw this quarter, we took some real opportunities to do that. And then finally, there is plenty left over for dividends and share buybacks. So really there is no change. There is certainly no change in risk appetite. There is certainly no change in going after chasing a different part of the risk curve or the yield curve. The strategy is exactly as we outlined it at Investor Day. I hope that helps.

Speaker #7: First and foremost, and at the same time, we invested in our growth agenda, which you saw this quarter. We took some real opportunities to do that.

Speaker #7: And then finally , there's there's plenty left over for dividends and share buybacks . So really , there is no change . There's certainly no change in risk appetite .

Speaker #7: There's certainly no change in going after, chasing a different part of the risk curve or the yield curve. The strategy is exactly as we outlined it at Investor Day.

Speaker #7: I hope that helps .

Speaker #8: Thank you very much

Rahul Nalgirkar: Thank you very much.

Stephen Boland: Thank you very much.

Speaker #1: Our next question comes from Doug Young from Desjardins Capital Markets. Please go ahead, your line is open.

Operator: Our next question comes from Doug Young from Desjardins Capital Markets. Please go ahead. Your line is open.

Speaker #9: Hi . Good morning . Daryl . I think you talked about the the this quarter demonstrates the earnings capacity of the capital market division .

Doug Young: Hi. Good morning. Darryl, I think you talked about this quarter demonstrates the earnings capacity of the Capital Markets division. Capital Markets can be all over the map, but this quarter was over 16% ROE. I think you are targeting 15%. Can you talk about the sustainability of the earnings relative to the past? Is the earnings capacity of this division higher than it has been in the past, and maybe you can talk a bit about why?

Speaker #9: And I know capital markets can be all over the map. But you know, this quarter was over 16% ROE. I think you're targeting 15%.

Speaker #9: So can you talk about the sustainability of the earnings . You know , relative to the past ? And , you know , is the earnings capacity of this of this division higher than it has been in the past ?

Speaker #9: And maybe you can talk a bit about why.

Speaker #5: , why .

Speaker #7: Yes . So thanks for the question . Maybe you addressed me . So I'll I'll begin the answer , but I'll also ask Alan to chip in here as he's he's running the business day to day .

Darryl White: Yeah. Thanks for the question. You addressed me, so I will begin the answer, but I will also ask Alan to chip in here as he is running the business day to day. Short answer is yes, the earnings capacity is higher than it had been historically. We have had constructive markets. The teams have done a really good job serving our clients within those constructive markets. At the same time, I remind us that over the course of the last few years, we have invested very heavily in the capabilities in this business on both sides of the border and internationally.

Speaker #7: The short answer is yes, the earnings capacity is higher than it had been historically. We have had constructive markets, and the teams have done a really good job serving our clients within those constructive markets.

Speaker #7: But at the same time, I remind us that over the course of the last few years, we've invested very heavily in the capabilities in this business on both sides of the border and internationally.

Speaker #7: So what you're what you're seeing is the combination of the market demand and our ability to service that demand . But also an elevation of our own capabilities , and therefore , from a , from a sustainable basis .

Darryl White: What you are seeing is the combination of the market demand and our ability to service that demand, but also an elevation of our own capabilities. Therefore, from a sustainable basis, I would say we absolutely expect more of ourselves than we might have a year and a half or two years ago. Alan, why don't you jump in?

Speaker #7: I would, I would say we, we absolutely expect more of ourselves than we might have a year and a half or two years ago.

Speaker #7: Alan , why don't you why don't you jump in ?

Speaker #10: Thanks , Daryl . The only thing I would add and Doug , appreciate the question is , as Daryl mentioned , we've gone through an investment cycle in people technology and broadening out our product set .

Alan Tannenbaum: Thanks, Darryl. The only thing I would add, and Doug, appreciate the question, is, as Darryl mentioned, we have gone through an investment cycle in people, technology, and broadening out our product set. You see that, Doug, reflected in the diversity of our results, right? This quarter, we will highlight strengths around our equity derivative businesses and some of our issuance businesses. Earlier in the year, we talked about our strength in our commodities businesses and our metals and mining M&A. That investment cycle and diversification of our business gives us confidence that these results are sustainable.

Speaker #10: And you see that Doug , in the diversity diversity of our results , right this quarter . You know , we'll highlight strengths around our equity derivative businesses and some of our issuance businesses .

Speaker #10: Earlier in the year, we talked about our strength in our commodities businesses and our metals and mining M&A. So, that investment cycle and diversification of our business gives us confidence that these results are sustainable.

Speaker #9: I appreciate that . And then just a quick one , it sounds like you're holding more liquidity than normal . Can you quantify what the impact that had on Nims this quarter ?

Doug Young: I appreciate that. Then just a quick one. It sounds like you are holding more liquidity than normal. Can you quantify what the impact that had on NIMs this quarter? Is that something, like at the all bank level, obviously, and then is this something, a drag that should continue for a few more quarters?

Speaker #9: And , you know , is that something like at the bank level , obviously , and then is this something a drag that should continue for a few more quarters

Speaker #11: I , if I were to quantify of the three basis points , Nim decline , which we had quarter over quarter , almost two basis points is related to higher liquidity , which we have .

Rahul Nalgirkar: If I were to quantify off the 3 basis points NIM decline, which we had quarter-over-quarter, almost 2 basis points is related to higher liquidity, which we have in corporate. I think if you think about it, I would characterize this as prudent liquidity management. You are aware we have got some pending dispositions here, especially in Q4, macro geopolitical developments, and also we were opportunistic about pre-funding some debt maturity. So when you put it all together, that is how we were looking at liquidity management here. We do expect, though, largely a lot of this to normalize post Q4 once the dispositions are behind us.

Speaker #11: In corporate , I think . And if you think about it , I would characterize this as prudent liquidity management . You're aware we've got some pending dispositions here , especially in the fourth quarter macro geopolitical developments .

Speaker #11: And also, we were opportunistic about pre-funding some debt maturities. So, when you put it all together, that's how we were looking at liquidity management here.

Speaker #11: We do expect , though , largely a lot of this to normalize both for post fourth quarter . Once the dispositions are behind us .

Doug Young: Appreciate it. Thank you.

Speaker #9: Appreciate it. Thank you.

Speaker #5: Appreciate it. Thank you.

Speaker #1: Our next question comes from Mario Mendonca from TD Securities. Please go ahead, your line is open.

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

Speaker #12: Good morning . Going to card Pcls . I appreciate it's not a big part of Bmo's business , but it seems like it's it can be a pretty helpful indicator of Canadian consumer credit .

Mario Mendonca: Good morning. Going to card PCLs. I appreciate it's not a big part of BMO's business, but it seems like it can be a pretty helpful indicator of Canadian consumer credit. Could you speak about why that may have dropped so abruptly? I am referring to the decline in card PCLs year-over-year and quarter-over-quarter. Is there something special in the quarter, or is that just a healing of the Canadian consumer?

Speaker #12: Could we speak about could you speak about why that may have dropped so abruptly ? And I'm referring to the decline in card Pcls year over year and quarter over quarter .

Speaker #12: Is there something special in the quarter, or is that just a healing of the Canadian consumer?

Speaker #13: Hi Mario, it's Piyush. So I'll begin, and maybe I'll invite Matt to join. What you're seeing is a combination of improvement over time in the Canadian macro environment.

Piyush Agrawal: Hi, Mario, it's Piyush. I will begin, and maybe I will invite Matt to join. What you are seeing is a combination of improvement over time in the Canadian macro environment. You saw unemployment tick down. There has been some seasonal changes in insolvencies that have been helpful, but really it's a very deliberate set of actions we have been taking to proactively manage and reduce risk in our portfolio while refocusing on the premium segment. This has resulted in some moderation in the balance growth, which we believe is turning the corner. We are seeing positive quarter-over-quarter momentum and expect continued improvement in the portfolio performance as we move through next year, which is why the overall confidence in our Q4 impacts, knowing that there are going to be some second order impacts as we go into 2027 from some of the policy changes. Matt?

Speaker #13: You saw unemployment tick down. There have been some seasonal changes in insolvencies that have been helpful. But really, it's a very deliberate set of actions.

Speaker #13: We've been taking steps to proactively manage and reduce risk in our portfolio, while refocusing on the premium segment. This has resulted in some moderation in the balance growth, which we believe is turning the corner.

Speaker #13: And we are seeing positive quarter over quarter momentum and expect continued improvement in the portfolio performance as we move through next year , which is why , you know , the overall confidence in our Q4 impacts , knowing that there are going to be some second order impacts as we go into 27 from some of the policy changes , Matt .

Speaker #7: Yeah . And just to build on the growth side for for just a second , we've seen quarter over quarter balanced growth for the first time in five quarters , which is excellent .

Mathew Mehrotra: Yeah, just to build on the growth side for just a second, we have seen quarter-over-quarter balance growth for the first time in five quarters, which is excellent. Our premium account growth is up 47% year-over-year. So to Piyush's comments, the strategy is working. We have taken deliberate action to reposition the portfolio, and we are growing into segments that we set out in Investor Day.

Speaker #7: And our premium account growth is up 47% year over year . So to push his comments , the strategy is working . We've taken deliberate action to reposition the portfolio , and we're growing in the segments that we set out in Investor Day .

Speaker #12: All right. Slightly different kind of question. You know, it's been many years since Canadian investors wanted to talk about U.S. bank M&A.

Mario Mendonca: All right. Slightly different kind of question. It has been many years since Canadian investors wanted to talk about US bank M&A. Your bank has been an acquirer. The valuation spread between our Canadian banks and US regionals, for examples, about as wide as I have seen it. Does that influence your outlook on US M&A?

Speaker #12: Your bank has been an acquirer. The valuation spread between our Canadian banks and U.S. regionals, for example, is about as wide as I've seen.

Speaker #12: It does. Does that influence your outlook on U.S. M&A?

Speaker #7: Hey Mario, it's Darryl. Look, there are a lot of things that go into the rubric of how we think about M&A.

Darryl White: Hey Mario, it is Darryl. Look, there is a lot of things that go into the rubric of how we think about M&A. I do not think today acknowledging there have been some dynamics that are supportive, as you pointed out in your question, but I do not think our posture has changed. Our number one imperative is to drive our business to the ROE targets that we have outlined for you all over the last couple of years and reinforced at Investor Day. I have said it before, so at the risk of boring with repetition, I will say it again. Might we engage in M&A in the US? Only if it meets very strict conditions. We think about it in the category of furthering our strategies around regional density and regional scale, and the strategies that Aron has been outlining quite clearly.

Speaker #7: I don't think today acknowledging there have been some dynamics that are supportive . As you pointed out in your question . But I don't think our posture has changed .

Speaker #7: Our number one imperative is to drive our business to the ROE targets that we've outlined for you all over the last couple of years.

Speaker #7: And reinforce that at Investor Day. I've said it before, so at the risk of boring you with repetition, I'll say it again.

Speaker #7: Might we engage in M&A in the US? Only if it meets very, very strict conditions. We think about it in the category of furthering our strategies around regional density and regional scale.

Darryl White: Only if it meets very strict conditions. We think about it in the category of furthering our strategies around regional density and regional scale, and the strategies that Aron has been outlining quite clearly. Secondly, that we would not look at anything that would delay our ROE promises from a timing perspective by a day. With that, you kind of get to a pretty narrow view of what you might do. In the meantime, I can reconfirm to all of our shareholders that our number one priority today is organic.

Speaker #7: And the strategies that Aaron's been outlining , outlining quite clearly . And secondly , that , you know , we wouldn't look at anything that would delay our ROE promises from a timing perspective by , by a day .

Darryl White: Secondly, that we would not look at anything that would delay our ROE promises from a timing perspective by a day. With that, you kind of get to a pretty narrow view of what you might do. In the meantime, I can reconfirm to all of our shareholders that our number one priority today is organic.

Speaker #7: And so , you know , with that , you kind of get to a pretty narrow view of what you might do . In the meantime , I can reconfirm to all of our shareholders that our number one priority today is organic .

Speaker #12: All right. Thank you.

[Analyst]: All right. Thank you.

Darryl White: All right. Thank you.

Speaker #5: Thank you .

Speaker #1: Our next question comes from Paul Holden from CIBC. Please go ahead, your line is open.

Operator: Our next question comes from Paul Holden from CIBC. Please go ahead. Your line is open.

Speaker #14: Thank you . Good morning So Darryl , on that on that organic priority and also your earlier comments on the Cht1 Organic Capital generation .

Paul Holden: Thank you. Good morning. Darryl, on that organic priority and also your earlier comments on the CET1 organic capital generation, again, very strong at 33 basis points. I guess what I want to ask is sort of the use of that, right? This quarter, we saw 21 basis points go to share buybacks and 12 for RWA. Probably want to see that inverse, right? More go to balance sheet growth, organic capital deployment, and a little bit less to share buybacks. Still some to buybacks. I guess my question there, is that a reasonable expectation? One is could we see RWA growth account for 20 basis points or more of CET1 consumption? Two, if it is a reasonable expectation, could we get there in 2027?

Speaker #14: Again, very strong at 33 basis points. I guess what I want to ask is sort of the use of that, right?

Speaker #14: So this quarter , we saw a 21 basis points go to share buybacks . And 12 for RW , a probably want to see that inverse right .

Speaker #14: More, more, more go to balance sheet growth or organic capital deployment, and a little bit less to share buybacks. Still some buybacks, but I guess my question there is, is that a reasonable expectation?

Speaker #14: One is could we see RWA growth account for 20 basis points or more of of Cht1 consumption ? And two , if it is a reasonable expectation , kind of could we get there in 2027 ?

Speaker #7: Yeah . Hey , Paul . Thanks . Thanks for the question . So the answer is we could and you know what you pointed out in your question is that we've got the flexibility to solve in the various quadrants that you just mentioned .

Darryl White: Yeah. Hey, Paul. Thanks for the question. The answer is we could. What you pointed out in your question is that we've got the flexibility to solve in the various quadrants that you just mentioned. I think the key point is that we don't create demand. To the extent that there is good demand for good growth in the client segments that we've targeted very consistently and explained to you, we're there to satisfy that. I don't find myself in a position today of turning away a single good opportunity for client growth in favor of buying back a share. That's not the way it works. It works the other way around. Really, the market will drive the answer to your question, the market meaning the real economy. To the extent that that good growth is there, let's use commercial banking, for example.

Speaker #7: I think the key point is that we don't create demand. And to the extent that there is good demand for good growth in the client segments that we've targeted very consistently and explained to you, we're there to satisfy that.

Speaker #7: So I don't find myself in a position today of turning away a single good opportunity for client growth in favor of buying back a share.

Speaker #7: That's not the way it works. It works the other way around. So really, the market will drive the answer to your question.

Darryl White: That's not the way it works. It works the other way around. Really, the market will drive the answer to your question, the market meaning the real economy. To the extent that that good growth is there, let's use commercial banking, for example. We've been pretty good at this, as you know, for decades in both countries. We'll be there to support that growth, and we'll think about buybacks as the leftover as opposed to the driver.

Speaker #7: The market meaning the real economy and to the extent that that good growth is there , I mean , let's use commercial banking for , for example , we've been we've been pretty good at this , as you know , for decades in both countries .

Darryl White: We've been pretty good at this, as you know, for decades in both countries. We'll be there to support that growth, and we'll think about buybacks as the leftover as opposed to the driver.

Speaker #7: And we'll be there to support that growth. And we'll think about buybacks as the leftover, as opposed to the driver.

Speaker #15: Okay .

Paul Holden: Thanks for that. One more if that's okay. In terms of the US business, obviously, seeing good loan growth there, as you've highlighted. A little bit of NIM compression. Is there anything strategically you can do in terms of deposit growth to keep NIM flat-ish, or do you just have to accept that with strong loan growth that there will be some NIM compression?

Speaker #14: Thanks for that . And one more if that's okay . In terms of the , the , the , the , the US business , obviously seeing good loan growth there as you've highlighted , like a little bit of Nim compression .

Speaker #14: Is there anything strategically you can do in terms of deposit growth to keep NIM flattish, or do you just have to accept that with strong loan growth, there will be some NIM compression?

Speaker #5: Compression

Speaker #4: Yes . Aaron , I'll take that . So remember when we think about Nam , our first focus continues to be on the ROE path .

Aron Levine: Yeah. It's Aron. I'll take that. Remember, when we think about NIM, our first focus continues to be on the ROE path. We've done a lot of work over the last 12 months on deposit optimization. You can see NIM improved 20 basis points year over year. Now we do turn to growth, both on the loan side, which you talked about, and on the deposit side. We have great relationships in our commercial bank, and we're seeing really good progress on driving against those relationships, with TPS growth, both on the deposit side and the fee side. In the consumer business, as we laid out on Investor Day, we have a really key clear strategy that we're executing against. I highlight three key areas of focus. One is the mass affluent, which is our partnership between consumer and wealth.

Speaker #4: We've done a lot of work over the last 12 months on deposit optimization. You can see NIM improved 20 basis points year over year.

Speaker #4: And now we have we do turn to sort of growth both on the on the loan side , which you talked about and on the deposit side , you know , we have great relationships in our commercial bank and we're seeing really good progress on , on driving against those relationships with TPS growth , both on the deposit side and the fee side .

Speaker #4: And in the consumer business, you know, as we laid out on Investor Day, we have a really clear strategy that we're executing against.

Speaker #4: I highlight sort of three key areas of focus. One is the mass affluent, which is our partnership between Consumer and Wealth.

Speaker #4: You heard some stats earlier about where that's making good progress. Second is our Bank at Work partnership between Consumer and Commercial. Again, an area of real opportunity for us.

Aron Levine: You heard some stats earlier about where that's making good progress. Second is our bank at work partnership between consumer and commercial. Again, an area of real opportunity for us. Then finally, as we really focus in on driving the client experience and just overall financial center productivity across our network, there's opportunity to continue to drive deposit growth, especially core operating accounts, which is where we're focused. That combination of delivering against our TPS business, which really covers everything from our business banking through our emerging middle market, all the way up to our larger middle market, and driving the kind of core operating accounts and consumer through a variety of initiatives, we feel good about the path we're on.

Speaker #4: And then finally , as we really focus in on driving the client experience and just overall financial center productivity across our network , there's opportunity to continue to drive deposit growth , especially core operating accounts , which is where we're focused .

Speaker #4: So, you know, that combination of delivering against our TPS business, which really covers everything from our business banking through our emerging middle market, all the way up to our larger middle market, and driving the kind of core operating accounts and consumer through a variety of initiatives.

Speaker #4: We feel good about the path we're on.

Speaker #14: Thank you

Paul Holden: Thank you.

Speaker #1: Our next question comes from David Conrad from KBW. Please go ahead. Your line is open.

Operator: Our next question comes from David Conrad from KBW. Please go ahead. Your line is open.

Operator: Our next question comes from David Konrad from KBW. Please go ahead. Your line is open.

Speaker #16: Yeah . Good morning . Most of my questions have been asked and answered , but just a follow up on the sustainability of capital markets .

David Conrad: Yeah, good morning. Most of my questions have been asked and answered, but just to follow up on the sustainability of Capital Markets. Maybe talk a little bit about how some of your core expertise in your product set may kind of fit with potential budget of the Canadian government in spending and infrastructure.

David Konrad: Yeah, good morning. Most of my questions have been asked and answered, but just to follow up on the sustainability of Capital Markets. Maybe talk a little bit about how some of your core expertise in your product set may kind of fit with potential budget of the Canadian government in spending and infrastructure.

Speaker #16: I mean, maybe talk a little bit about how some of your core expertise in your product set may kind of fit with the potential budget of the Canadian government and spending on infrastructure.

Darryl White: Thanks, David. Appreciate the question, and great opportunity for me to highlight, as you articulate some of the strengths around our business around metals and mining, PU&I, the industrial

Alan Tannenbaum: Thanks, David. Appreciate the question, and great opportunity for me to highlight, as you articulate some of the strengths around our business around metals and mining, *Konrad, the industrial sectors where I feel we shine. We feel like as we think about the macro trends, you highlight some of the infrastructure investment in Canada, which again, we think is going to be a fantastic opportunity. We've touched on in earlier questions the AI opportunity, which we see in multiple dimensions. We see a number of opportunities that align well with the areas that we've invested in.

Speaker #10: Thanks , David . I appreciate the question and a great opportunity for me to highlight , as you articulate some of the strengths around our business around metals and mining , P , you and I , the industrial sectors where I feel we shine .

Alan Tannenbaum: sectors where I feel we shine. We feel like as we think about the macro trends, you highlight some of the infrastructure investment in Canada, which again, we think is going to be a fantastic opportunity. We've touched on in earlier questions the AI opportunity, which we see in multiple dimensions. We see a number of opportunities that align well with the areas that we've invested in. At the same time, as we're all aware, you see shifts in markets and some of the areas that have been less productive for us and our competitors this year, some of the core fixed income businesses which have experienced very low volatility, we see as having potential to reverse and create better opportunities for us on a go-forward basis. It's the theme of specific areas of opportunity, the diversification of our business, the investments that we've made.

Speaker #10: So we feel like, as we think about the macro trends, you highlight some of the infrastructure investment in Canada, which, again, we think is going to be a fantastic opportunity.

Speaker #10: You've we've touched on an earlier questions . The AI opportunity , which we see in multiple dimensions . We see a number of opportunities that align well with the areas that we've invested in .

Speaker #10: And at the same time, as we're all aware, you see shifts in markets and some of the areas that have been less productive for us and our competitors this year.

Alan Tannenbaum: At the same time, as we're all aware, you see shifts in markets and some of the areas that have been less productive for us and our competitors this year, some of the core fixed income businesses which have experienced very low volatility, we see as having potential to reverse and create better opportunities for us on a go-forward basis. It's the theme of specific areas of opportunity, the diversification of our business, the investments that we've made. That's really what gives us confidence that there's room for us to continue to grow these businesses over the coming years.

Speaker #10: Some of the core fixed income businesses, which have experienced very low volatility, we see as having potential to reverse and create better opportunities for us on a go-forward basis.

Speaker #10: So it's the theme of specific areas of opportunity, the diversification of our business, the investments that we've made. That's really what gives us confidence that there's room for us to continue to grow these businesses over the coming years.

Alan Tannenbaum: That's really what gives us confidence that there's room for us to continue to grow these businesses over the coming years.

Speaker #16: Perfect . Thank you

David Conrad: Perfect. Thank you.

David Konrad: Perfect. Thank you.

Speaker #1: Our next question comes from Gabriel Dechaine from National Bank Financial. Please go ahead, your line is open.

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

Speaker #17: Hey , good morning . Just want to go back to the margin . And , you know , the divergence between corporate and the segments .

Gabriel Dechaine: Hey, good morning. Just want to go back to the margin and the divergence between corporate and the segments. Can you give a sense of when the corporate, whatever balance sheet mix issues are like a large number of lower yielding securities? Is that going to be adjusted in the next few quarters when those dispositions are closed? As far as the margin, specifically on the US and maybe in Canada as well, you use the term resilient. I'd pinpoint more the US here, but the loan growth is accelerating clearly. If deposit growth is still lagging loan growth, do you expect margins to be flat, or could we actually see them be down maybe beyond Q4 when the funding from the transportation finance business is reallocated?

Speaker #17: Can you , you know , give a sense of when the corporate whatever balance sheet mix issues are like a large number of lower yielding securities , is , is that going to .

Speaker #17: You know , be adjusted in the next few quarters when those dispositions are closed ? And then as far as the margin specifically on the US and , you know , maybe on Canada as well , you use the term resilient .

Speaker #17: If . And I pinpoint more of the US here , but the loan growth is accelerating . Clearly , if deposit growth is still lagging , loan growth , how , you know , do you expect margins to to , you know , be flat or could we actually see them be down ?

Speaker #17: Maybe beyond Q4, when, you know, the funding from the transportation finance businesses is reallocated.

Speaker #11: Yeah . Thank you . Gabe , this is Rahul . So let me take the two questions . I'll start with corporate and then go to Nim .

Rahul Nalgirkar: Yeah, thank you, Gabe. This is Rahul. Let me take the two questions. I will start with corporate and then go to NIM. On corporate services, it was a combination of lower revenues and higher expenses. As I mentioned, a part of the lower revenues had to do with the prudent liquidity management and extra low-yielding assets we are carrying because of that. In addition to that, there is always normal market volatility from hedges and interest rates impacting the balance sheet positions. That changes from quarter to quarter. Those are some of the reasons why we had lower revenues, and we were expecting that direction as we had previously shared in the last quarter.

Speaker #11: So on corporate services , it was a combination of lower revenues and higher expenses . As I mentioned , a part of the lower revenues had to do with the prudent liquidity management and extra low yielding assets .

Speaker #11: We are carrying . Because of that , in addition to that , you know , there's always normal market volatility from hedges and interest rates impacting the balance sheet positions .

Speaker #11: You know , that changes from quarter to quarter . So those are some of the reasons why we had lower revenues . And we were expecting that direction , as we had previously shared in the last quarter .

Speaker #11: In addition to that , as we talk about some higher expenses , as I mentioned in my prepared remarks , we were deliberate about in some investments in growth opportunities , especially on brand marketing .

Rahul Nalgirkar: In addition to that, as I mentioned in my prepared remarks, we were deliberate about some investments in growth opportunities, especially on brand marketing, and that was what was in there. When you look at it together, lower revenues, higher expenses is where we landed, and I think we expect Q4 to be broadly consistent with Q3 is how we are looking at the composition. That is the first part of your question. Let me come to the second part, which is NIM. In my prepared remarks, I talked about the resilience of NIM in the core businesses, which is Canadian P&C and US banking. I do recognize that the loan mix as loans grow faster and also the competition for higher for longer is going to put pressure.

Speaker #11: And that was what was in there . So when you look at it together , lower revenues , higher expenses is where we landed .

Speaker #11: And I think we expect fourth quarter to be broadly consistent with third quarter, is how we are looking at the composition. So that's the first part of your question.

Speaker #11: Let me come to the second part , which is Nim . And we in my prepared remarks , I talked about the resilience of Nim in the core businesses , which is Canadian , PNC and US banking .

Speaker #11: I do recognize that the loan mix, as loans grow faster and also the competition for higher-for-longer, is going to put pressure.

Speaker #11: But both Matt and Sharon, and Aaron, have talked about the deliberate efforts on growing core operating deposits. Our core operating deposits were up 8% year over year, while the total deposits were flat.

Rahul Nalgirkar: But both Matt and Sharon and Aron have talked about the deliberate efforts on growing core operating deposits. Our core operating deposits were up 8% year over year while the total deposits were flat. Also, we have been very good at optimizing high-priced deposits when the balance sheet need was not there. When you look at the concerted efforts to grow good core deposits while managing the balance sheet liquidity, that is the offset to the headwinds which we have, and that is how our approach is for resilience.

Speaker #11: And also , we've been very good at optimizing high price deposits when the balance sheet need wasn't there . So when you look at the concerted efforts to grow good core while managing the balance sheet , liquidity , that is the offset to the headwinds which we have .

Speaker #11: And that's how our approach is for resilience.

Speaker #17: Okay. And just to the credit outlook, just to reiterate, you expect a similar level of impaired in Q4. And it's not clear what you're saying about 2027.

Gabriel Dechaine: Okay. Just to the credit outlook just to reiterate, you expect a similar level of impairments in Q4 and not clear what you are saying about 2027, if you said anything at all. Is it kind of up in the air considering this tariff dispute?

Speaker #17: If you said anything at all, is it kind of up in the air considering this tariff dispute?

Speaker #13: Morning , Gabe . It's Piyush , so too soon to give you 27 guidance . We generally do that at the end of Q4 , and we will do that at that point of time .

Piyush Agrawal: Morning, Gabe, it's Piyush. Too soon to give you 2027 guidance. We generally do that at the end of Q4, and we will do that at that point in time. As I step back again, we've seen the drivers of our impairments show some real strength. As we look at watch lists, our gross impaired loan balances, and our retail performance that we just spoke to, we have a high degree of conviction around where Q4 impaired should come out, which is in line with Q3. Again, there is always some basis point volatility for some of the wholesale files. That should round out to our overall guidance we gave at the beginning of 2026. As I said three days ago, had you asked me on 2027, I would have the conviction of the investor day that we would end 2027 in the mid-30s.

Speaker #13: But as I step back again , you know , we've seen the drivers of our impairments show some real strength . So as we look at watch list , our gross impaired loan balances and a retail performance that we just spoke to , we have a high degree of conviction around where Q4 impaired should come out , which is in line with Q3 .

Speaker #13: And again, there is always some basis point volatility for some of the wholesale files, but that should round out to our overall guidance we gave at the beginning of '26. I would just say, three days ago, had you asked me on the 27th, I would have had the conviction of the Investor Day that we would end.

Piyush Agrawal: That should round out to our overall guidance we gave at the beginning of 2026. As I said three days ago, had you asked me on 2027, I would have the conviction of the investor day that we would end 2027 in the mid-30s. But we'll continue to update that as we go through the trade policy files and any second-order impacts and come back to you at the end of Q4.

Speaker #13: 27 and the mid-30s, but we continue to update that as we go through the trade policy files and any second-order impacts, and come back to you at the end of the fourth quarter.

Piyush Agrawal: But we'll continue to update that as we go through the trade policy files and any second-order impacts and come back to you at the end of Q4.

Speaker #17: All righty . Thank you

Gabriel Dechaine: Alrighty. Thank you.

Speaker #1: Our last question comes from Darko Mihelic from RBC. Please go ahead, your line is open.

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

Speaker #18: Hi . Thank you . I'll be quick and brief . Just trying to model in a couple of things . First , with respect to the dispositions , I'm suspecting that was the bigger contributor to earnings .

Darko Mihelic: Hi. Thank you. I will be quick and brief. Just trying to model in a couple of things. First, with respect to the dispositions.

Darko Mihelic: I am suspecting that Moneris was the bigger contributor to earnings that will be lost in the future. Can you just remind me, where are the earnings for Moneris? In which segment is that reported? Are you willing to tell us how much of the lost earnings are by business unit at this time?

Speaker #18: That will be lost in the future. Can you just remind me where the earnings from— in which segment is that reported?

Speaker #18: And are you willing to tell us how much of the lost earnings are, or by business unit, at this time?

Rahul Nalgirkar: Hi, Darko. This is Rahul. Thanks for the question. As we think about the lost earnings, let me characterize that in two ways. Moneris, in fact, was not the major part. As you are aware, we sold 138 branches. They had about $5 billion in deposits, so there is income related to that. Transportation finance was also a major part of it. Almost $10 billion in USD, CAD 16 billion loan balances. So it was a mix. I would say, if you were to ask me, it is probably like two-third, one-third. Two-third US banking, one-third in Canadian P&C. At that point, let me just remind you of one more item. There was a strategy behind these dispositions. These businesses did not meet our long-term growth and return objectives.

Speaker #11: This is Rahul . So thanks for the question . So as we think about the lost earnings , let me kind of characterize that in two ways .

Speaker #11: In fact, that was not the major part. As you are aware, we sold 138 branches. They had about $5 billion in deposits.

Speaker #11: So there's income related to that. Transportation finance was also a major part of it, almost $10 billion in U.S. dollars, $15 billion to $16 billion in Canadian dollar loan balances.

Speaker #11: So it was a mix , I would say , if you were to ask me , it's probably like two third , one third , two third US banking , one third in Canadian PNC , but at that point , let me just remind you of one one more item .

Speaker #11: The there was a strategy behind these dispositions . They these businesses did not meet our long term growth and return objectives . We've been very rigorous about where we are allocating this capital and resources to client relationships , which will be at our higher growth , higher return expectations .

Rahul Nalgirkar: We have been very rigorous about where we are allocating this capital and resources to client relationships, which will be at our higher growth, higher return expectations. We had already factored this in in our Investor Day path, which we gave you. So our Investor Day commitments on EPS growth, PPPT growth remain unchanged. In fact, what we had factored in was as we replenish this capital from single-digit ROE businesses, though the contribution was modest to earnings, to replenish it to 15-plus ROE businesses is our path. So that is how we are thinking about it. Hopefully that answers your tactical question and also my strategic overview.

Speaker #11: And we had already factored this in, in our Investor Day path, which we gave you. So our Investor Day commitments on EPS growth, PPT growth remain unchanged.

Speaker #11: And in fact , what we had factored in was as we replenished this capital from single digit ROE businesses , though , the contribution was modest to earnings to replenish it to 15 plus ROE businesses is our path .

Speaker #11: So, that's how we are thinking about it. Hopefully, that answers your tactical question, and also my strategic overview.

Speaker #8: No .

Darko Mihelic: No, that is really helpful. Just real quick on the drop in average common equity for the US business quarter-over-quarter. Is that the DSB? What will the drop look like after you have disposed of the branches and transportation finance?

Speaker #18: That's really helpful. And just really quickly, on the drop in average common equity for the U.S. business quarter over quarter—is that the DSB? And what will the drop look like after you've disposed of the branches and finance?

Speaker #11: Yeah . As you are aware , so that was in our reported numbers . So I mentioned we have a goodwill charge , which we have taken ahead a quarter for the transportation business to be sold .

Rahul Nalgirkar: Yeah, as you are aware, that was in our reported numbers. I mentioned we have a goodwill charge which we have taken ahead a quarter for the transportation business to be sold, and that is what is reflected in the change in equity for US business.

Speaker #11: And that's what's reflected in the change in equity for the U.S. business.

Darko Mihelic: Oh, okay. I was confused because the charge was recorded.

Speaker #18: Okay. I was confused.

Speaker #5: Because

Speaker #18: The charge was recorded .

Speaker #5: In corporate

Speaker #11: So, could you repeat your question again?

Rahul Nalgirkar: Sorry, repeat your question again.

Speaker #18: I thought the charge for the goodwill was actually taken through the corporate segment . So that's my mistake . I guess . But in any event , okay .

Darko Mihelic: I thought the charge for the goodwill was actually taken through the corporate segment, so that's my mistake, I guess. But in any event, okay. Then with respect to the drop going forward, is there anything you can tell us about the expected decline to common equity once the US branches and the transportation finance business is sold? Will it just be one for one, like I can consider it CRB with-

Speaker #18: And then, with respect to the drop going forward, is there anything you can tell us about the expected decline to common equity once the US branches and the transportation finance business are sold? Would it just be one for one?

Speaker #18: Like, I can consider it for... the...

Speaker #11: The overall effect of these dispositions will generate 50 basis points of CET1 for us. So as we take those, that replenishment, we put it back in our capital framework.

Rahul Nalgirkar: The overall, these dispositions will generate 50 basis points of CET1 for us. As we take that replenishment, we put it back in our capital framework. Obviously, loan growth, as Darryl mentioned, is the primary focus, and then we look at all other factors as a part of our dynamic capital management.

Speaker #11: Obviously, loan growth, as Darryl mentioned, is the primary focus. And then we look at all other factors as a part of our dynamic capital management.

Speaker #18: Okay . That's helpful .

Darko Mihelic: Okay. That's helpful. Thank you.

Speaker #5: Thank you . Thank you

Speaker #1: We have no further questions. I'd like to turn the call back to Darryl White for closing remarks.

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

Speaker #5: Closing remarks .

Speaker #7: Yeah . Thank . Thanks . Operator , and thank you all for your questions . This morning . I just very quickly conclude by saying that our performance this quarter and for the year to date reflect our continued discipline , executing against the very strategy that we outlined at our Investor Day .

Darryl White: Yeah. Thanks, operator, and thank you all for your questions this morning. I just very quickly conclude by saying that our performance this quarter and for the year to date reflect our continued discipline executing against the very strategy that we outlined at our Investor Day. We have strengthened our returns, we have delivered stronger earnings growth, and we are growing momentum across each of our businesses. Perhaps most importantly, we are positioned well to build on this performance. In short, good results, good momentum, and we are not done yet. Thank you for joining us today, and we look forward to speaking to you again in December.

Speaker #7: We've strengthened our returns . We've delivered stronger earnings growth , and we're growing momentum across each of our businesses and perhaps most importantly , we're positioned well to build on this performance .

Speaker #7: So in short , good results , good momentum . And we're not done yet . Thank you for joining us today . And we look forward to speaking to you again in December .

Operator: This concludes today's conference call. Thank you for your participation. You may now disconnect.