Bank of Montreal

Good morning and welcome to the BMO Financial Group's Q3 2025 earnings release and conference call for August 26, 2025. Your host for today is Christine Viau. Please go ahead.

Thank you. We will begin today's call with remarks from Gerald White, BMO CEO, followed by Typhoon Tizun, our Chief Financial Officer, and Piyush Agrawal, our Chief Risk Officer. Also present to answer questions are our group heads. Matt Marotra, Canadian Personal and Business Banking, Sharon Hayward-Laird, Canadian Commercial Banking, Aaron Levine, U.S. Banking, Alan Tenenbaum, BMO Capital Markets, Dellen Kamenga, BMO Wealth Management, and Daryl Hackett, BMO U.S. CEO. As our call will end at 8.15, and to give everyone a chance to participate, please limit your questions to one and re-queue. As noted on slide two, forward-looking statements may be made during this call, which involve assumptions that have inherent risks and uncertainties. Actual results could differ materially from these statements. I would also remind listeners that the bank uses non-GAAP financial measures to arrive at adjusted results. 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 now I'll turn the call over to Daryl.

Thank you, Christine, and good morning, everyone. This morning we announced another quarter of strong earnings growth and progress against our ROE rebuild objective. Third quarter earnings per share increased 22 percent to $3.23, and net income of $2.4 billion was the second highest quarter on record. Pre-provisioned pre-tax earnings of $4 billion were up 13 percent, with good contribution from every operating group. Credit was well managed with lower provisions compared with last year and last quarter. Our CET1 ratio of 13.5 percent remained strong, as we continue to execute share buybacks to return excess capital to our shareholders with ample flexibility to deploy our balance sheet to support client growth. We continue to invest to drive sustainable growth across our businesses, including our recently announced acquisition of Burgundy Asset Management. Return on equity improved to 12% for the quarter. Execution against each of our ROE rebuild strategies, US P&C improvement, Normalizing PCL, overall operating performance, and capital optimization is driving tangible results. Year-to-date, revenue growth was 12%, and PPPT is up 19% with strong all-bank operating leverage of 4.7%. We've now delivered positive operating leverage for six consecutive quarters, and we expect continued PCL normalization to support ROE going forward. This remains our number one imperative. and Typhoon will elaborate further. We achieved these results in what remains an uncertain economic environment. In recent months, some trade-related risks to the North American economy have eased, though the final outcome is unclear and geopolitical challenges persist. Canada's economy is navigating a period of modest growth amid shifting policy and global trade pressures. Most industries remain USMCA compliant, and government programs are beginning to roll out to support the most impacted industries, limiting the negative impact. Despite slower job growth, consumer spending has remained resilient. For the US, despite headwinds from higher interest rates and tariffs, strong corporate earnings, a resilient labor market, and continued consumer spending have helped maintain resilience in the US economy and should support growth in 2026. This quarter, we announced important changes to our organizational structure in US banking to accelerate our performance even further. We've brought together our U.S. personal and business banking, commercial and wealth management businesses under the leadership of Aaron Levine. Aaron brings three decades of U.S. banking experience and will lead our go-to-market strategy, optimizing the strength and scale of all three businesses to drive greater synergies and superior one-client service. We've also announced new co-leaders in Canadian PNC with Matt Mehrotra, leading Canadian personal and business banking, and Sharon Hayward-Laird, leading Canadian commercial banking, as well as North American integrated solutions, including treasury and payments, cards, and customer connect centers. These changes reflect both BMO's deep strength in talent development and our ability to attract exceptional leaders. Turning now to highlights in each of our businesses. In Canadian personal banking, we continue to drive top tier high quality customer growth with deep relationships. BMOS checking account growth is nearly double the industry benchmark as measured by Argus advisory driven by strong acquisition. These results are underpinned by robust digital and branch performance fueled by the strength of our data and marketing capabilities and our commitment to real financial progress for our customers. For example, Our market-leading savings amplifier account has now surpassed $12 billion in deposits, attracting another $2 billion since last quarter. And we recently launched BMO Preferred program for investors, designed to help families build and preserve their wealth with reduced fees and personalized financial guidance. This innovative program is attracting good mutual fund flows of $1.4 billion to date while deepening customer relationships and growing households. Canadian commercial banking had broad-based loan and deposit growth over the last year. We're seeing a pickup in conversations as clients gain greater clarity on the environment and prepare to move forward on their business plans. Client growth remains steady, supported by increased referrals between commercial, wealth, and capital markets, and continued momentum in digital engagement. Our integrated treasury and payment solutions delivered strong performance, with fee revenue up 23% year-to-date across our North American platform. In US P&C, continued momentum and PPPT growth reflect strong positive operating leverage through disciplined expense management and balance sheet optimization. ROE is improving, and the changes to our structure I mentioned earlier will help accelerate our progress going forward. We continue to see good client acquisition in US PNBB in both the Midwest and West markets with over 90% coming from new checking clients, including 8% year-over-year growth in checking account acquisitions in our West markets. In U.S. commercial banking, client engagement is strong even as borrowers remain cautious amid policy uncertainty. In our emerging middle markets business, one of our highest return segments, we've deployed enhanced tools for faster, more predictable loan decisioning and deeper client insights which are driving quality originations. One client referrals between this segment and wealth management are up 27% over last year and fee income from treasury and payments continues to perform strongly. Our premium commercial banking franchise was again recognized by World Finance Magazine as the best commercial bank in both Canada and the United States. We were also named the best private bank in Canada for the 15th year in a row, a testament to the exceptional service and strategic expertise our teams deliver. BMO Wealth Management had a strong quarter with record revenue in wealth and asset management delivered by continued growth in net new assets as we continue to strategically invest in talent and innovative products. The announced acquisition of Burgundy Asset Management will further expand BMO's wealth management and financial planning capabilities upon closing we will be adding one of Canada's most respected independent investment managers known for its high-caliber team, rigorous investment process, and dedicated service to private clients, institutions, and family offices. We look forward to welcoming BMO's teams and clients to BMO. In BMO Capital Markets, PPPT has consistently been strong this year. The third quarter benefited from strong underwriting and advisory fees, as we captured more mandates and executed on pipelines that had been building. We're winning more lead positions as we maintain a consistent focus on building talent and capabilities to support client needs. Trading revenue was strong across products, driven by our ability to respond quickly to evolving market conditions and client demand. In the US, we saw good momentum in mid-market investment banking activity and were well positioned for profitable growth in the markets where we compete. Across our businesses, we continue to invest and deploy digital and AI capabilities to drive value in our businesses and for our clients, balancing innovation with disciplined risk management. We're seeing tangible value from AI in several areas, including decisioning, customer experience, software development, and employee productivity. We recently launched Lumi Assistant, BMO's award-winning AI-powered tool that equips frontline teams with real-time, simplified access to critical policy and process information to provide advice and guidance to clients. This quarter, we also received the 2025 Sellant Model Bank Award for Payments Innovation for five separate digital payments and client experience initiatives. Our strong performance this quarter is evidence of consistent execution on our plan to rebuild ROE while continuing to manage risk effectively. Investments we've made in the business paired with BMO's award-winning culture with industry-leading employee engagement are helping to power the progress we make for our clients, colleagues, and the communities we serve. With that, I will turn it over to Typhoon.