Bank of Montreal

Good morning and welcome to BMO Financial Group's Q1 2025 earnings release and conference call for February 25th, 2025. Your host for today's question video, please go ahead. Thank you and good morning.

We will begin the call with remarks from Daryl White, BMO's CEO, followed by Typhoon Tuzun, our Chief Financial Officer, and Piyush Agrawal, our Chief Risk Officer. Also present to take questions today are Ernie Johanson, Head of BMO North American Personal and Business Banking, Nadeem Herji, head of BMO Commercial Banking, Alan Tenenbaum, head of BMO Capital Markets, Deland Kamenga, head of BMO Wealth Management, and Darrell Hackett, BMO U.S. CEO. I would ask participants to limit to one question during the Q&A to give everyone a chance to participate. As noted on slide two, forward-looking statements may be made during this call, which involve assumptions that have inherent risks and uncertainties. Actual results may 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. Daryl and Typhoon will be referring to adjusted results in their remarks unless otherwise noted as reported, and I will now turn the call over to Daryl.

Thank you, Christina, and good morning, everyone. We began the year with a very strong start, with first quarter adjusted net income of $2.3 billion. and earnings per share of $3.04. Pre-provision pre-tax earnings of $4 billion increased 32% from last year. Revenue growth was broad-based, up 18%, which drove strong all-bank operating leverage of 8.9% and positive in each of our operating groups. Provisions for credit losses declined from the prior quarter, as expected, and we continue to review and pressure test our portfolio in light of geopolitical uncertainty. Our CET1 ratio remains strong at 13.6%, providing ample opportunity for organic growth and investment while returning capital to shareholders. We began executing our share buyback program as planned after receiving regulatory approval, repurchasing 1.2 million shares this quarter and a total of 3.2 million shares as of today. Return on equity improved. to 11.3%. Our top priority is rebuilding return on equity to achieve our target of 15% over the medium term. At the end of last year, we laid out a path to our goal, and today Typhoon will expand on the steps we are taking within our U.S. business. Looking at the economic backdrop, while widespread tariffs between the U.S. and Canada have been deferred, the challenge has been put plainly before us. In client conversations throughout the past few weeks, their comments on recent events have been clear. Trade wars introduce uncertainty and disrupt the efficient allocation of capital. To that end, we are seeing some clients on both sides of the border adopt a more cautious posture around capital deployment. At the same time, we're closely monitoring the implications of potential tariffs on our portfolio and working proactively to support client needs. Millions of customers rely on us every day, but particularly in days of uncertainty. We've been helping our clients grow and our communities thrive for over 200 years, and we've helped our clients navigate their way through all economic environments. We have a strong balance sheet, robust capital and liquidity, and a well-diversified business model built to deliver resilient performance through cycles. Our strategies are aimed at providing trusted advice to clients across our North American franchise positioning us well to compete and grow in today's dynamic operating environment. Turning to the businesses, each operating group delivered good PPPT growth this quarter and positive operating leverage. In Canadian P&C, PPPT was up 13%, with record revenues of $3 billion, driven by customer and balance sheet growth. Our innovative products and client-focused advice are driving engagement. We've opened more than 1 million savings amplifier accounts since launch, and customers have set more than 1.7 million financial goals, empowering them to make real financial progress through informed financial decisions. We recently announced the new BMO VIP Porter Travel Rewards Credit Card Suite in partnership with Porter Airlines and MasterCard, providing customers with enhanced travel benefits. We now have more than 20,000 customers already on a waiting list, and we're excited to announce the details of these innovative products to Canadians shortly. In Canadian commercial banking, strong revenue growth was driven by continued solid loan and deposit growth as we continue to expand and deepen client relationships, including with our award-winning treasury and payments solutions. This quarter, we launched BMO Sync in Canada, an innovative solution that integrates BMO online banking for business services directly into resource planning and accounting systems boosting automation and efficiency for our clients. Previously available only in the US, it's an example of how our North American platform brings industry-leading technologies and capabilities to clients on both sides of the border. US P&C grew PPPT 6% with revenue growth and good expense management. We're seeing continued momentum in core customer growth and digital adoption, including a 14% increase in checking account acquisition in the new West markets and overall strong performance in the Midwest. In U.S. commercial banking, consistent with the industry, loan growth remains subdued. However, client engagement is strong. We're making progress on our one client strategy, growing connected relationships with strong referral growth between commercial banking, capital markets, and wealth, and we're continuing to add top talent, particularly in the California market. We're well positioned for growth as the market improves. In BMO Wealth Management, PPPT was up 48% with strong revenue growth in wealth and asset management, reflecting market appreciation and net new assets, as well as a strong quarter for insurance as we took advantage of investment opportunities in the market. This quarter was the highest quarter of mutual fund sales and 15, and ETF flows continue to be strong. Our industry-leading ETF offerings were recognized with 22 fund grade A plus awards across several categories, the most of any financial organization for 2024. We've also launched new and innovative products, helping Canadians expand their investment options across global markets. BMO Capital Markets grew PPPT by 67%, driven by a strong global markets trading performance across all products and strong client flows in our U.S. business. Investment in corporate banking had a good quarter with higher client activity in corporate banking and underwriting. Our results this quarter also reflect the broad-based and differentiated capabilities in our metals and mining business. BMO is a global leader and a trusted advisor across the industry, and this week we're proud to be hosting our 34th annual Global Metals, Mining, and Critical Minerals Conference. Our strong performance this quarter reflects ongoing investments we've made in talent and technology. This quarter, we took a bold step forward in advancing our digital-first agenda and joined the IBM Quantum Network, which will enable us to develop and deploy quantum-powered solutions across our operations and deliver progress and outcomes at scale by merging human experience with cutting-edge technology. Investments like this support our commitment to driving new revenue opportunities and improving efficiency, supporting stronger returns over the long term. Before I end, I want to recognize the profound impact the recent wildfires in Los Angeles have had on countless individuals and families. Our thoughts are with those who have lost their homes, businesses, and neighborhoods in the wake of these devastating events. For our employees and customers who were impacted, we're providing ongoing relief and financial assistance, and we've pledged $3 million to local charities to support recovery and rebuilding efforts. I believe that California and the L.A. area will emerge even stronger out of this difficult period. With that, I will turn it over to Typhoon.