Bank of Montreal (BMO) Q3 FY25 earnings call: guidance and Q&A

Seeking clarity on the U.S. loan growth trajectory given macro changes and the bank's strategy of exiting low-ROE exposures, and potential sale of Transportation Finance business.

Darryl White expressed comfort with the U.S. wholesale loan growth, viewing current declines as a 'short-term reset' for ROE optimization. He noted originations are up despite lower utilizations and expects market or better growth in H2 FY25 and FY26. Aron Levine highlighted the strategic benefit of the unified U.S. business structure, emphasizing leveraging scale and cross-enterprise capabilities for sustainable, profitable loan and deposit growth, supported by technology and talent investments.

“My expectation for this business as we benefit from this reset that we've got right now, gets really exciting because if the market grows and we do expect it to grow as we go through the back half of this year and particularly into next year, you should watch us grow at market or better in terms of our asset growth.”

asked by Gabriel Dechaine · answered by Darryl White

Whether the 12% U.S. P&C ROE target will increase given the inclusion of U.S. Wealth earnings (analyst mentioned CAD 60 million).

Aron Levine highlighted the strategic benefit of integrating U.S. Wealth for client connectivity. Tayfun Tuzun clarified that the 12% ROE target for U.S. P&C will not be adjusted, as the contribution from U.S. Wealth is relatively small.

“Gabe, we're not adjusting the 12% target. The 12% target remains because it's rather a small contribution.”

asked by Gabriel Dechaine · answered by Tayfun Tuzun

Whether the performing provision release indicates a more positive view on the U.S. economy and if U.S. impaired PCLs have peaked.

Piyush Agrawal confirmed that the U.S. performing provision release was driven by an improved macroeconomic forecast for the U.S. and faster stabilization of portfolio quality. He expressed reasonable confidence that U.S. impaired PCLs have passed their peak, acknowledging potential quarter-to-quarter variability.

“I would say, given everything you've seen over the last 3 or 4 quarters, the answer is yes. Things have significantly improved... So I feel reasonably confident about that... I would give you the confidence that we have passed our high point or the peak in the U.S.”

asked by Matthew Lee · answered by Piyush Agrawal

Seeking management's perspective on the Canadian economic trajectory, given mixed signals (tariff uncertainty vs. client conversations picking up).

Darryl White described Canada as being in the 'middle innings' of a modest growth environment (1%-1.5% in H2 FY25), neither robust nor recessionary. He noted that while some industries are impacted by uncertainty, most are USMCA compliant. The outlook for 2026 depends on macro factors, trade, and policy actions, with a current positive narrative for pro-growth policies.

“I mean, at the end of the day, in the back half of the year, if we're in the zone of 1%, 1.5% growth, I wouldn't be surprised as we look around the economy right now.”

asked by Ebrahim Poonawala · answered by Darryl White

Whether the uptick in Canadian CRE impaired formations was due to one credit or several.

Piyush Agrawal confirmed it was primarily one idiosyncratic file, a single developer with multiple projects, that moved into impaired formation. He noted that while some projects needed resolution, others were performing well, and the bank is actively managing these.

“But you're right, it's one idiosyncratic file that's one developer that moved into the impaired formation. And it's actually a combination of projects that we've lent to within the developer where you see this impaired formation increase.”

asked by John Aiken · answered by Piyush Agrawal

Asking for clarification on what specific uncertainties management is referring to, given other positive indicators.

Darryl White stated that his 'uncertainty meter' is lower than earlier in the year, but not at zero. He cited geopolitics and the trade file as remaining uncertainties, but noted improved clarity on U.S. policy, Canadian government direction, client behavior, and rate environment consensus compared to six months prior.

“My -- early this year, my uncertainty meter was very high. And today, it's less high, it doesn't mean there's no uncertainty. There's still uncertainty, but there's just a little less of it.”

asked by Mario Mendonca · answered by Darryl White