00:00We acquired Bank of the West in 2023, so we have this fantastic foothold now on the West,
00:05but really feel like there's a huge opportunity to grow further and really densify in those
00:10markets that we are. So we have strong presence in San Francisco and L.A., but as we go down
00:15the
00:15coast of California, really felt like there was opportunity to expand both on the commercial bank
00:20side as we're adding more people, but also the physical footprint, which is an important sort
00:24of presence for us with our brand. So real opportunity. When we talk about the opportunity
00:29on the commercial side, particularly in light of current economic conditions, which I guess are
00:34in flux to be diplomatic about it, I know this is a longer-term growth story, but short-term,
00:39what adjustments are you making? Yeah, when we talk to clients, they're really saying the same
00:43thing. Obviously, there's uncertainty, but they're almost becoming a little more accustomed to
00:46operating in that uncertainty. Clients are very focused right now on sort of execution,
00:52thoughtful capital deployment, and obviously seeing where this environment goes. You know,
00:56with what's going on right now, clearly there's this immediate shock, could have some impact. But
01:01really, right now, what we're seeing for our growth strategy and for our clients is there's still
01:06opportunity. The economy is still strong. There's still places to invest capital, but everyone's
01:11taking a very sort of cautious approach. Well, as part of that growth strategy, I mean,
01:15Romaine mentioned, of course, the branches that you plan to open up on the west coast of the United
01:19States. To do that, you announced in October that you plan to sell 138 branches in 11 states,
01:25mostly in the Midwest to sort of help boost that presence in California. Talk us through,
01:31I mean, when you take a look at the landscape of the U.S., it seems like, again, focusing on
01:34the
01:35west, maybe de-emphasizing the mid- the Midwest. Is that what we should expect to see going forward?
01:41Well, I think you have to keep in mind, we have very strong presence in Illinois and Wisconsin.
01:45You know, BMO bought Harris Bank Bank in the 80s. We've been in the Midwest for 40 years.
01:50We acquired a bank in the 90s in Wisconsin. So great Midwest presence, and it's a really important
01:56part of our business. California, obviously, we think is a much bigger growth market, which it
02:01certainly is. Where we're selling is really in between those areas. In states, we didn't feel
02:06that we could ultimately grow and drive all three of our businesses, commercial, wealth, and personal.
02:11So it was really just taking capital and redeploying it to where we think is most. But that's going to
02:16go both to those areas in the Midwest, where we are strong, and to the West Coast, where we can
02:21grow
02:21more. Well, you mentioned that Bank of the West acquisition completed in 2023, certainly helping
02:26to fuel that expansion. When it comes to M&A overall and your ambitions to grow in the U.S.,
02:32do you think
02:32that more deals could be potentially part of that story? Well, first and foremost, it's an organic growth
02:38story. So when I think about my plan over the next three years, it's absolutely driven by how do we
02:43grow organically? How do we deepen current client relationships? As we said in our last earnings
02:48calls, certainly have to look at an opportunity. And if it was accretive and if it fit into our
02:53parameters and helped us with our number one priority, which is driving to 12% ROE by the end
02:58of 2027, then that might be something we look at. But our strategy and our plan is very much focused
03:04on organic growth. And that 12% target for ROE by 2027, you're confident you can meet that?
03:09Yeah, I am. I'm very confident. And the enterprise's focus is 15% when you include the entire North
03:14American business. But for here in the U.S., again, given the strength that we have in commercial and
03:19the opportunity we now have, I feel very good about it. With regards to what we've been seeing with
03:23regards to the war in the Middle East, the spike that we've seen in energy prices and a lot of
03:27concern
03:28about a potential drag on the global economy and potentially on the U.S., is that now something you have
03:33to factor into your forecast? Yeah, well, you certainly always have to factor in all kind of
03:38changing conditions. And these days, conditions are changing constantly. So you're constantly
03:42updating your forecast. The reality is we have to see now the timing. Right now, I think all our
03:48economists and others would say if this is within a three, four, five-month resolution, that might be
03:54one scenario. If it's longer than that, that could be another scenario. We plan for all. And it's times
04:00like this that our clients do lean on us for advice and guidance. That's where we really add value.
04:04This much uncertainty, having to think through what ifs, that's where we really work well with
04:09our clients and say, all right, let's think about the different potential scenarios and how would we
04:14react to those and help you react to those. With regards to the policies coming out of Washington,
04:18is there any potential impact, either positive or negative, from, I guess, a somewhat easing in the
04:25capital requirement rules that's now on the table? Yeah, I think we welcome the administration's
04:29looking at the capital rules, thinking about it. Like everything, we've got to evaluate and see how
04:34it plays out. But I think smart regulatory environment is helpful for the banks. It helps
04:39then create more loans for our clients. And so this is one that we'll look at and make sure that
04:46we
04:46understand it and how it helps us to help our clients. As you build out the U.S. business at
04:50BMO,
04:50there's been a lot of discussion about the idea of scale and how important that is in this
04:55environment. You're a relatively large player, but still nowhere near the top. I am curious. I know
05:01you said you want to grow organically. Yeah. But is there some urgency to have a little bit more
05:05scale and a little bit more reach? Yeah. So we announced yesterday that we're going to add 150
05:09centers, primarily in the West Coast. So 90% of those centers will be there. And that's at a very
05:14sub-market level. Yeah, you want to grow and densify and add scale. But scale can take a couple
05:19different forms. It can be physical footprint. It can be people. We've actually added over 100
05:24client-facing bankers and wealth advisors over the last 12 months. So that creates scale. So I
05:29think it's a combination, certainly greater digital capabilities, investing in AI, physical footprint,
05:35and people. All of those things drive scale. And that's what we're doing right now.
Comments