Bank of Montreal Q1 FY2026 earnings call

• Darrell White noted first quarter results were strong, adjusted EPS $3.48 up 15% from last year, record pre-provision pre-tax earnings of $4.1 billion. ROE improvement, strong revenue in operating segments, fee growth in market-driven businesses, margin expansion in Canadian and U.S. banking. Committed to expense management and operational efficiency. Credit performance in line with expectations, CET1 ratio 13.1% strong. Executing on strategy to achieve 15% ROE. - Rahul Malgakar discussed strong operating performance, adjusted EPS $3.48 up 15%, net income $2.6 billion up 11%. Revenue increased 6% or 8% constant currency basis. NII ex-markets up 5% or 7% constant currency basis. Expenses grew 9% but well managed. CET1 ratio 13.1% strong. - Piyush Agrawal spoke about economic environment, credit performance in line with expectations, total provision for credit losses stable, impaired provisions and performing provisions as per segments.

Canadian P&C: Attracting more customers with deeper relationships, core operating deposits up 8% from last year. Canadian commercial banking: Revenue grew 10%, new client acquisition healthy, operating deposits up 9%, TPS fees up 13%, referral revenue from commercial and wealth up 75%. Canadian retail: Above-market growth in checking accounts and operating deposits, mutual fund sales up 13%, transitioning to reimagined Blue Rewards loyalty program. U.S. banking: Record revenue and strong margin expansion, 3% growth in non-interest bearing deposits, expect positive commercial loan growth in second half of the year. Wealth management: Earnings up 16% on stronger markets and net new asset growth, successfully integrated Burgundy asset management. Capital markets: PPPT of $893 million, driven by strong trading activity and higher advisory fee revenue, ranked number one in ECM and world's best metals and mining investment bank for 17th year.

• Expect to realize annualized savings of approximately $250 million from severance charge, half in 2026 and remainder in 2027. - Expect positive operating leverage again this year. - Anticipate a softer economic environment in Canada, but expansionary fiscal policies, supportive monetary policy, and AI investments should support growth in US. - Expect impaired provisions to remain in mid-40 basis points range with quarterly variability. - Continue repurchasing shares while supporting deployment for growth and maintaining strong capital position towards target CET1 ratio of 12.5%.

• Trade issues between Canada and US unresolved, USMCA renegotiation presents uncertainty. - Soft economic environment in Canada could impact credit performance. - Competitive landscape evolution may affect deposit pricing and margins. - Geopolitical uncertainty could translate into observable changes in portfolio quality.

Q: Gabriel Duchenne asked about ROE performance and US outlook.

A: Daryl and Aaron responded that they are on track, US is at inflection point with optimization work nearly complete, and there's momentum in pipelines.

Q: Ibrahim Poonawalla followed up on net interest margin and loan growth.

A: Rahul and Aaron discussed NIM outlook, loan growth drivers including client sentiment and investments.

Q: Doug Young asked about US commercial loan growth and new client acquisitions.

A: Daryl and others explained portfolio optimization, balance sheet loans reduction, and momentum in client relationships.

Q: Paul Holden asked about US deposit growth and capital markets momentum.

A: Relevant speakers talked about deposit growth opportunities and capital markets outlook.

Q: Mario Mendonca asked about credit card impaired rate and US RWA.

A: Matt and others discussed credit card loss rate stability and RWA optimization.

Q: Mike Razanovich asked about Canadian personal commercial banking NIR and Canada's housing market.

A: Sharon and Piyush provided insights on NIR and housing market concerns.

Q: Darko Mihalic asked about deposit mix in Canada.

A: Relevant speakers discussed deposit optimization and mix trends.