- Key insights: BMO Financial Group announced a profit of $1.82 billion for the first quarter of fiscal 2026.
- What’s going wrong: This robust profit brings BMO closer to its profitability targets: a 15% return on assets across all businesses and a 12% ROA for its U.S. banking operations.
- Expert quote: “The U.S. economy is set to outperform Canada for the fourth consecutive year, and we are well-prepared to seize growth opportunities as business activity increases.” — BMO CEO Darryl White
BMO Financial Group is nearing the end of optimizing its U.S. balance sheet and is optimistic about growing intrastate lending in the latter half of fiscal 2026.
“We anticipate solid commercial loan growth in the second half of this year, driven by our current strong pipeline,” BMO CEO Darryl White mentioned during a conference call with analysts. “The U.S. economy is projected to outperform Canada for the fourth year in a row, and we’re well-prepared to capture growth opportunities as business activity expands.”
“Everything is aligning,” said BMO US Chairman Aaron Levine later in the call. “There’s still work ahead, but we’re optimistic about the direction of momentum in the upcoming quarters.”
Levine indicated that BMO expects U.S. loan growth to be in the mid-single digits, though he hesitated to give a precise timeline for that expectation. He believes that BMO will match the overall U.S. banking sector, which recorded a 2% loan growth from Q3 to Q4.
The upbeat sentiment from BMO’s executives marks a shift from 2025. The $1.07 trillion-asset Bank of Canada spent the previous year focused on reducing low-yield loans and high-cost deposits in its U.S. branches.
The financial results from the quarter ending January 31 revealed that U.S. loan volumes had dropped by 3% year-on-year, with deposits down by 5% over the same period.
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The optimization initiative is currently about 90% complete and is expected to finish between February and April 2026, according to BMO’s U.S. CEO Darrell Hackett. “We’re observing that lower-returning assets are gradually phasing out, while higher-returning assets are on the rise,” Hackett stated during the conference call.
This initiative, aiming to achieve a 12% return on assets in BMO’s U.S. operations over the next three to five years, seems to be yielding results. For the three months ending January 31, BMO reported a 7.9% ROE for its U.S. unit, rising from 6.5% the year prior.
In the first quarter, the U.S. banking sector’s net income reached $539 million, marking a 21% increase from the same quarter a year earlier. Revenue stood at $2.1 billion, up 2%.
On a companywide scale, BMO’s quarterly net income was $1.82 billion in U.S. dollars, reflecting a 16% year-on-year increase. Wealth revenue surged 14% year-over-year to $1.1 billion, largely due to the acquisition of Burgundy Asset Management in November. Additionally, strong deposit growth contributed to Canadian personal and commercial banking revenues of $2.38 billion, a 7% rise compared to the same timeframe last year.
BMO is aiming for a 15% return on assets across the board. White expressed that this goal is within reach, expecting it to be met by the end of fiscal year 2027. The return on equity for the quarter that ended January 31 was 12.1%.
“The first quarter was robust,” White noted. “We are fulfilling our commitment to deliver increased revenues and profitable growth.”
