Bank of Montreal at National Bank Financial Services Conference (Virtual) Transcript

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

Question: Gabriel Dechaine - National Bank Financial, Inc., Research Division - Analyst : So I guess that's a good place to start. And from BMO, I've heard that having the cross-border P&C business, there are plenty of benefits of them. What can you give us or some examples we'll talk about in terms of the combined business in that sense that provides benefits to shareholders.

Question: Gabriel Dechaine - National Bank Financial, Inc., Research Division - Analyst : Are there -- like in terms of shared resources, whether it's back office or risk or underwriting, whatever, like how many of those are truly shared?

Question: Gabriel Dechaine - National Bank Financial, Inc., Research Division - Analyst : So the other obvious -- and it's, I guess, a debate from a spot [checking] standpoint, Canada versus the U.S., you've got your feet in both regions. From, let's just say, lending growth standpoint, the vaccines rollout in the U.S. is more advanced. Is that really something you see giving a big boost for sort of the time period in the U.S., and Canada, much slower to recover. There's other factors in these vaccines is stimulus checks that could suppress the demand and stuff like that. So I'll stop talking to you.

Question: Gabriel Dechaine - National Bank Financial, Inc., Research Division - Analyst : Now, the credit card business, that's near and dear to my heart. But from -- we saw the big dip in balances across the industry. We -- and there's a lot of talk of as things reopen, spending starts up again. But there's offsetting of factors there, especially with stimulus checks rolling out in Canada, the government's local bank. In your view, do you think the balances are nearly flat out here or growing in Canada because it's a bigger business for you, I guess?

Question: Gabriel Dechaine - National Bank Financial, Inc., Research Division - Analyst : Well, on -- in a similar vein, there's the wait and see for things to come back. But in the interim, you're looking at your product lineup, thinking or -- customer needs are evolving really fast. We've got to tweak the product, introduce this new product, a whole host of things. Are there any product initiatives you'd like to highlight that really kind of match up to that description in terms of here's a new need or an evolving need, and this is what we've done to step in to fill that need.

Question: Gabriel Dechaine - National Bank Financial, Inc., Research Division - Analyst : (inaudible) Visa, right?

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

Question: Gabriel Dechaine - National Bank Financial, Inc., Research Division - Analyst : I do have a question on deposits, but I want to get -- your answer makes me think of expenses. And I mean that's a boring topic, but last year was about tightening and negative expense growth and really ratcheting down. And now -- and BMO is actually at a consolidated level in the Canadian banking, and U.S. banking for that matter, has been successful when driving down expenses. Are there any reasons to expect maybe a quicker than expected return to normal spending patterns because you see the growth -- the light at the end of the tunnel or you don't want to be missing the growth wave, whether it's this year or next year? Like how would you frame the expense outlook for investors in the next 6 to 12 months?

Question: Gabriel Dechaine - National Bank Financial, Inc., Research Division - Analyst : So for -- I mean, just -- I expect for the industry, and BMO included in that, of course, in the retail P&C businesses, the revenue line is going to be pretty flat this year, maybe a pick up in the second half. But there's no reason to expect like a little spike in expenses because you're buying 2022 and this year might be less of an operating leverage year, you're still committed to positive operating leverage this year. 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 24, 2021 / 5:35PM, BMO.TO - Bank of Montreal at National Bank Financial Services Conference (Virtual)

Question: Gabriel Dechaine - National Bank Financial, Inc., Research Division - Analyst : Okay. So going back to the deposit question I had -- well, I didn't ask, but I'll have Canadian and the U.S. one, and they're kind of similar. But in Canada, like all banks, massive uptick in deposits, is it wrong for me to assume that, that's going to be a big impediment to loan growth because of the simple fact that borrowers are not so much in the savings, like they don't need to borrow to buy stuff other than mortgage, obviously.

Question: Gabriel Dechaine - National Bank Financial, Inc., Research Division - Analyst : Okay. The U.S. deposit question I have is more one of like the funding mix here. Before COVID, your loans to deposit ratio in the U.S. was over 100%. And today, it's 85% because of the big deposit growth largely. A, do you think that, that position holds? Maybe you don't want it to be that low, but below 100. And if it does stay below 100, what sort of advantages does that bring you from either a margin standpoint or an SFR standpoint, anything? Do those -- should those numbers matter to me, I guess, is what I'm asking. 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 24, 2021 / 5:35PM, BMO.TO - Bank of Montreal at National Bank Financial Services Conference (Virtual)

Question: Gabriel Dechaine - National Bank Financial, Inc., Research Division - Analyst : Okay. So just to put a finer point on that, the -- I guess, is it a target of yours to have a certain ratio of loans to deposits? And why?

Question: Gabriel Dechaine - National Bank Financial, Inc., Research Division - Analyst : So I'll bring in the margin. This is like too much of a good thing almost because the last quarter, and I think the prior one as well, but especially last quarter, you had margin expansion in Canada, you had margin expansion in the U.S. A lot of investors I talked to are, wow, that's a great outcome, but they're also scratching their heads. Why is this happening to BMO? And we're not seeing the same, especially in Canada, I'm not seeing the same outcomes for some other banks. Can you give me a bit more insight on how that happened? And maybe just refine the guidance a bit on where you expect margins to -- how you expect margins to perform the rest of the year?

Question: Gabriel Dechaine - National Bank Financial, Inc., Research Division - Analyst : Okay. The deposit -- back to the deposit thing, actually. And I think of it as the -- oh, here's money that's going to come out of deposits and loan growth is going to ensue. But it's also a big source of wealth product sales potential. Like what are you working on with your wealth colleagues these days to kind of capture that opportunity?

Question: Gabriel Dechaine - National Bank Financial, Inc., Research Division - Analyst : Okay. I just want to wrap up, we're into overtime soon. But whatever revenue generation has been challenging in the past, in my history of covering the sector, there's always been a little bit of a trend in the Canadian bank, especially of toggling your fees, increasing them. Is it still as easy to increase banking fees as it was 5, 6, 7 years ago? And B, even if it's not or is or whatever, do you still have the same philosophy about it? And I heard from one of your peers this morning talking about, well, we're going to introduce product that waives the first overdraft fee because they want to improve the customer experience. What are your views on this item? 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 24, 2021 / 5:35PM, BMO.TO - Bank of Montreal at National Bank Financial Services Conference (Virtual)

Question: Gabriel Dechaine - National Bank Financial, Inc., Research Division - Analyst : Okay. Well, that wraps it up. Great talking to you, and I hope the rest of your meetings go well today if -- that's about it. Have a good day.