- Adjusted EPS Growth Increased to $3.48, up 15% YoY, driven by record pre-provision pretax earnings of $4.1 billion.
- ROE Improvement Rose to 13.1%, a 180-basis-point increase YoY, with a 15% ROE target by 2027.
- U.S. Banking Momentum Achieved 3% growth in noninterest-bearing deposits and record revenue, supported by 23% YoY commercial TPS fee growth.
- Capital Markets Performance Generated $893 million in pre-provision pretax earnings, driven by strong trading activity and advisory fees.
- U.S. Segment Optimization ROE increased 150 bps YoY, with 90% of optimization work completed, expected to drive growth in H2 2026.
Segment Performance
The Canadian Personal and Commercial Banking segment saw growth in core operating deposits and mutual fund sales, with a 75% increase in referral revenue. The U.S. Banking segment reported record revenue and strong margin expansion, with a 3% growth in noninterest-bearing deposits. Wealth Management earnings were up 16%, driven by stronger markets and net new asset growth. Capital Markets had a strong quarter, with pre-provision pretax earnings of $893 million, driven by strong trading activity and higher advisory fee revenue.
Credit Quality and Risk Management
The company's credit performance was largely in line with expectations, with total provision for credit losses stable at 44 basis points or $746 million. Gross impaired loans decreased $228 million to $6.9 billion, driven by lower formations in commercial businesses. The performing loan allowance for credit losses (ACL) is at $4.6 billion, with a strong coverage of 69 basis points.
Valuation and Outlook
BMO's Price-to-Tangible Book Value (P/TBV) is around 1.64, which is reasonable given the company's strong ROE performance. The Dividend Yield is 3.22%, which is attractive for income-seeking investors. With analysts estimating revenue growth at 5.5% next year, BMO is well-positioned for continued growth. The company's commitment to delivering high-quality solutions for investors was recognized at the 2025 Fundata Fundgrade A+ Awards, where BMO ETFs and mutual funds earned 27 awards.
Guidance and Future Expectations
The company expects to achieve its 15% ROE target by 2027, driven by continued growth in its U.S. Banking segment. The U.S. commercial loan growth is expected to be mid-single-digit, driven by great talent in the field, organizational alignment, and industry expertise. The company is focused on optimizing its term business and has seen strong operating deposit growth driven by net customer growth.