- Key insight: BMO Financial Group is poised for more growth in the U.S. following a series of changes to its stateside balance sheet, executives said Wednesday.
- What's at stake: The balance-sheet remix, which included the sale of retail branches in the Midwest and Great Plains, is designed to help improve BMO's U.S. profitability.
- Forward look: The bank continues to expect to achieve a return on equity of 12% for its U.S. business in 2027.
Six quarters after
In fact, the Toronto-based bank's stateside business has reached "an inflection point" following a series of changes to the balance sheet, according to CEO Darryl White. The changes include selling off certain transactional, lower-returning portfolios and jettisoning retail branches in slower-growth markets.
The moves are meant to help BMO boost its profitability in the U.S., where the company generates nearly half of its revenues. The bank has set a goal to achieve a 12% return on equity for its U.S. business by 2027. Its U.S. return on equity for its second quarter, which ended April 30, was 8.6%.
"The portfolio today is where we like it," White told analysts during BMO's second-quarter earnings call. "It's focused on full consumer relationships. It's focused on regional scale and density, where we have a right to win and where we compete."
BMO, one of the largest Canadian banks by assets, has big plans for its stateside business.
The deal also offered accelerated growth in commercial banking and a scaled point of entry into California, where BMO currently has a 2% deposit market share.
At an investor day in March, BMO executives laid out their rationale for
Over the next six months, the bank expects to open on average one new branch per month in Southern California, White said Wednesday. In 2027, the pace of expansion will ramp up, resulting in 27 to 29 new branches opening next year, Aron Levine, BMO's U.S. president, said on Wednesday's call.
Aside from California, BMO has laid out plans to open about 15 branches in Arizona.
As BMO prepares for the future, it has exited certain parts of its U.S. business. The list includes the
According to White, BMO's U.S. plan is yielding solid benefits.
"We've improved the [return on equity], we've improved the efficiency, we've built capital. And we've got capital, therefore, to invest, principally organically," he told analysts Wednesday.
For the bank's second quarter, BMO reported net income of $2.6 billion Canadian dollars, up 34% from the same quarter of 2025, when net income totaled nearly CA$2 billion.
Earnings per share came in at CA$3.53, beating analysts' average estimate of CA$3.33, according to S&P Capital IQ.
Company-wide, BMO's return on equity was 13%, compared with 9.4% in the year-ago quarter. While that was an improvement, it was short of BMO's stated return on equity target of 15% in 2027.
U.S. net income was $575 million on a U.S. dollar basis, up about 37% year over year, BMO said. Revenue growth was driven by higher fee income and higher net interest income, the bank said.
Analysts were somewhat underwhelmed by the company-wide results, noting that BMO's Canadian banking earnings fell below expectations.
"Although there will not likely be any complaints on the performance of U.S. retail or wealth, we note that much of BMO's upside came from strong results in capital markets while [Canadian] retail underperformed," Jefferies analyst John Aiken wrote in a note. "While we do not believe that this will fully take away from BMO's perceived results, it does remove some of the luster."
