Bloomberg
Published Jun 19, 2019 10:00
Updated Jun 19, 2019 11:47
Bank of Montreal CEO Surpasses U.S. Growth Target in Six Months
(Bloomberg) -- Bank of Montreal (TSX:BMO) Chief Executive Officer Darryl White said last September that he’d like a third of his bank’s earnings to come from the U.S. in three to five years. It was a matter of months before the goal was reached.
Now he expects things to settle down a bit.
“I wouldn’t have put a three-to-five-year target out if I knew we were going to hit it in six months,” White, 47, said in an interview Tuesday at the bank’s Toronto headquarters. “The level that we’re at right now is sustainable, and I think we’re going to see the U.S. business continue to grow faster than the rest of the bank -- but not that much faster than the rest of the bank.”
White, who became CEO in November 2017, made it his mission to boost the share of earnings from the U.S., where the lender owns Chicago-based BMO Harris Bank and has an investment-banking presence through BMO Capital Markets. White first disclosed specifics of his U.S. target in an interview in September, and reiterated the goal at an Oct. 24 investor event.
At the time, Bank of Montreal, Canada’s fourth-largest lender, earned 28% of adjusted earnings from the U.S. -- up from 24% in fiscal 2017, before White took the helm. For the first half of the fiscal year ending Oct. 31, the company generated 35% of adjusted profit from the U.S., according to company disclosures.
Bank of Montreal’s U.S. operations benefited from a “substantial” increase in corporate loans and improving credit quality, as well as a market that’s been helped by rate increases, U.S. economic growth supported by fiscal stimulus and tight labor markets, White said.
‘Rising Tide’
“We were deliberately positioning ourselves into what we saw to be a rising tide, and we took advantage of it,” White said. “We’ll continue to see an increase in the share of our profits that come from the U.S., but I would say at a much more gradual rate from where we are today.”
White said he’s encouraged by the mix within the bank’s U.S. earnings, with profitable businesses in personal and business banking, commercial lending, capital markets, and wealth and asset management.
“Commercial continued to be the big driver, but the others started to play a more important role in the portfolio as well,” he said. “I really like where we are right now, with more than a third of the bank’s earnings coming from the U.S. and in particular the diversification of those earnings.”
Other comments from the interview:
Written By: Bloomberg
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