BMO says it's finishing US reset, set to resume loan growth

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2026-03-27 14:06:20

BMO says it’s finishing US reset, set to resume loan growth

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John Reosti

Thu, February 26, 2026 at 6:37 AM GMT+9 4 min read

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**Key insights:** Canadian lender BMO Financial Group reported a $1.82 billion profit for the first quarter of its 2026 fiscal year.

**What's at stake: **The solid bottom-line result pushed BMO closer to reaching its twin profitability targets, a 15% return on assets for companywide operations and a 12% ROA for its U.S. banking operations.

**Expert quote: **"With the U.S. economy expected to outpace Canada for a fourth straight year … we're well-positioned to capture growth opportunities as business activity expands." — BMO CEO Darryl White

BMO Financial Group is nearly done optimizing its U.S. balance sheet and is sounding bullish about growing stateside loans in the second half of its 2026 fiscal year.

“We expect to see positive commercial loan growth in the second half of the year, supported by currently strong pipelines,” BMO CEO Darryl White said Wednesday on a conference call with analysts. “With the U.S. economy expected to outpace Canada for a fourth straight year … we’re well-positioned to capture growth opportunities as business activity expands.”

“It’s all coming together,” BMO U.S. President Aron Levine said later on the call. “We’ve got work to do, but we feel confident about where the momentum is pointing to over the next couple of quarters.”

Levine said BMO is projecting U.S. loan growth in the mid-single digits, though he did not provide a specific timeframe for that forecast. His prediction would put BMO in line with the rest of the U.S. banking industry, which experienced 2% loan growth between the third quarter and the fourth quarter, according to recently released Federal Deposit Insurance Corp. statistics.

The confident tones from BMO executives represent a turnabout from 2025. The $1.07 trillion-asset Canadian bank spent last year focused on shedding low-yield loans and high-cost deposits in its U.S. business.

The company released financial results for the quarter ending Jan. 31 on Wednesday, reporting a 3% year-over-year decline in U.S. loan volume, along with a 5% annual decline in deposits.

As part of its U.S. optimization plan, Toronto-based BMO previously sold what it described as a nonrelationship credit card portfolio, and it exited an underperforming franchise loan portfolio.

It also agreed to sell 138 branches in the Midwest and Mountain West regions to the $229.7 billion-asset First Citizens BancShares in Raleigh, North Carolina. That transaction, which was intended to sharpen BMO’s focus on markets such as California where it sees the highest growth potential, is expected to close in the second half of 2026.

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Now, the optimization program is 90% complete, with the finish expected to come between February and April of 2026, according to Darrel Hackett, BMO’s U.S. CEO. “What you should see from here is the low-return stuff that still exists from time to time rolls off, and better-return assets roll on,” Hackett said on the conference call.

The effort, aimed at boosting the return on assets for BMO’s U.S. operation to 12% over the next three to five years, appears to be paying dividends. For the three months ending Jan. 31, BMO reported a 7.9% ROE for its U.S. segment, up from 6.5% a year ago.

The U.S. banking unit produced first-quarter net income totaling $539 million, up 21% from the same quarter in 2025. Revenues of $2.1 billion were up 2%.

Company-wide, BMO reported quarterly net income totaling $1.82 billion in U.S. dollars, up 16% year over year. Buoyed by the acquisition of Burgundy Asset Management in November, wealth revenue grew 14% from a year earlier to $1.1 billion. Meanwhile, strong deposit growth helped push revenue from Canadian personal and commercial banking operations to $2.38 billion, up 7% from the same period in 2025.

BMO has targeted a company-wide 15% return on assets. The goal is in reach and should be attained by the end of fiscal 2027, White said. The return on equity for the quarter ending Jan. 31 was 12.1%.

“First-quarter results were very strong,” White said. “We’re executing on our commitment to deliver higher returns and profitable earnings growth.”

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