Bank of Montreal

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

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. 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 Tannenbaum, BMO Capital Markets, Dellen Kamenga, Wealth Management, and Darryl Hackett, BMO U.S. CEO. A reminder that our call will end at 8.15 this morning. 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. 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.

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-provisioned pre-tax earnings of 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-provisioned 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 deliver 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 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%. 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. 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. 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. 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 U.S. 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. 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 U.S. 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. 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. 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 $903 million, reflecting the benefits of our diversified franchise and leading sector expertise. We had strong contributions across global markets and investment in 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. We also recently announced an agreement to acquire the capital markets business of Euros Hartley's 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 value, 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, Smart Decision. 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 frontline chat box 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 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, 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. 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. 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. 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. 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. We're 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. 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. 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. 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. With that, I'll turn it over to Rahul.