Bank of Montreal at National Bank Financial Services Conference Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Gabriel Dechaine - National Bank - Analyst : Well, I've had a Chief Risk Officer in that chair just prior to you, and I'll start off with the same question. The whole economic outlook and the scenarios you've got that are underpinning your performing provision, you know, we got the comments in Q1. I'm wondering how you're thinking about those outlooks and those scenarios and how they may have changed over the past few weeks. Is it -- I'm sure it's a fluid situation, to put it mildly, and just maybe let's start off with that.

Question: Gabriel Dechaine - National Bank - Analyst : So soft landing scenario, and we've seen it, I guess, since Q3 or starting last year, banks started adding to the performing provision again, as opposed to reversals prior to that. If suddenly -- it seems more likely that a hard landing as opposed to a soft landing, is that when we start seeing much larger performing provisions?

Question: Gabriel Dechaine - National Bank - Analyst : So my next question is about exposure to European, and financials, and US regional banks. I mean, I'm asking that question, but I also want to know like exposure, it's a word I throw out, but where would the exposures be? Am I thinking about the wholesale business where it's counterparty? Is it, I mean, probably not direct lending to your competitors, but is it really isolated to that or where else could these exposures be? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MARCH 29, 2023 / 2:30PM, BMO.TO - Bank of Montreal at National Bank Financial Services Conference

Question: Gabriel Dechaine - National Bank - Analyst : I probably should have started this one, but you joined BMO from Citibank and were there for several years. And you had roles in risk management strategy, as you mentioned to me earlier. What does that -- your historical experience and the wars you've been through in your previous employer, how does that translate to what you're doing today at BMO?

Question: Gabriel Dechaine - National Bank - Analyst : As far as the deposit business goes, I'm just generally -- I've asked every presenter today, are you seeing any increase in outflows or whatever? That would be scary if you said yes. But I'm more interested in the US trends. Are you actually seeing money coming into the bank because of being a larger/Canadian bank? Is that actually working in your favor?

Question: Gabriel Dechaine - National Bank - Analyst : Another related issue is the securities portfolios and unrealized losses in the health and maturity category. We're talking apples to watermelons as far as -- not even apples-to-oranges comparison. Yet BMO's loss position is relatively larger than its Canadian peers. Is that something -- I mean, I think there's a technical reason for that, I suspect, but what -- should we be concerned?

Question: Gabriel Dechaine - National Bank - Analyst : Switching gears to the mortgage business, that's the affordability issue, the payment shock issue when people eventually renew their variable rate mortgages a few hundred dollars a month, $500, whatever, of increased debt servicing costs. How do you think about that from a credit standpoint?

Question: Gabriel Dechaine - National Bank - Analyst : So moving over to the commercial real estate, commercial mortgage side of the business, 10% of your consolidated loan book, on par with your peers. We've heard of several stories in the US and other countries of borrowers freezing payments or renegotiating, defaulting outright. You have a decent sized chunk of that CRE book in the US. Are you just in a different sandbox or are you seeing any of those situations develop?

Question: Gabriel Dechaine - National Bank - Analyst : You're good for it?

Question: Gabriel Dechaine - National Bank - Analyst : Just -- we've got a few minutes left, moments left here. Credit risk transfers have been very topical. I know I've asked a lot of questions about it. Looks like you've credit risk transferred about $50 billion of loans over the past year or so. One, what is the residual risk of these transactions if the counterparty goes bust or whatever? And then two, I think you're signaling less of it going forward, but is there -- how does it change your origination strategy? Do you become less judicious, I guess, because you know you're going to transfer the risk anyway? And I mean, it could create some bad incentives.

Question: Gabriel Dechaine - National Bank - Analyst : And a typical counterparty is what? Pension fund?

Question: Gabriel Dechaine - National Bank - Analyst : Sounds like an advertisement. Well, thank you, Piyush. It's nice meeting you in person. And well, we'll call it a wrap. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MARCH 29, 2023 / 2:30PM, BMO.TO - Bank of Montreal at National Bank Financial Services Conference