Bank of Montreal (BMO) Scotiabank Financials Summit summary

Credit performance and outlook

• Credit losses have been higher than peers this year, mainly due to a small number of wholesale accounts underwritten during the pandemic with higher leverage and risk factors.

• No significant concentration by geography or industry was found in impaired accounts; issues were linked to specific underwriting vintages and circumstances.

• Management expects the bulge in credit losses to peak in Q4 and largely subside within six months, viewing the issue as temporary and well-understood.

• The business mix, with a heavier U.S. and commercial focus, explains the difference from peers and is seen as a long-term advantage despite current challenges.

• Adjustments to underwriting and monitoring are being made surgically, focusing on specific risk factors rather than broad changes to maintain growth momentum.

U.S. business strategy and integration

• The U.S. market remains a core long-term growth strategy, with significant presence in major MSAs and a history of both organic and acquisition-driven expansion.

• The Bank of the West integration was technically successful, with customer growth resuming post-acquisition, but revenue growth has lagged due to market-wide headwinds and timing.

• Revenue expectations for the U.S. business have been pushed from end-2025 to end-2026, with confidence that the delay is temporary and not structural.

• U.S. business health metrics, such as branch productivity and cross-sell, are improving, and cost synergies from the acquisition have been achieved.

Capital markets and earnings guidance

• The capital markets business focuses on upper middle market and specialized areas, not mega-deals, and has achieved leadership in rates and securitization.

• Earnings revisions for 2024 and 2025 are almost entirely attributed to credit outcomes, not operating performance.

• Operating leverage and PPPT delivery have met targets, with positive trends expected to continue.