BMO hits US growth target in 6 months

Bloomberg

Bank of Montreal (BMO) Chief Executive Officer Darryl White said last September that he’d like a third of his bank’s earnings to come from the US 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 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 US 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 share of earnings from the US, where the len-der owns Chicago-based BMO Harris Bank and has an investment-banking presence through BMO Capital Markets. White first disclosed specifics of his US target in an interview in September, and reiterated the goal at an
October 24 investor event.
At the time, Bank of Montreal, Canada’s fourth-largest lender, earned 28 percent of adjusted earnings from the US — up from 24 percent in fiscal 2017, before White took the helm. For the first half of the fiscal year ending October 31, the company generated 35 percent of adjusted profit from the US, according to company disclosures. Bank of Montreal’s US 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, US economic growth supported by fiscal stimulus and tight labour markets, White said. “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 US, 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 US 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 US and in particular the diversification of those earnings.”