BMO.TO - Earnings call transcript Q4 2022

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Operator

Good morning, and welcome to the BMO Financial Group's Q4 2022 earnings release and conference call for December 1, 2022.

Your host for today is Christine Viau. Please. go ahead.

Christine Viau

Thank you, and good morning.

Officer. call Tayfun from Officer; Tuzun, Agrawal, Chief today's CEO; White, and begin our by followed our Risk will with Darryl remarks BMO's Piyush We Chief Financial Johannson Also from U.S. present questions to are Canadian Dave Casper take P&C; from Ernie BMO Barclay and Markets; Management. from BMO Deland P&C; from Wealth Capital Dan Kamanga

remind could statements I As that and measures risks have remarks forward-looking assessing made that basis to differ and underlying from unless this statements. noted as noted performance may listeners adjusted results with will considers in these Darryl materially noted also and uses adjusted performance. to on useful Tayfun -- measures slide call, bank during would I'll inherent arrive uncertainties. over and otherwise be on be to call a two, results. And turn the business non-GAAP which be assumptions the Actual involve Management Darryl. reported. reported financial their both that, in adjusted referring to at results

Darryl White

backdrop and interest remain rapidly to the of these improved we against committed you, of out and strategy over performance. that of our a met Thank has period, $X.XX in that quarter, billion income EPS health of $XX.XX. morning, market of our to fourth $X announced we to range where And and businesses commitment by the a operating We've consistent efficiency delivering challenge for pretax continued to share positive Over positive and points growth XXXX, rate improvement basis pre-provision on earnings efficiency operating note, the Today, leverage closing changing to grow to we've forward. each earnings time This including last years. each achieved our year, included five sustained of leverage everyone. per strong execute delivered our adjusted record of conditions. XXX year Of strengthen and we going ratio wide net and worst we XX.X%. another our Christine, diversified and deliver results economic achieved consistent good

For growth and as of investment of we the on XX% advance the above XXXX, to revenue on inflation. our while growth year. higher target, remains leverage even PPPT our was up Return through in impact XX.X% in this And X%, our was drive operating absorb building the of building capital business X.X% increased year acquisition. last year midterm equity

Our built confidence proven environment. through and maintaining track resilient to record focus are operating our performance of to that performance and credit we sustain in business me gives cycles managing deliver dynamically any our strategic market

Turning to our operating group performance this year.

solutions that to continue support real highly business American strong with financial We and banking tools customers developing P&C, with the PPPT our was we've more year revenue market-sensitive reflecting lower year. that Investments customers benefit Business winning North these capabilities, our everyday Personal to benefit up to interest BMO account, as businesses. XX% In In We from Commercial net award flagship employees. rates, up made Banking customers flexible Visa time Florida marketing leverage. and businesses, and well-diversified offset amplifier functionality digital and enhancing growth results in adding in than new rising our markets this PPPT acquisition, its ratio in and drove together strongest have had Eclipse, customer our our balanced as efficiency well from P&C core customer and Texas. added model. with the of flagship growth for on Day this sales equipped below them resulting such our purchases. Commercial to and digitizing BMO continue experience commercial Combined products billing, our we expand year payment competitive nearly significant in Banking, expanded retail and strengthened continue We've help and and force revenue as Grace XXX,XXX attractive new XX%, onboarding that them including to we with and strong relationships. and our invest led with presence on US savings strengthen platform, leading savings suite robust franchise. and operating offer progress, an insights, in features make offering Same XX%, record We've treasury as including strong digital full in rewards Canadian

the we've a to leading of in And next XX%, growth reduced With foundation a regional maintained for and US we've underserved North addition, of fees have the customer momentum an efficiency step bank share on core American execute across the branch number West. our return equity the our two our In we expanded together XX% Bank and deposit building and footprint. ratio groups. access strategy, with of

Markets net BMO for convenience base. growth We customer our PPPT significantly increase and in enable our and transaction footprint, first conditions BMO and Wealth in our this several strengthened in billion resulted M&A the across the in new Upon close strong growth peer-leading that will transforming year, Canada in categories maintained our Despite investment past expect as US our businesses positioning calendar for US, access improve. challenging modernization investments in delivered We've environment in we of XXXX, growth. in businesses to XXXX. In American market and year. market a talent, in divesting improved closing, lower-return share platform key the us a building to resilient a position will quarter $X.X that to technology accelerated with record the significant national in over year strength Management, major capabilities made markets foundation expanded North revenue we and the performance new difficult leverage accelerate diversified and in markets we've Capital offering asset of growth. providing delivered progress years, future underlying capabilities strategic reflecting

the on our BMO's of to and and elevated products, priorities. businesses. competitive aligned focus Our in further our our an XXXX full and clients leading bringing We've advice by suite achieving performance strategic services was strengthening collaboration our and partnership empowered leadership, client to driven culture team across winning one

investor digital-first retail and of We've line modernize banking, significant We've approach, at employee enhancing management have coverage invested clients advancing also progress also across with banking analytics. and new XX% of use experiences example, For cloud product expand to capital needs employ and made enhanced commercial We've together. our aimed and client’s prior markets efficiency. to a the revenue and our drive our models customer relationship wealth us. serve holistically businesses data-driven to technology, over

transactions through systems completed self-serve such Xero. market-leading as growth are payable functionality improved enable loyalty banking channels, of it to XX% example, our We've customers For through online we're FISPAN innovative that driving able solutions over commercial need banking banking and frontline focus With integrate to employees through enhanced Canadian our partnerships, and delivering most. receivable sales. in open their delivering clients and P&C, platforms, accounts through and on leading when digital our advice service

and transition our Digital Climate score in ambition we're of our with Mobile our the Experience as QX and J.D. policy way the climate was advice of received innovative the adopt leader and solutions. satisfaction highest in partner Radicle leadership Mobile change a Through Satisfaction overall a Banking and announced credit evidence acquisition Institute, number Banking structuring development in the areas. in bridging of clients with Canada Canada. to our world, science, recognized BMO agent the customer BMO clients' in the highest they the Group, XXXX Power lead scale of climate Markets Advice today, Retail as, one Banking As sustainability XXXX we expected the and is support Canadian And ranking leading App the as solutions. economics net-zero six to In Canadian capabilities. ranks add later supporting to and Review to be the Capital we're close our Apps will progress, Study which for carbon our Forrester

support and Sustainability at of economy sustainable as new the just Benchmark. Global Our by globally progress in Benchmarking financial was the a top-ranked Alliance's institution World recognized COPXX,

by dynamically with with lowering XXXX, in Real At and the Canada in close remains capital ahead interest have rates US calendar rates the the look growth macro rates through BMO, the our near-term. expected we to XXX slow GDP economy quarter businesses we as and grow expect As and of starting of be last environment to January manage expected higher XXXX. we'll first to continue our years to the in peak customers. to our interest to the to we is support uncertain and the end resources just and inflation both zero,

So looking addition deliver through the and long-term West. reach, opportunities of XXXX and for both forward, to strengthen our shareholders, the of our expand organically value businesses our Bank brings the tremendous

our financial consistent part I'm performance empowered your our time. be now guided for purpose-driven quarter. I'll details highly I it of are exceptional our have to employees and team financial grow to to As BMO, results strategy, more for Tayfun for a for and than valued we dedication customers opportunities positioned ever clients. our aligned financial our support client diverse proud confident to and we base, more to deliver service I'm turn thank our engaged, to providing the to uniquely communities. our that by we over continue progress over on

Tayfun Tuzun

activities the shown related you, and and items EPS X. on quarter by impact billion. net this billion. of comments income are $X.X $X.XX, on the Slide reported My was to the Darryl. fair XX $X.X acquisition value Bank Thank net West, was of increased income quarter will include which management start Fourth Adjusting of Slide

for digits. as lowered by total growth speak on recorded Adjusted provision earnings Performance and strong higher continued continued year-over-year of $XXX offset Total market as losses, last income, securities $XX $XXX net well growth performing Canada as loan in provision from remainder was As fourth EPS in was pre-provision the in legal and $X.X decreased X% a billion impact revenue well Capital these environment in down previously billion, million as partially to the expansion focus at prior in was income divestitures. net be $X.X XX% his income disclosed, as in was was will our of more will The $XXX pretax XX% offset with The grow lower last loans, revenues Wealth as with up quarter million. growth remarks. results. pre-provision and income year, we X% in compared year. in Total very Piyush million than also recovery provision, adjusted interest recovery of which compared fee margin $X.XX, of US, Markets the earnings by results reflecting year. of a growth in strong net including muted pretax credit the a by comments to of Management. strong P&C PCL million, and helped for gains my year-over-year, with a double businesses

Consumer balance was slide growth growth the groups. the government core X% quarter-over-quarter. currency with our XX% as deposit X% constant On were on to up XX. business growth customer sheet year-over-year year-over-year Moving businesses a diversified in we prior all on increased increased remain from Loan the basis, strong P&C and balances and XX% loans and across in focused deposits reflecting X%, growing wealth. X% sequentially, base. operating and Average year,

range, Looking growth year pipelines loan in expect to deposits. similar diversified reflecting strong matching we and full ahead, single-digit rates in be the growth high

Turning environment, balance XX. quarter, last XX% year due margin XX by last income up margin lower-yielding growth interest basis points in up assets. offset strong was interest driven and to Net partly on last basis an X% points XX% and basis quarter-over-quarter, from growth was expansion. and ex-trading ex-trading rate year from up to higher up and slide Net sheet X by from

deposit higher year in the forward based of curves the increase the yields the in XXXX, the deposits. long-term US, to rates. loan continued expect expansion to fiscal During customer and In full on high XXXX, expanded based in NIM single-digit on and compared Canada cost year outpace increase quarter, we margins

and due we end be approaching changing cycle, past months mix our betas. NIM of XX XX this the the are more deposit rising deposit As to expansion will months, next moderate in rate the than

is shock Moving rate next A to rate Bank base XX over interest the basis XX. the interest net on slide including to million capital closing. XXX income benefit of pre expected higher $XXX by West impact our sensitivity point of months, the

decline outperformed move expectations, to betas date, to coinciding sensitivity asset them anticipated the expect of have hikes. To we our expect the future rate current for cycle. while with closing, end rate our higher deposit post and We

related in of full the XX. line X% expectations, dollar Moving to slide or revenue a of drive efficiency prior were to and US expansion up On and expenses the up year our expenses in points. were targeted areas our basis, We the divested delivered excluding performance-based year to X% operating force XX Lower stronger year higher the with compensation. from in for basis and ratio positive the X.X% and growth reinvested by sales leverage efficiency businesses improved improvement impact including technology.

deliver to again positive next expect We year. leverage operating

slide to XX. Moving

capital with strong Tier Our remained of equity ratio a XX.X%. X position common

the Excluding the of of the related changes points benefit DRIP, increased XX common Bank CETX provision, risk-weighted in growth and internal ratio combined legal by from shares the generation of capital the impact the offset to partially transaction, fair net value the West issued from under basis assets. strong

Source risk-weighted was management our largely in capital growth by lending were which assets currency actions. higher, reflecting offset businesses, commercial

interest due value is West be in by the the As well-positioned to incremental points expected discussed which since basis we cumulative announcement be announcement. this higher the quarter. on remain of the by closing the impact actions generated fair to capital rates changes offset transaction, We previously, XXX December last of close will the Bank of expect to management later since goodwill

more groups of more to XX% in Canadian was for XX. earnings from spread and basis year. losses. pre-provision reflecting XX%, by Revenue the margins. higher increased higher growth, was points offset up shift starting Moving a offset growth due which increased margins. on prior prior than tighter the balance the growth deposits, $XXX pre-tax Net loan exceeding basis and XX% Strong sequentially last reflected to delivered lower credit deposit from The deposit of operating year. provisions million, than higher interest higher net points three P&C income million six margins decline growth down margins. from and strong $XXX loan slide year to income deposit NIM

with expansion relative business QX to Average growth We term continued P&C margin. and expect force in in to were expand investment in and mortgage including X% up year-over-year residential deposits. loans NIM XXXX sales XX% business, and in Canadian in strong were XX% the X% in and technology with loans. higher sequentially, increased our in salaries. Expenses with commercial XX% up our lending Deposits X% growth

growth up P&C in points during Moving XX%, technology margin in commercial lower higher pre-tax growth the and expansion. NIM to mainly margins. $XXX was growth income it's here periods, XX revenue X% to performance. very Expenses with interest income. to net on The was pre-provision last Net income interest predominantly to basis employee revenue strong points to due net XX% operating higher earnings US lease of million, strong interest due deposit with will slide in due dollar investments. rate My decline non-interest deposit and XX%. XX. fees, was increased offset year and basis higher comments XX% speak largely up to US from XX loan which sequentially due and costs increased Revenue

increase. NIM continued moderate more expansion as deposit at expect We but a betas pace

quarter, our X% prior expectations. year, the On commercial balance from X% XX% and loans from declined last year-over-year sheet, up the deposits strong line in Average growth. reflecting average were very with

million, XX. from by more last impact Slide and $XX new divestitures Insurance partially investments offset prior interest weaker year. net $XX were was income income Asset assets million was Management net the $XX business. $XXX than of in down Management the income by due and $XXX growth as the mainly net markets. to BMO offset X% $XXX client was down million million income to were Wealth million, down in net divestitures, compared and million, Wealth year. global Moving Expenses with in

due bank commitments. on activity. down Global environment, corporate in investments higher higher quarter, XX% to X% reflecting loan due revenue ongoing up higher with and XX. Markets the banking year, XX% million, but banking And the Slide weakness and market markdowns the revenue down to quarter-over-quarter. impact Markets was XX%, corporate employee-related the costs. in corporate compared in -- lower Compared income higher up higher to were technology up Expenses on up net prior Capital BMO prior was investment $XXX to and client million to the was Turning $XXX of

year. Slide our $XXX were the conclude, was well-balanced business quarter to demonstrate results compared the full net continue to million and the To our for diversified prior strong now overall to $XXX advantage XX. in and Turning Corporate year loss Services mix. of million, the

We growing to company dynamically focus continue our continue profitably. to managing on

the environment increases XXXX, to and continued with ahead near-term remain the Looking in in we rates, economic to expect slowing growth in markets. challenging interest volatility

loan same the expense of to single-digits expect maintaining growth it growth bank turn and rates NIM the positive expand time, key to will be we I as growth Overall, to mid- areas. a the Piyush. for to to pace to we We continue customer with in operating the the achieve sustaining total trading while And At in expect deposit year-over-year leverage basis, interest year. during high year investments and continue commitment to that, slow ex our rise. on over will

Piyush Agrawal

We strong Thank everyone. you, this strong supported discipline XX. year by bank. economic risk of first management steady morning, had year, Tayfun, risk half during and Slide the good performance the across the the recovery on and the Starting fiscal

first on Gross loans started recovery year, For weaker largely performing to the pandemic the basis $XXX $XXX fiscal reduced $X condition total points provisions million provisions compared XX XX to for compared points million In provision half in the to were or and billion in ago. basis of on basis the due second of X was provision decreased points. economic the million the environment. we the a XX the impaired loans or year. reflecting for credit uncertainty from points part release XXXX. year building economic basis performing credit to points, $XXX from the the basis a loan of year recognized We the losses XX or year, year this Impaired

XX. with provisions another million terms quarter quarter. was Despite from points $XXX were QX Total inflation on third was from and or quarter $XXX for million a $XXX compared the rates, XX for provision quarter. last million provision Turning million now of interest strong performance. slide losses the points, to in $XXX of credit headwinds or current X up quarter in the Impaired basis basis credit

losses Although, million Canadian loan as modestly due formations. products, such commercial and the a commercial we very low below commercial, in they and in while modest been our The impaired a those the PCL in to pre-COVID lower our remain pre-pandemic $XX Canadian is they is US impaired P&C. provisions in And with on measures than low QX, up businesses, were expecting remain impaired million loss we have markets. corporate $XXX normalization quarter, loan strong our no levels. million in rate impaired increasing rates million which in to some unsecured reported consistent for gradual impaired last were Similar performance low delinquency $X levels represent concerns. provisions $XX US last $XX from capital from of underlying formations losses in million Retail that increase quarter, and in up and P&C levels. systemic well In credit with

benefit on The this pandemic losses XX. growth, loans offset for reflecting was slide outlook and improvement, to provision the in performing largely Moving the this weaker reduction credit and continued credit transactions $XX portfolio transfer portfolio risk million uncertainty quarter. including by of quarter, economic

to billion basis credit gross performing comfortable that current this coverage impaired over provides put allowances into the before formations were our impaired and $X.X perspective, remain points million, billion decade loans gross $X.X adequate impaired Given And below loan relative for provisioning loan we of strong still XX losses. of own flat rates performing that to were are pandemic. of performance. portfolio profile losses, our points forecast and and of the formations provides compared our of low quarter. our with basis previous coverage gross Both On to last and pre-COVID loans a XX, loan $XXX levels our slide compared are impaired the XX against

mortgage Turning to our portfolio.

XX, strong. And of of only credit year, the you maturing. can very quality. see small that rates portfolio over coming is lower remain portion Our that, delinquency Slide XX% very our of a On is

at at we a customer this not who customers in to positive to renewal. out think likely outreach. reaching any proactively And most renewals. had And have are increase have future delinquency are we have observable mortgage to response there challenges We been

serve see high I've structures capabilities discipline. of uncertain. the management as sound Over rate geopolitical the months, the and the This interest to and several practices, in will the inflation review us as underwriting consumers underwriting foundation and good for myself and and portfolios strong our portfolio adapt increases, and chance remains while businesses standards and macroeconomic quality well of had robust past as high risk overall, a to environment stead impact situation the the

in do in are range to losses So experience we I gradually expect call impaired the quarter, low this call. while back the Q&A low turn points. through impaired towards of to PCL rate our of our will XXs to basis of we fiscal pleased the terms the with now this move portion high pre-pandemic teens for XXXX the operator

Operator

Thank you.

from from is take And will Ebrahim the first Please of from Bank now telephone [Operator your Poonawala ahead. We questions go lines. Instructions] America. question

Ebrahim Poonawala

secondly, I of a of the where the in a or One, rates? base. just around from. morning. us if just borrowers the on Casper demand had commercial higher how maybe customer And the you're sense, up a Good are give interest Dave face coming sense holding around is commercial line Darryl question

In Darryl, are where you you. next tightening from? X% you lending? are bank demand that where year. And think, areas growth is there mentioned backdrop, seeing loan Thank coming I GDP the

Darryl White

Dave It's line. Darryl. question. on the is for thanks the Ebrahim,

So anything it And Dave, if will. have a you I why give I add, don't start? to

Dave Casper

pre-pandemic terms the of continue I'm would than economy more weakens. great to in year, US, are little have And would into It's our client have the New protection. as interest of capital some cases, revolving. and And our Canada clients, Sure. modest some to first demand The we the our and And question. stronger far others. are bit businesses, that well. businesses kind part a strong move strong, large the quite bases loan rates I as in been many both had in It the as probably strong holding more borrowers the Their very about up will impact But as across very demand it, period. expect probably than rate impact. talking that a we so Year are -- customers of some see into recessionary dropping increases of that in think probably extent correspond a is well probably growth acquisition a I this of our

last as that you wade feel example, an right be expect the next going There's bit will clients For clients. of lot a the through very is the just time still asset-based continues but year. of Canada. in I Darryl our a our the answer. in add? Dan together where border our on momentum they've kinds a There's we overall, both loan broad-based up. built still definitely hope -- everyone, good to just The I think than businesses dynamics Barclay, on and out probably for done there. both health of But a less myself, still year, that all putting that Darryl, be of clients. ago, have there where put growth spending as wealth, growth. there's clients, And of That's our gave dealers lots of US But I than both or good acquisition, lending, a good the about auto good good diminish they we some spent good adding capital job, bit optimism. And a we client really going long the time a strong. very awful about and of to of little I optimism still to next Del, have the to year more all less was growth, things kind sides I commercial, couple good start, maybe and markets, great months, think, with little lastly,

Darryl White

is think do it client this not do consequence Yeah. come I I I in thing Ebrahim, see that book down you And of from year. would we'll you position. about healthy market same what in when going The to agree only that. would say a is slamming in a We listen expect with good. the happen. little would should base. expect that We to the category Dave, The momentum the slowing might I healthy. all of brakes. I bit we naturally We The The add, most to forward see tend outperform a the do environments. of next in is pretty business is the And of

go. You customers that loan that this the tend to they see performance still the But go through year growth probably to good won't you time. see think loan we going year. should because select saw growth good to the you're to ones, tend next they where what have we That's And be I tend and you expect.

Ebrahim Poonawala

Any BMO for in risk lot or of between interconnectedness non-banks. particularly see non-bank the banks that for And of banks providing then leverage There's terms you chatter just one quick entities? the and a about Darryl. follow-up, to system

Darryl White

two question. the non-banks, seeing that But who the -- Yes. I and this I said Ebrahim? wouldn't you in But as see I say the in something more between to there's you I'm border. It's I today think question, apologize the it. I've look add heard market. or don't ago. right. you that I and I of question carefully a banks perpetual see as trends the current difference. environment, anything, himself, than a Would that's the quarter We on wouldn't We me I both monitor I at enhanced always the a risk. lot don't concerning pronounced that enhance say Piyush interconnectedness, it, wouldn't far sides here, missed an isn't risk did see if pretty studies the -- if I'll the a it Piyush? turn

Piyush Agrawal

events there is and would quarters, look happened at come of shortage I the well. market, been last mean, very or that if just have say you the that the two hasn't I all in one in proof a we've out

our So client a Ebrahim. like I And good it's comes well risk in think which in. very us, which exposure we client interconnectedness, banks there, it's discipline manage the while have contained, how and

know But non-bank of So I out well. clients, got again, news. and have the this within very you've come been wide variety a some actually in space, we've

base about and actually I market, client feel the we the have have So we target very good with the them. structures

highlight So area I concern in space of yet. wouldn't any this

Ebrahim Poonawala

you. Thank sense. Makes

Operator

is Thank go Please Meny you. Grauman The question from ahead. Scotiabank. next from

Meny Grauman

Bank question us ratio capital. that? A CETX update could you on on where of West, an morning. on do good the deal your give if Tayfun, see you Hi, close of

Tayfun Tuzun

when not -- to still Yes, QX, or Meny, have at the year post we our XX% above be sure. the We mean, really changed starting expect since last I capital closing expectations, announced transaction. transaction. in

has the same for that good there. obviously, continue we've we the how past the And So it to feel And ourselves four pretty quarters. for will build position from able been to picture closing. stayed about

Meny Grauman

And Darryl, to on comfortable acceptable Is being XX% closer that that feel deal still close? something you would is to so, you?

Darryl White

our We to this Yes, about. question be believe in the asked your today question Meny. we And that talked is when quarter what here. Tayfun answer positioning that yes. the consistent you believe last We're very the we'll range in

Meny Grauman

of your anything see of capital? to And types close. RWA business you're Okay. saying the managing just otherwise just that in And you and – capital a to? certain in how you're there And to maybe -- this specifically, consider no because you're then different of a follow-up that deal considerations managing would are there question of how is terms lead up as

Tayfun Tuzun

the during still doing very should I loan a mean, that growth our we're quarter. Look, with business proof the all Obviously, had have. we clients that be that Yes. strong we

Meny Grauman

you. Thank

Operator

ahead. from is Young question next Desjardin The Capital Doug Please Markets. you. from Thank go

Doug Young

or saying up in at If you're assume then end be so Darryl Tayfun. of and QX. Yes. message Maybe below QX, But above the want the can follow that I in closes Is ratio, could just you morning. I just assumption, would a just – to I like fair -- deal clarify the I there. I just know CETX if QX, if above on at the XX%. -- good or can XX%, there's building

Tayfun Tuzun

second quarter. closing But the quarter. it made, that We always fall than referred will earlier the mean, I to at Yes. in XX% closing, if comment below the quarter typically we above the the following second move closes have I XX% quarter. we could

Doug Young

a business getting rid growing other that doing just point blocks else doing free book? of behind know scenes to there terms to? Anything there of or Is in kind the to that securitization? maybe of you're you're follow-on. -- up I Is loan of capital you're the And stuff things

Tayfun Tuzun

know, And quarters with a three about you this Yes. probably investors. as and bit our past over we've or the talked two little

the we the we used different For years leverage good we than to transactions. some We're these this to transfer the base of that that risk on way if past have. it. five these tools. capabilities knowledge want And users was We're And comment in been more? not of and Piyush, pretty you knowledgeable. four, pretty it year, continue have have much past at these years, we

Piyush Agrawal

say risk just that, bank, practices, I risk loan discipline, of as result Yes. sales, dynamic would good a of part transfers. saw these probably as syndication, of any good many synthetic

as place we And cycle, about who manage. actively We've also good of been and play. this economic just of of to pools the of think them. side, All on part are the good capital weaker is, have The we our your other get dynamically investors putting portfolio into using to it's a are these toolkit. part

mutual a so there's always And dialogue happening.

and so, risk through management think, this XXXX. And active will continue that I continues

Doug Young

second then quickly Great. on question, NIMs. And just just a the

Can and and of and at Canada bit a -- missed helpful. where you unfold front-end it, color some but and you. I indication think, more bit would I whether more gave back-end at if Any further US be go loaded? about or so talk Thank directionally up apologize how be it will -- the it you loaded would think Canada the all-bank it you a I level.

Tayfun Tuzun

the different have US our the two And looking feel about years. seen expansion. that there to Canada, very NIM quarter, were bit this good We a we very a for basis dynamics. strong mean, in have next high have countries numbers, single-digit done only factors NIM, relative year-over-year of you displaying not played role. NIM two, two-and-a-half are sort a In we And a little this And the three I of importantly, the I quarter just more that expansion. but probably past as into on have we outperform, Absolutely. will continue Sure. year. guided I suspect over

growth. One of loan a them was deposit over strong growth very

But itself spread our next side. rate be prepayments the points, comments half business on almost rate expansion suspect smaller dynamics, it of NIM happened point for rising matures, expect of by over I'll as actually suspect first over compared in quarter for turn that to our couple the looking the see from had year X side. I that basis had I we the then almost broader pressures. prime increase -- in So the now, expand. the to NIM environment But in business in at couple impact. Canada over will double-digit the the to NIM, in that will basis quarters, a Ernie Canada. and And half. it comments a will second the to BA that in And in like for of expansion a type mortgage of Ernie the a the we the NIM slowly probably in cycle always

Ernie Johannson

Thanks, Tayfun. for the having this that as our question strong had and is we've on NIM us well. around over NIM really The think I Thanks of course for year. the notion a performance,

for has us, focus. next really growth and And a strong year. into that's continuing deposits on been see key Our that you'll been

mortgage will our Tayfun to fiscal well, then and impact, forward. to in much see As our we'll as prepayments, core business expect down. be we expansion interest slow as And XXXX increases see as which that go we're negative to as to a NIM going as in lending mix. next that It prime obviously, taking Tayfun us obviously, growth support, a will this be deposits. We -- of term on, our And year. as said, then our quarter. deposit focused had the place And don't we expect pace well moderate obviously, mentioned, see around rate that just

to it's what yet migrate their We've about But that year. in shift. doing maximize equity And in this core term or key. we've our products we're business deposit been markets into quarter-to-quarter, the out I'll growth term seen personal from we've business, talk on in terms shift is And a and customer overall. savings portfolio particular the customers core they're growth migrating in is as acquisition the seeing everyday of into our What Canada. business also Sometimes our a is longer earnings. our term commitment lumpy from strong account but had record either the of into replacement full levels

we've of shifted that's positive actually and savings banking And out and everyday growth. have checking for sustain. us going replaced, we've our flat we what continue very account, to So forward to had

to brand existing not So I can but the you shift use our only quality replacing is see as out customers it street. term. deposits, with the from good that customers which We're terminology, important new from

about in we're encouraged see going the final And growth year. next forward a performance comment on So carrying strong the forward. year. We've got momentum just and Canada, into that P&C we a

Doug Young

Very helpful.

double So just to Is clarify, off Tayfun, you QX? digit. say that

Tayfun Tuzun

Yes, it's off QX.

Doug Young

Thank you. Good.

Operator

ahead. you. is go Gabriel from Dechaine next Please Financial. question The from Thank National Bank

Gabriel Dechaine

morning. Good

I you Bank of of any the the of to close, come West still Just didn't timing shift. across the QX clarify, XXXX? expect

it pushed of bit…? little back a kind peer Your

Darryl White

first can say. didn't tight Gabe, first speak what a know, Yeah. quarter pretty had ours. first but saying fiscal calendar Is we that's I I to see range. quarter, or it XXXX. of to We're only quarter they don't

about occurring thought occur. we it as would way we're So rounding think third base, it today, the I is and everything

pretty about So it and I pretty think tight in soon. think you range. can that It's

Gabriel Dechaine

Thanks. it. Got

capital for and in points I RWA Now, thought Tier X you growth, from commercial especially the I and RWAs. had, there. that bigger with core we consumption of at loan number the would inflation, basis see the a look four But position,

quarter, explanation? usually there or risk in transfer another Were the credit XX You're active XX. is particularly up into you transaction this

Tayfun Tuzun

past a on No. days transactions in growth had credit We transfer have that risk numbers the XXX XX the had over an net of were. to RWA. actually We impact number

Gabriel Dechaine

would And those is activities? big give revenue a there you given us

Tayfun Tuzun

The transactions cost respect equity in very these of No. cost to of with general. compare well

Gabriel Dechaine

last the then one, And sorry.

Piyush Agrawal

say time, are these to of capital. part going as just bank was risk for up actually positive the I these frees because that, transfers it Gabe, over

get different you're capital as fees areas. earning from clients, to so price across actually at And the market current you redeploy

the it's management, risk net time. a a from revenue win over for bank. a on So win It's the

So I positive. this very consider

Gabriel Dechaine

And what's... XX $XX one. then you total just year-over-year. financial the quarter $XX balance The of that billion your I'm a me non-bank the looking wholesale is billion a category. services loans, About supplement. from that of last -- Page tell up Can within at is

Piyush Agrawal

book? at loan So... the overall You're looking

Gabriel Dechaine

Yes, loan…

Piyush Agrawal

Yes.

is obviously, is macro financial very Our a taxonomy.

of got within lots so that, you've subcategories. And

of investment different companies, break broker it these others. lending well obviously And and long private a you There's companies, have up sponsor had risk structured. carry I those. exposures They're we time. also We've if profile. to other banks, dealers, So between a for and of equity -- these different will we've to very each customers in lending forms have

we I know say... the the to referring the about was feel I one and would something of performance so good which if And don't these. loans but you're news just in across recently, quality of each

Gabriel Dechaine

No.

Piyush Agrawal

Then...

Gabriel Dechaine

a in get what's understanding It's a know vanilla. it. I It's there big of to more When plain and want number. better they jump just out,

-- there categories two one or there that... is I the So is of mentioned,

Piyush Agrawal

all they're that All And well is good. managed, concentrations. limits, our No. all within

wouldn't significant. add So that's anything I

Gabriel Dechaine

a good you. day. Have Okay. Thank

Piyush Agrawal

Thanks.

Gabriel Dechaine

from Paul Thank Holden from you. ahead. question is next The go Please CIBC.

Paul Holden

you. better to impact Is through the I doesn't flowing a P&L risk it. Good Like revenue. credit must if I go of comes on want how back morning. big with costs understand just associated through to the the that transactions. Thank line? have be expense some to it transfer there kind want it

potential that. any size impact. the us earnings and So see help And of quantify there's can that just disclosure wondering we would if the that program where

Tayfun Tuzun

those don't can bit income depending more a But both let lay transactions it our for will it impact how if back upon us current through the see Paul, provide come out We we take on transaction. have statement. disclosures you. and that clarity Yes, that

Paul Holden

kind That is from to credit you with would to respect customers opening customers, out levels, credit And be line terming of And on guess, a up helpful. utilization, commercial second then of and will, kind those then potential capital debt, is back repay any I potential pre-pandemic is above, below? markets lines? type of back question there particularly if in corporate debt now and Thank with a down it headwind on there you. the

Darryl White

we that with you Why don't Paul. Dave? and have Dan Dave help question,

Dave Casper

Yes.

it's good side, has One we've really in pre-pandemic, had commercial think, to business return. growth. I dealer -- actually areas it's I it's earlier, where couple our quite of not back auto the on the mentioned started but a

But see probably lot, our and outstandings there's more on was and it that's where You'll increased actually not the utilization. pre-pandemic. helped cars us that yet increased

particularly have that, gear that now. up companies And lending. asset-based holiday to slow this pass time. But and is that come on and around the it up, And season, would it the the then we I’ll to builds is area other over normal as nothing The will outside start everything down, the over past. market expected down in what Dan will to capital side.

Dan Barclay

percent the pre-pandemic or Yes. And so. still last I I is would below up experience we're is, the utilization. is quarters, think, everybody. for opening a little robust the And that on couple our think nothing bit but I concerning, It's markets of say of good more then,

good a outcome. that's So

Paul Holden

Okay. Got Thank there. leave it. it you. I’ll

Operator

Persaud question Cormark Securities. Lemar The from next ahead. you. Please, from is Thank go

Lemar Persaud

would about is talk I market taking the missed then, in spreads? mortgage if the me One bit out talk talk Obviously, color peers XXXX relative suggested value mortgage to industry. relative strong seeing at across they mortgage tight a And the growth domestic? unprofitable, to could to in helpful. looking that of but something cross-selling franchising peers. the your sequential about and forward it, stands And a historical for be the Can Perhaps Any and growth mortgages we're if slowdown levels. in us time. that's maybe in maybe are growth that thing to opportunities. seeing share there us you maybe is you outlook what proposition this about around and One to Hi. true of [ph] it's you're terms

Ernie Johannson

customers. at summary our business can I Lemar. relationships And Ernie. expanding acquiring life -- customers existing really know with core businesses product in We customer Sure. It's market give well our business you as just quickly, Thanks, new that our with mortgage we is customers. consolidate will mortgage a a a is about with approach strategy. as when of the stage

in come we a couple of ways. it at So

turn effective We it them, use our in our overall that, end business relationships them. team actually digital a of with credit retooling mortgage deposits, day, specialist that cetera. franchise. as up customers first, customers in been in come language, I well. we've out mortgage our mortgages, customers. growth, HELOC capabilities, And over successful fuel our the and been more we're which to full be for including cross-sell can business would our talking We've past have very out customers card, new and sell seeking a sales we whether build brings to able if there et with is is being primary And accordingly majority really us, to that That that our you team, business, every as to be for then successful. if that a more use very The

And around really valuable, customer growth. is so focus, our relationship been that's sustainable

profitable It looking more obviously, single challenging. terms profitable. perspective, bank extremely we is are In now, total with products marketplace, it's Mortgage relationship -- And are growth. for at new customer is than our a customer. as little you of a are at profitable. other phenomenally the with customers service prime all can our the is market as as the CA imagine, it competitive of spread, a It competitors very right

new around customers So our bringing long-term customer focus the relationship quality and build is franchise. into growth,

see slowdown I in mean, we it. market. all are some we We think housing experiencing the forward, Moving

will to market. at continue We play

market at mortgage to businesses. is proprietary in strategy be our Our

that goes your where that run question. market and answers direction. pace the in Hopefully, keep we'll So

Lemar Persaud

And switch Yeah, could Casper commercial growth. maybe on that's if gears loan I to then helpful. over Dave

current in out present outperformance loan your us was commercial the peers? remind able of that seen things One the factors is those what environment? above-market you we've the pandemic rates of that then And maintain the Thank secondly, Could still you. coming particularly in are of versus of to BMO growth, drove US.

Dave Casper

our we've the of we and really geographically well all, both of grown have first as Well, some US expanded in specialties.

to of right whether it's And referrals of New strong about the as So momentum we is to very geography franchises mentioned Year record going some have the our and have excited from I've the that I happen West both specialties whether that just talked The of into they'll colleagues. Coast. our what's geographically. through particularly And customers. We'll excellent into together, into Florida, expand existing with the whether frankly, These franchise. be West feel of an Texas, about a we it's it good so Bank getting our some going of Darryl move continue. now, we we Bank expand I'm the West. move it's I it's specialties, the will just We'll the better. have expanding, existing expect

And the story. to growth mentioned It's commercial, wealth our as I back acquisition, our continued business So cross-sell into markets capital a earlier, or expect into and deposits. whether our and those into very ability our I business in it's referring client commercial. businesses loans very, positive

Lemar Persaud

Okay.

you So that can it sounds Is bank outpace statement? US continue like peers. you to fair a your think

Dave Casper

clients we're the new bank continue comes Well, And the of sole lead clients. were and is -- And or I from. new sole those the bank. of our the business parts are that's existing either grow one of to are key the expect profitability where growing where we're XX% are almost we'll our actual

business, in sole about the the or talked lead Ernie are bank. as Just her we

I think to well services. to where continue the fight And You're to that's all have not given will offering. ancillary do going our we over

Lemar Persaud

I appreciate the time.

Darryl White

clients in a the just now franchise when years. thought your for might that's This don't. of there is is helpful that who lead, market are to a fact I together, or States structure in us. me, for If question, because That provokes be relative Dave's deliberate very banking has questioning about think lot United builds largest a the talked may Dave got a hundreds fourth, arguably advantages commercial and When to commercial and where one interesting that compliment that on hundreds really Darryl. US. them on XX% put which for the just you the of premium we've the fifth important bank in the you Canada they're a it's We've Lemar, that franchises, I continent. sole market think the which answer strategy for in players of the capabilities unique fragmented and about you're

as positive go installed client so And capacity and to have there the come and through that through on can share do important. is add today, existing rely selection pandemic the or borrow just more add very ability to the more clients, you your so base not and

well. it very a and a strategy, deliberate at that's West about because couldn't the to Bank come here better So the are time, of frankly, the add franchise as from we

think it's teams important to decided really done we've but quite the wanted deliberately the I we job both have commercial, personal also advantage structure acknowledge of. the and in market take So that to

Lemar Persaud

Thank you.

Operator

is Thank Securities. you. go ahead. TD Mendonca question from The Mario next from Please

Mario Mendonca

when a deal. point made of both Good morning. announced the West Tayfun the capital Darryl, your and the the changed around you that Bank expectations haven't from year-ago you

mean I be I What little and you the at by that close the quarter, different. above XX% comfortably close, from is in, does last So expect outside would above. CETX it said sound think looking at comfortably to a ratio sub-XX% you isn't

change I'm is curious this from changed? quarter? last made about what What outlook So what's

Darryl White

closed, we if didn't we you Sorry, very believe to anything Mario, is communicate well. led

say, we changed, anything's has Sorry, well. should communicate I changed. very didn't Nothing

comfortably we've think we've pretty you the first say, pretty be above as XX%, at consistently would to ratio consistently, quarter post in close. least that I the tried say

ratio this continue of And we that, we where to look at that's QX year. that, that's maintain So would we to calendar and be. the assume the expect

all. not change So at any we're -- that's not intending signal to

Mario Mendonca

now So not close, and post is I comfortably but there you're after. it close was that nuance was well, above. -- the Maybe the at your message quarter now, heard

Tayfun Tuzun

Mario. always it's close, Yes, been post

Mario Mendonca

Correct.

Okay.

Okay. nuance I up didn't a That's on. pick

where have kind slows? is related otherwise. or the the mild some you an starts capital were increase how any call could How some does that do recession, your it, you in RWA about as your think question think in environment, be about being, Do clear near-term. your of heading slowing, of ratio, -- we a you How let's capital worry peers it you way? and that sort holds to as other do little density ratio in been you The things economy up are into of tight

Tayfun Tuzun

Yes.

we actually, that's how clearly So manage has One outside bank I question. is influence. is always been about three way a position capital, of sphere and and And think the good are the joined that is the -- capital. our since of primarily it's factors there impact our regulators that sort

capital a The way current That second factor role expected plays third peers. environment. is and factor make targets. the And relative not establish is position the is outlier. important in to we for we us are environment environment, an management very the the always to It the sure our that

And and so be going management factors forward that updates as we will our look the environment you us in levels, will that we with we establish the into, time about goes by. capital where as those are we collectively will inform those share should

Mario Mendonca

but and risk where So a sit today raise very this -- sound blunt, I modest deal be to this capital going there that a you to know of putting get all and very, it together is then, done. Is true? would

Tayfun Tuzun

done? deal get To the

Mario Mendonca

unlikely bank, next way Yes, that that's I exactly deal bluntly another people was raise. course, your speculation. done that are It's to was And inside be would over support of hearing quarter. from the Not quarters. the capital there speculation I capital the to it the just during ratio that few the the because get that ask

Tayfun Tuzun

my but sort think about mean, capital really deal, I involves of Yes. we just not how the not comments overall. --

said appropriate. and for transaction, capital we I our Darryl As that said feel ratios the are

Mario Mendonca

you. Thank Okay.

Operator

Thank go Ho ahead. Suisse. from Kim is Credit Please The Joo from next question you.

Joo Ho Kim

Good Hi. And thanks morning. for my question. taking

very growth cards the this firstly, strong growth, the in on was Canada Just quarter.

that's if a the comment how cards meaningful, you're next you what year And on revolving to on And contributor can you outlook your for Just kind seeing think about the Thanks. growth business? of, if margin year? wondering, next balances?

Ernie Johannson

Joo It's the answer Ernie. I'll Ho. Thanks, question.

performance that relevant cards our several result, and products as function year-over-year out number Canadians we've business had improvement record things. of a had effective continues. new is, a One has launched a have are strong very for It's in of acquisition. and Our a recently increases overall,

into within from existing our market franchise, overall, So improvement conditions general then spending. in our And we're we're new franchise. cross-selling benefiting on an customers growing

are So up. our balances indeed

up over cards the as year. to there performance. business point right they're revolve be overall in where you number Our business of them were pre-pandemic. of now. overall in moving course some pickup a fact, we their They're be And not have, the to in spend don't also, They engagement improvement rate, But our expect overall revolving a variety balances, they out, will next That whether improve and model, their see to customers it seeing balances. we our we're of our categories. in starting nice level. And we're spending then will,

their recently, thing And The will PaySmart, just be it's like customers buy to on option a to pay a launched help little encourage around their bit but to credit able lending cards. later, note continue against small a again, our now to smarter do called and our which product some allows customers, base, prudent again card new which to our other thing an finances. we've is do interesting the

So, rightly be just overall, overall the also supportive given personal our and I'd of continue to growth say will the lesser the as pointed extent, in year out, business balances a but strong, performance NIM, size revenue is you next and of involved. the

Joo Ho Kim

Thank you. That’s it me. for

Operator

Please, is Genuity. our you. And Thank from question ahead. Chan go Canaccord last Scott from

Scott Chan

everyone. modeling to morning, for question Good I'll it keep Tayfun. a quick

good just in you you $XX expense quarter any and last was of? versus if in shares, $XX And lot On remind And a this rate there's it quarter, and run than know is the I the upcoming that me the the quarter million was -- the activities forward? higher in million. the activities quarter? think a expense dividend going preferred the Can

Tayfun Tuzun

Yes.

I the the impacted $X change delta in quarter, in between that think new about had the billion, issuance quarter-over-quarter QX. That's a and the coupons. we and QX

Scott Chan

Was it at the start of quarter? the

Tayfun Tuzun

It was think. September, I in

Scott Chan

September?

Tayfun Tuzun

Yes.

Scott Chan

Okay. Thank you.

Tayfun Tuzun

Yes.

Operator

to White. Thank to session. the the question-and-answer I'd This like turn Darryl you. concludes call over

Darryl White

strong important leverage for Well, positive consecutive themes. operator, thank results all of the with few your a X%, the fifth thank very questions. you, with continued and operating key growth The and were morning year. overall for year's you conclude I'll PPPT

inflationary remain given operating XXXX. pressures. expenses again particularly well We've committed in delivering managed, Our to leverage

And confident remains driven grow from to perform environment. financial advantaged in enables a I'm bank. and, we're got performance allowance I credit Our strong. purpose our will protect going continue any that an performance. to that's the forward We've with mix significant say, us to position set that will strength of strategy deliver consistent

Year. for I you in want We all to So the again thank in today's to look participating you. New of to speaking you forward call. Thank

Operator

your Thank and you. disconnect ended. your lines time, thank has The at this you we for conference Please now participation.

Bank of Montreal (BMO) 1 Dec 222022 Q4 Earnings call transcript