Canadian banking giant BMO Financial Group is making a bold statement: it's ready to bounce back in the US market after a year of strategic adjustments.
A $1.82 billion profit in Q1 2026 has BMO executives feeling optimistic. This impressive result brings the bank closer to achieving its ambitious profitability goals: a 15% return on assets (ROA) company-wide and a 12% ROA specifically for its US operations. CEO Darryl White attributes this success to the US economy's consistent outperformance of Canada, a trend expected to continue for the fourth year in a row.
But here's the twist: BMO's US strategy has been a rollercoaster. In 2025, they focused on trimming low-yield loans and expensive deposits in the US. This led to a 3% drop in US loan volume and a 5% decline in deposits year-over-year. However, BMO's US President Aron Levine assures that the bank is now poised for growth, with a projected mid-single-digit loan growth rate in the US.
And this is where it gets interesting: BMO's US optimization plan involved selling off non-core assets, including a credit card portfolio and an underperforming franchise loan portfolio. They also agreed to sell 138 branches in the Midwest and Mountain West to First Citizens BancShares, a strategic move to focus on high-growth markets like California. This optimization program is nearly complete, with only 10% left to go, according to BMO's US CEO, Darrel Hackett.
The results are already showing. BMO's US operations reported a 7.9% return on equity (ROE) for the quarter ending Jan. 31, up from 6.5% a year ago. This is a significant step towards their 12% ROA target for the US. Meanwhile, company-wide, BMO is on track to hit its 15% ROA goal by the end of fiscal 2027, with a 12.1% ROE for the quarter.
BMO's leadership is confident in their strategy. CEO White affirms, "We're executing on our commitment to deliver higher returns and profitable earnings growth." But will this strategy pay off in the long term? Only time will tell. The bank's success in the US market is a controversial topic, with some analysts questioning the sustainability of its growth. What do you think? Is BMO on the right track, or is this just a temporary upswing?
