Standard&Poor's Ratings Services' ratings outlook on Bank of Montreal (BMO) is stable, reflecting our expectations that the bank will maintain a risk profile consistent with the current rating through continued favorable asset quality metrics, prudent balance-sheet management, a still-adequate risk-adjusted capital (RAC) ratio supported by earnings generation, and a funding and liquidity profile that benefits from a well-established core deposit franchise though wholesale funding dependence is fairly high. We could lower the ratings if the Marshall&Ilsley (M&I) acquisition pressures BMO's operating performance through weakening asset quality, making net charge-offs (NCOs) consistently and notably weaker than those of peers. We could also lower the ratings if BMO's RAC ratio falls below 7% for several consecutive quarters. Alternatively,
