March 26 - Bank of Montreal announced on Thursday that it is targeting a return on equity (ROE) of more than 15% by 2028, with management pointing to expansion in its wealth management and U.S. businesses as central to that ambition.
Speaking at BMO's Investor Day, CEO Darryl White said the bank has "a clear line of sight to 15% ROE" and that it is "accelerating growth across each of our businesses as we deliver on that target." He also cited the institution's North American capital markets franchise, saying, "Our North American capital markets business continues to be a growth engine for us."
For the first quarter, the Canada-based lender reported a 12.1% return on equity, a commonly used gauge of how efficiently a bank generates profit for shareholders. Management's stated goal represents a step-up from that quarterly result and sets a multi-year performance target.
White framed the strategy as long term and resilient, saying the bank is built to perform across a range of economic outcomes. He noted that the rapidly evolving geopolitical environment remains highly dynamic, adding context to the guidance.
The CEO pointed to recent geopolitical tensions, including the Iran war, as a factor that has pushed oil prices higher. Those energy price movements, he said, have added to inflation risks and have clouded the global economic outlook.
White also emphasised the bank's track record in managing through disruption. "The bank has successfully navigated periods of disruption and change and has consistently supported its clients," he said, underscoring the institution's focus on client continuity during volatile periods.
Investors remain attentive to BMO's ability to extract cost savings and achieve revenue synergies as it scales its U.S. presence in a highly competitive market. Delivering on those operational improvements will be central to bridging the gap between the current 12.1% ROE and the target of more than 15% by 2028.
Summary
Bank of Montreal is pursuing a ROE above 15% by 2028 through growth in wealth, U.S. operations, and its North American capital markets business, while noting geopolitical-driven inflation risks and the need to capture cost and revenue synergies as it expands.