Bank of Montreal (BMO) Q1 2023 Earnings Call Transcript

For the period ending JANUARY 31, 2023

February 28, 2023 7:15 a.m. ET

Prepared Remarks

Questions and Answers

Call Participants

Prepared Remarks:

Operator

Good morning, and welcome to the BMO Financial Group Q1 2023 Earnings Release and Conference Call for February 28, 2023. Your host for today is Christine Viau. Please go ahead.

Christine Viau

Thank you, and good morning. We will begin the call with remarks from Darryl White, BMO's CEO; followed by Tayfun Tuzun, our Chief Financial Officer; and Piyush Agrawal, our Chief Risk Officer.

Also present to take questions on our group heads, Ermi Johannson from Canadian P&C; Dave Casper from U.S. P&C; Dan Barclay from BMO Capital Markets; and Deland Kamanga from BMO Wealth Management.

As noted on Slide 2, forward-looking statements may be made during this call, which involve assumptions that have inherent risks and uncertainties. Actual results could differ materially from these statements. I would also remind listeners that the bank uses non-GAAP financial measures to arrive at adjusted results. Management measures performance on a reported and adjusted basis and considers both to be useful in assessing underlying business performance. Darryl and Tayfun will be referring to adjusted results in their remarks unless otherwise noted as reported.

I will now turn the call over to Darryl.

Darryl White

Thank you, Christine, and good morning, everyone. We had a very good start to the year with record revenue, adjusted earnings per share of $3.22 and net income of $2.3 billion for the first quarter.

The benefit of our balanced and well-diversified business model was front and center again this quarter with record revenue and PPPT in our P&C businesses and significantly improving momentum in BMO Capital Markets.

The strategic investments we've been making in talent and technology are driving good growth in each of our businesses. Risk remains well managed with strong performance across our portfolios. Each of our operating groups delivered return on equity above 15%, even with the higher regulatory capital levels.

Our P&C businesses continued to deliver positive operating leverage, while negative operating leverage at the all-bank level this quarter reflected the particularly strong revenue performance in capital markets in Q1 last year, as well as the impact of investments we've made over the past year to drive growth.

We expect expense growth to moderate through this year with continued momentum in revenue. We remain committed to delivering positive full year operating leverage on a BMO stand-alone basis as we have for the last five years. While the macroeconomic environment remains uncertain, we're well situated to win in any environment. With inflation still at high levels, we expect rates to remain elevated, slowing the economy in the near term, real GDP in both Canada and the U.S. is expected to rise only modestly this year, and we expect central banks to hold off from reducing policy rates until 2024.