Bank of Montreal

Strong earnings / ROE momentum (core story) - Adjusted EPS: $3.67, +40% YoY; net income: $2.7B (record); pre-provision pretax (PPPT): $4.4B (+16% YoY). - ROE: 13.5%, +370 bps YoY; ROTCE: 17.6% (+480 bps). - Operating leverage: 4.1%; efficiency ratio: 54.4% (improved), helped by cost discipline funding investment.

Credit quality: “stable” overall, but Canadian unsecured consumer pressure is real - Total PCL: $739M, stable QoQ; impaired provisions $734M (slightly down). - Performing coverage: 69 bps; performing allowance $4.7B. - What’s concerning (negative): Canadian unsecured consumer delinquency rising (delinquencies in upward trend; driven by elevated insolvencies/unemployment, incl. parts of the GTA). Management emphasized it’s pressuring provisions, but also said they’ve derisked and unsecured is smaller than secured. - What’s reassuring: secured book benefits from low LTVs (~60%) and higher FICOs; expectation is this is transitory, with high recoveries (~98–99% noted).

NIM/margins: expecting stability, with near-term volatility from liquidity - NIM ex markets: 229 bps, +12 bps YoY, -4 bps QoQ. - Sequential NIM headwind: higher low-yielding liquid assets due to prudent liquidity management (pending dispositions, upcoming debt maturities, geopolitical uncertainty). - Forecast: bank NIM “relatively stable” for near term; tailwinds from ladder reinvestments and deposit initiatives, offset by mix/liquidity levels.