Bank Of Montreal (NYSE:BMO) Chief Executive Officer Darryl White reiterated the bank’s focus on improving profitability and outlined a timeline for meeting a key return target, saying the lender expects to exit 2027 with a 15% return on equity (ROE) and sustain that level into 2028 and beyond.
White’s comments came during a question-and-answer session in which he pointed to operating execution in 2025 and several ongoing initiatives—particularly in the U.S. business—as the main drivers behind the bank’s ROE trajectory.
15% ROE target: exit 2027 timeline
He added that the ROE improvement was not driven by credit releases, stating impaired provisions for credit losses (PCLs) were “roughly flat” in 2025 versus 2024. Instead, he said the gains were driven by operating performance, including 4.3% operating leverage and 18% growth in pre-provision, pre-tax earnings (PPPT) in 2025.
Looking forward, White said the bank is recommitting to positive operating leverage in 2026 at the total bank level, continuing capital optimization efforts he expects to “come to a conclusion in the second quarter” of 2026, and leaning on improvement in the U.S. segment. He also emphasized that management’s intent is to make the 15% ROE level “sustainable,” not a temporary milestone.
U.S. segment: integrated model and 12% ROE objective
White said BMO’s objective is to exit 2027 with a 12% ROE in the U.S. banking segment, while reiterating that the total bank’s 15% ROE is the primary target. He highlighted a U.S. reorganization implemented July 7, 2025, which placed personal and business banking, commercial banking, and wealth management “under one leadership spine in country.”
According to White, the new structure is intended to unlock both business-line synergies (revenue and cost) and balance-sheet synergies that had been limited under the prior organizational setup. He said BMO’s U.S. lending-book optimization is about 80% complete and that by the second quarter of 2026 the bank expects to have the full benefit from the reorganized structure and balance sheet actions, alongside what he characterized as a potentially improving U.S. macro environment.
On growth, White said BMO expects net new loan growth to become visible around the middle of the second quarter of 2026 and indicated that, assuming the macro backdrop is consistent with his expectations, mid-single-digit loan growth could follow. He added that BMO has “lots of capital” in its U.S. bank and has been building capacity even while optimizing the balance sheet, including adding 100 bankers across personal and commercial roles.
On deposits, White said U.S. deposit performance has been “really good” following volatility tied to Silicon Valley-area banking concerns earlier in the cycle, and he expects deposit growth to track in line with loan growth. He also described efforts to improve deposit mix by attracting low-cost retail deposits across client segments and shifting commercial deposits more toward operating deposits rather than temporary balances.
Credit outlook: flattish near-term, normalization later
White said the bank continues to work toward normalizing impaired PCLs “somewhere in the mid-30s,” but he does not expect an environment that produces that outcome in 2026. Instead, he expects credit to be “flattish” for at least the next couple of quarters, with improvement in the U.S., stability in Canadian commercial, and a modest increase in impairments in Canadian retail.
He said the ROE benefit from credit normalization at the all-bank level is less than 100 basis points and that BMO is not relying on a large credit tailwind to achieve the 15% ROE goal. He also said his forecasts assume roughly flat performing provisions, with “no big build” and “no big release.”
Canada outlook: low single-digit loan growth amid uncertainty
White described the Canadian loan-growth environment as tough over the past year, attributing much of the hesitation to uncertainty around tariffs and geopolitics. However, he said the economy appears “more resilient” than he expected several months earlier and noted client conversations suggesting some businesses are becoming more willing to move forward with plans despite continued trade uncertainty.
For Canada, White said BMO is budgeting for low single-digit loan growth for the year, with unemployment a key variable for retail demand.
Expenses, capital deployment, and capital markets commentary
On efficiency, White said BMO has narrowed its efficiency ratio gap to peer averages over time, citing a reduction from 400 basis points five years ago to 160 basis points at the end of 2025. He also updated investors on restructuring charges discussed on the fourth-quarter call, saying the bank now expects a first-quarter expense closer to $200 million (down from a prior range of $225 million), tied to an estimated $250 million annual run-rate benefit. He said BMO expects to realize about half of that benefit in 2026 and the full amount in 2027.
Regarding capital, White said BMO generated 90 basis points of capital in 2025 and ended the year with a 13.3% CET1 ratio. He reiterated the bank’s capacity to meet organic loan demand while continuing share repurchases, noting BMO bought back 22 million shares last year (about 3% of market cap) and remains active in the market.
On U.S. M&A, White said a strong deal environment is “not a reason to do M&A,” emphasizing BMO’s ability to improve U.S. returns without acquisitions. He said BMO would only consider a limited “tuck-in” deal that accelerates densification and local scale and does not delay the ROE rebuild timeline. He also discussed a previously announced sale of 138 branches in nine states where the bank does not have wealth or commercial businesses, describing the branches as having about half the productivity of core Midwest and California markets.
In capital markets, White said 2025 was a strong year and that 2026 has started well. He noted BMO had previously targeted more than $625 million of PPPT per quarter in the capital markets business and said the bank exceeded that level in all four quarters of 2025, suggesting it is “time to rethink” the target higher. He also highlighted BMO’s metals and mining franchise, describing it as a long-standing global strength and saying policy shifts supportive of resource development could be beneficial over time, while cautioning that capital flows and project timelines do not accelerate immediately.
In closing remarks, White said he is “as optimistic as I’ve been in a while,” citing expectations for U.S. GDP growth of roughly 2.3% to 2.4% and Canadian GDP growth around 1.7%. He reiterated that the ROE rebuild remains BMO’s top priority and restated the bank’s expectation to exit 2027 at 15% ROE on a sustainable basis.
About Bank Of Montreal (NYSE:BMO)
Bank of Montreal (NYSE:BMO), commonly known as BMO Financial Group, is one of Canada’s largest and longest-established banks. Founded in Montreal and headquartered in Montreal, Quebec, the bank provides a broad range of financial services to retail, commercial, corporate and institutional clients. BMO is publicly listed in both Canada and the United States and operates under a consolidated financial services model that integrates banking, capital markets, wealth management and asset management activities.
BMO’s core businesses include personal and commercial banking—offering checking and savings accounts, lending, mortgages, and small-business services—alongside wealth management and private banking through its asset and investment management divisions.
