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 Financial, Inc., Research Division - Analyst : One thing I do want to start off with, not specific numbers question but numbers nonetheless. Q1 '24 was a challenging quarter for BMO. And your message was this is going to be the low-water mark for revenue performance or growth and then the high-water mark for expenses. So what gives you the confidence in that, in Q1 being what it is and the rest of the way is going to be better?

Question: Gabriel Dechaine - National Bank Financial, Inc., Research Division - Analyst : Okay. And then before we get into the P&C business, the Capital Markets had a tough quarter. Embedded in there was like the impact of the dividend taxation and the reduction of the teb -- trading revenues. Wondering how investors should expect that to be, I mean, addressed, for lack of a better term, over the course of time, whether you backfill with new activities and it takes just a while to get back to where you were or is an element of market participants in that particular activity that readjust and higher pricing, presumably, and there'll be some return to -- a partial return of that business, if you will?

Question: Gabriel Dechaine - National Bank Financial, Inc., Research Division - Analyst : Now the balance sheet optimization has been an industry theme, but BMO has been the poster child for making some decisions under that umbrella. So credit risk transfers leading up to the Bank of the West closing, the RV and marine business exit, if you will, and the exit of the indirect auto lending in Canada and the U.S. I know you've been asked before. I'll ask it again. Is there more to come from BMO in this regard?

Question: Gabriel Dechaine - National Bank Financial, Inc., Research Division - Analyst : Credit risk transfers?

Question: Gabriel Dechaine - National Bank Financial, Inc., Research Division - Analyst : So as far as the individual portfolios and not so much the synthetic stuff, but I look at smaller parts of the BMO bank, mortgages in the U.S., and then there's maybe the life insurance business. Maybe talk about those 2 as far as how could they contribute to your portfolio optimization strategy, if at all. 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 26, 2024 / 3:40PM, BMO.TO - Bank of Montreal at National Bank Financial Services Conference

Question: Gabriel Dechaine - National Bank Financial, Inc., Research Division - Analyst : And last one on balance sheet optimization. You indicated or stated that it's -- these are ROE accretive transactions. But there is a gap between -- and timing gap between when you execute on a transaction, free up the capital and redeploy it. And what's your expectation of timing before putting it back to work? Is it over the course of a year? Or is it going to take us longer? Because these are smaller transactions, but dispositions are sometimes good. But then there is -- well, how do you put -- how do you get the earnings back that you've just disposed?

Question: Gabriel Dechaine - National Bank Financial, Inc., Research Division - Analyst : Okay. Then speaking of timing lags, and this is clarify if I misunderstood, but Piyush on the last call made it sound like the timing gap between when rates are cut and when credit risk deflates essentially is very short. So that -- and BMO is not the only bank to indicate this, but Q4, there's an expectation that will be peak losses and it will start to decline in 2025. Is that still -- is that the message? And then how come it could be so short as far as rate cuts leading to a benefit?

Question: Gabriel Dechaine - National Bank Financial, Inc., Research Division - Analyst : Stay in your lane...

Question: Gabriel Dechaine - National Bank Financial, Inc., Research Division - Analyst : As far as last one on credit, but the impairment formation -- impaired loan formations over the past 2 quarters have been pretty substantial. Is there anything unusual that took place in Q4 and Q1 that...

Question: Gabriel Dechaine - National Bank Financial, Inc., Research Division - Analyst : Switching to Bank of the West, and I'm going to draw a line between the M&I experience and then what I may or may not expect to see in the Bank of the West situation. BMO seemed to plug in a strong sales culture system, whatever, and this is post M&I acquisition. And it was generating industry-leading growth almost to a point where people were getting concerned. Didn't turn out to be a problem, thankfully. But I'm wondering if -- when the economy stabilizes or whatever, is there an outlook for reviving my words, Bank of the West sales culture and growth prospects that you're implementing now? 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 26, 2024 / 3:40PM, BMO.TO - Bank of Montreal at National Bank Financial Services Conference

Question: Gabriel Dechaine - National Bank Financial, Inc., Research Division - Analyst : And the California part of Bank of the West is obviously the largest, but are you expecting other parts of that footprint to be more -- earlier to respond, I guess, to stimulus?

Question: Gabriel Dechaine - National Bank Financial, Inc., Research Division - Analyst : Okay. Last one quickly on margins. You're guiding to modest increases this year. What kind of rate cut activity is underpinning that guidance? And then would you expect loans to reprice faster than deposits or vice versa?

Question: Gabriel Dechaine - National Bank Financial, Inc., Research Division - Analyst : The securities.

Question: Gabriel Dechaine - National Bank Financial, Inc., Research Division - Analyst : All right. And that's a wrap. Thank you. Getting hungry. Lunch time, I believe.

Question: Gabriel Dechaine - National Bank Financial, Inc., Research Division - Analyst : Thanks for coming to Montreal.