Earnings jump at BMO (TSX: BMO) with 20% EPS growth in Q1
Filing Impact
Filing Sentiment
Form Type
6-K
Rhea-AI Filing Summary
BMO Financial Group reported strong first-quarter 2026 results, with net income of
Revenue grew to
Return on equity strengthened to
Positive
- None.
Negative
- None.
Insights
BMO delivered double-digit earnings growth with solid capital and lower credit losses.
BMO Financial Group posted Q1 2026 net income of
Credit quality remained manageable, as total provision for credit losses declined to
Capital and shareholder returns stayed robust, with a Common Equity Tier 1 Ratio of
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Washington, D.C. 20549
FORM 6-K
Report of Foreign Private Issuer
Pursuant to Rule 13a-16 or 15d-16
of the Securities Exchange Act of 1934
of the Securities Exchange Act of 1934
For the month of: February, 2026 Commission File Number: 001-13354
(Name of Registrant) | |||||
100 King Street West 1 First Canadian Place Toronto, Ontario Canada, M5X 1A1 (Executive Offices) | 129 rue Saint-Jacques Montreal, Quebec Canada, H2Y 1L6 (Head Office) | ||||
Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F:
Form 20-F ________ Form 40-F __X____
INCORPORATION BY REFERENCE
The information contained in this Form 6-K and any exhibits hereto shall be deemed filed with the Securities and Exchange Commission (“SEC”) solely for purposes of incorporation by reference into and as part of the following registration statements of the registrant on file with and declared effective by the SEC:
1.Registration Statement – Form F-3 – File No. 333-214934
2.Registration Statement – Form F-3 – File No. 333-285508
3.Registration Statement – Form S-8 – File No. 333-191591
4.Registration Statement – Form S-8 – File No. 333-180968
5.Registration Statement – Form S-8 – File No. 333-177579
6.Registration Statement – Form S-8 – File No. 333-177568
7.Registration Statement – Form S-8 – File No. 333-176479
8.Registration Statement – Form S-8 – File No. 333-175413
9.Registration Statement – Form S-8 – File No. 333-175412
10.Registration Statement – Form S-8 – File No. 333-113096
11.Registration Statement – Form S-8 – File No. 333-14260
12.Registration Statement – Form S-8 – File No. 33-92112
13.Registration Statement – Form S-8 – File No. 333-207739
14.Registration Statement – Form S-8 – File No. 333-237522
15.Registration Statement – Form S-8 – File No. 333-276007
EXHIBIT INDEX
Exhibit Description of Exhibit
99.1 First Quarter 2026 Management’s Discussion and Analysis of Results of Operations and Financial Condition
99.2 First Quarter 2026 Consolidated Financial Statements
99.3 First Quarter 2026 Consolidated Capitalization of Bank of Montreal
101. Interactive Data File (formatted as Inline XBRL)
104. Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
BANK OF MONTREAL By: /s/ Rahul Nalgirkar | |||||
Name: Rahul Nalgirkar Title: Chief Financial Officer By: /s/ Pascale Elharrar | |||||
Name: Pascale Elharrar Title: Corporate Secretary | |||||
Date: February 25, 2026
BMO Financial Group Reports First Quarter 2026 Results
REPORT TO SHAREHOLDERS
BMO’s First Quarter 2026 Report to Shareholders, including the unaudited interim consolidated financial statements for the period ended January 31, 2026, are available online at www.bmo.com/investorrelations, on the Canadian Securities Administrators’ website at www.sedarplus.ca, and on the EDGAR section of the U.S. Securities and Exchange Commission’s website at www.sec.gov.
Financial Results Highlights
First Quarter 2026 compared with First Quarter 2025:
•Reported net income1 of $2,489 million, an increase of 16% from $2,138 million; adjusted net income1 of $2,551 million, an increase of 11% from $2,289 million
•Reported earnings per share (EPS)2 of $3.39, an increase of 20% from $2.83; adjusted EPS1, 2 of $3.48, an increase of 15% from $3.04
•Provision for credit losses (PCL) of $746 million, a decrease from $1,011 million
•Reported return on equity (ROE) of 12.1%, compared with 10.6%; adjusted ROE1 of 12.4%, compared with 11.3%
•Common Equity Tier 1 (CET1) Ratio3 of 13.1%, compared with 13.6%
Toronto, February 25, 2026 – BMO Financial Group (TSX:BMO) (NYSE:BMO) reported net income for the first quarter ended January 31, 2026 was $2,489 million, compared with $2,138 million in the prior year, and EPS of $3.39, compared with $2.83. Reported ROE was 12.1%, compared with 10.6% in the prior year. Adjusted net income was $2,551 million and adjusted EPS was $3.48, an increase from $2,289 million and $3.04, respectively, in the prior year. Adjusted ROE was 12.4%, compared with 11.3% in the prior year. Reported and adjusted results in the current quarter included severance costs of $147 million ($202 million pre-tax) associated with advancing operational efficiencies across the enterprise, recorded in the respective operating segments. On November 1, 2025, the bank completed the acquisition of Burgundy Asset Management Ltd. (Burgundy), with results included in the Wealth Management operating segment.
“BMO had a very strong start to the year. Building on last year’s momentum we are executing on our commitments, delivering higher return on equity and double-digit earnings growth. We earned record revenue in each of our operating segments this quarter, with strong fee growth in our market-driven businesses. Our focus on closely managing expenses and operational efficiency is creating capacity for strategic investments in technology and talent that deliver value for today and the future. Credit is well-managed and in-line with our expectations,” said Darryl White, CEO of BMO Financial Group.
“Through disciplined execution of our strategy we are making meaningful progress on the clear path we set to elevate returns and drive profitable earnings growth as we focus on delivering value for our clients and shareholders,” concluded Mr. White.
Concurrent with the release of results, BMO announced a second quarter 2026 dividend of $1.67 per common share, unchanged from the prior quarter and an increase of $0.08 or 5% from the prior year. The quarterly dividend of $1.67 is equivalent to an annual dividend of $6.68 per common share. During the quarter, we purchased for cancellation 6.0 million common shares under the normal course issuer bid.
Caution
The foregoing section contains forward-looking statements. Please refer to the Caution Regarding Forward-Looking Statements section.
(1)Results and measures in this document are presented on a generally accepted accounting principles (GAAP) basis. They are also presented on an adjusted basis that excludes the impact of certain specified items from reported results. Adjusted results and ratios are non-GAAP and are detailed in the Non-GAAP and Other Financial Measures section. Unless otherwise indicated, all amounts are in Canadian dollars. All ratios and percentage changes in this document are based on unrounded numbers.
(2)All EPS measures in this document refer to diluted EPS, unless specified otherwise.
(3)The CET1 Ratio is disclosed in accordance with the Capital Adequacy Requirements (CAR) Guideline, as set out by the Office of the Superintendent of Financial Institutions (OSFI), as applicable.
BMO Financial Group First Quarter Report 2026 1
Enhanced Disclosure Task Force
Disclosures related to recommendations from the Financial Stability Board’s Enhanced Disclosure Task Force (EDTF) to provide high-quality, transparent risk disclosures are detailed in the index below, as presented in BMO’s 2025 Annual Report, the First Quarter 2026 Report to Shareholders (RTS), Supplemental Financial Information (SFI) or Supplemental Regulatory Capital Information (SRCI). Information on BMO’s website, including information within the SFI or SRCI, is not and should not be considered incorporated by reference into our First Quarter 2026 Report to Shareholders.
| Topic | EDTF Disclosure | Page Number | |||||||||||||||
| 2025 Annual Report | Q1 2026 | ||||||||||||||||
RTS | SFI | SRCI | |||||||||||||||
| General | 1. Risk-related information in each report, including an index for easy navigation | 67-107 | 3 | Index | Index | ||||||||||||
| 2. Risk terminology, measures and key parameters | 70-107, 122-124 | 27 | – | – | |||||||||||||
| 3. Top and emerging risks | 67-69 | 5,27 | – | – | |||||||||||||
| 4. Plans to meet new key regulatory ratios once applicable rules are finalized | 61 | 15 | – | – | |||||||||||||
| Risk Governance, Risk Management and Business Model | 5. Risk management and governance framework, processes and key functions | 70-74 | – | – | – | ||||||||||||
| 6. Risk culture, risk appetite and procedures to support the culture | 72-75 | – | – | – | |||||||||||||
| 7. Risks that arise from business models and activities | 63,72-74 | – | – | – | |||||||||||||
| 8. Stress testing within the risk governance and capital frameworks | 75 | – | – | – | |||||||||||||
| Capital Adequacy and Risk-Weighted Assets (RWA) | 9. Pillar 1 capital requirements | 59-61,185 | – | – | 5-6,15 | ||||||||||||
10. Composition of capital components and reconciliation of the accounting balance sheet to the regulatory balance sheet. A main features template can be found at https://www.bmo.com/main/about-bmo/investor-relations/regulatory-disclosure | 62 | 15-16 | – | 7 | |||||||||||||
| 11. Flow statement of movements in regulatory capital, including changes in Common Equity Tier 1 Capital, Additional Tier 1 Capital and Tier 2 Capital | – | – | – | 8 | |||||||||||||
| 12. Capital management and strategic planning | 58-63 | – | – | – | |||||||||||||
13. Risk-weighted assets (RWA) by operating segment | 63 | – | – | 16 | |||||||||||||
14. Analysis of capital requirements for each method used in calculating RWA | 59-63, 76-80 | – | – | 16,22-49, 55-67,70-71, 78-82,84, 86-91 | |||||||||||||
15. Tabulate credit risk in the banking book for Basel asset classes and major portfolios | – | – | – | 22-49, 51-67,89-91 | |||||||||||||
16. Flow statement that reconciles movements in RWA by risk type | – | – | – | 50,71,83 | |||||||||||||
17. Basel validation and back-testing process, including estimated and actual loss parameter information | 101-102 | – | – | 92 | |||||||||||||
| Liquidity | 18. Management of liquidity needs, and liquidity reserve held to meet those needs | 89-95 | 30,33 | – | – | ||||||||||||
| Funding | 19. Encumbered and unencumbered assets disclosed by balance sheet category | 91 | 31 | 48 | – | ||||||||||||
| 20. Consolidated total assets, liabilities and off-balance sheet commitments by remaining contractual maturity | 96-97 | 35-36 | – | – | |||||||||||||
21. Analysis of funding sources and funding strategy | 92-93 | 31-32 | – | – | |||||||||||||
| Market Risk | 22. Linkage of trading and non-trading market risk to the Consolidated Balance Sheet | 88 | 29 | – | – | ||||||||||||
| 23. Significant trading and non-trading market risk factors | 84-88 | 29-30 | – | – | |||||||||||||
| 24. Market risk model assumptions, validation procedures and back-testing | 84-88, 101-102 | – | – | – | |||||||||||||
25. Primary techniques for risk measurement and risk assessment, including risk of loss | 84-88 | 29-30 | – | – | |||||||||||||
| Credit Risk | 26. Analysis of credit risk profile, exposure and concentration | 62-63,76-83, 145-152, 163-164 | 12-13,47-51 | 24-45 | 16-81 | ||||||||||||
| 27. Policies to identify impaired loans and renegotiated loans | 146,151 | – | – | – | |||||||||||||
| 28. Reconciliation of opening and closing balances of impaired loans and allowance for credit losses | 82,148 | 13,47-48 | – | – | |||||||||||||
| 29. Counterparty credit risk arising from derivative transactions | 76-78,83, 163-164 | – | – | 55-73 | |||||||||||||
30. Credit risk mitigation | 76-78,147, 154,196-197 | – | – | 21,51-52,68 | |||||||||||||
| Other Risks | 31. Discussion of other risks | 70-73, 98-107 | – | – | – | ||||||||||||
| 32. Publicly known risk events involving material or potentially material loss events | 98-107, 197-198 | – | – | – | |||||||||||||
2 BMO Financial Group First Quarter Report 2026
Management’s Discussion and Analysis
Management’s Discussion and Analysis (MD&A) commentary is as at February 25, 2026 for the period ended January 31, 2026. The material that precedes this section comprises part of this MD&A. The MD&A should be read in conjunction with the unaudited interim consolidated financial statements for the period ended January 31, 2026, included in this document, as well as the audited annual consolidated financial statements for the year ended October 31, 2025, and the 2025 annual MD&A, contained in Bank of Montreal’s 2025 Annual Report.
The 2025 annual MD&A includes a comprehensive discussion of our businesses, strategies and objectives, and can be accessed on our website, together with other disclosure materials, including interim filings, and our most recent Annual Information Form, Notice of Annual Meeting of Shareholders and Proxy Circular at www.bmo.com/investorrelations. Readers are also encouraged to visit the site to view other quarterly financial information.
Bank of Montreal uses a unified branding approach that links all of the organization’s member companies. Bank of Montreal, together with its subsidiaries, is known as BMO Financial Group. In this document, the names BMO and BMO Financial Group, as well as the words “bank”, “we” and “our”, mean Bank of Montreal, together with its subsidiaries.
| Table of Contents | ||||||||||||||||||||||||||
4 | Caution Regarding Forward-Looking Statements | 25 | Accounting Policies and Critical Accounting Estimates and Judgments | |||||||||||||||||||||||
5 | Economic Developments and Outlook | 25 | Allowance for Credit Losses | |||||||||||||||||||||||
6 | Financial Highlights | 26 | Disclosure for Global Systemically Important Banks (G-SIB) | |||||||||||||||||||||||
7 | Non-GAAP and Other Financial Measures | 26 | Future Changes in Accounting Policies | |||||||||||||||||||||||
10 | Impact of Foreign Exchange | 27 | Other Regulatory Developments | |||||||||||||||||||||||
11 | Net Income | 27 | Risk Management | |||||||||||||||||||||||
11 | Revenue | 27 | Top and Emerging Risks That May Affect Future Results | |||||||||||||||||||||||
12 | Total Provision for Credit Losses | 27 | Real Estate Secured Lending | |||||||||||||||||||||||
13 | Impaired Loans | 28 | International Exposures | |||||||||||||||||||||||
13 | Non-Interest Expense | 29 | Market Risk | |||||||||||||||||||||||
13 | Provision for Income Taxes | 30 | Liquidity and Funding Risk | |||||||||||||||||||||||
14 | Balance Sheet | 32 | Credit Ratings | |||||||||||||||||||||||
15 | Capital Management | 37 | Glossary of Financial Terms | |||||||||||||||||||||||
17 | Operating Segments Performance Review | 40 | Interim Consolidated Financial Statements | |||||||||||||||||||||||
18 | Canadian Personal and Commercial Banking (Canadian P&C) | 40 | Consolidated Statement of Income | |||||||||||||||||||||||
19 | U.S. Banking | 41 | Consolidated Statement of Comprehensive Income | |||||||||||||||||||||||
21 | Wealth Management | 42 | Consolidated Balance Sheet | |||||||||||||||||||||||
22 | Capital Markets | 43 | Consolidated Statement of Changes in Equity | |||||||||||||||||||||||
23 | Corporate Services | 44 | Consolidated Statement of Cash Flows | |||||||||||||||||||||||
24 | Summary Quarterly Earnings Trends | 45 | Notes to Interim Consolidated Financial Statements | |||||||||||||||||||||||
25 | Transactions with Related Parties | 62 | Investor and Media Information | |||||||||||||||||||||||
25 | Off-Balance Sheet Arrangements | |||||||||||||||||||||||||
Bank of Montreal's management, under the supervision of the Chief Executive Officer and the Chief Financial Officer, has evaluated the effectiveness, as at January 31, 2026, of Bank of Montreal's disclosure controls and procedures (as defined in the rules of the U.S. Securities and Exchange Commission and the Canadian Securities Administrators) and has concluded that such disclosure controls and procedures are effective.
There were no changes in our internal control over financial reporting during the quarter ended January 31, 2026, which materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Because of inherent limitations, disclosure controls and procedures and internal control over financial reporting can provide only reasonable assurance and may not prevent or detect misstatements.
As in prior quarters, Bank of Montreal's Audit and Conduct Review Committee reviewed this document and Bank of Montreal’s Board of Directors approved the document prior to its release.
BMO Financial Group First Quarter Report 2026 3
Caution Regarding Forward-Looking Statements
Bank of Montreal’s public communications often include written or oral forward-looking statements. Statements of this type are included in this document and may be included in other filings with Canadian securities regulators or the U.S. Securities and Exchange Commission, or in other communications. All such statements are made pursuant to the “safe harbor” provisions of, and are intended to be forward-looking statements under, the United States Private Securities Litigation Reform Act of 1995 and any applicable Canadian securities legislation. Forward-looking statements in this document may include, but are not limited to: statements with respect to our objectives and priorities for fiscal 2026 and beyond; our strategies or future actions; our targets and commitments; expectations for our financial condition, capital position, the regulatory environment in which we operate, the results of, or outlook for, our operations or the Canadian, U.S. and international economies; and include statements made by our management. Forward-looking statements are typically identified by words such as “will”, “would”, “should”, “believe”, “expect”, “anticipate”, “project”, “intend”, “estimate”, “plan”, “goal”, “commit”, “target”, “may”, “might”, “schedule”, “forecast”, “outlook”, “timeline”, “suggest”, “seek” and “could” or negative or grammatical variations thereof.
By their nature, forward-looking statements require us to make assumptions and are subject to inherent risks and uncertainties, both general and specific in nature. There is significant risk that predictions, forecasts, conclusions or projections will not prove to be accurate, that our assumptions may not be correct, and that actual results may differ materially from such predictions, forecasts, conclusions or projections. We caution readers of this document not to place undue reliance on our forward-looking statements, as a number of
factors – many of which are beyond our control and the effects of which can be difficult to predict – could cause actual future results, conditions, actions or events to differ materially from the targets, expectations, estimates or intentions expressed in the forward-looking statements.
The future outcomes that relate to forward-looking statements may be influenced by many factors, including, but not limited to: general economic and market conditions in the countries in which we operate, including labour challenges and changes in foreign exchange and interest rates; political conditions, including changes relating to, or affecting, economic or trade matters, including tariffs, countermeasures and tariff mitigation policies; changes to our credit ratings; cyber and information security, including the threat of data breaches, hacking, identity theft and corporate espionage, as well as the possibility of denial of service resulting from efforts targeted at causing system failure and service disruption; technology resilience, innovation and competition; technological change, including the use of data and artificial intelligence (AI) in our business, including generative AI; failure of third parties to comply with their obligations to us; disruptions of global supply chains; environmental and social risk, including climate change; the Canadian housing market and consumer leverage; inflationary pressures; changes in laws, including tax legislation and interpretation, or in supervisory expectations or requirements, including capital, interest rate and liquidity requirements and guidance, including if the bank were designated a global systemically important bank, and the effect of such changes on funding costs and capital requirements; changes in monetary, fiscal or economic policy; weak, volatile or illiquid capital or credit markets; the level of competition in the geographic and business areas in which we operate; exposure to, and the resolution of, significant litigation or regulatory matters, our ability to successfully appeal adverse outcomes of such matters and the timing, determination and recovery of amounts related to such matters; the accuracy and completeness of the information we obtain with respect to our customers and counterparties; our ability to successfully execute our strategic plans, complete acquisitions or dispositions and integrate acquisitions, including obtaining regulatory approvals, and realize any anticipated benefits from such plans and transactions; critical accounting estimates and judgments, and the effects of changes in accounting standards, rules and interpretations on these estimates; operational and infrastructure risks, including with respect to reliance on third parties; global capital markets activities; the emergence or continuation of widespread health emergencies or pandemics, and their impact on local, national or international economies, as well as their heightening of certain risks that may affect our future results; the possible effects on our business of war or terrorist activities; natural disasters, such as earthquakes or flooding, and disruptions to public infrastructure, such as transportation, communications, power or water supply; and our ability to anticipate and effectively manage risks arising from all of the foregoing factors.
We caution that the foregoing list is not exhaustive of all possible factors. Other factors and risks could adversely affect our results. For further information, please refer to the discussion in the Risks That May Affect Future Results section, and the sections related to credit and counterparty, market, liquidity and funding, operational non-financial, legal and regulatory compliance, strategic, environmental and social, and reputation risk in the Enterprise-Wide Risk Management section of BMO’s 2025 Annual Report, and the Risk Management section in our First Quarter 2026 Report to Shareholders, all of which outline certain key factors and risks that may affect our future results. Investors and others should carefully consider these factors and risks, as well as other uncertainties and potential events, and the inherent uncertainty of forward-looking statements. We do not undertake to update any forward-looking statements, whether written or oral, that may be made from time to time by the organization or on its behalf, except as required by law. The forward-looking information contained in this document is presented for the purpose of assisting shareholders and analysts in understanding our financial position as at and for the periods ended on the dates presented, as well as our strategic priorities and objectives, and may not be appropriate for other purposes.
Material economic assumptions underlying the forward-looking statements contained in this document include those set out in the Economic Developments and Outlook section of BMO’s 2025 Annual Report, as updated in the Economic Developments and Outlook section in our First Quarter 2026 Report to Shareholders, as well as in the Allowance for Credit Losses section of BMO’s 2025 Annual Report, as updated in the Allowance for Credit Losses section in our First Quarter 2026 Report to Shareholders. Assumptions about the performance of the Canadian and U.S. economies, as well as overall market conditions and their combined effect on our business, are material factors we consider when determining our strategic priorities, objectives and expectations for our business. In determining our expectations for economic growth, we primarily consider historical economic data, past relationships between economic and financial variables, changes in government policies, and the risks to the domestic and global economy.
4 BMO Financial Group First Quarter Report 2026
Economic Developments and Outlook (1)
The renegotiation of the United States-Mexico-Canada Agreement (USMCA) is expected to shape the direction of trade policies in 2026. We assume the renegotiation will extend into next year, preserving the compliance exemption that allows most Canadian and Mexican goods to enter the U.S. duty-free, but also prolonging the uncertainty.
Despite high tariffs on some products, including motor vehicles, steel and aluminum, Canada’s economy continues to expand. However, real gross domestic product (GDP) is estimated to have slowed to almost no growth in the fourth quarter of 2025, compared with an annual rate of 2.6% in the third quarter. The slowdown reflects the negative effects of uncertain trade policies on business investment, along with continued weakness in the Ontario housing market. An increase in consumer and government spending likely provided some offsetting support to the economy. Real GDP is projected to expand a modest 1.4% in 2026, supported by prior declines in interest rates and expansionary fiscal policies aimed at increasing business investment. The unemployment rate, which decreased over the past year to 6.5% in January 2026, is expected to decline slightly to 6.4% by the end of 2026 as economic growth improves and population growth remains slow in response to lower immigration targets. Consumer price inflation remained moderate at 2.3% year-over-year in January 2026, but is projected to average 2.5% in 2026, partially due to rising food costs. After reducing policy rates by a total of 100 basis points in 2025, the Bank of Canada is anticipated to maintain a steady policy rate stance in 2026. The Canadian dollar is projected to strengthen moderately in 2026, assuming trade tensions begin to subside and interest-rate differentials with the United States narrow. Housing market activity remains weak in Ontario and British Columbia due to affordability challenges and slower population growth. As a result, industry-wide growth in residential mortgage balances, at 4.6% year-over-year in December 2025, is expected to moderate somewhat in 2026. Year-over-year growth in consumer credit (excluding mortgages) remained moderate at 3.4% in December 2025, but is expected to improve somewhat in 2026, due to support from lower interest rates. Industry-wide growth in non-financial corporate credit balances was 3.7% year-over-year in December 2025, and will likely remain moderate until trade-policy uncertainty improves.
The U.S. economy has expanded at a healthy rate. Real GDP grew at an annual rate of 1.4% in the fourth quarter of 2025 following a strong 4.4% increase in the third quarter. The deceleration was primarily due to a six-week partial shutdown of the federal government. Consumer spending remains solid, supported by the wealth effect from rising equity markets, while substantial investment in AI technologies and data centres continues to drive business spending. With support from lower interest rates and expansionary fiscal policies, real GDP is expected to increase 2.5% in 2026, improving from 2.2% in 2025. Slower hiring pushed the unemployment rate up modestly in the past year to 4.3% in January 2026, and it is expected to average 4.5% in 2026, which is still low by historical standards. Consumer price inflation eased in the past year to 2.4% year-over-year in January 2026, despite new tariffs, and is projected to further decline modestly in 2026 amid a moderation in wage growth. After lowering policy rates by 75 basis points in 2025 to address labour-market softness, the Federal Reserve is projected to reduce rates by a similar amount in 2026 amid easing inflation pressure. However, longer-term interest rates are expected to remain near current levels due to concerns about the large federal budget deficit and lingering above-target inflation. Industry-wide growth in residential mortgage balances remained modest at 2.2% year-over-year in January 2026 amid continued weakness in home sales, but will likely strengthen in 2026 on somewhat lower mortgage rates. Year-over-year growth in consumer loan balances improved to 4.1% in January 2026 and is projected to remain firm in 2026. Year-over-year growth in business, industrial and commercial real estate credit was solid at 4.0% in January 2026 and is anticipated to remain healthy in 2026.
The above economic outlook is subject to several risks that could lead to a less favourable outcome for the North American economy. The most immediate threat stems from further escalation of U.S. tariffs. Canadian businesses face longer-term risks if renegotiation of the USMCA is unsuccessful, as significant tariffs could then apply to more goods exported to the U.S., potentially leading to a recession in Canada. If the USMCA is renegotiated, some tariffs are likely to persist, which could result in slower growth. Other risks include an escalation of the Russia-Ukraine war; heightened tensions between the U.S. and Iran that could destabilize the Middle East; and a potential escalation of the U.S.’s involvement in Venezuela. Elevated equity valuations also pose the risk of a destabilizing correction. Longer-term, substantial business spending to develop and adopt AI systems, while providing material support to the economy, presents new challenges for workers and industries, such as software. Although AI has not yet led to significant job losses, it could increasingly affect hiring decisions and drive significant shifts in workforce composition, requiring displaced workers to learn new skills.
Our operations, clients and customers may be affected by significant changes to the economic environment and heightened economic uncertainty. An increase in provisions for credit losses, volatility in capital markets and slower loan growth could result if tariffs increase substantially. Management regularly monitors the economic environment and takes proactive measures to respond to uncertainties and reduce the impact on our results.
Caution
This Economic Developments and Outlook section contains forward-looking statements. Please refer to the Caution Regarding Forward-Looking Statements.
(1)All periods in this section refer to the calendar quarter and calendar year, rather than the fiscal quarter or fiscal year.
BMO Financial Group First Quarter Report 2026 5
Financial Highlights
TABLE 1 | |||||||||||
| (Canadian $ in millions, except as noted) | Q1-2026 | Q4-2025 | Q1-2025 | ||||||||
Summary Income Statement (1) | |||||||||||
| Net interest income | 5,643 | 5,496 | 5,398 | ||||||||
| Non-interest revenue | 4,181 | 3,845 | 3,868 | ||||||||
| Revenue | 9,824 | 9,341 | 9,266 | ||||||||
| Provision for credit losses on impaired loans | 739 | 750 | 859 | ||||||||
Provision for credit losses on performing loans | 7 | 5 | 152 | ||||||||
| Total provision for credit losses (PCL) | 746 | 755 | 1,011 | ||||||||
| Non-interest expense | 5,753 | 5,556 | 5,427 | ||||||||
| Provision for income taxes | 836 | 735 | 690 | ||||||||
| Net income | 2,489 | 2,295 | 2,138 | ||||||||
Net income (loss) attributable to non-controlling interest in subsidiaries | (1) | 7 | 4 | ||||||||
| Dividends on preferred shares and distributions on other equity instruments | 81 | 163 | 65 | ||||||||
| Net income available to common shareholders | 2,409 | 2,125 | 2,069 | ||||||||
| Adjusted net income | 2,551 | 2,514 | 2,289 | ||||||||
| Adjusted net income available to common shareholders | 2,471 | 2,344 | 2,220 | ||||||||
Common Share Data ($, except as noted) (1) | |||||||||||
| Basic earnings per share | 3.40 | 2.98 | 2.84 | ||||||||
| Diluted earnings per share | 3.39 | 2.97 | 2.83 | ||||||||
| Adjusted diluted earnings per share | 3.48 | 3.28 | 3.04 | ||||||||
| Book value per share | 110.45 | 111.57 | 109.46 | ||||||||
| Closing share price | 185.37 | 174.23 | 143.88 | ||||||||
Number of common shares outstanding (in millions) | |||||||||||
| End of period | 706.2 | 708.9 | 728.8 | ||||||||
| Average basic | 708.4 | 713.3 | 729.6 | ||||||||
| Average diluted | 710.2 | 715.1 | 730.7 | ||||||||
Market capitalization ($ millions) | 130,908 | 123,513 | 104,855 | ||||||||
Dividends declared per common share | 1.67 | 1.63 | 1.59 | ||||||||
Dividend yield (%) | 3.6 | 3.7 | 4.4 | ||||||||
Dividend payout ratio (%) | 49.1 | 54.7 | 56.1 | ||||||||
Adjusted dividend payout ratio (%) | 47.9 | 49.6 | 52.3 | ||||||||
Financial Measures and Ratios (%) (1) (2) | |||||||||||
Return on equity | 12.1 | 10.7 | 10.6 | ||||||||
| Adjusted return on equity | 12.4 | 11.8 | 11.3 | ||||||||
Return on tangible common equity | 16.2 | 14.7 | 14.4 | ||||||||
| Adjusted return on tangible common equity | 16.1 | 15.4 | 14.9 | ||||||||
| Efficiency ratio | 58.6 | 59.5 | 58.6 | ||||||||
Adjusted efficiency ratio | 57.8 | 56.7 | 56.3 | ||||||||
| Operating leverage | 0.0 | (21.2) | 20.1 | ||||||||
| Adjusted operating leverage | (2.8) | 3.0 | 8.9 | ||||||||
| Net interest margin on average earning assets | 1.68 | 1.67 | 1.62 | ||||||||
Adjusted net interest margin, excluding Global Markets and Insurance | 2.33 | 2.30 | 2.13 | ||||||||
| Effective tax rate | 25.2 | 24.2 | 24.4 | ||||||||
| Adjusted effective tax rate | 25.0 | 23.6 | 24.5 | ||||||||
| Total PCL-to-average net loans and acceptances | 0.44 | 0.44 | 0.58 | ||||||||
| PCL on impaired loans-to-average net loans and acceptances | 0.44 | 0.44 | 0.50 | ||||||||
Balance Sheet and Other Information (as at, $ millions, except as noted) | |||||||||||
| Assets | 1,458,132 | 1,476,802 | 1,468,093 | ||||||||
| Average earning assets | 1,334,388 | 1,304,278 | 1,319,541 | ||||||||
| Gross loans and acceptances | 674,383 | 682,922 | 694,027 | ||||||||
| Net loans and acceptances | 669,316 | 677,872 | 689,235 | ||||||||
| Deposits | 954,789 | 976,202 | 996,832 | ||||||||
| Common shareholders’ equity | 77,999 | 79,095 | 79,772 | ||||||||
Total risk-weighted assets (3) | 442,058 | 437,945 | 433,944 | ||||||||
| Assets under administration | 872,742 | 864,891 | 830,137 | ||||||||
| Assets under management | 547,035 | 506,661 | 450,617 | ||||||||
Capital and Liquidity Measures (%) (3) | |||||||||||
| Common Equity Tier 1 Ratio | 13.1 | 13.3 | 13.6 | ||||||||
| Tier 1 Capital Ratio | 14.8 | 15.0 | 15.4 | ||||||||
| Total Capital Ratio | 16.9 | 17.3 | 17.6 | ||||||||
| Leverage Ratio | 4.4 | 4.3 | 4.4 | ||||||||
| TLAC Ratio | 29.1 | 29.7 | 29.8 | ||||||||
Liquidity Coverage Ratio | 126 | 132 | 128 | ||||||||
Net Stable Funding Ratio | 116 | 117 | 116 | ||||||||
Foreign Exchange Rates ($) | |||||||||||
| As at Canadian/U.S. dollar | 1.3589 | 1.4016 | 1.4514 | ||||||||
| Average Canadian/U.S. dollar | 1.3759 | 1.3887 | 1.4303 | ||||||||
(1)Adjusted results exclude certain items from reported results and are used to calculate our adjusted measures as presented in the table above. Management assesses performance on a reported basis and an adjusted basis, and considers both to be useful. For further information, refer to the Non-GAAP and Other Financial Measures section.
(2)PCL, ROE and ROTCE ratios are presented on an annualized basis.
(3)Capital and liquidity measures are disclosed in accordance with the Capital Adequacy Requirements (CAR) Guideline and the Liquidity Adequacy Requirements (LAR) Guideline, as set out by the Office of the Superintendent of Financial Institutions (OSFI), as applicable.
Certain comparative figures have been reclassified to conform with the current period’s presentation.
6 BMO Financial Group First Quarter Report 2026
Non-GAAP and Other Financial Measures
Results and measures in this document are presented on a generally accepted accounting principles (GAAP) basis. Unless otherwise indicated, all amounts are in Canadian dollars and have been derived from our audited annual consolidated financial statements and our unaudited interim consolidated financial statements, prepared in accordance with International Financial Reporting Standards (IFRS), as issued by the International Accounting Standards Board (IASB). References to GAAP mean IFRS. We use a number of financial measures to assess our performance, as well as the performance of our operating segments, including amounts, measures and ratios that are presented on a non‑GAAP basis, as described below. We believe that these non‑GAAP amounts, measures and ratios, read together with our GAAP results, provide readers with a better understanding of how management assesses results.
Non-GAAP amounts, measures and ratios do not have standardized meanings under GAAP. They are unlikely to be comparable to similar measures presented by other companies and should not be viewed in isolation from, or as a substitute for, GAAP results.
For further information regarding the composition of our non-GAAP and other financial measures, including supplementary financial measures, refer to the Glossary of Financial Terms.
Adjusted measures and ratios
Management considers both reported and adjusted results and measures to be useful in assessing underlying ongoing business performance. Adjusted results and measures remove certain specified items from revenue, non‑interest expense and income taxes, as detailed in the following table. Adjusted results and measures presented in this document are non‑GAAP. Presenting results on both a reported and an adjusted basis permits readers to assess the impact of certain items on results for the periods presented, and to better assess results excluding those items that may not reflect ongoing business performance. As such, the presentation may facilitate readers’ analysis of underlying trends. Except as otherwise noted, management’s discussion of changes in reported results in this document applies equally to changes in the corresponding adjusted results.
Net Interest Margin, excluding Global Markets and Insurance
Effective the first quarter of fiscal 2026, we report net interest margin on a basis that excludes net interest income from our Global Markets business in Capital Markets, and average earning assets from our Global Markets and Insurance businesses. Management considers this measure to be useful in allowing readers to assess performance of BMO’s lending, investing and deposit-raising activities without the volatility that may be associated with market and trading-related activities. This measure replaces Net Interest Margin, excluding trading and insurance previously disclosed, and prior periods have been reclassified to conform with the current period’s presentation.
Tangible common equity and return on tangible common equity
Tangible common equity is calculated as common shareholders’ equity, less goodwill and acquisition-related intangible assets, net of related deferred tax liabilities. Return on tangible common equity (ROTCE) is calculated as net income available to common shareholders, adjusted for the amortization of acquisition-related intangible assets and any impairments, as a percentage of average tangible common equity. ROTCE is commonly used in the North American banking industry and is meaningful as a consistent measure of the performance of businesses, whether they were acquired or developed organically.
Adjusting Items
Adjusted results in the current quarter and prior periods excluded the following items:
•Acquisition and integration costs of $7 million ($9 million pre-tax) in the current quarter. Prior periods included expense of $3 million ($4 million pre-tax) in Q4-2025 and $7 million ($10 million pre-tax) in Q1-2025. Amounts are recorded in non-interest expense in the related operating segment: Burgundy in Wealth Management and Bank of the West in Corporate Services.
•Amortization of acquisition-related intangible assets of $71 million ($96 million pre-tax) in the current quarter. Prior periods included $123 million ($168 million pre-tax) in Q4-2025 and $79 million ($106 million pre-tax) in Q1-2025. Amounts are recorded in non-interest expense in the related operating segment.
•Change in the fair value of contingent consideration related to the acquisition of Burgundy, which reduced non-interest revenue in the current quarter by $16 million (pre-tax and after-tax), recorded in Wealth Management. For further information, refer to Note 13 of the unaudited interim consolidated financial statements and Note 9 of the audited annual consolidated financial statements of BMO’s 2025 Annual Report.
•Impact of divestitures related to the announced sale of 138 branches in select U.S. markets included divestiture-related costs of $3 million ($4 million pre-tax) in the current quarter. Prior periods included a write-down of goodwill of $102 million (pre-tax and after-tax) in Q4-2025. Amounts are recorded in non-interest expense in Corporate Services.
•U.S. Federal Deposit Insurance Corporation (FDIC) special assessment recorded in non-interest expense in Corporate Services. Q1-2026 included a partial reversal of a prior charge of $35 million ($47 million pre-tax). Prior periods included a $9 million ($12 million pre-tax) partial reversal in Q4-2025 and a $5 million ($7 million pre-tax) partial reversal in Q1-2025.
•Impact of aligning accounting policies for employee vacation across legal entities of $70 million ($96 million pre-tax) in Q1-2025, recorded in non-interest expense in Corporate Services.
Adjusting items in aggregate decreased net income by $62 million in the current quarter, compared with a $151 million decrease in the prior year and a decrease of $219 million in the prior quarter.
BMO Financial Group First Quarter Report 2026 7
Non-GAAP and Other Financial Measures (1)
TABLE 2 | |||||||||||
| (Canadian $ in millions, except as noted) | Q1-2026 | Q4-2025 | Q1-2025 | ||||||||
| Reported Results | |||||||||||
| Net interest income | 5,643 | 5,496 | 5,398 | ||||||||
| Non-interest revenue | 4,181 | 3,845 | 3,868 | ||||||||
| Revenue | 9,824 | 9,341 | 9,266 | ||||||||
| Provision for credit losses | 746 | 755 | 1,011 | ||||||||
| Non-interest expense | 5,753 | 5,556 | 5,427 | ||||||||
| Income before income taxes | 3,325 | 3,030 | 2,828 | ||||||||
| Provision for income taxes | 836 | 735 | 690 | ||||||||
| Net income | 2,489 | 2,295 | 2,138 | ||||||||
| Dividends on preferred shares and distributions on other equity instruments | 81 | 163 | 65 | ||||||||
Net income (loss) attributable to non-controlling interest in subsidiaries | (1) | 7 | 4 | ||||||||
| Net income available to common shareholders | 2,409 | 2,125 | 2,069 | ||||||||
Diluted EPS ($) | 3.39 | 2.97 | 2.83 | ||||||||
| Adjusting Items Impacting Revenue (Pre-tax) | |||||||||||
Change in fair value of contingent consideration (2) | (16) | – | – | ||||||||
| Impact of adjusting items on revenue (pre-tax) | (16) | – | – | ||||||||
| Adjusting Items Impacting Non-Interest Expense (Pre-tax) | |||||||||||
Acquisition and integration costs | (9) | (4) | (10) | ||||||||
Amortization of acquisition-related intangible assets (3) | (96) | (168) | (106) | ||||||||
Impact of divestitures | (4) | (102) | – | ||||||||
| FDIC special assessment | 47 | 12 | 7 | ||||||||
| Impact of alignment of accounting policies | – | – | (96) | ||||||||
| Impact of adjusting items on non-interest expense (pre-tax) | (62) | (262) | (205) | ||||||||
| Adjusting Items Impacting Revenue (After-tax) | |||||||||||
Change in fair value of contingent consideration | (16) | – | – | ||||||||
| Impact of adjusting items on revenue (after-tax) | (16) | – | – | ||||||||
| Adjusting Items Impacting Non-Interest Expense (After-tax) | |||||||||||
Acquisition and integration costs | (7) | (3) | (7) | ||||||||
Amortization of acquisition-related intangible assets (3) | (71) | (123) | (79) | ||||||||
Impact of divestitures | (3) | (102) | – | ||||||||
| FDIC special assessment | 35 | 9 | 5 | ||||||||
| Impact of alignment of accounting policies | – | – | (70) | ||||||||
| Impact of adjusting items on non-interest expense (after-tax) | (46) | (219) | (151) | ||||||||
| Impact of adjusting items on reported net income (after-tax) | (62) | (219) | (151) | ||||||||
Impact on diluted EPS ($) | (0.09) | (0.31) | (0.21) | ||||||||
| Adjusted Results | |||||||||||
| Net interest income | 5,643 | 5,496 | 5,398 | ||||||||
| Non-interest revenue | 4,197 | 3,845 | 3,868 | ||||||||
| Revenue | 9,840 | 9,341 | 9,266 | ||||||||
| Provision for credit losses | 746 | 755 | 1,011 | ||||||||
| Non-interest expense | 5,691 | 5,294 | 5,222 | ||||||||
| Income before income taxes | 3,403 | 3,292 | 3,033 | ||||||||
| Provision for income taxes | 852 | 778 | 744 | ||||||||
| Net income | 2,551 | 2,514 | 2,289 | ||||||||
| Net income available to common shareholders | 2,471 | 2,344 | 2,220 | ||||||||
Diluted EPS ($) | 3.48 | 3.28 | 3.04 | ||||||||
(1)Adjusted results exclude certain items from reported results and are used to calculate our adjusted measures as presented in the table above. Refer to the commentary in this Non-GAAP and Other Financial Measures section for further information on adjusting items.
(2)Recorded in non-interest revenue.
(3)Represents amortization of acquisition-related intangible assets and any impairment.
8 BMO Financial Group First Quarter Report 2026
Summary of Reported and Adjusted Results by Operating Segment
TABLE 3 | |||||||||||||||||||||||
Wealth | Capital | Corporate | U.S. Operations (1) | ||||||||||||||||||||
| (Canadian $ in millions, except as noted) | Canadian P&C | U.S. Banking | Management | Markets | Services | Total Bank | (US$ in millions) | ||||||||||||||||
| Q1-2026 | |||||||||||||||||||||||
| Reported net income (loss) | 948 | 742 | 352 | 657 | (210) | 2,489 | 715 | ||||||||||||||||
| Dividends on preferred shares and distributions on | |||||||||||||||||||||||
other equity instruments | 13 | 14 | 2 | 15 | 37 | 81 | 17 | ||||||||||||||||
Net income (loss) attributable to non-controlling interest in subsidiaries | – | (2) | – | – | 1 | (1) | (1) | ||||||||||||||||
Net income (loss) available to common shareholders | 935 | 730 | 350 | 642 | (248) | 2,409 | 699 | ||||||||||||||||
Acquisition and integration costs | – | – | 7 | – | – | 7 | – | ||||||||||||||||
| Amortization of acquisition-related intangible assets | 3 | 60 | 5 | 3 | – | 71 | 46 | ||||||||||||||||
Change in fair value of contingent consideration | – | – | 16 | – | – | 16 | – | ||||||||||||||||
| Impact of divestitures | – | – | – | – | 3 | 3 | 2 | ||||||||||||||||
FDIC special assessment | – | – | – | – | (35) | (35) | (26) | ||||||||||||||||
Adjusted net income (loss) (2) | 951 | 802 | 380 | 660 | (242) | 2,551 | 737 | ||||||||||||||||
Adjusted net income (loss) available to common shareholders (2) | 938 | 790 | 378 | 645 | (280) | 2,471 | 721 | ||||||||||||||||
| Q4-2025 | |||||||||||||||||||||||
| Reported net income (loss) | 733 | 807 | 399 | 525 | (169) | 2,295 | 616 | ||||||||||||||||
| Dividends on preferred shares and distributions on | |||||||||||||||||||||||
| other equity instruments | 11 | 15 | 2 | 10 | 125 | 163 | 3 | ||||||||||||||||
Net income attributable to non-controlling interest in subsidiaries | – | 7 | – | – | – | 7 | 5 | ||||||||||||||||
Net income (loss) available to common shareholders | 722 | 785 | 397 | 515 | (294) | 2,125 | 608 | ||||||||||||||||
Acquisition and integration costs | – | – | 1 | – | 2 | 3 | 1 | ||||||||||||||||
| Amortization of acquisition-related intangible assets | 48 | 64 | – | 11 | – | 123 | 47 | ||||||||||||||||
| Impact of divestitures | – | – | – | – | 102 | 102 | 73 | ||||||||||||||||
FDIC special assessment | – | – | – | – | (9) | (9) | (6) | ||||||||||||||||
Adjusted net income (loss) (2) | 781 | 871 | 400 | 536 | (74) | 2,514 | 731 | ||||||||||||||||
Adjusted net income (loss) available to common shareholders (2) | 770 | 849 | 398 | 526 | (199) | 2,344 | 723 | ||||||||||||||||
| Q1-2025 | |||||||||||||||||||||||
Reported net income (loss) | 877 | 635 | 328 | 589 | (291) | 2,138 | 639 | ||||||||||||||||
| Dividends on preferred shares and distributions on | |||||||||||||||||||||||
| other equity instruments | 12 | 15 | 2 | 10 | 26 | 65 | 3 | ||||||||||||||||
Net income attributable to non-controlling interest in subsidiaries | – | – | – | – | 4 | 4 | 3 | ||||||||||||||||
Net income (loss) available to common shareholders | 865 | 620 | 326 | 579 | (321) | 2,069 | 633 | ||||||||||||||||
Acquisition and integration costs | – | – | – | – | 7 | 7 | 5 | ||||||||||||||||
| Amortization of acquisition-related intangible assets | 3 | 72 | – | 4 | – | 79 | 52 | ||||||||||||||||
FDIC special assessment | – | – | – | – | (5) | (5) | (4) | ||||||||||||||||
| Impact of alignment of accounting policies | – | – | – | – | 70 | 70 | 25 | ||||||||||||||||
Adjusted net income (loss) (2) | 880 | 707 | 328 | 593 | (219) | 2,289 | 717 | ||||||||||||||||
Adjusted net income (loss) available to common shareholders (2) | 868 | 692 | 326 | 583 | (249) | 2,220 | 711 | ||||||||||||||||
(1)U.S. Operations comprises reported and adjusted results recorded in U.S. Banking, and the U.S. operations in Capital Markets and Corporate Services.
(2)Refer to the commentary in this Non-GAAP and Other Financial Measures section for details on adjusting items.
Certain comparative figures have been reclassified to conform with the current period’s presentation.
Return on Equity and Return on Tangible Common Equity
TABLE 4 | |||||||||||
| (Canadian $ in millions, except as noted) | Q1-2026 | Q4-2025 | Q1-2025 | ||||||||
| Reported net income | 2,489 | 2,295 | 2,138 | ||||||||
Net income (loss) attributable to non-controlling interest in subsidiaries | (1) | 7 | 4 | ||||||||
| Net income attributable to bank shareholders | 2,490 | 2,288 | 2,134 | ||||||||
| Dividends on preferred shares and distributions on other equity instruments | 81 | 163 | 65 | ||||||||
Net income available to common shareholders (A) | 2,409 | 2,125 | 2,069 | ||||||||
| After-tax amortization of acquisition-related intangible assets | 71 | 123 | 79 | ||||||||
| Net income available to common shareholders after adjusting for amortization of | |||||||||||
acquisition-related intangible assets (B) | 2,480 | 2,248 | 2,148 | ||||||||
After-tax impact of other adjusting items (1) | (9) | 96 | 72 | ||||||||
Adjusted net income available to common shareholders (C) | 2,471 | 2,344 | 2,220 | ||||||||
Average common shareholders’ equity (D) | 79,075 | 78,511 | 77,693 | ||||||||
| Goodwill | (16,838) | (16,716) | (17,209) | ||||||||
| Acquisition-related intangible assets | (2,330) | (2,171) | (2,514) | ||||||||
| Net of related deferred tax liabilities | 858 | 882 | 1,011 | ||||||||
Average tangible common equity (E) | 60,765 | 60,506 | 58,981 | ||||||||
Return on equity (%) (= A/D) (2) | 12.1 | 10.7 | 10.6 | ||||||||
Adjusted return on equity (%) (= C/D) (2) | 12.4 | 11.8 | 11.3 | ||||||||
Return on tangible common equity (%) (= B/E) (2) | 16.2 | 14.7 | 14.4 | ||||||||
Adjusted return on tangible common equity (%) (= C/E) (2) | 16.1 | 15.4 | 14.9 | ||||||||
(1)Refer to the commentary in this Non-GAAP and Other Financial Measures section for details on adjusting items.
(2)Quarterly calculations are on an annualized basis.
BMO Financial Group First Quarter Report 2026 9
Return on Equity by Operating Segment (1)
TABLE 5 | |||||||||||||||||||||||
Wealth | Capital | Corporate | U.S. Operations (2) | ||||||||||||||||||||
| (Canadian $ in millions, except as noted) | Canadian P&C | U.S. Banking | Management | Markets | Services | Total Bank | (US$ in millions) | ||||||||||||||||
| Q1-2026 | |||||||||||||||||||||||
| Reported | |||||||||||||||||||||||
Net income (loss) available to common shareholders | 935 | 730 | 350 | 642 | (248) | 2,409 | 699 | ||||||||||||||||
Total average common equity | 16,405 | 36,797 | 4,199 | 15,219 | 6,455 | 79,075 | 33,150 | ||||||||||||||||
Return on equity (%) | 22.6 | 7.9 | 33.1 | 16.7 | na | 12.1 | 8.4 | ||||||||||||||||
Adjusted (3) | |||||||||||||||||||||||
Net income (loss) available to common shareholders | 938 | 790 | 378 | 645 | (280) | 2,471 | 721 | ||||||||||||||||
| Total average common equity | 16,405 | 36,797 | 4,199 | 15,219 | 6,455 | 79,075 | 33,150 | ||||||||||||||||
Return on equity (%) | 22.7 | 8.5 | 35.7 | 16.8 | na | 12.4 | 8.6 | ||||||||||||||||
| Q4-2025 | |||||||||||||||||||||||
| Reported | |||||||||||||||||||||||
Net income (loss) available to common shareholders | 722 | 785 | 397 | 515 | (294) | 2,125 | 608 | ||||||||||||||||
| Total average common equity | 16,938 | 36,458 | 3,049 | 14,076 | 7,990 | 78,511 | 32,235 | ||||||||||||||||
Return on equity (%) | 16.9 | 8.5 | 51.7 | 14.5 | na | 10.7 | 7.5 | ||||||||||||||||
Adjusted (3) | |||||||||||||||||||||||
Net income (loss) available to common shareholders | 770 | 849 | 398 | 526 | (199) | 2,344 | 723 | ||||||||||||||||
| Total average common equity | 16,938 | 36,458 | 3,049 | 14,076 | 7,990 | 78,511 | 32,235 | ||||||||||||||||
Return on equity (%) | 18.1 | 9.2 | 52.0 | 14.8 | na | 11.8 | 8.9 | ||||||||||||||||
| Q1-2025 | |||||||||||||||||||||||
| Reported | |||||||||||||||||||||||
Net income (loss) available to common shareholders | 865 | 620 | 326 | 579 | (321) | 2,069 | 633 | ||||||||||||||||
| Total average common equity | 16,515 | 38,033 | 3,044 | 13,536 | 6,565 | 77,693 | 32,650 | ||||||||||||||||
Return on equity (%) | 20.8 | 6.5 | 42.5 | 17.0 | na | 10.6 | 7.7 | ||||||||||||||||
Adjusted (3) | |||||||||||||||||||||||
Net income (loss) available to common shareholders | 868 | 692 | 326 | 583 | (249) | 2,220 | 711 | ||||||||||||||||
| Total average common equity | 16,515 | 38,033 | 3,044 | 13,536 | 6,565 | 77,693 | 32,650 | ||||||||||||||||
Return on equity (%) | 20.9 | 7.2 | 42.5 | 17.1 | na | 11.3 | 8.6 | ||||||||||||||||
(1)Return on equity is based on allocated capital. Capital is allocated to the operating segments based on the amount of regulatory capital required to support business activities, including risk-weighted assets and capital deductions, with unallocated capital reported in Corporate Services. Effective the first quarter of fiscal 2026, the allocation approach was updated to primarily reflect an increase in the capital allocation rate to 12.5% of risk-weighted assets, compared with 12.0% in fiscal 2025. Capital allocation methodologies are reviewed annually. For further information, refer to the How BMO Reports Operating Segments Results section. Return on equity ratios are presented on an annualized basis.
(2)U.S. Operations comprises reported and adjusted results and allocated capital recorded in U.S. Banking, and the U.S. operations in Capital Markets and Corporate Services.
(3)Refer to the commentary in this Non-GAAP and Other Financial Measures section for details on adjusting items.
na - not applicable
Certain comparative figures have been reclassified to conform with the current period’s presentation.
Caution
This Non-GAAP and Other Financial Measures section contains forward-looking statements. Please refer to the Caution Regarding Forward-Looking Statements.
Impact of Foreign Exchange
TABLE 6 | ||||||||
| Q1-2026 | ||||||||
| (Canadian $ in millions, except as noted) | vs. Q1-2025 | vs. Q4-2025 | ||||||
| Canadian/U.S. dollar exchange rate (average) | ||||||||
| Current period | 1.3759 | 1.3759 | ||||||
| Prior period | 1.4303 | 1.3887 | ||||||
| Increased/(Decreased) | ||||||||
Effects on U.S. Operations reported results | ||||||||
Net interest income | (95) | (22) | ||||||
Non-interest revenue | (59) | (13) | ||||||
Total revenue | (154) | (35) | ||||||
Provision for credit losses | 17 | 1 | ||||||
Non-interest expense | 94 | 24 | ||||||
Provision for income taxes | 8 | 2 | ||||||
Net income | (35) | (8) | ||||||
Impact on basic earnings per share ($) | (0.05) | (0.01) | ||||||
Impact on diluted earnings per share ($) | (0.05) | (0.01) | ||||||
Effects on U.S. Operations adjusted results (1) | ||||||||
Net interest income | (95) | (22) | ||||||
Non-interest revenue | (59) | (13) | ||||||
Total revenue | (154) | (35) | ||||||
Provision for credit losses | 17 | 1 | ||||||
Non-interest expense | 88 | 22 | ||||||
Provision for income taxes | 10 | 3 | ||||||
Net income | (39) | (9) | ||||||
Impact on basic earnings per share ($) | (0.05) | (0.01) | ||||||
Impact on diluted earnings per share ($) | (0.05) | (0.01) | ||||||
(1)Adjusted results are on a non-GAAP basis and are discussed in the Non-GAAP and Other Financial Measures section.
10 BMO Financial Group First Quarter Report 2026
The table above indicates the relevant average Canadian/U.S. dollar exchange rates and the impact of changes in those rates on reported and adjusted results in BMO’s U.S. operations, comprising U.S. Banking and the U.S. operations in Capital Markets and Corporate Services.
The Canadian dollar equivalents of BMO’s U.S. operations results that are denominated in U.S. dollars decreased in the first quarter of fiscal 2026, relative to the fourth quarter of fiscal 2025 and the first quarter of fiscal 2025, due to changes in the Canadian/U.S. dollar exchange rate. References in this document to the impact of the U.S. dollar do not include U.S. dollar-denominated amounts recorded outside of BMO’s U.S. operations.
Economically, our U.S. dollar income stream was not hedged against the risk of changes in foreign exchange rates during fiscal 2026 and fiscal 2025. Changes in exchange rates will affect future results measured in Canadian dollars, and the impact on those results is a function of the periods in which revenue, expenses and provisions for (or recoveries of) credit losses and income taxes arise.
Refer to the Enterprise-Wide Capital Management section of BMO’s 2025 Annual MD&A for a discussion of the impact that changes in foreign exchange rates can have on BMO’s capital position.
Net Income
Q1 2026 vs. Q1 2025
Reported net income was $2,489 million, an increase of $351 million or 16% from the prior year, and adjusted net income was $2,551 million, an increase of $262 million or 11%. The impact of the weaker U.S. dollar decreased net income by 2% on both a reported basis and an adjusted basis. Reported earnings per share (EPS) was $3.39, an increase of $0.56 from the prior year, and adjusted EPS was $3.48, an increase of $0.44 or 15%. Reported and adjusted results in the current quarter included severance costs of $147 million ($202 million pre-tax) associated with advancing operational efficiencies across the enterprise, recorded in the respective operating segments. The impact of these severance costs reduced EPS by $0.21 per share.
The increase in reported results included the impact of aligning accounting policies for employee vacation across legal entities in the prior year and a larger partial reversal of the FDIC special assessment in the current quarter.
The increase in reported and adjusted net income reflected higher revenue and a lower provision for credit losses, partially offset by higher expenses, and increased across all operating segments. Corporate Services recorded a lower net loss on a reported basis in the current year, primarily due to the items noted above, and a higher net loss on an adjusted basis.
Q1 2026 vs. Q4 2025
Reported net income increased $194 million or 8% from the prior quarter, and adjusted net income increased $37 million or 1%. Reported EPS increased $0.42 from the prior quarter, and adjusted EPS increased $0.20, due to higher net income and lower dividends on preferred shares and distributions on other equity instruments.
The increase in reported net income was primarily due to a write-down of goodwill related to the announced sale of branches in certain U.S. markets in the prior quarter, and lower amortization of acquisition-related intangible assets in the current quarter.
The increase in adjusted net income reflected higher revenue, partially offset by higher expenses. Reported and adjusted net income increased in Canadian P&C and Capital Markets, and decreased in U.S. Banking and Wealth Management. Corporate Services recorded a higher net loss compared with the prior quarter on both a reported and an adjusted basis.
Refer to the Non-GAAP and Other Financial Measures section for further information on non-GAAP amounts, measures and ratios, including adjusting items in this Net Income section.
Revenue
Q1 2026 vs. Q1 2025
Reported revenue was $9,824 million, an increase of $558 million or 6% from the prior year, and adjusted revenue was $9,840 million, an increase of $574 million or 6%. The impact of the weaker U.S. dollar decreased revenue by 2% on both a reported basis and an adjusted basis. Adjusted revenue excluded the impact of a change in the fair value of contingent consideration related to the acquisition of Burgundy, which reduced non-interest revenue in the current quarter by $16 million. Reported and adjusted revenue increased in Canadian P&C, Wealth Management and Capital Markets. Reported and adjusted revenue decreased in U.S. Banking due to the impact of the weaker U.S. dollar, and increased on a source currency basis. Revenue increased in Corporate Services on both a reported and an adjusted basis.
Reported and adjusted net interest income was $5,643 million, an increase of $245 million or 5% from the prior year, driven by higher net interest margin, balance growth in Canadian P&C and Wealth Management, and higher net interest income in Corporate Services, partially offset by lower balances in U.S. Banking.
BMO’s overall reported net interest margin of 1.68% increased 6 basis points from the prior year. Net interest margin, excluding Global Markets and Insurance, was 2.33%, an increase of 20 basis points, primarily due to higher deposit margins from the benefit of ladder reinvestment rates, a favourable deposit mix and disciplined pricing, as well as higher net interest income and lower low-yielding average assets in Corporate Services.
Reported non-interest revenue was $4,181 million, an increase of $313 million or 8% from the prior year, and adjusted non-interest revenue was $4,197 million, an increase of $329 million or 9%, with increases across most categories, primarily driven by higher wealth management fees, trading revenue, underwriting and advisory fee revenue, as well as above-trend card fee revenue in Canadian Personal and Business Banking due to revised future redemption assumptions in the current quarter. Trading non-interest revenue of $866 million increased $64 million from the prior year.
BMO Financial Group First Quarter Report 2026 11
Q1 2026 vs. Q4 2025
Reported revenue increased $483 million or 5% from the prior quarter, and adjusted revenue increased $499 million or 5%. Revenue increased across all operating segments and decreased in Corporate Services.
Reported and adjusted net interest income increased $147 million or 3% from the prior quarter, driven by higher trading-related net interest income and higher net interest margin, partially offset by lower net interest income in Corporate Services.
BMO’s overall reported net interest margin increased 1 basis point from the prior quarter. Net interest margin, excluding Global Markets and Insurance, increased 3 basis points, primarily due to higher deposit margins, partially offset by lower net interest income in Corporate Services.
Reported non-interest revenue increased $336 million or 9% from the prior quarter, and adjusted non-interest revenue increased $352 million or 9%, due to higher trading revenue, wealth management fees and above-trend card fee revenue noted above, partially offset by lower securities gains, excluding trading, and underwriting and advisory fee revenue. Trading non-interest revenue increased $309 million from the prior quarter.
Change in Net Interest Income, Average Earning Assets and Net Interest Margin (1)
TABLE 7 | |||||||||||||||||||||||||||||||||||
| (Canadian $ in millions, except as noted) | Net interest income (teb) (2) | Average earning assets (3) | Net interest margin (in basis points) | ||||||||||||||||||||||||||||||||
| Q1-2026 | Q4-2025 | Q1-2025 | Q1-2026 | Q4-2025 | Q1-2025 | Q1-2026 | Q4-2025 | Q1-2025 | |||||||||||||||||||||||||||
| Canadian P&C | 2,523 | 2,464 | 2,385 | 344,866 | 344,411 | 339,325 | 290 | 284 | 279 | ||||||||||||||||||||||||||
U.S. Banking | 2,267 | 2,234 | 2,322 | 224,843 | 229,046 | 243,645 | 400 | 387 | 378 | ||||||||||||||||||||||||||
All other operating segments and Corporate Services | 853 | 798 | 691 | 764,679 | 730,821 | 736,571 | na | na | na | ||||||||||||||||||||||||||
| Total reported | 5,643 | 5,496 | 5,398 | 1,334,388 | 1,304,278 | 1,319,541 | 168 | 167 | 162 | ||||||||||||||||||||||||||
Global Markets net interest income, and Global Markets and Insurance assets | 369 | 266 | 397 | 436,238 | 402,940 | 387,786 | na | na | na | ||||||||||||||||||||||||||
Total reported, excluding Global Markets and Insurance | 5,274 | 5,230 | 5,001 | 898,150 | 901,338 | 931,755 | 233 | 230 | 213 | ||||||||||||||||||||||||||
U.S. Banking (US$ in millions) | 1,648 | 1,609 | 1,623 | 163,417 | 164,942 | 170,348 | 400 | 387 | 378 | ||||||||||||||||||||||||||
(1)Adjusted results and ratios in this table are on a non-GAAP basis and are discussed in the Non-GAAP and Other Financial Measures section.
(2)Operating segment revenue is presented on a taxable equivalent basis (teb) in net interest income. For further information, refer to the How BMO Reports Operating Segments Results section in BMO’s 2025 Annual MD&A.
(3)Average earning assets represents the daily average balance of interest bearing deposits at central banks, deposits with other banks, securities borrowed or purchased under resale agreement, securities and loans over a period.
na – not applicable
Certain comparative figures have been reclassified to conform with the current period’s presentation.
Total Provision for Credit Losses
| TABLE 8 | ||||||||||||||||||||
| Wealth | Capital | Corporate | ||||||||||||||||||
| (Canadian $ in millions) | Canadian P&C | U.S. Banking | Management | Markets | Services | Total Bank | ||||||||||||||
| Q1-2026 | ||||||||||||||||||||
| Provision for credit losses on impaired loans | 497 | 202 | 2 | 29 | 9 | 739 | ||||||||||||||
Provision (recovery of provision) for credit losses on performing loans | 18 | 17 | (4) | (21) | (3) | 7 | ||||||||||||||
Total provision (recovery of provision) for credit losses | 515 | 219 | (2) | 8 | 6 | 746 | ||||||||||||||
Total PCL-to-average net loans and acceptances (%) (1) | 0.60 | 0.41 | (0.02) | 0.04 | nm | 0.44 | ||||||||||||||
PCL on impaired loans-to-average net loans and acceptances (%) (1) | 0.58 | 0.38 | 0.03 | 0.14 | nm | 0.44 | ||||||||||||||
| Q4-2025 | ||||||||||||||||||||
| Provision for credit losses on impaired loans | 496 | 209 | 5 | 37 | 3 | 750 | ||||||||||||||
Provision (recovery of provision) for credit losses on performing loans | 153 | (90) | (1) | (39) | (18) | 5 | ||||||||||||||
Total provision (recovery of provision) for credit losses | 649 | 119 | 4 | (2) | (15) | 755 | ||||||||||||||
Total PCL-to-average net loans and acceptances (%) (1) | 0.76 | 0.22 | 0.05 | (0.01) | nm | 0.44 | ||||||||||||||
PCL on impaired loans-to-average net loans and acceptances (%) (1) | 0.58 | 0.38 | 0.06 | 0.18 | nm | 0.44 | ||||||||||||||
| Q1-2025 | ||||||||||||||||||||
| Provision for credit losses on impaired loans | 491 | 312 | 1 | 35 | 20 | 859 | ||||||||||||||
Provision (recovery of provision) for credit losses on performing loans | 51 | 102 | (1) | 11 | (11) | 152 | ||||||||||||||
Total provision (recovery of provision) for credit losses | 542 | 414 | – | 46 | 9 | 1,011 | ||||||||||||||
Total PCL-to-average net loans and acceptances (%) (1) | 0.64 | 0.71 | 0.00 | 0.21 | nm | 0.58 | ||||||||||||||
PCL on impaired loans-to-average net loans and acceptances (%) (1) | 0.58 | 0.54 | 0.01 | 0.16 | nm | 0.50 | ||||||||||||||
(1)PCL ratios are presented on an annualized basis.
nm – not meaningful
Certain comparative figures have been reclassified to conform with the current year’s presentation.
Q1 2026 vs. Q1 2025
Total provision for credit losses was $746 million, compared with a provision of $1,011 million in the prior year. Total provision for credit losses as a percentage of average net loans and acceptances was 44 basis points, compared with 58 basis points in the prior year. The provision for credit losses on impaired loans was $739 million, a decrease of $120 million, largely due to lower provisions in U.S. Banking. The provision for credit losses on impaired loans as a percentage of average net loans and acceptances was 44 basis points, compared with 50 basis points in the prior year. There was a $7 million provision for credit losses on performing loans, compared with a $152 million provision in the prior year. The provision for credit losses on performing loans in the current quarter primarily reflected portfolio credit migration, partially offset by lower balances in certain portfolios and improvement in the macroeconomic scenarios.
12 BMO Financial Group First Quarter Report 2026
Q1 2026 vs. Q4 2025
Total provision for credit losses decreased $9 million from the prior quarter. The provision for credit losses on impaired loans decreased $11 million, largely due to lower provisions in Capital Markets and U.S. Banking. The provision for credit losses on impaired loans as a percentage of average net loans and acceptances was relatively unchanged from the prior quarter. The provision for credit losses on performing loans was relatively unchanged from the prior quarter.
Impaired Loans
TABLE 9 | |||||||||||
| (Canadian $ in millions, except as noted) | Q1-2026 | Q4-2025 | Q1-2025 | ||||||||
| GIL, beginning of period | 7,091 | 6,951 | 5,843 | ||||||||
| Classified as impaired during the period | 1,452 | 1,835 | 2,373 | ||||||||
Transferred to performing during the period | (351) | (235) | (364) | ||||||||
| Net repayments | (779) | (779) | (616) | ||||||||
| Amounts written-off | (423) | (660) | (424) | ||||||||
| Disposals of loans | (19) | (65) | (2) | ||||||||
| Foreign exchange and other movements | (108) | 44 | 144 | ||||||||
| GIL, end of period | 6,863 | 7,091 | 6,954 | ||||||||
GIL to gross loans and acceptances (%) | 1.02 | 1.04 | 1.00 | ||||||||
Total gross impaired loans and acceptances (GIL) were $6,863 million, a decrease from $7,091 million in the prior quarter, largely due to lower formations in impaired loans. GIL as a percentage of gross loans and acceptances was 1.02%, a decrease from 1.04% in the prior quarter.
Loans classified as impaired during the quarter were $1,452 million, a decrease from $1,835 million in the prior quarter, reflecting lower formations in business and government lending.
Factors contributing to the change in GIL are outlined in the table above.
Non-Interest Expense
Q1 2026 vs. Q1 2025
Reported non‑interest expense was $5,753 million, an increase of $326 million or 6% from the prior year, and adjusted non‑interest expense was $5,691 million, an increase of $469 million or 9%. Severance costs in the quarter contributed 4% to the increase. The impact of the weaker U.S. dollar decreased non-interest expense by 2% on both a reported basis and an adjusted basis.
Reported results included the impact of aligning accounting policies for employee vacation across legal entities in the prior year and a larger partial reversal of the FDIC special assessment in the current quarter. Reported and adjusted non-interest expense increased, primarily due to higher employee-related expenses, including severance and performance-based compensation, and higher computer and equipment costs, partially offset by the impact of the weaker U.S. dollar.
Reported efficiency ratio was 58.6%, unchanged from the prior year, and adjusted efficiency ratio was 57.8%, compared with 56.3%. Reported operating leverage was nil and adjusted operating leverage was negative 2.8%, due to the severance charge noted above.
Q1 2026 vs. Q4 2025
Reported non-interest expense increased $197 million or 4% from the prior quarter, and adjusted non-interest expense increased $397 million or 8%.
Reported non-interest expense included the impact of the write-down of goodwill related to the announced sale of branches in certain U.S. markets in the prior quarter, lower amortization of acquisition-related intangible assets and a larger partial reversal of the FDIC special assessment. The increase in adjusted non-interest expense was primarily due to higher employee-related expenses, including severance, and stock-based compensation for employees eligible to retire and seasonal benefits that are expensed in the first quarter of each year. These were partially offset by lower professional fees, computer and equipment, advertising and premises costs.
Refer to the Non-GAAP and Other Financial Measures section for further information on non-GAAP amounts, measures and ratios, including adjusting items in this Non-Interest Expense section.
Provision for Income Taxes
The reported provision for income taxes was $836 million, an increase of $146 million from the prior year, and an increase of $101 million from the prior quarter. The reported effective tax rate was 25.2%, compared with 24.4% in the prior year and 24.2% in the prior quarter. The adjusted provision for income taxes was $852 million, an increase of $108 million from the prior year, and an increase of $74 million from the prior quarter. The adjusted effective tax rate was 25.0%, compared with 24.5% in the prior year and 23.6% in the prior quarter.
The change in the reported effective tax rate relative to the prior year and the prior quarter was primarily due to the impact of lower income in the prior year and the prior quarter. The change in the adjusted effective tax rate relative to the prior year was primarily due to the impact of lower income in the prior year. The change in the adjusted effective tax rate relative to the prior quarter was primarily due to earnings mix and the impact of lower income in the prior quarter.
Refer to the Non-GAAP and Other Financial Measures section for further information on non-GAAP amounts, measures and ratios, including adjusting items in this Provision for Income Taxes section.
BMO Financial Group First Quarter Report 2026 13
Balance Sheet
| TABLE 10 | ||||||||
| (Canadian $ in millions) | As at January 31, 2026 | As at October 31, 2025 | ||||||
| Assets | ||||||||
| Cash and cash equivalents and interest bearing deposits with banks | 70,248 | 70,322 | ||||||
| Securities | 421,331 | 423,476 | ||||||
| Securities borrowed or purchased under resale agreements | 109,725 | 129,421 | ||||||
| Net loans and acceptances | 669,316 | 677,872 | ||||||
| Derivative instruments | 69,398 | 57,151 | ||||||
| Other assets | 118,114 | 118,560 | ||||||
| Total assets | 1,458,132 | 1,476,802 | ||||||
| Liabilities and Equity | ||||||||
| Deposits | 954,789 | 976,202 | ||||||
| Derivative instruments | 65,392 | 58,729 | ||||||
| Securities lent or sold under repurchase agreements | 132,280 | 134,967 | ||||||
| Other liabilities | 211,508 | 210,304 | ||||||
| Subordinated debt | 8,412 | 8,500 | ||||||
| Equity | 85,705 | 88,051 | ||||||
| Non-controlling interest in subsidiaries | 46 | 49 | ||||||
| Total liabilities and equity | 1,458,132 | 1,476,802 | ||||||
Total assets were $1,458.1 billion as at January 31, 2026, a decrease of $18.7 billion from October 31, 2025. The impact of the weaker U.S. dollar decreased assets by $23.3 billion, excluding the impact on derivative assets.
Cash and cash equivalents and interest bearing deposits with banks were relatively unchanged from the prior quarter, as higher balances held with central banks were offset by the impact of the weaker U.S. dollar.
Securities decreased $2.1 billion, with higher levels of client activity in Capital Markets more than offset by the impact of the weaker U.S. dollar.
Securities borrowed or purchased under resale agreements decreased $19.7 billion, due to lower levels of client activity in Capital Markets and the impact of the weaker U.S. dollar.
Net loans and acceptances decreased $8.6 billion, primarily due to the impact of the weaker U.S. dollar. Business and government loans and acceptances decreased $5.2 billion, with underlying loan growth more than offset by the impact of the weaker U.S. dollar. Residential mortgages decreased $1.9 billion. Consumer instalment and other personal decreased $0.9 billion and credit card balances decreased $0.5 billion.
Derivative assets increased $12.2 billion, driven by an increase in the fair value of commodity, foreign exchange and interest rate contracts.
Other assets decreased $0.4 billion, primarily due to the impact of the weaker U.S. dollar, partially offset by higher balances in Wealth Management, Corporate Services and Capital Markets.
Liabilities decreased $16.3 billion from October 31, 2025. The impact of the weaker U.S. dollar decreased liabilities by $22.3 billion, excluding the impact on derivative liabilities.
Deposits decreased $21.4 billion. Customer deposits decreased $12.0 billion, primarily due to the impact of the weaker U.S. dollar, moderately lower balances in Canadian P&C and U.S. Banking, partially offset by higher balances in Wealth Management and Capital Markets. Other deposits decreased $9.4 billion, due to the impact of the weaker U.S. dollar and lower balances in Global Markets.
Derivative liabilities increased $6.7 billion, driven by an increase in the fair value of foreign exchange, commodity and equity contracts.
Securities lent or sold under repurchase agreements decreased $2.7 billion, due to the impact of the weaker U.S. dollar, partially offset by higher levels of client activity in Capital Markets.
Other liabilities increased $1.2 billion, primarily in Capital Markets, due to higher securitization liabilities, partially offset by the impact of the weaker U.S. dollar.
Subordinated debt was relatively unchanged from the prior quarter, with no new issuances or redemptions during the quarter.
Equity decreased $2.3 billion from October 31, 2025. Accumulated other comprehensive income decreased $1.8 billion, primarily due to a decline in accumulated other comprehensive income on translation of net foreign operations, losses on cash flow hedges and remeasurement of own credit risk on financial liabilities designated at fair value. Preferred shares and other equity instruments decreased $1.3 billion, due to the redemption of our Limited Recourse Capital Notes, Series 1 (NVCC). Retained earnings increased $0.3 billion, as a result of net income earned in the year, partially offset by dividends and distributions on other equity instruments and the purchase of common shares for cancellation under the normal course issuer bid (NCIB). Common shares increased $0.3 billion.
Contractual obligations by year of maturity are outlined in the Contractual Maturities of Assets and Liabilities and Off-Balance Sheet Commitments table in the Risk Management section.
14 BMO Financial Group First Quarter Report 2026
Capital Management
BMO continues to manage its capital within the framework described in the Enterprise-Wide Capital Management section of BMO’s 2025 Annual Report.
First Quarter 2026 Regulatory Capital Review
BMO’s Common Equity Tier 1 (CET1) Ratio was 13.1% as at January 31, 2026, a decrease from 13.3% at the end of the fourth quarter of 2025, as internal capital generation was more than offset by higher source currency risk-weighted assets (RWA) and the impact of the purchase of common shares for cancellation.
CET1 Capital was $57.8 billion as at January 31, 2026, a decrease from $58.3 billion as at October 31, 2025, with internal capital generation more than offset by the impact of common shares purchased for cancellation and the impact of foreign exchange movements.
RWA were $442.1 billion as at January 31, 2026, an increase from $437.9 billion as at October 31, 2025. RWA increased due to higher credit, market and operational risk RWA, partially offset by the impact of foreign exchange movements. The increase in credit risk RWA was primarily due to methodology and model changes, and an increase in asset size, partially offset by changes in asset quality.
In calculating regulatory capital ratios, total RWA must be increased when a capital floor amount calculated under the standardized approaches, multiplied by a capital floor adjustment factor, is higher than a similar calculation using more risk-sensitive internal modelled approaches, where applicable. The capital floor was not operative as at January 31, 2026, unchanged from October 31, 2025.
The bank’s Tier 1 and Total Capital Ratios were 14.8% and 16.9%, respectively, as at January 31, 2026, compared with 15.0% and 17.3%, respectively, as at October 31, 2025. The Tier 1 Capital Ratio and Total Capital Ratio were lower, due to the same factors impacting the CET1 Capital Ratio.
BMO’s investments in foreign operations are primarily denominated in U.S. dollars, and the foreign exchange impact of U.S. dollar-denominated RWA and capital deductions may result in variability in the bank’s capital ratios. We manage the impact of foreign exchange movements on RWA and capital deductions on our capital ratios, and during the current quarter, this impact was largely offset.
Our Leverage Ratio was 4.4% as at January 31, 2026, an increase from 4.3% at the end of the fourth quarter of 2025, driven by lower leverage exposures, partially offset by lower Tier 1 Capital.
The bank’s risk-based Total Loss Absorbing Capacity (TLAC) Ratio and TLAC Leverage Ratio were 29.1% and 8.6%, respectively, as at January 31, 2026, compared with 29.7% and 8.5%, respectively, as at October 31, 2025.
Regulatory Capital Developments
OSFI’s revised Capital Adequacy Requirements (CAR) Guideline and the Capital and Liquidity Treatment of Crypto-Asset Exposures (Banking) Guideline were effective the first quarter of fiscal 2026. These changes did not have a material impact.
On December 18, 2025, OSFI announced that the Domestic Stability Buffer (DSB) will remain at 3.5%.
For a discussion on other regulatory developments, refer to the Enterprise-Wide Capital Management section of BMO’s 2025 Annual Report.
Regulatory Capital, Leverage and Total Loss Absorbing Capacity
Regulatory capital requirements for BMO are determined in accordance with guidelines issued by OSFI, which are based on the Basel III framework developed by the Basel Committee on Banking Supervision (BCBS), and include OSFI’s CAR Guideline and the Leverage Requirements (LR) Guideline. TLAC requirements are determined in accordance with OSFI’s TLAC Guideline. For more information, refer to the Enterprise-Wide Capital Management section of BMO’s 2025 Annual Report.
OSFI’s capital, leverage and TLAC requirements are summarized in the following table.
| TABLE 11 | |||||||||||||||||||||||
(% of risk-weighted assets or leverage exposures) | Minimum requirements | Total Pillar 1 Capital buffer (1) | Tier 1 Capital buffer (2) | Minimum requirements before domestic stability buffer | Domestic stability buffer (3) | Minimum capital, leverage and TLAC requirements including capital buffers | BMO capital, leverage and TLAC ratios as at January 31, 2026 | ||||||||||||||||
| Common Equity Tier 1 Ratio | 4.5% | 3.5% | na | 8.0% | 3.5% | 11.5% | 13.1% | ||||||||||||||||
| Tier 1 Capital Ratio | 6.0% | 3.5% | na | 9.5% | 3.5% | 13.0% | 14.8% | ||||||||||||||||
| Total Capital Ratio | 8.0% | 3.5% | na | 11.5% | 3.5% | 15.0% | 16.9% | ||||||||||||||||
| TLAC Ratio | 21.5% | na | na | 21.5% | 3.5% | 25.0% | 29.1% | ||||||||||||||||
| Leverage Ratio | 3.0% | na | 0.5% | 3.5% | na | 3.5% | 4.4% | ||||||||||||||||
| TLAC Leverage Ratio | 6.75% | na | 0.5% | 7.25% | na | 7.25% | 8.6% | ||||||||||||||||
(1)The minimum CET1 Ratio requirement of 4.5% is augmented by the 3.5% Total Pillar 1 Capital buffers, which can absorb losses during periods of stress. Pillar 1 Capital buffers, which will be met with CET1 Capital, include a capital conservation buffer of 2.5%, a Common Equity Tier 1 surcharge for domestic systemically important banks (D-SIBs) of 1.0% and a countercyclical buffer, as prescribed by OSFI (immaterial for the quarter). If a bank’s capital ratios fall within the range of this combined buffer, restrictions on discretionary distributions of earnings (such as dividends, share repurchases and discretionary compensation) would ensue, with the degree of such restrictions varying according to the position of the bank’s ratios within the buffer range.
(2)D-SIBs are required to meet a 0.5% Tier 1 Capital buffer requirement for the Leverage and TLAC Leverage Ratios.
(3)OSFI requires all D-SIBs to hold a DSB against Pillar 2 risks associated with systemic vulnerabilities. Breaches of the DSB do not result in a bank being subject to automatic constraints on capital distributions. In the event of a breach, OSFI would require a remediation plan, and would expect for the plan to be executed in a timely manner. Banks may be required to hold additional buffers that are applicable to capital, leverage and TLAC ratios.
na – not applicable
BMO Financial Group First Quarter Report 2026 15
Regulatory Capital and TLAC Position
| TABLE 12 | |||||||||||
| (Canadian $ in millions, except as noted) | Q1-2026 | Q4-2025 | Q1-2025 | ||||||||
Gross common equity (1) | 77,999 | 79,095 | 79,772 | ||||||||
| Regulatory adjustments applied to common equity | (20,198) | (20,809) | (20,575) | ||||||||
| Common Equity Tier 1 Capital (CET1) | 57,801 | 58,286 | 59,197 | ||||||||
Additional Tier 1 Eligible Capital (2) | 7,706 | 7,706 | 7,787 | ||||||||
| Regulatory adjustments applied to Tier 1 Capital | (82) | (102) | (135) | ||||||||
| Additional Tier 1 Capital (AT1) | 7,624 | 7,604 | 7,652 | ||||||||
| Tier 1 Capital (T1 = CET1 + AT1) | 65,425 | 65,890 | 66,849 | ||||||||
Tier 2 Eligible Capital (3) | 9,466 | 9,679 | 9,494 | ||||||||
| Regulatory adjustments applied to Tier 2 Capital | (1) | (7) | (3) | ||||||||
| Tier 2 Capital (T2) | 9,465 | 9,672 | 9,491 | ||||||||
| Total Capital (TC = T1 + T2) | 74,890 | 75,562 | 76,340 | ||||||||
Other TLAC instruments (4) | 53,652 | 54,510 | 53,148 | ||||||||
| Adjustments applied to Other TLAC | (88) | (115) | (113) | ||||||||
| Other TLAC available after adjustments | 53,564 | 54,395 | 53,035 | ||||||||
| TLAC | 128,454 | 129,957 | 129,375 | ||||||||
Risk-Weighted Assets (5) | 442,058 | 437,945 | 433,944 | ||||||||
| Leverage Ratio Exposures | 1,488,813 | 1,521,813 | 1,529,299 | ||||||||
Capital, Leverage and TLAC Ratios (%) | |||||||||||
| CET1 Ratio | 13.1 | 13.3 | 13.6 | ||||||||
| Tier 1 Capital Ratio | 14.8 | 15.0 | 15.4 | ||||||||
| Total Capital Ratio | 16.9 | 17.3 | 17.6 | ||||||||
| TLAC Ratio | 29.1 | 29.7 | 29.8 | ||||||||
| Leverage Ratio | 4.4 | 4.3 | 4.4 | ||||||||
| TLAC Leverage Ratio | 8.6 | 8.5 | 8.5 | ||||||||
(1)Gross Common Equity includes issued qualifying common shares, retained earnings, accumulated other comprehensive income and eligible common share capital issued by subsidiaries.
(2)Additional Tier 1 Eligible Capital includes directly and indirectly issued qualifying Additional Tier 1 instruments.
(3)Tier 2 Eligible Capital includes subordinated debentures and may include portion of expected credit loss provisions.
(4)Other TLAC includes senior unsecured debt subject to the Canadian Bail-In Regime.
(5)Institutions using one of the internal model-based approaches for credit risk, counterparty credit risk, or market risk are subject to a capital floor requirement that is applied to RWA, as prescribed in OSFI’s CAR Guideline.
Outstanding Shares and Securities Convertible into Common Shares (1)
| TABLE 13 | ||||||||
| Number of | Amount | |||||||
| As at January 31, 2026 | shares | (in millions) | ||||||
Common shares | 706,195,754 | $23,708 | ||||||
Class B Preferred shares (2) | ||||||||
| Series 44 | 16,000,000 | $400 | ||||||
| Series 50 | 500,000 | $500 | ||||||
| Series 52 | 650,000 | $650 | ||||||
Other Equity Instruments (2) | ||||||||
4.800% Additional Tier 1 Capital Notes (3) | US$500 | |||||||
| 5.625% Limited Recourse Capital Notes, Series 2 (LRCNs) | $750 | |||||||
| 7.325% Limited Recourse Capital Notes, Series 3 (LRCNs) | $1,000 | |||||||
| 7.700% Limited Recourse Capital Notes, Series 4 (LRCNs) | US$1,000 | |||||||
| 7.300% Limited Recourse Capital Notes, Series 5 (LRCNs) | US$750 | |||||||
| 6.875% Limited Recourse Capital Notes, Series 6 (LRCNs) | US$1,000 | |||||||
Medium-Term Notes | ||||||||
| 3.803% Subordinated Notes due 2032 | US$1,250 | |||||||
Series K - First Tranche | $1,000 | |||||||
| 3.088% Subordinated Notes due 2037 | US$1,250 | |||||||
| Series L - First Tranche | $750 | |||||||
| Series M - First Tranche | $1,150 | |||||||
| Series M - Second Tranche | $1,000 | |||||||
| Series N - First Tranche | $1,250 | |||||||
| Stock options | ||||||||
| Vested | 2,706,330 | |||||||
| Non-vested | 3,148,295 | |||||||
(1)Details on the Medium-Term Notes are outlined in Note 16 of the audited consolidated financial statements of BMO’s 2025 Annual Report. Details on share capital and other equity instruments are outlined in Note 6 of the unaudited interim consolidated financial statements and Note 16 of the audited annual consolidated financial statements of BMO’s 2025 Annual Report.
(2)Convertible into common shares. For LRCNs, convertible into common shares by virtue of the recourse to the Preferred Shares Preferred Shares Series 49, Preferred Shares Series 51, Preferred Shares 53, Preferred Shares 54, and Preferred Shares 55 for Series 2, Series 3, Series 4, Series 5, and Series 6 LRCNs, respectively, issued concurrently with the LRCNs, which currently comprise the limited recourse trust assets.
(3)The notes had an initial interest rate of 4.800% and reset on August 25, 2024 to 6.709%.
If a NVCC trigger event were to occur, our NVCC instruments would be converted into BMO common shares pursuant to automatic conversion formulas, with a conversion price based on the greater of: (i) a floor price of $5.00; and (ii) the current market price of our common shares at the time of the trigger event (calculated using a 10-day weighted average). Based on a floor price of $5.00, these NVCC capital instruments would be converted into approximately 4.4 billion BMO common shares, assuming no accrued interest and no declared and unpaid dividends.
16 BMO Financial Group First Quarter Report 2026
Other Capital Developments
On November 12, 2025, we redeemed the $1,250 million 4.300% LRCNs, Series 1 (NVCC) and the corresponding $1,250 million Non-Cumulative 5-Year Fixed Rate Reset Class B Preferred Shares, Series 48 (NVCC).
As part of the acquisition of Burgundy on November 1, 2025, we issued 2,723,726 common shares with an aggregate value of $481 million to shareholders of Burgundy.
BMO has a normal course issuer bid (NCIB) to purchase up to 30 million of our common shares for cancellation which commenced on September 5, 2025 and ends no later than September 4, 2026. The timing and amount of purchases under the NCIB are determined by management, based on factors such as market conditions and capital levels. During the three months ended January 31, 2026, we purchased for cancellation 6.0 million common shares under the NCIB, at an average price of $178.05 per share for a total amount of $1,088 million, including tax. The bank has purchased a total of 11.8 million common shares for cancellation under the NCIB as at January 31, 2026.
Dividends
On February 25, 2026, BMO announced that the Board of Directors had declared a quarterly dividend on common shares of $1.67 per share, unchanged from the prior quarter and an $0.08 increase from the prior year. The dividend is payable on May 26, 2026 to shareholders of record on April 29, 2026. Common shareholders may elect to have their cash dividends reinvested in common shares of BMO, in accordance with the Shareholder Dividend Reinvestment and Share Purchase Plan (DRIP).
Common shares under the DRIP are purchased on the open market without a discount.
For the purposes of the Income Tax Act (Canada) and any similar provincial and territorial legislation, BMO designates all dividends paid or deemed to be paid on both its common and preferred shares as “eligible dividends”, unless indicated otherwise.
Caution
This Capital Management section contains forward-looking statements. Please refer to the Caution Regarding Forward-Looking Statements.
Operating Segments Performance Review
How BMO Reports Operating Segments Results
BMO reports financial results for its four operating segments, Canadian Personal and Commercial Banking, U.S. Banking, Wealth Management and Capital Markets, all of which are supported by Corporate Units and Technology and Operations (T&O) within Corporate Services. Operating segments results include allocations from Corporate Services for treasury-related revenue, corporate and T&O expenses, taxes and capital.
BMO employs funds transfer pricing and liquidity transfer pricing between corporate treasury and the operating segments in order to assign cost or credit on assets and liabilities to facilitate effective pricing and business decision-making, and to help assess the profitability performance of each line of business. These practices also capture the cost of holding supplemental liquid assets to meet contingent liquidity requirements, as well as facilitating the management of interest rate and liquidity risk within our risk appetite framework and regulatory requirements. We review our transfer pricing methodologies at least annually in order to align with our interest rate, liquidity and funding risk management practices, and update these as appropriate.
The costs of Corporate Units and T&O services are largely allocated to the four operating segments, with any remaining amounts retained in Corporate Services. Certain expenses directly incurred to support a specific operating segment are generally allocated to that operating segment. Other expenses are generally allocated across the operating segments in amounts that are reasonably reflective of the level of support provided to each operating segment. We review our allocation methodologies at least annually and update these as appropriate.
Capital is allocated to the operating segments based on the amount of regulatory capital required to support business activities, including risk-weighted assets and capital deductions. Effective the first quarter of fiscal 2026, the allocation approach was updated, primarily to reflect an increase in the capital allocation rate to 12.5% of risk-weighted assets, compared with 12.0% in fiscal 2025. Unallocated capital is reported in Corporate Services. We review our capital allocation methodologies at least annually and update these as appropriate.
Periodically, certain lines of business and units within our organizational structure are realigned to support our strategic priorities. In addition, revenue and expense allocations, including between operating segments, are updated to more accurately align with these priorities. Results for prior periods are reclassified to conform with the current period’s presentation.
We analyze revenue at the consolidated level based on GAAP revenue as reported in the audited annual consolidated financial statements, rather than on a taxable equivalent basis (teb). Similar to many banks, BMO analyzes revenue on a teb basis at the operating segment level. Net interest income, total revenue and provision for (recovery of) income taxes in Capital Markets and U.S. Banking are increased on tax-exempt securities to equivalent pre-tax amounts in order to facilitate comparisons of income from taxable and tax-exempt sources, and are reflected in the key performance metrics. The offset to the segment teb adjustments is reflected in Corporate Services net interest income, total revenue and provision for (recovery of) income taxes.
Caution
This How BMO Reports Operating Segments Results section contains forward-looking statements. Please refer to the Caution Regarding Forward-Looking Statements.
BMO Financial Group First Quarter Report 2026 17
Canadian Personal and Commercial Banking (Canadian P&C) (1)
| TABLE 14 | |||||||||||
| (Canadian $ in millions, except as noted) | Q1-2026 | Q4-2025 | Q1-2025 | ||||||||
| Net interest income | 2,523 | 2,464 | 2,385 | ||||||||
| Non-interest revenue | 735 | 638 | 658 | ||||||||
| Total revenue | 3,258 | 3,102 | 3,043 | ||||||||
| Provision for credit losses on impaired loans | 497 | 496 | 491 | ||||||||
Provision for credit losses on performing loans | 18 | 153 | 51 | ||||||||
Total provision for credit losses (PCL) | 515 | 649 | 542 | ||||||||
| Non-interest expense | 1,437 | 1,445 | 1,293 | ||||||||
| Income before income taxes | 1,306 | 1,008 | 1,208 | ||||||||
| Provision for income taxes | 358 | 275 | 331 | ||||||||
| Reported net income | 948 | 733 | 877 | ||||||||
Dividends on preferred shares and distributions on other equity instruments | 13 | 11 | 12 | ||||||||
Net income available to common shareholders | 935 | 722 | 865 | ||||||||
Amortization of acquisition-related intangible assets (2) | 3 | 48 | 3 | ||||||||
| Adjusted net income | 951 | 781 | 880 | ||||||||
Adjusted net income available to common shareholders | 938 | 770 | 868 | ||||||||
| Adjusted non-interest expense | 1,433 | 1,377 | 1,289 | ||||||||
Key Performance Metrics | |||||||||||
| Personal and Business Banking revenue | 2,306 | 2,194 | 2,179 | ||||||||
| Commercial Banking revenue | 952 | 908 | 864 | ||||||||
Return on equity (%) (3) (4) | 22.6 | 16.9 | 20.8 | ||||||||
Adjusted return on equity (%) (3) (4) | 22.7 | 18.1 | 20.9 | ||||||||
Operating leverage (%) | (4.1) | (2.7) | 3.7 | ||||||||
Adjusted operating leverage (%) | (4.1) | 0.7 | 3.6 | ||||||||
Efficiency ratio (%) | 44.1 | 46.6 | 42.5 | ||||||||
Adjusted efficiency ratio (%) | 44.0 | 44.4 | 42.3 | ||||||||
PCL on impaired loans-to-average net loans and acceptances (%) (4) | 0.58 | 0.58 | 0.58 | ||||||||
Net interest margin on average earning assets (%) | 2.90 | 2.84 | 2.79 | ||||||||
| Average earning assets | 344,866 | 344,411 | 339,325 | ||||||||
| Average gross loans and acceptances | 343,093 | 342,659 | 337,611 | ||||||||
| Average deposits | 311,425 | 312,344 | 313,950 | ||||||||
(1)Adjusted results and ratios are on a non-GAAP basis and are discussed in the Non-GAAP and Other Financial Measures section.
(2)Amortization of acquisition-related intangible assets and any impairments, recorded in non‑interest expense. Q4-2025 included a $64 million impairment related to AIR MILES.
(3)Return on equity is based on allocated capital. For further information, refer to the How BMO Reports Operating Segments Results section.
(4)Return on equity and PCL ratios are presented on an annualized basis.
Certain comparative figures have been reclassified to conform with the current period’s presentation.
Q1 2026 vs. Q1 2025
Canadian P&C reported net income was $948 million, an increase of $71 million or 8% from the prior year.
Total revenue was $3,258 million, an increase of $215 million or 7% from the prior year. Net interest income increased $138 million or 6%, primarily due to higher net interest margin and higher balances. Non-interest revenue increased $77 million or 12%, primarily due to above-trend card fee revenue in Personal and Business Banking due to revised future redemption assumptions in the current quarter, as well as higher gains on investments in our Commercial Banking business and higher mutual fund distribution fee revenue. Net interest margin of 2.90% increased 11 basis points from the prior year, primarily due to higher deposit and loan margins, partially offset by a change in product mix.
Personal and Business Banking revenue increased $127 million or 6% and Commercial Banking revenue increased $88 million or 10%, both due to higher net interest income and higher non-interest revenue.
Total provision for credit losses was $515 million, a decrease of $27 million from the prior year. The provision for credit losses on impaired loans was $497 million, an increase of $6 million, with higher provisions in Personal and Business Banking, partially offset by lower provisions in Commercial Banking. There was a $18 million provision for credit losses on performing loans in the current quarter, compared with a $51 million provision in the prior year.
Non-interest expense was $1,437 million, an increase of $144 million or 11% from the prior year, reflecting higher employee-related expenses, including severance, and higher technology costs.
Average gross loans and acceptances increased $5.5 billion or 2% from the prior year to $343.1 billion. Personal and Business Banking loan balances increased 2%, primarily reflecting growth in residential mortgages. Commercial Banking loan balances increased 2% and credit card balances decreased 6%. Average deposits decreased $2.5 billion or 1% from the prior year to $311.4 billion, with lower term deposits, partially offset by higher operating deposits. Personal and Business Banking deposits decreased 3% and Commercial Banking deposits increased 4%.
Q1 2026 vs. Q4 2025
Reported net income increased $215 million or 29% from the prior quarter.
Total revenue increased $156 million or 5% from the prior quarter. Net interest income increased $59 million or 2%, primarily due to higher net interest margin. Non-interest revenue increased $97 million or 15% from the prior quarter, primarily due to above-trend card fee revenue noted above, and higher gains on investments in our commercial business. Net interest margin of 2.90% increased 6 basis points from the prior quarter, primarily due to higher deposit margins.
Personal and Business Banking revenue increased $112 million or 5% and Commercial Banking revenue increased $44 million or 5%, both due to higher net interest income and higher non-interest revenue.
18 BMO Financial Group First Quarter Report 2026
Total provision for credit losses decreased $134 million from the prior quarter, largely due to a lower provision on performing loans, while the provision on impaired loans was relatively unchanged.
Non-interest expense decreased $8 million or 1% from the prior quarter, primarily due to lower amortization of acquisition-related intangible assets reflecting an impairment related to AIR MILES in the prior quarter, partially offset by higher employee-related expenses, including severance and the impact of stock-based compensation for employees eligible to retire that is expensed in the first quarter of each year.
Average gross loans and acceptances increased $0.4 billion from the prior quarter. Average deposits decreased $0.9 billion from the prior quarter as strong growth in operating deposits was more than offset by lower term deposits. Personal and Business Banking deposits decreased 1% and Commercial Banking deposits increased 1%.
Refer to the Non-GAAP and Other Financial Measures section for further information on non-GAAP amounts, measures and ratios, including adjusting items in this Operating Segments Performance Review section.
U.S. Banking (1)
| TABLE 15 | |||||||||||
| (Canadian $ in millions, except as noted) | Q1-2026 | Q4-2025 | Q1-2025 | ||||||||
Net interest income (teb) (2) | 2,267 | 2,234 | 2,322 | ||||||||
| Non-interest revenue | 629 | 641 | 642 | ||||||||
Total revenue (teb) (2) | 2,896 | 2,875 | 2,964 | ||||||||
| Provision for credit losses on impaired loans | 202 | 209 | 312 | ||||||||
Provision (recovery of provision) for credit losses on performing loans | 17 | (90) | 102 | ||||||||
Total provision for credit losses (PCL) | 219 | 119 | 414 | ||||||||
| Non-interest expense | 1,734 | 1,719 | 1,752 | ||||||||
| Income before income taxes | 943 | 1,037 | 798 | ||||||||
Provision for income taxes (teb) (2) | 201 | 230 | 163 | ||||||||
| Reported net income | 742 | 807 | 635 | ||||||||
Dividends on preferred shares and distributions on other equity instruments | 14 | 15 | 15 | ||||||||
Net income (loss) attributable to non-controlling interest in subsidiaries | (2) | 7 | – | ||||||||
Net income available to common shareholders | 730 | 785 | 620 | ||||||||
Amortization of acquisition-related intangible assets (3) | 60 | 64 | 72 | ||||||||
| Adjusted net income | 802 | 871 | 707 | ||||||||
Adjusted net income available to common shareholders | 790 | 849 | 692 | ||||||||
| Adjusted non-interest expense | 1,653 | 1,634 | 1,655 | ||||||||
| Average earning assets | 224,843 | 229,046 | 243,645 | ||||||||
| Average gross loans and acceptances | 215,479 | 218,999 | 232,078 | ||||||||
| Average deposits | 235,206 | 236,483 | 257,741 | ||||||||
| (US$ equivalent in millions) | |||||||||||
Net interest income (teb) (2) | 1,648 | 1,609 | 1,623 | ||||||||
| Non-interest revenue | 457 | 463 | 449 | ||||||||
Total revenue (teb) (2) | 2,105 | 2,072 | 2,072 | ||||||||
| Provision for credit losses on impaired loans | 148 | 151 | 217 | ||||||||
Provision (recovery of provision) for credit losses on performing loans | 12 | (65) | 70 | ||||||||
| Total provision for credit losses | 160 | 86 | 287 | ||||||||
| Non-interest expense | 1,260 | 1,238 | 1,225 | ||||||||
| Income before income taxes | 685 | 748 | 560 | ||||||||
Provision for income taxes (teb) (2) | 146 | 166 | 114 | ||||||||
| Reported net income | 539 | 582 | 446 | ||||||||
Dividends on preferred shares and distributions on other equity instruments | 10 | 11 | 11 | ||||||||
Net income (loss) attributable to non-controlling interest in subsidiaries | (1) | 5 | – | ||||||||
Net income available to common shareholders | 530 | 566 | 435 | ||||||||
Amortization of acquisition-related intangible assets (3) | 44 | 45 | 50 | ||||||||
| Adjusted net income | 583 | 627 | 496 | ||||||||
Adjusted net income available to common shareholders | 574 | 611 | 485 | ||||||||
| Adjusted non-interest expense | 1,201 | 1,178 | 1,157 | ||||||||
Key Performance Metrics (US$ basis) | |||||||||||
| Personal and Business Banking revenue | 754 | 753 | 715 | ||||||||
| Commercial Banking revenue | 1,134 | 1,100 | 1,156 | ||||||||
Private Wealth revenue | 217 | 219 | 201 | ||||||||
Return on equity (%) (4) (5) | 7.9 | 8.5 | 6.5 | ||||||||
Adjusted return on equity (%) (4) (5) | 8.5 | 9.2 | 7.2 | ||||||||
Operating leverage (%) | (1.3) | 4.4 | 3.8 | ||||||||
Adjusted operating leverage (%) | (2.2) | 3.6 | 3.2 | ||||||||
Efficiency ratio (%) | 59.9 | 59.8 | 59.1 | ||||||||
Adjusted efficiency ratio (%) | 57.1 | 56.9 | 55.9 | ||||||||
Net interest margin on average earning assets (%) | 4.00 | 3.87 | 3.78 | ||||||||
PCL on impaired loans-to-average net loans and acceptances (%) (5) | 0.38 | 0.38 | 0.54 | ||||||||
| Average earning assets | 163,417 | 164,942 | 170,348 | ||||||||
| Average gross loans and acceptances | 156,612 | 157,706 | 162,258 | ||||||||
| Average deposits | 170,947 | 170,295 | 180,205 | ||||||||
Assets under administration (6) | 125,263 | 104,368 | 103,501 | ||||||||
Assets under management (6) | 85,751 | 83,036 | 70,469 | ||||||||
(1)Adjusted results and ratios are on a non-GAAP basis and are discussed in the Non-GAAP and Other Financial Measures section.
(2)Net interest income, total revenue and the provision for income taxes are presented on a taxable equivalent basis (teb) and are reflected in the ratios. Teb amounts of $7 million in Q1-2026, $8 million in Q4-2025 and $9 million in Q1-2025 are offset in Corporate Services. On a source currency basis: US$5 million in Q1-2026, US$6 million in both Q4-2025 and Q1-2025.
BMO Financial Group First Quarter Report 2026 19
(3)Amortization of acquisition-related intangible assets and any impairments, recorded in non‑interest expense. On a source currency basis: US$59 million in Q1-2026, US$60 million in Q4-2025, and US$68 million in Q1-2025.
(4)Return on equity is based on allocated capital. For further information, refer to the How BMO Reports Operating Segments Results section.
(5)Return on equity and PCL ratios are presented on an annualized basis.
(6)Relates to Private Wealth. Assets under administration excludes assets under custody.
Certain comparative figures have been reclassified to conform with the current period’s presentation.
Q1 2026 vs. Q1 2025
U.S. Banking reported net income was $742 million, an increase of $107 million or 17% from the prior year. The impact of the weaker U.S. dollar decreased net income by 5%, and revenue and expenses by 4%, respectively. All amounts in the remainder of this section are presented on a U.S. dollar basis.
Reported net income was $539 million, an increase of $93 million or 21% from the prior year.
Total revenue was $2,105 million, an increase of $33 million or 2% from the prior year. Net interest income increased $25 million or 2%, due to higher net interest margin, partially offset by lower balances. Non-interest revenue increased $8 million or 2% from the prior year, primarily due to higher investment management, deposit and advisory fee revenue, partially offset by lower lending fee revenue. Net interest margin of 4.00% increased 22 basis points, primarily due to higher deposit margins, partially offset by lower deposit balances.
Personal and Business Banking revenue increased $39 million or 5%, primarily due to higher net interest income. Commercial Banking revenue decreased $22 million or 2%, primarily due to lower net interest income. Private Wealth revenue increased $16 million or 8%, primarily due to higher non-interest revenue.
Total provision for credit losses was $160 million, a decrease of $127 million from the prior year. The provision for credit losses on impaired loans was $148 million, a decrease of $69 million, largely due to lower provisions in Commercial Banking. There was a $12 million provision for credit losses on performing loans in the current quarter, compared with a $70 million provision in the prior year.
Non-interest expense was $1,260 million, an increase of $35 million or 3% from the prior year, primarily due to higher employee-related expenses, including severance and investments in talent.
Average gross loans and acceptances decreased $5.7 billion or 3% from the prior year to $156.6 billion. Commercial Banking balances decreased 6% reflecting balance sheet optimization initiatives, with Personal and Business Banking balances relatively unchanged from the prior year. Private Wealth balances increased 10%. Average total deposits decreased $9.3 billion or 5% from the prior year to $170.9 billion, driven by lower term deposits. Personal and Business Banking deposits decreased 8%, Commercial Banking deposits decreased 2% and Private Wealth deposits decreased 5%.
Assets under management increased $15.3 billion or 22% from the prior year to $85.8 billion, driven by stronger markets and higher client assets. Assets under administration increased $21.8 billion or 21% to $125.3 billion, primarily driven by stronger markets.
Q1 2026 vs. Q4 2025
Reported net income decreased $65 million or 8% from the prior quarter. All amounts in the remainder of this section are presented on a U.S. dollar basis.
Reported net income decreased $43 million or 7% from the prior quarter.
Total revenue increased $33 million or 2% from the prior quarter. Net interest income increased $39 million or 2%, primarily due to higher net interest margin. Non-interest revenue was relatively unchanged from the prior quarter. Net interest margin increased 13 basis points, primarily due to higher deposit and loan margins.
Commercial Banking revenue increased $34 million or 3%, due to higher net interest income, partially offset by lower non-interest revenue, with Personal and Business Banking and Private Wealth revenue relatively unchanged from the prior quarter.
Total provision for credit losses increased $74 million from the prior quarter, largely due to higher provisions on performing loans. The provision for credit losses on impaired loans decreased $3 million, with lower provisions in Commercial banking partially offset by higher provisions in Personal and Business Banking. There was a $12 million provision for credit losses on performing loans in the current quarter, compared with a $65 million recovery in the prior quarter.
Non-interest expense increased $22 million or 2% from the prior quarter, primarily due to higher employee-related expenses, including severance and the impact of stock-based compensation for employees eligible to retire that is expensed in the first quarter of each year, and higher technology costs, partially offset by lower advertising costs.
Average gross loans and acceptances decreased $1.1 billion or 1% from the prior quarter, due to lower Commercial Banking and Personal and Business Banking balances. Average total deposits were relatively unchanged from the prior quarter. Commercial Banking deposits increased 3% and Personal and Business Banking deposits decreased 2%, with Private Wealth deposits relatively unchanged.
Assets under management increased $2.7 billion or 3%, driven by stronger markets and higher client assets. Assets under administration increased $20.9 billion or 20%, due to stronger markets.
Refer to the Non-GAAP and Other Financial Measures section for further information on non-GAAP amounts, measures and ratios, including adjusting items in this Operating Segments Performance Review section.
20 BMO Financial Group First Quarter Report 2026
Wealth Management (1)
| TABLE 16 | |||||||||||
| (Canadian $ in millions, except as noted) | Q1-2026 | Q4-2025 | Q1-2025 | ||||||||
| Net interest income | 290 | 274 | 238 | ||||||||
Non-interest revenue | 1,210 | 1,168 | 1,082 | ||||||||
| Total revenue | 1,500 | 1,442 | 1,320 | ||||||||
| Provision for credit losses on impaired loans | 2 | 5 | 1 | ||||||||
Provision (recovery of provision) for credit losses on performing loans | (4) | (1) | (1) | ||||||||
Total provision (recovery of provision) for credit losses (PCL) | (2) | 4 | – | ||||||||
| Non-interest expense | 1,030 | 908 | 883 | ||||||||
| Income before income taxes | 472 | 530 | 437 | ||||||||
| Provision for income taxes | 120 | 131 | 109 | ||||||||
| Reported net income | 352 | 399 | 328 | ||||||||
Dividends on preferred shares and distributions on other equity instruments | 2 | 2 | 2 | ||||||||
Net income available to common shareholders | 350 | 397 | 326 | ||||||||
Acquisition and integration costs (2) | 7 | 1 | – | ||||||||
Amortization of acquisition-related intangible assets (3) | 5 | – | – | ||||||||
Change in fair value of contingent consideration (4) | 16 | – | – | ||||||||
| Adjusted net income | 380 | 400 | 328 | ||||||||
Adjusted net income available to common shareholders | 378 | 398 | 326 | ||||||||
Adjusted total revenue | 1,516 | 1,442 | 1,320 | ||||||||
| Adjusted non-interest expense | 1,015 | 906 | 883 | ||||||||
| Key Performance Metrics | |||||||||||
| Wealth and Asset Management reported net income | 273 | 320 | 245 | ||||||||
| Wealth and Asset Management adjusted net income | 301 | 321 | 245 | ||||||||
Insurance reported net income | 79 | 79 | 83 | ||||||||
Return on equity (%) (5) (6) | 33.1 | 51.7 | 42.5 | ||||||||
Adjusted return on equity (%) (5) (6) | 35.7 | 52.0 | 42.5 | ||||||||
Efficiency ratio (%) | 68.7 | 63.0 | 66.8 | ||||||||
Adjusted efficiency ratio (%) | 66.9 | 62.9 | 66.8 | ||||||||
Operating leverage (%) | (3.1) | 4.8 | 10.8 | ||||||||
Adjusted operating leverage (%) | (0.2) | 5.1 | 10.8 | ||||||||
PCL on impaired loans-to-average net loans and acceptances (%) (6) | 0.03 | 0.06 | 0.01 | ||||||||
| Average assets | 56,164 | 53,776 | 52,550 | ||||||||
| Average gross loans and acceptances | 30,802 | 30,400 | 29,702 | ||||||||
| Average deposits | 57,405 | 54,324 | 49,936 | ||||||||
Assets under administration (7) | 288,269 | 282,258 | 256,092 | ||||||||
| Assets under management | 430,512 | 390,282 | 348,338 | ||||||||
(1)Adjusted results and ratios are on a non-GAAP basis and are discussed in the Non-GAAP and Other Financial Measures section.
(2)Acquisition and integration costs related to the acquisition of Burgundy, recorded in non-interest expense.
(3)Amortization of acquisition-related intangible assets and any impairments, recorded in non‑interest expense.
(4)Change in fair value of contingent consideration related to the acquisition of Burgundy, recorded in non-interest revenue.
(5)Return on equity is based on allocated capital. For further information, refer to the How BMO Reports Operating Segments Results section.
(6)Return on equity and PCL ratios are presented on an annualized basis.
(7)Certain assets under management that are also administered by the bank are included in assets under administration.
Certain comparative figures have been reclassified to conform with the current period’s presentation.
Q1 2026 vs. Q1 2025
Wealth Management reported net income was $352 million, an increase of $24 million or 7% from the prior year. Wealth and Asset Management net income was $273 million, an increase of $28 million or 11%, and Insurance net income was $79 million, a decrease of $4 million or 5%.
Total revenue was $1,500 million, an increase of $180 million or 14% from the prior year. Revenue in Wealth and Asset Management was $1,372 million, an increase of $186 million or 16%, primarily due to the impact of stronger global markets and net sales, growth in deposit and loan balances and the inclusion of Burgundy, partially offset by a change in fair value of contingent consideration related to the acquisition. Insurance revenue was $128 million, a decrease of $6 million or 4%, due to lower service results, partially offset by higher investment results driven by effective portfolio optimization.
Total recovery of the provision for credit losses was $2 million, compared with nil in the prior year.
Non-interest expense was $1,030 million, an increase of $147 million or 17%, primarily due to higher employee-related expenses, including higher revenue-based costs and severance, and the impact of Burgundy.
Assets under management increased $82.2 billion or 24% from the prior year to $430.5 billion, primarily due to stronger global markets and higher client assets, as well as the inclusion of Burgundy. Assets under administration increased $32.2 billion or 13% to $288.3 billion, primarily driven by stronger global markets. Average gross loans increased 4% and average deposits increased 15%.
Q1 2026 vs. Q4 2025
Reported net income decreased $47 million or 12% from the prior quarter. Wealth and Asset Management reported net income decreased $47 million or 15% from the prior quarter, and Insurance net income was relatively unchanged.
Total revenue increased $58 million or 4% from the prior quarter. Revenue in Wealth and Asset Management increased $59 million or 5%, primarily due to the inclusion of Burgundy, stronger global markets and good growth in deposit and loan balances, partially offset by the change in fair value of contingent consideration noted above. Insurance revenue was relatively unchanged.
Total recovery of the provision for credit losses was $2 million, compared with a provision of $4 million in the prior quarter.
BMO Financial Group First Quarter Report 2026 21
Non-interest expense increased $122 million or 13%, primarily due to higher employee-related expenses, including stock-based compensation for employees eligible to retire that are expensed in the first quarter of each year and severance, as well as the impact of Burgundy.
Assets under management increased $40.2 billion or 10%, due to the inclusion of Burgundy, higher client assets and stronger global markets. Assets under administration increased $6.0 billion or 2%, due to stronger global markets. Average gross loans increased 1% and average deposits increased 6%.
Refer to the Non-GAAP and Other Financial Measures section for further information on non-GAAP amounts, measures and ratios, including adjusting items in this Operating Segments Performance Review section.
Capital Markets (1)
| TABLE 17 | |||||||||||
| (Canadian $ in millions, except as noted) | Q1-2026 | Q4-2025 | Q1-2025 | ||||||||
Net interest income (teb) (2) | 700 | 580 | 699 | ||||||||
| Non-interest revenue | 1,512 | 1,239 | 1,374 | ||||||||
Total revenue (teb) (2) | 2,212 | 1,819 | 2,073 | ||||||||
Provision for credit losses on impaired loans | 29 | 37 | 35 | ||||||||
Provision (recovery of provision) for credit losses on performing loans | (21) | (39) | 11 | ||||||||
Total provision (recovery of provision) for credit losses (PCL) | 8 | (2) | 46 | ||||||||
| Non-interest expense | 1,324 | 1,120 | 1,251 | ||||||||
| Income before income taxes | 880 | 701 | 776 | ||||||||
Provision for income taxes (teb) (2) | 223 | 176 | 187 | ||||||||
| Reported net income | 657 | 525 | 589 | ||||||||
Dividends on preferred shares and distributions on other equity instruments | 15 | 10 | 10 | ||||||||
Net income available to common shareholders | 642 | 515 | 579 | ||||||||
Amortization of acquisition-related intangible assets (3) | 3 | 11 | 4 | ||||||||
| Adjusted net income | 660 | 536 | 593 | ||||||||
Adjusted net income available to common shareholders | 645 | 526 | 583 | ||||||||
| Adjusted non-interest expense | 1,319 | 1,105 | 1,246 | ||||||||
Key Performance Metrics | |||||||||||
| Global Markets revenue | 1,440 | 1,037 | 1,363 | ||||||||
| Investment and Corporate Banking revenue | 772 | 782 | 710 | ||||||||
Return on equity (%) (4) (5) | 16.7 | 14.5 | 17.0 | ||||||||
Adjusted return on equity (%) (4) (5) | 16.8 | 14.8 | 17.1 | ||||||||
Operating leverage (teb) (%) | 0.8 | 10.4 | 18.1 | ||||||||
Adjusted operating leverage (teb) (%) | 0.7 | 9.3 | 16.5 | ||||||||
Efficiency ratio (teb) (%) | 59.9 | 61.5 | 60.4 | ||||||||
Adjusted efficiency ratio (teb) (%) | 59.7 | 60.7 | 60.1 | ||||||||
PCL on impaired loans-to-average net loans and acceptances (%) (5) | 0.14 | 0.18 | 0.16 | ||||||||
| Average assets | 593,769 | 548,583 | 578,952 | ||||||||
| Average gross loans and acceptances | 86,972 | 85,586 | 86,575 | ||||||||
U.S. Business Select Financial Data (US$ in millions) | |||||||||||
Total revenue (teb) | 816 | 635 | 778 | ||||||||
| Non-interest expense | 475 | 417 | 441 | ||||||||
| Reported net income | 249 | 168 | 241 | ||||||||
| Adjusted non-interest expense | 473 | 414 | 439 | ||||||||
| Adjusted net income | 251 | 170 | 243 | ||||||||
| Average assets | 204,563 | 187,111 | 201,230 | ||||||||
| Average gross loans and acceptances | 35,298 | 33,067 | 31,763 | ||||||||
(1)Adjusted results and ratios are on a non-GAAP basis and are discussed in the Non-GAAP and Other Financial Measures section.
(2)Net interest income, total revenue and the provision for income taxes are presented on a taxable equivalent basis (teb) and are reflected in the ratios. Teb amounts of $2 million in Q1-2026, $2 million in Q4-2025, and $nil in Q1-2025 are offset in Corporate Services.
(3)Amortization of acquisition-related intangible assets and any impairments, recorded in non‑interest expense. Q4-2025 included an impairment related to Radicle of $10 million.
(4)Return on equity is based on allocated capital. For further information, refer to the How BMO Reports Operating Segments Results section.
(5)Return on equity and PCL ratios are presented on an annualized basis.
Certain comparative figures have been reclassified to conform with the current period’s presentation.
Q1 2026 vs. Q1 2025
Capital Markets reported net income was $657 million, an increase of $68 million or 11% from the prior year. The impact of the weaker U.S. dollar decreased net income by 3%, and revenue and non-interest expense by 2%, respectively.
Total revenue was $2,212 million, an increase of $139 million or 7% from the prior year. Global Markets revenue increased $77 million or 6%, primarily due to higher equities trading revenue, partially offset by the impact of the weaker U.S. dollar. Investment and Corporate Banking revenue increased $62 million or 9%, primarily due to higher advisory fee revenue, partially offset by the impact of the weaker U.S. dollar.
Total provision for credit losses was $8 million, compared with a $46 million provision in the prior year. The provision for credit losses on impaired loans was $29 million, a decrease of $6 million from the prior year. There was a $21 million recovery of the provision for credit losses on performing loans in the current quarter, compared with an $11 million provision in the prior year.
Non-interest expense was $1,324 million, an increase of $73 million or 6% from the prior year, driven by higher employee-related expenses, including higher performance-based compensation and severance, partially offset by the impact of the weaker U.S. dollar.
Average gross loans and acceptances of $86.9 billion increased $0.4 billion from the prior year.
22 BMO Financial Group First Quarter Report 2026
Q1 2026 vs. Q4 2025
Reported net income increased $132 million or 25% from the prior quarter.
Total revenue increased $393 million or 22% from the prior quarter. Global Markets revenue increased $403 million or 39%, primarily due to higher trading revenue from strong client activity. Investment and Corporate Banking revenue decreased $10 million or 1%, primarily due to lower debt underwriting revenue, partially offset by higher corporate banking and advisory fee revenue.
Total provision for credit losses was $8 million, compared with a $2 million recovery of the provision for credit losses in the prior quarter. The provision for credit losses on impaired loans decreased $8 million from the prior quarter. There was a $21 million recovery of the provision on performing loans in the current quarter, compared with a $39 million recovery in the prior quarter.
Non-interest expense increased $204 million or 18% from the prior quarter, driven by higher employee-related expenses, including higher performance-based compensation, the impact of stock-based compensation for employees eligible to retire that is expensed in the first quarter of each year and severance.
Average gross loans and acceptances increased $1.4 billion or 2% from the prior quarter.
Refer to the Non-GAAP and Other Financial Measures section for further information on non-GAAP amounts, measures and ratios, including adjusting items in this Operating Segments Performance Review section.
Corporate Services (1)
| TABLE 18 | |||||||||||
| (Canadian $ in millions, except as noted) | Q1-2026 | Q4-2025 | Q1-2025 | ||||||||
Net interest income before segment teb offset | (128) | (46) | (237) | ||||||||
Segment teb offset | (9) | (10) | (9) | ||||||||
| Net interest income (teb) | (137) | (56) | (246) | ||||||||
| Non-interest revenue | 95 | 159 | 112 | ||||||||
| Total revenue (teb) | (42) | 103 | (134) | ||||||||
Provision for credit losses on impaired loans | 9 | 3 | 20 | ||||||||
Recovery of provision for credit losses on performing loans | (3) | (18) | (11) | ||||||||
Total provision (recovery of provision) for credit losses | 6 | (15) | 9 | ||||||||
| Non-interest expense | 228 | 364 | 248 | ||||||||
Loss before income taxes | (276) | (246) | (391) | ||||||||
Recovery of income taxes (teb) | (66) | (77) | (100) | ||||||||
Reported net loss | (210) | (169) | (291) | ||||||||
| Dividends on preferred shares and distributions on other equity instruments | 37 | 125 | 26 | ||||||||
Net income attributable to non-controlling interest in subsidiaries | 1 | – | 4 | ||||||||
Net loss available to common shareholders | (248) | (294) | (321) | ||||||||
Acquisition and integration costs (2) | – | 2 | 7 | ||||||||
Impact of divestitures | 3 | 102 | – | ||||||||
FDIC special assessment | (35) | (9) | (5) | ||||||||
Impact of alignment of accounting policies | – | – | 70 | ||||||||
| Adjusted net loss | (242) | (74) | (219) | ||||||||
| Adjusted net loss available to common shareholders | (280) | (199) | (249) | ||||||||
| Adjusted non-interest expense | 271 | 272 | 149 | ||||||||
U.S. Business Select Financial Data (US$ in millions) | |||||||||||
| Total revenue | (27) | – | (19) | ||||||||
Total provision (recovery of provision) for credit losses | – | (3) | 4 | ||||||||
| Non-interest expense | 90 | 174 | 57 | ||||||||
Recovery of income taxes (teb) | (44) | (37) | (32) | ||||||||
Reported net loss | (73) | (134) | (48) | ||||||||
| Adjusted non-interest expense | 122 | 108 | 21 | ||||||||
Adjusted net loss | (97) | (66) | (22) | ||||||||
(1)Adjusted results are on a non-GAAP basis and are discussed in the Non-GAAP and Other Financial Measures section.
(2)Acquisition and integration costs related to the acquisition of Bank of the West, recorded in non-interest expense.
(3)Segment taxable equivalent basis (teb) offset amounts recorded in net interest income, total revenue and provision for (recovery of) income taxes: $9 million in Q1-2026, $10 million in Q4-2025 and $9 million in Q1-2025.
Certain comparative figures have been reclassified to conform with the current period’s presentation.
Q1 2026 vs. Q1 2025
Corporate Services reported net loss was $210 million, compared with reported net loss of $291 million in the prior year, with the change primarily reflecting the impact of aligning accounting policies for employee vacation across legal entities in the prior year and the benefit of a larger partial reversal of the FDIC special assessment in the current quarter.
Adjusted net loss was $242 million, compared with adjusted net loss of $219 million in the prior year, with the change primarily driven by higher expenses reflecting higher employee-related expenses, including severance, partially offset by higher treasury-related revenue.
Q1 2026 vs. Q4 2025
Reported net loss was $210 million, compared with reported net loss of $169 million in the prior quarter, and adjusted net loss was $242 million, compared with adjusted net loss of $74 million in the prior quarter.
Reported net loss included the impact of the larger partial reversal of the FDIC special assessment. The higher adjusted net loss primarily reflected lower treasury-related revenue. Expenses were relatively unchanged from the prior quarter, with lower premises and technology costs and professional fees, offset by higher employee-related expenses reflecting severance and the seasonal impact of employee benefits.
BMO Financial Group First Quarter Report 2026 23
Refer to the Non-GAAP and Other Financial Measures section for further information on non-GAAP amounts, measures and ratios, including adjusting items in this Operating Segments Performance Review section.
Summary Quarterly Earnings Trends (1)
| TABLE 19 | ||||||||||||||||||||||||||
| (Canadian $ in millions, except as noted) | Q1-2026 | Q4-2025 | Q3-2025 | Q2-2025 | Q1-2025 | Q4-2024 | Q3-2024 | Q2-2024 | ||||||||||||||||||
| Net interest income | 5,643 | 5,496 | 5,496 | 5,097 | 5,398 | 5,438 | 4,794 | 4,515 | ||||||||||||||||||
| Non-interest revenue | 4,181 | 3,845 | 3,492 | 3,582 | 3,868 | 3,519 | 3,398 | 3,459 | ||||||||||||||||||
| Revenue | 9,824 | 9,341 | 8,988 | 8,679 | 9,266 | 8,957 | 8,192 | 7,974 | ||||||||||||||||||
| Provision for credit losses on impaired loans | 739 | 750 | 773 | 765 | 859 | 1,107 | 828 | 658 | ||||||||||||||||||
| Provision for credit losses on performing loans | 7 | 5 | 24 | 289 | 152 | 416 | 78 | 47 | ||||||||||||||||||
| Total provision for credit losses | 746 | 755 | 797 | 1,054 | 1,011 | 1,523 | 906 | 705 | ||||||||||||||||||
Non-interest expense | 5,753 | 5,556 | 5,105 | 5,019 | 5,427 | 4,427 | 4,839 | 4,844 | ||||||||||||||||||
| Income before income taxes | 3,325 | 3,030 | 3,086 | 2,606 | 2,828 | 3,007 | 2,447 | 2,425 | ||||||||||||||||||
| Provision for income taxes | 836 | 735 | 756 | 644 | 690 | 703 | 582 | 559 | ||||||||||||||||||
Reported net income (see below) | 2,489 | 2,295 | 2,330 | 1,962 | 2,138 | 2,304 | 1,865 | 1,866 | ||||||||||||||||||
Acquisition and integration costs/reversal | 7 | 3 | 4 | (1) | 7 | 27 | 19 | 26 | ||||||||||||||||||
| Amortization of acquisition-related intangible assets | 71 | 123 | 69 | 81 | 79 | 92 | 79 | 79 | ||||||||||||||||||
Change in fair value of contingent consideration | 16 | – | – | – | – | – | – | – | ||||||||||||||||||
| Impact of divestitures | 3 | 102 | – | – | – | – | – | – | ||||||||||||||||||
| Legal provision/reversal (including related interest expense and legal fees) | – | – | – | – | – | (870) | 13 | 12 | ||||||||||||||||||
| FDIC special assessment | (35) | (9) | (4) | 4 | (5) | (11) | 5 | 50 | ||||||||||||||||||
| Impact of alignment of accounting policies | – | – | – | – | 70 | – | – | – | ||||||||||||||||||
| Adjusted net income | 2,551 | 2,514 | 2,399 | 2,046 | 2,289 | 1,542 | 1,981 | 2,033 | ||||||||||||||||||
Operating Segment Reported Revenue (2) | ||||||||||||||||||||||||||
| Canadian P&C | 3,258 | 3,102 | 3,076 | 2,953 | 3,043 | 2,913 | 2,888 | 2,799 | ||||||||||||||||||
| U.S. Banking | 2,896 | 2,875 | 2,830 | 2,814 | 2,964 | 2,735 | 2,722 | 2,639 | ||||||||||||||||||
| Wealth Management | 1,500 | 1,442 | 1,365 | 1,263 | 1,320 | 1,240 | 1,190 | 1,163 | ||||||||||||||||||
| Capital Markets | 2,212 | 1,819 | 1,776 | 1,779 | 2,073 | 1,600 | 1,666 | 1,661 | ||||||||||||||||||
| Corporate Services | (42) | 103 | (59) | (130) | (134) | 469 | (274) | (288) | ||||||||||||||||||
| Total revenue | 9,824 | 9,341 | 8,988 | 8,679 | 9,266 | 8,957 | 8,192 | 7,974 | ||||||||||||||||||
| Key Performance Metrics | ||||||||||||||||||||||||||
Diluted earnings per share ($) (3) | 3.39 | 2.97 | 3.14 | 2.50 | 2.83 | 2.94 | 2.48 | 2.36 | ||||||||||||||||||
Adjusted diluted earnings per share ($) | 3.48 | 3.28 | 3.23 | 2.62 | 3.04 | 1.90 | 2.64 | 2.59 | ||||||||||||||||||
Total PCL-to-average net loans and acceptances (annualized) (%) | 0.44 | 0.44 | 0.47 | 0.63 | 0.58 | 0.91 | 0.54 | 0.44 | ||||||||||||||||||
Effective tax rate (%) | 25.2 | 24.2 | 24.5 | 24.7 | 24.4 | 23.4 | 23.8 | 23.1 | ||||||||||||||||||
Adjusted effective tax rate (%) | 25.0 | 23.6 | 24.5 | 24.7 | 24.5 | 21.7 | 23.9 | 23.3 | ||||||||||||||||||
Canadian/U.S. dollar average exchange rate ($) | 1.3759 | 1.3887 | 1.3730 | 1.4203 | 1.4303 | 1.3641 | 1.3705 | 1.3625 | ||||||||||||||||||
(1)Adjusted results exclude certain items from reported results and are used to calculate our adjusted measures as presented in the table above. Management assesses performance on a reported basis and an adjusted basis, and considers both to be useful. For further information on adjusting items, refer to the Non-GAAP and Other Financial Measures sections in both this document and BMO’s 2025 Annual Report. For details on the composition of non-GAAP amounts, measures and ratios, as well as supplementary financial measures, refer to the Glossary of Financial Terms.
(2)Operating segment revenue, net interest income, total revenue and provision for income taxes are presented on a taxable equivalent basis (teb). The offset to the segments’ teb adjustments is reflected in Corporate Services. For further information, refer to the How BMO Reports Operating Segments Results section.
(3)Net income and earnings from our business operations are attributable to shareholders by way of EPS and diluted EPS. Adjusted EPS and adjusted diluted EPS are non‑GAAP measures. For further information, refer to the Non-GAAP and Other Financial Measures section.
Certain comparative figures have been reclassified to conform with the current period’s presentation.
Earnings in certain quarters are impacted by seasonal factors, such as higher employee expenses related to employee benefits and stock-based compensation for employees eligible to retire, which are recorded in the first quarter of each year, as well as the impact of fewer days in the second quarter relative to other quarters. Results are also impacted by foreign currency translation, primarily changes in the U.S. dollar relative to the Canadian dollar. Quarterly EPS is impacted by the semi-annual payment of dividends on certain equity instruments. Economic conditions, such as evolving trade policies and global events may also impact our results and the markets in which we operate. The table above outlines summary results for the second quarter of fiscal 2024 through the first quarter of fiscal 2026.
A number of adjusting items impacted reported results in certain quarters. The first quarter of fiscal 2026 included a change in the fair value of contingent consideration related to the acquisition of Burgundy. The fourth quarter of fiscal 2025 included a write-down of goodwill related to the announced sale of certain U.S. branches. The first quarter of fiscal 2025 included the impact of aligning accounting policies for employee vacation across legal entities. The fourth quarter of fiscal 2024 included a reversal of a fiscal 2022 legal provision, including accrued interest, associated with a predecessor bank, M&I Marshall and Ilsley Bank. All periods were impacted by an FDIC special assessment charge and reversal of prior charges, acquisition and integration costs, as well as the amortization of acquisition-related intangible assets and any impairments.
Financial performance benefitted from the strength and diversification of our businesses, with improving revenue trends.
Revenue growth in Canadian P&C reflected good customer acquisition, volume growth and higher net interest margin. U.S. Banking revenue was impacted by muted industry loan demand and balance sheet optimization activities, with the past five quarters benefitting from higher net interest margin and higher fee revenue. Wealth Management revenue benefitted from stronger global markets and steady growth in client assets and balance sheet growth, as well as the inclusion of Burgundy beginning the first quarter of fiscal 2026. Insurance revenue is subject to variability resulting from market-related impacts. Capital Markets revenue, which is largely driven by market conditions that affect client activity, continued to benefit from robust trading activity from strong client flows, as well as improvement in equity underwriting and advisory activity in recent quarters.
Provisions for credit losses on impaired loans can vary depending on the economic environment and specific client circumstances. Provisions for credit losses on impaired loans increased in fiscal 2024, reflecting the impact of prolonged higher interest rates, tightening credit conditions and shifting consumer demand. In fiscal 2025 and fiscal 2026, provisions for credit losses on impaired loans moderated and have remained relatively stable
24 BMO Financial Group First Quarter Report 2026
over the past five quarters with lower provisions in U.S. Banking and Capital Markets, offset by higher provisions in Canadian P&C. Provisions on performing loans were impacted by the macroeconomic outlook, credit migration and loan growth. In fiscal 2024 and the first half of fiscal 2025, the bank added provisions on performing loans reflecting credit migration and uncertainty in credit conditions, with overall provisions during the past three quarters remaining stable, as the impact of credit migration was largely offset by improvements in the macroeconomic outlook.
Non-interest expense was impacted by the specific items in certain quarters noted above, and reflected disciplined expense management, while we continue to invest in our business to drive revenue growth. Expense growth has largely been driven by employee-related expenses and technology costs. The first quarter of fiscal 2026 included severance costs associated with advancing operational efficiencies across the enterprise.
The effective tax rate has varied with legislative changes; changes in tax policy, including their interpretation by tax authorities and the courts; earnings mix, including the relative proportion of earnings attributable to the different jurisdictions in which we operate, the level of pre-tax income; and the level of investments or securities which generate tax credits, or tax-exempt income from securities. The reported effective tax rate was impacted by the elimination of the income tax deduction for certain Canadian dividends in fiscal 2024 and the implementation of the global minimum tax rules beginning the first quarter of fiscal 2025.
Refer to the Non-GAAP and Other Financial Measures section for further information on non-GAAP amounts, measures and ratios, including adjusting items in this Summary Quarterly Earnings Trend section.
Transactions with Related Parties
In the ordinary course of business, we provide banking services to our key management personnel on the same terms that we offer these services to our preferred customers. Key management personnel are defined as those persons having authority and responsibility for planning, directing and/or controlling the activities of an entity, being the directors and most senior executives of the bank. We provide banking services to our joint ventures and associates on the same terms offered to our customers for these services. We also offer employees a subsidy on annual credit card fees.
The bank’s policies and procedures for related party transactions did not materially change from October 31, 2025, as described in Note 27 of the audited annual consolidated financial statements of BMO’s 2025 Annual Report.
Off-Balance Sheet Arrangements
We enter into a number of off-balance sheet arrangements in the normal course of operations. The most significant of these are structured entities, credit instruments and guarantees, which are described in the Off-Balance Sheet Arrangements section of BMO’s 2025 Annual Report. We consolidate our own securitization vehicles, certain capital and funding vehicles, and other structured entities created to meet our own, as well as our customers’ needs. We do not consolidate our customer securitization vehicles, certain capital vehicles, various BMO-managed funds or various other structured entities where investments are held. There have been no significant changes to the bank’s off-balance sheet arrangements since October 31, 2025.
Accounting Policies and Critical Accounting Estimates and Judgments
Material accounting policies are described in BMO’s 2025 Annual Report and in the notes to our annual consolidated financial statements for the year ended October 31, 2025, and in Note 1 of the unaudited interim consolidated financial statements, together with a discussion of certain accounting estimates that are considered particularly important as they require management to make significant judgments, some of which relate to matters that are inherently uncertain. Readers are encouraged to review the discussion in Note 1 of the audited annual consolidated financial statements of BMO’s 2025 Annual Report, as well as the updates provided in Note 1 of the unaudited interim consolidated financial statements.
Allowance for Credit Losses
The allowance for credit losses (ACL) primarily consists of allowances for impaired loans, which represent estimated losses related to impaired loans provided for but not yet written off, and allowances for performing loans, which is the bank’s best estimate of impairment in the existing portfolio for loans that have not yet been individually identified as impaired. Expected credit losses (ECL) are calculated on a probability-weighted basis, based on four economic scenarios described below, and are calculated for each exposure in the portfolio as a function of the probability of default (PD), exposure at default (EAD) and loss given default (LGD), with the timing of the loss also considered. Where there has been a significant increase in credit risk, lifetime ECL is recorded; otherwise, 12 months of ECL is generally recorded. Determining a significant increase in credit risk involves consideration of many different factors that will vary by product and risk segment. The principal factors considered in making this determination are the change in PD since origination and certain other criteria, such as 30-day past due and watchlist status. We may apply experienced credit judgment to reflect factors not captured in the results produced by the ECL models, as we deem necessary. In the current quarter, we applied experienced credit judgment to reflect the impact of the uncertain environment on credit conditions and the economy. We have controls and processes in place to govern the ECL process, including judgments and assumptions used in determining the allowance on performing loans. These judgments and assumptions may change over time, with the impact of any such change recorded in future periods.
In establishing our allowance for performing loans, we attach probability weightings to economic scenarios that are representative of our view of economic and market conditions at the reporting date. The base scenario represents our view of the most probable outcome, as well as upside, downside, and severe downside scenarios, all of which have been developed by our Economics group.
BMO Financial Group First Quarter Report 2026 25
When changes in economic performance in the forecasts are measured, we use real GDP as the basis, which acts as the key driver for movements in many of the other economic and market variables used, including equity market and volatility indices, corporate credit spreads, unemployment rates, housing prices and consumer credit. In addition, we also consider industry-specific variables, where applicable. Many of the variables have a high degree of interdependency, and as such, there is no single variable to which the allowance is sensitive.
Our total allowance for credit losses as at January 31, 2026, was $5,753 million ($5,739 million as at October 31, 2025) and comprised an allowance on performing loans of $4,609 million and an allowance on impaired loans of $1,144 million ($4,709 million and $1,030 million, respectively, as at October 31, 2025). The allowance on performing loans decreased $100 million from the fourth quarter of 2025, primarily driven by movements in foreign exchange rates, lower balances in certain portfolios and improvement in the macroeconomic scenarios, partially offset by portfolio credit migration.
Information on the Provision for Credit Losses for the three months ended January 31, 2026, can be found in the Total Provision for Credit Losses section.
For additional information, refer to the Risk Management section, Allowance for Credit Losses section of BMO’s 2025 Annual Report, Note 3 of the audited annual consolidated financial statements, as well as Note 3 of the unaudited interim consolidated financial statements.
This Accounting Policies and Critical Accounting Estimates and Judgments section contains forward-looking statements. Please refer to the Caution Regarding Forward-Looking Statements.
Disclosure for Global Systemically Important Banks (G-SIB)
As a domestic systemically important bank (D-SIB), OSFI requires that we disclose on an annual basis the 13 indicators comprising the assessment methodology of Global Systemically Important Banks (G-SIB). These indicators measure the impact a bank’s failure would have on the global financial system and wider economy. The indicators reflect the size of banks, their interconnectedness, the lack of alternative infrastructure for services banks provide, their global activity and complexity. As required under the current methodology, which is integrated in the Basel Committee on Banking Supervision (BCBS) consolidated Basel Framework, the indicators are calculated based on specific instructions, and as a result, the measures used may not be based on the most recent version of Basel III framework. Therefore, values may not be consistent with other measures used in this report. Based on fiscal 2024 indicators, the bank was not designated as a G-SIB in the most recent assessment issued by the Financial Stability Board (FSB) in November 2025. If the bank were designated as a G-SIB in the future, the bank's capital ratio requirements would include the higher of the D-SIB and G-SIB surcharges, both of which are currently set at 1%, and the higher of the D-SIB and G-SIB leverage buffer requirements, both of which are currently set at 0.5%. In addition, the bank may be subject to increased supervisory expectations and requirements.
Indicator values have been reported based on regulatory requirements for consolidation and therefore, insurance and other non-banking information is only included insofar as it is included in the regulatory consolidation of the group, or as otherwise specified by the assessment methodology. This level of consolidation differs from that used in the consolidated financial statements. Results may therefore not be comparable to other disclosures in this report.
The table below provides the fiscal year-end data of the 13 indicators for the bank. During fiscal 2025, notional amounts of over-the-counter derivatives decreased, primarily driven by the compressions of centrally-cleared notionals, as well as the natural run-off of positions across the portfolio. The securities outstanding increased, primarily driven by BMO common share price appreciation. The higher underwritten transactions were primarily due to favourable market conditions. Other year-over-year movements in indicators reflect normal changes in business activity.
| TABLE 20 | |||||||||||
| (Canadian $ in millions) | Indicators | As at October 31 | |||||||||
| 2025 (1) | 2024 | ||||||||||
| A. Cross-jurisdictional activity | 1. Cross-jurisdictional claims | 802,959 | 787,081 | ||||||||
| 2. Cross-jurisdictional liabilities | 732,465 | 707,844 | |||||||||
| B. Size | 3. Total exposures as defined for use in the Basel III leverage ratio | 1,555,645 | 1,514,998 | ||||||||
| C. Interconnectedness | 4. Intra-financial system assets | 191,907 | 191,887 | ||||||||
| 5. Intra-financial system liabilities | 80,071 | 80,702 | |||||||||
| 6. Securities outstanding | 383,818 | 348,447 | |||||||||
| D. Substitutability/Financial institution infrastructure | 7. Payments activity (2) | 41,815,459 | 38,624,267 | ||||||||
| 8. Assets under custody | 436,356 | 409,334 | |||||||||
9. Underwritten transactions in debt and equity markets | 172,983 | 143,176 | |||||||||
| 10. Trading volume (includes the two sub indicators) | |||||||||||
Trading volume fixed income sub indicator | 2,502,576 | 2,813,092 | |||||||||
Trading volume equities and other securities sub indicator | 4,902,969 | 5,912,720 | |||||||||
| E. Complexity | 11. Notional amount of over-the-counter (OTC) derivatives | 19,050,126 | 22,857,725 | ||||||||
12. Trading, FVTPL and FVOCI securities (3) | 80,748 | 79,820 | |||||||||
| 13. Level 3 assets | 7,848 | 7,148 | |||||||||
(1)The fiscal 2025 indicator values are subject to regulatory review following the date of this report. Should any revisions be required as a result of that review, an update with revised indicators will be published in accordance with the applicable regulatory disclosure requirements.
(2)Included intercompany transactions that are cleared through a correspondent bank.
(3)FVTPL: Fair value through profit or loss; FVOCI: Fair value through other comprehensive income.
Future Changes in Accounting Policies
We monitor the potential changes proposed by the International Accounting Standards Board (IASB) and analyze the effect that changes in the standards may have on BMO’s financial reporting and accounting policies. New standards and amendments to existing standards, which are effective for the bank in the future, can be found in Note 1 of the audited annual consolidated financial statements of BMO’s 2025 Annual Report.
26 BMO Financial Group First Quarter Report 2026
Other Regulatory Developments
We continue to monitor and prepare for other regulatory developments, including those referenced elsewhere in this document.
For a comprehensive discussion of other regulatory developments, refer to the Enterprise-Wide Capital Management section, the Risks That May Affect Future Results section, the Liquidity and Funding Risk section, and the Legal and Regulatory Compliance Risk section of BMO’s 2025 Annual Report.
Liquidity Adequacy Requirement
In January 2026, OSFI published its final Liquidity Adequacy Requirements (LAR) Guideline for fiscal 2026, which comes into effect on May 1, 2026. The changes primarily relate to retail deposit categorization with updated guidance on the retail structured products and their treatment under LAR. These changes are not expected to have a material impact on our liquidity and funding practices.
U.S. Federal Deposit Insurance Corporation Assessment
In November 2023, the U.S. Federal Deposit Insurance Corporation (FDIC) approved the final rule to implement the special assessment on depository institutions to recover the losses incurred in the deposit insurance fund that were attributable to the protection of uninsured depositors of Silicon Valley Bank and Signature Bank. In the first quarter of fiscal 2026, we recorded a reversal of $35 million ($47 million pre-tax) in non-interest expense reflecting an updated FDIC assessment, indicating reduced losses subject to the special assessment.
Risk Management
BMO’s risk management policies and processes, designed to identify, assess, measure, manage and report its credit and counterparty, market, liquidity and funding, operational non-financial, including artificial intelligence, cyber, information and other technology-related risks, legal and regulatory compliance, strategic, environmental and social, and reputation risks are outlined in the Enterprise-Wide Risk Management section of BMO’s 2025 Annual Report.
Top and Emerging Risks That May Affect Future Results
BMO’s top and emerging risks and other factors that may affect future results are described in the Enterprise-Wide Risk Management section of BMO’s 2025 Annual Report. These risks have the potential to materially impact BMO’s financial results, our operational efficiency, strategic direction or reputation. We continue to monitor the environment in which the bank operates, in order to identify and respond to any adverse developments, such as changes in general economic conditions and trade disputes, and take appropriate steps to reduce the impact on our results. For developments on general economic conditions and trade disputes, refer to the Economic Developments and Outlook section.
Real Estate Secured Lending
Real Estate Secured Lending includes residential mortgage and home equity line of credit (HELOC) exposures. The following tables provide a breakdown of residential mortgages and home equity lines of credit by geographic region, as well as insured and uninsured balances. Residential mortgages and home equity lines of credit are secured by residential properties.
Canadian Real Estate Secured Lending
| TABLE 21 | |||||||||||||||||
| (Canadian $ in millions, except as noted) | Residential mortgages | Amortizing home equity lines of credit | Total amortizing real estate secured lending | Non-amortizing real estate secured lending | Total Canadian real estate secured lending | ||||||||||||
| As at January 31, 2026 | 162,052 | 38,754 | 200,806 | 13,871 | 214,677 | ||||||||||||
| As at October 31, 2025 | 162,340 | 38,089 | 200,429 | 13,969 | 214,398 | ||||||||||||
Residential Mortgages (1)
| TABLE 22 | |||||||||||||||||||||||||||||||||||
| As at January 31, 2026 | As at October 31, 2025 | ||||||||||||||||||||||||||||||||||
| (Canadian $ in millions, except as noted) | Outstanding Balances | For the three months ended | Outstanding Balances | For the three months ended | |||||||||||||||||||||||||||||||
Region (2) | Insured (3) | Uninsured | Total | % of total | Average LTV uninsured (4) | Insured (3) | Uninsured | Total | % of total | Average LTV uninsured (4) | |||||||||||||||||||||||||
| Atlantic | 3,227 | 4,090 | 7,317 | 3.8% | 69% | 3,274 | 4,024 | 7,298 | 3.7% | 70% | |||||||||||||||||||||||||
| Quebec | 7,801 | 13,236 | 21,037 | 10.8% | 70% | 8,145 | 13,427 | 21,572 | 11.0% | 70% | |||||||||||||||||||||||||
| Ontario | 14,562 | 69,261 | 83,823 | 43.2% | 70% | 14,495 | 68,506 | 83,001 | 42.3% | 70% | |||||||||||||||||||||||||
| Alberta | 9,092 | 8,568 | 17,660 | 9.1% | 71% | 9,234 | 8,546 | 17,780 | 9.1% | 72% | |||||||||||||||||||||||||
| British Columbia | 4,244 | 24,291 | 28,535 | 14.7% | 68% | 4,303 | 24,663 | 28,966 | 14.8% | 69% | |||||||||||||||||||||||||
| All other Canada | 2,073 | 1,607 | 3,680 | 1.9% | 72% | 2,109 | 1,614 | 3,723 | 1.9% | 72% | |||||||||||||||||||||||||
| Total Canada | 40,999 | 121,053 | 162,052 | 83.5% | 70% | 41,560 | 120,780 | 162,340 | 82.8% | 70% | |||||||||||||||||||||||||
| United States | 58 | 31,979 | 32,037 | 16.5% | 72% | 60 | 33,633 | 33,693 | 17.2% | 73% | |||||||||||||||||||||||||
| Total | 41,057 | 153,032 | 194,089 | 100% | 70% | 41,620 | 154,413 | 196,033 | 100% | 71% | |||||||||||||||||||||||||
(1)Reporting methodologies are in accordance with OSFI’s Residential Mortgage Underwriting Practices and Procedures (B-20) Guideline.
BMO Financial Group First Quarter Report 2026 27
(2)Region is based upon address of the property mortgaged.
(3)Insured mortgages are defined as mortgages that are insured individually or in bulk through an eligible insurer (i.e., CMHC, Sagen MI CanadaTM).
(4)Loan-to-value (LTV) is based on original outstanding balances for mortgages and authorized amounts for HELOCs, divided by the value of the collateral at point of origination.
Home Equity Lines of Credit (1)
| TABLE 23 | |||||||||||||||||||||||||||||||||||
| As at January 31, 2026 | As at October 31, 2025 | ||||||||||||||||||||||||||||||||||
| (Canadian $ in millions, except as noted) | Portfolio | For the three months ended | Portfolio | For the three months ended | |||||||||||||||||||||||||||||||
Region (2) | Outstanding Balances | % | Authorizations | % | Average LTV (4) | Outstanding Balances | % | Authorizations | % | Average LTV (4) | |||||||||||||||||||||||||
Atlantic | 1,181 | 2.0% | 2,238 | 1.8% | 67% | 1,149 | 2.0% | 2,180 | 1.8% | 67% | |||||||||||||||||||||||||
Quebec | 9,483 | 16.0% | 19,354 | 16.0% | 71% | 9,364 | 15.9% | 19,123 | 15.8% | 71% | |||||||||||||||||||||||||
Ontario | 26,404 | 44.7% | 49,441 | 40.8% | 66% | 26,177 | 44.5% | 48,939 | 40.5% | 66% | |||||||||||||||||||||||||
Alberta | 3,379 | 5.7% | 7,564 | 6.2% | 67% | 3,328 | 5.7% | 7,471 | 6.2% | 66% | |||||||||||||||||||||||||
British Columbia | 11,445 | 19.3% | 21,692 | 17.9% | 62% | 11,311 | 19.2% | 21,338 | 17.7% | 63% | |||||||||||||||||||||||||
All other Canada | 733 | 1.2% | 1,501 | 1.2% | 67% | 729 | 1.2% | 1,485 | 1.2% | 68% | |||||||||||||||||||||||||
Total Canada | 52,625 | 88.9% | 101,790 | 83.9% | 66% | 52,058 | 88.5% | 100,536 | 83.2% | 66% | |||||||||||||||||||||||||
United States | 6,583 | 11.1% | 19,522 | 16.1% | 56% | 6,762 | 11.5% | 20,288 | 16.8% | 57% | |||||||||||||||||||||||||
| Total | 59,208 | 100% | 121,312 | 100% | 65% | 58,820 | 100% | 120,824 | 100% | 65% | |||||||||||||||||||||||||
Refer to footnote references in the Residential Mortgages table above.
Residential Mortgages by Remaining Term of Amortization (1) (2)
| TABLE 24 | ||||||||||||||||||||||||||
| As at January 31, 2026 | ||||||||||||||||||||||||||
| Amortization period | ||||||||||||||||||||||||||
| < 5 Years % | 6-10 Years % | 11-15 Years % | 16-20 Years % | 21-25 Years % | 26-30 Years % | 31-35 Years % | > 35 Years % | |||||||||||||||||||
Canada (3) | 0.7% | 2.8% | 8.1% | 19.7% | 33.7% | 28.1% | 2.5% | 4.4% | ||||||||||||||||||
United States (4) | 0.3% | 1.6% | 3.3% | 3.1% | 13.3% | 78.2% | 0.1% | 0.1% | ||||||||||||||||||
| Total | 0.7% | 2.6% | 7.3% | 16.9% | 30.4% | 36.3% | 2.1% | 3.7% | ||||||||||||||||||
| As at October 31, 2025 | ||||||||||||||||||||||||||
| Amortization period | ||||||||||||||||||||||||||
| < 5 Years % | 6-10 Years % | 11-15 Years % | 16-20 Years % | 21-25 Years % | 26-30 Years % | 31-35 Years % | > 35 Years % | |||||||||||||||||||
Canada (3) | 0.7% | 2.8% | 8.1% | 19.5% | 34.6% | 27.1% | 2.5% | 4.7% | ||||||||||||||||||
United States (4) | 0.3% | 1.6% | 3.3% | 2.9% | 11.1% | 80.6% | 0.1% | 0.1% | ||||||||||||||||||
Total | 0.7% | 2.6% | 7.3% | 16.6% | 30.6% | 36.2% | 2.1% | 3.9% | ||||||||||||||||||
(1)In Canada, the remaining amortization is based on the current balance, interest rate, customer payment amount and payment frequency. The contractual payment schedule is used in the United States.
(2)Reporting methodologies are in accordance with OSFI’s B-20 Guideline.
(3)As a result of increases in interest rates, the portfolio included less than $0.1 billion (relatively unchanged from October 31, 2025) of variable-rate mortgages in negative amortization, with all of the contractual payments in the current period being applied to interest, and the portion of interest due that is not met by each payment added to the principal.
(4)A large proportion of U.S.-based mortgages in the longer-amortization band are primarily associated with modification programs for troubled borrowers and regulator-initiated mortgage refinancing programs.
International Exposures
BMO’s geographic exposures outside of Canada and the United States are subject to a risk management framework that incorporates assessments of the economic and political risk in each region or country. These exposures are also managed within limits based on product, entity and country of ultimate risk. Our total net exposure to these regions is set out in the table below.
The table outlines total net exposure for funded lending and undrawn commitments, securities (including cash products, traded credit and credit default swap activity), repo-style transactions and derivatives. Repo-style transactions and derivatives exposure are reported at fair value. Derivatives exposures incorporate transaction netting where master netting agreements with counterparties have been entered into, and collateral offsets for counterparties where a Credit Support Annex is in effect.
Exposure by Region
| TABLE 25 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| As at January 31, 2026 | As at October 31, 2025 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| (Canadian $ in millions) | Funded Lending and Commitments | Securities | Repo-Style Transactions and Derivatives | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Region | Bank | Corporate | Sovereign | Total | Bank | Corporate | Sovereign | Total | Bank | Corporate | Sovereign | Total | Total Net Exposure | Total Net Exposure | ||||||||||||||||||||||||||||||||||||||||||
| Europe (excluding United Kingdom) | 592 | 3,615 | – | 4,207 | 236 | 62 | 4,333 | 4,631 | 1,681 | 717 | 124 | 2,522 | 11,360 | 13,822 | ||||||||||||||||||||||||||||||||||||||||||
| United Kingdom | 194 | 6,620 | – | 6,814 | 120 | 32 | 2,543 | 2,695 | 515 | 655 | 59 | 1,229 | 10,738 | 9,440 | ||||||||||||||||||||||||||||||||||||||||||
| Latin America | 2,922 | 4,376 | – | 7,298 | – | 95 | – | 95 | 1 | 482 | 42 | 525 | 7,918 | 8,202 | ||||||||||||||||||||||||||||||||||||||||||
| Asia-Pacific | 2,414 | 2,644 | 63 | 5,121 | 419 | 17 | 473 | 909 | 495 | 177 | 287 | 959 | 6,989 | 6,726 | ||||||||||||||||||||||||||||||||||||||||||
| Africa and Middle East | 2,379 | 1,662 | 103 | 4,144 | – | 45 | 23 | 68 | 2 | 60 | 1,709 | 1,771 | 5,983 | 5,500 | ||||||||||||||||||||||||||||||||||||||||||
Other (1) | – | 2 | 12 | 14 | – | – | 3,465 | 3,465 | 10 | – | 263 | 273 | 3,752 | 4,508 | ||||||||||||||||||||||||||||||||||||||||||
| Total | 8,501 | 18,919 | 178 | 27,598 | 775 | 251 | 10,837 | 11,863 | 2,704 | 2,091 | 2,484 | 7,279 | 46,740 | 48,198 | ||||||||||||||||||||||||||||||||||||||||||
(1)Primarily exposure to supranational entities.
Caution
This Risk Management section contains forward‑looking statements. Please refer to the Caution Regarding Forward‑Looking Statements.
28 BMO Financial Group First Quarter Report 2026
Market Risk
BMO’s market risk management practices and key measures are outlined in the Market Risk section of BMO’s 2025 Annual Report.
Linkages between Balance Sheet Items and Market Risk Disclosures
The table below presents items reported in our Consolidated Balance Sheet that are subject to market risk, comprising balances that are subject to either traded risk or non-traded risk measurement techniques.
| TABLE 26 | |||||||||||||||||||||||||||||||||||
| As at January 31, 2026 | As at October 31, 2025 | ||||||||||||||||||||||||||||||||||
| Consolidated | Subject to market risk | Not subject | Consolidated | Subject to market risk | Not subject | Primary risk factors for | |||||||||||||||||||||||||||||
| Balance | Traded | Non-traded | to market | Balance | Traded | Non-traded | to market | non-traded risk | |||||||||||||||||||||||||||
| (Canadian $ in millions) | Sheet | risk (1) | risk (2) | risk | Sheet | risk (1) | risk (2) | risk | balances | ||||||||||||||||||||||||||
| Assets Subject to Market Risk | |||||||||||||||||||||||||||||||||||
| Cash and cash equivalents | 67,378 | – | 67,378 | – | 67,484 | – | 67,484 | – | Interest rate | ||||||||||||||||||||||||||
| Interest bearing deposits with banks | 2,870 | 429 | 2,441 | – | 2,838 | 456 | 2,382 | – | Interest rate | ||||||||||||||||||||||||||
| Securities | 421,331 | 166,732 | 254,599 | – | 423,476 | 172,680 | 250,796 | – | Interest rate, credit spread, equity | ||||||||||||||||||||||||||
Securities borrowed or purchased | |||||||||||||||||||||||||||||||||||
under resale agreements | 109,725 | – | 109,725 | – | 129,421 | – | 129,421 | – | Interest rate | ||||||||||||||||||||||||||
Loans and acceptances | |||||||||||||||||||||||||||||||||||
(net of allowance for credit losses) | 668,235 | 7,553 | 660,682 | – | 677,161 | 6,271 | 670,890 | – | Interest rate, foreign exchange | ||||||||||||||||||||||||||
| Derivative instruments | 69,398 | 63,880 | 5,518 | – | 57,151 | 51,829 | 5,322 | – | Interest rate, foreign exchange | ||||||||||||||||||||||||||
Customers’ liabilities under acceptances | 1,081 | – | 1,081 | – | 711 | – | 711 | – | Interest rate | ||||||||||||||||||||||||||
| Other assets | 118,114 | 5,483 | 17,670 | 94,961 | 118,560 | 6,411 | 12,460 | 99,689 | Interest rate | ||||||||||||||||||||||||||
Total assets | 1,458,132 | 244,077 | 1,119,094 | 94,961 | 1,476,802 | 237,647 | 1,139,466 | 99,689 | |||||||||||||||||||||||||||
| Liabilities Subject to Market Risk | |||||||||||||||||||||||||||||||||||
| Deposits | 954,789 | 50,471 | 904,318 | – | 976,202 | 49,093 | 927,109 | – | Interest rate, foreign exchange | ||||||||||||||||||||||||||
| Derivative instruments | 65,392 | 62,714 | 2,678 | – | 58,729 | 54,770 | 3,959 | – | Interest rate, foreign exchange | ||||||||||||||||||||||||||
| Acceptances | 1,081 | – | 1,081 | – | 711 | – | 711 | – | Interest rate | ||||||||||||||||||||||||||
| Securities sold but not yet purchased | 47,409 | 47,409 | – | – | 54,876 | 54,876 | – | – | Interest rate | ||||||||||||||||||||||||||
Securities lent or sold under | |||||||||||||||||||||||||||||||||||
| repurchase agreements | 132,280 | – | 132,280 | – | 134,967 | – | 134,967 | – | Interest rate | ||||||||||||||||||||||||||
| Other liabilities | 163,018 | – | 99,642 | 63,376 | 154,717 | – | 91,688 | 63,029 | Interest rate | ||||||||||||||||||||||||||
| Subordinated debt | 8,412 | – | 8,412 | – | 8,500 | – | 8,500 | – | Interest rate | ||||||||||||||||||||||||||
Total liabilities | 1,372,381 | 160,594 | 1,148,411 | 63,376 | 1,388,702 | 158,739 | 1,166,934 | 63,029 | |||||||||||||||||||||||||||
(1)Primarily comprises balance sheet items that are subject to the trading and underwriting risk management framework and recorded at fair value through profit or loss.
(2)Primarily comprises balance sheet items that are subject to the structural balance sheet insurance risk management framework and secured financing transactions.
Trading Market Risk Measures
Average Total Trading Value at Risk (VaR) decreased quarter-over-quarter, primarily due to increased diversification and reduced equity risk, partially offset by higher interest rate exposures.
Total Trading Value at Risk (1)
| TABLE 27 | ||||||||||||||||||||||||||
| For the quarter ended January 31, 2026 | October 31, 2025 | January 31, 2025 | ||||||||||||||||||||||||
| Quarter-end | Average | High | Low | Average | Average | |||||||||||||||||||||
| Commodity VaR | 9.4 | 9.2 | 16.2 | 5.1 | 9.9 | 3.4 | ||||||||||||||||||||
| Equity VaR | 11.1 | 12.6 | 17.0 | 9.4 | 14.9 | 26.1 | ||||||||||||||||||||
| Foreign exchange VaR | 1.3 | 1.3 | 2.6 | 0.5 | 1.6 | 1.6 | ||||||||||||||||||||
Interest rate VaR (2) | 28.5 | 31.8 | 40.3 | 26.1 | 27.5 | 29.2 | ||||||||||||||||||||
| Diversification | (23.8) | (27.4) | nm | nm | (22.0) | (21.0) | ||||||||||||||||||||
| Total Trading VaR | 26.5 | 27.5 | 34.3 | 22.6 | 31.9 | 39.3 | ||||||||||||||||||||
(1)One‑day measure using a 99% confidence interval. Gains are presented in brackets and losses are presented as positive numbers.
(2)Interest rate VaR includes general credit spread risk.
nm - not meaningful
BMO Financial Group First Quarter Report 2026 29
Structural (Non-Trading) Market Risk
Our structural market risk strategy and profile remains consistent with prior periods. The net balance sheet is fully invested in an intermediate duration target interest rate profile. Structural economic value exposure to rising rates and structural economic value benefit to falling rates increased, compared with October 31, 2025, primarily due to an increase in longer-term fixed rate term assets.
Structural earnings benefit to rising interest rates and structural earnings exposure to falling interest rate decreased, compared with October 31, 2025, as fewer net assets are scheduled to reprice over the next 12 months.
Structural Interest Rate Sensitivity (1) (2)
| TABLE 28 | |||||||||||||||||||||||||||||||||||
| Economic value sensitivity | Earnings sensitivity over the next 12 months | ||||||||||||||||||||||||||||||||||
| January 31, 2026 | October 31, 2025 | January 31, 2025 | January 31, 2026 | October 31, 2025 | January 31, 2025 | ||||||||||||||||||||||||||||||
| (Pre-tax Canadian $ equivalent in millions) | |||||||||||||||||||||||||||||||||||
Canada (3) | United States | Total | Total | Total | Canada (3) | United States | Total | Total | Total | ||||||||||||||||||||||||||
| 100 basis point increase | (1,284) | (793) | (2,077) | (1,736) | (1,627) | 87 | 153 | 240 | 357 | 357 | |||||||||||||||||||||||||
100 basis point decrease | 1,283 | 162 | 1,445 | 1,063 | 842 | (54) | (206) | (260) | (322) | (236) | |||||||||||||||||||||||||
(1)Losses are presented in brackets and gains are presented as positive numbers.
(2)Interest rate sensitivities assume an immediate and sustained parallel shift in assumed interest rates across the entire yield curve as at the end of the period, using a constant balance sheet.
(3)Includes Canadian dollar and other currencies.
Liquidity and Funding Risk
Liquidity and funding risk is managed under a robust risk management framework. There were no material changes in the framework during the quarter.
BMO continued to maintain a strong liquidity position in the first quarter of 2026. Customer deposits and loans declined during the quarter, primarily due to the impact of the weaker U.S. dollar. Wholesale funding decreased, reflecting net maturities. BMO’s liquidity metrics, including the Liquidity Coverage Ratio (LCR) and Net Stable Funding Ratio (NSFR), exceeded internal targets and regulatory requirements.
BMO’s liquid assets are primarily held in our trading businesses, as well as in liquidity portfolios that are maintained for contingent liquidity risk management purposes and as investments of excess structural liquidity. Liquid assets include unencumbered, high-quality assets that are marketable, can be pledged as security for borrowings, and can be converted to cash in a time frame that meets our liquidity and funding requirements. BMO’s liquid assets are summarized in the table below.
In the normal course of business, we may encumber a portion of cash and securities holdings as collateral in support of trading activities and participation in clearing and payment systems in Canada and abroad. In addition, we may receive liquid assets as collateral and may re-pledge these assets in exchange for cash or as collateral in support of trading activities. Net unencumbered liquid assets, defined as on-balance sheet assets, such as BMO-owned cash and securities and securities borrowed or purchased under resale agreements, plus other off-balance sheet eligible collateral received, less assets encumbered as collateral, totalled $367.0 billion as at January 31, 2026, compared with $393.5 billion as at October 31, 2025. The decrease in unencumbered liquid assets was due to lower securities balances and the impact of the weaker U.S. dollar.
Net unencumbered liquid assets are primarily held at the parent bank level, at BMO Bank N.A., and in our broker/dealer operations. In addition to liquid assets, BMO has access to the Bank of Canada’s lending assistance programs, the Federal Reserve Bank discount window in the United States, the Bank of England’s Sterling Monetary Framework, and European Central Bank standby liquidity facilities. We do not consider central bank facilities as a source of available liquidity when assessing the soundness of our liquidity position.
In addition to cash and securities holdings, we may also pledge other assets, including mortgages and loans, to raise long-term secured funding. BMO’s total encumbered assets and unencumbered liquid assets are summarized in the Asset Encumbrance table.
Liquid Assets
| TABLE 29 | |||||||||||||||||||||||
| As at January 31, 2026 | As at October 31, 2025 | ||||||||||||||||||||||
| Other cash & | Net | Net | |||||||||||||||||||||
| Bank-owned | securities | Total gross | Encumbered | unencumbered | unencumbered | ||||||||||||||||||
| (Canadian $ in millions) | assets | received | assets (1) | assets | assets (2) | assets (2) | |||||||||||||||||
| Cash and cash equivalents | 67,378 | – | 67,378 | 87 | 67,291 | 67,376 | |||||||||||||||||
| Deposits with other banks | 2,870 | – | 2,870 | – | 2,870 | 2,838 | |||||||||||||||||
| Securities and securities borrowed or purchased under resale agreements | |||||||||||||||||||||||
| Sovereigns/Central banks/Multilateral development banks | 187,831 | 105,635 | 293,466 | 150,842 | 142,624 | 151,602 | |||||||||||||||||
| NHA mortgage-backed securities and U.S. agency mortgage-backed | |||||||||||||||||||||||
| securities and collateralized mortgage obligations | 128,815 | 12,513 | 141,328 | 81,597 | 59,731 | 62,856 | |||||||||||||||||
| Corporate and other debt | 38,228 | 28,771 | 66,999 | 29,730 | 37,269 | 37,886 | |||||||||||||||||
| Corporate equity | 66,457 | 67,834 | 134,291 | 95,716 | 38,575 | 51,389 | |||||||||||||||||
| Total securities and securities borrowed or purchased under resale agreements | 421,331 | 214,753 | 636,084 | 357,885 | 278,199 | 303,733 | |||||||||||||||||
NHA mortgage-backed securities (reported as loans at amortized cost) (3) | 25,138 | – | 25,138 | 6,502 | 18,636 | 19,588 | |||||||||||||||||
| Total liquid assets | 516,717 | 214,753 | 731,470 | 364,474 | 366,996 | 393,535 | |||||||||||||||||
(1)Gross assets include bank‑owned assets and cash and securities received from third parties.
(2)Net unencumbered assets are defined as total gross assets less encumbered assets.
(3)Under IFRS, National Housing Act (NHA) mortgage-backed securities that include mortgages owned by BMO as the underlying collateral are classified as loans. Unencumbered NHA mortgage-backed securities have liquidity value and are included as liquid assets under BMO’s Liquidity and Funding Risk Management Framework. This amount is shown as a separate line item, NHA mortgage-backed securities.
30 BMO Financial Group First Quarter Report 2026
Asset Encumbrance
| TABLE 30 | |||||||||||||||||||||||
Encumbered (2) | Net unencumbered | ||||||||||||||||||||||
| (Canadian $ in millions) | Total gross | Pledged as | Other | Other | Available as | ||||||||||||||||||
| As at January 31, 2026 | assets (1) | collateral | encumbered | unencumbered (3) | collateral (4) | ||||||||||||||||||
| Cash and deposits with other banks | 70,248 | – | 87 | – | 70,161 | ||||||||||||||||||
Securities (5) | 661,222 | 275,543 | 88,844 | 25,876 | 270,959 | ||||||||||||||||||
| Loans | 643,097 | 61,950 | 1,859 | 415,899 | 163,389 | ||||||||||||||||||
| Other assets | |||||||||||||||||||||||
| Derivative instruments | 69,398 | – | – | 69,398 | – | ||||||||||||||||||
| Customers' liability under acceptances | 1,081 | – | – | 1,081 | – | ||||||||||||||||||
| Premises and equipment | 6,140 | – | – | 6,140 | – | ||||||||||||||||||
| Goodwill | 16,619 | – | – | 16,619 | – | ||||||||||||||||||
| Intangible assets | 5,015 | – | – | 5,015 | – | ||||||||||||||||||
| Current tax assets | 2,181 | – | – | 2,181 | – | ||||||||||||||||||
| Deferred tax assets | 2,602 | – | – | 2,602 | – | ||||||||||||||||||
| Receivable from brokers, dealers and clients | 45,203 | – | – | 45,203 | – | ||||||||||||||||||
| Other | 40,354 | 11,250 | – | 29,104 | – | ||||||||||||||||||
| Total other assets | 188,593 | 11,250 | – | 177,343 | – | ||||||||||||||||||
| Total assets | 1,563,160 | 348,743 | 90,790 | 619,118 | 504,509 | ||||||||||||||||||
| Encumbered (2) | Net unencumbered | ||||||||||||||||||||||
| (Canadian $ in millions) | Total gross | Pledged as | Other | Other | Available as | ||||||||||||||||||
| As at October 31, 2025 | assets (1) | collateral | encumbered | unencumbered (3) | collateral (4) | ||||||||||||||||||
| Cash and deposits with other banks | 70,322 | – | 108 | – | 70,214 | ||||||||||||||||||
Securities (5) | 682,594 | 271,748 | 87,525 | 25,739 | 297,582 | ||||||||||||||||||
| Loans | 650,883 | 58,052 | 1,834 | 435,852 | 155,145 | ||||||||||||||||||
| Other assets | |||||||||||||||||||||||
| Derivative instruments | 57,151 | – | – | 57,151 | – | ||||||||||||||||||
| Customers' liability under acceptances | 711 | – | – | 711 | – | ||||||||||||||||||
| Premises and equipment | 6,252 | – | – | 6,252 | – | ||||||||||||||||||
| Goodwill | 16,797 | – | – | 16,797 | – | ||||||||||||||||||
| Intangible assets | 4,758 | – | – | 4,758 | – | ||||||||||||||||||
| Current tax assets | 1,970 | – | – | 1,970 | – | ||||||||||||||||||
| Deferred tax assets | 2,732 | – | – | 2,732 | – | ||||||||||||||||||
| Receivable from brokers, dealers and clients | 43,167 | – | – | 43,167 | – | ||||||||||||||||||
| Other | 42,884 | 11,149 | – | 31,735 | – | ||||||||||||||||||
| Total other assets | 176,422 | 11,149 | – | 165,273 | – | ||||||||||||||||||
| Total assets | 1,580,221 | 340,949 | 89,467 | 626,864 | 522,941 | ||||||||||||||||||
(1)Gross assets include on-balance sheet and off-balance sheet assets.
(2)Pledged as collateral refers to the portion of on-balance sheet assets and other cash and securities that is pledged through repurchase agreements, securities lending, derivative contracts and requirements associated with participation in clearing houses and payment systems. Other encumbered assets include assets that are restricted for legal or other reasons, such as minimum required deposits at central banks, short sales and certain U.S. agency securities that have been sold to third parties but are consolidated under IFRS.
(3)Other unencumbered assets include select liquid asset holdings that management believes are not readily available to support BMO’s liquidity requirements. These include securities of $25.9 billion as at January 31, 2026, and include securities held at BMO’s insurance subsidiary, seller financing securities and certain investments held at our merchant banking business. Other unencumbered assets include mortgages and loans that may be securitized to access secured funding.
(4)Loans included in available as collateral represent loans currently lodged at central banks that may be used to access central bank funding. Loans available for pledging as collateral do not include other sources of additional liquidity that may be realized from BMO’s loan portfolio, such as incremental securitization, covered bond issuances and U.S. Federal Home Loan Bank (FHLB) advances.
(5)Includes securities, securities borrowed or purchased under resale agreements and NHA mortgage-backed securities (reported as loans at amortized cost).
Net Unencumbered Liquid Assets by Legal Entity
| TABLE 31 | ||||||||
| (Canadian $ in millions) | As at January 31, 2026 | As at October 31, 2025 | ||||||
| BMO (parent) | 214,953 | 232,874 | ||||||
| BMO Bank N.A. | 121,671 | 127,012 | ||||||
| Broker dealers | 30,372 | 33,649 | ||||||
| Total net unencumbered liquid assets by legal entity | 366,996 | 393,535 | ||||||
Funding Strategy
BMO’s funding strategy requires that secured and unsecured wholesale funding used to support loans and less liquid assets must have a term
(typically two to ten years) that will support the effective term to maturity of these assets. Secured and unsecured wholesale funding for liquid trading assets is largely shorter term (maturing in one year or less), is aligned with the liquidity of the assets being funded and is subject to limits on aggregate maturities across different periods. Supplemental liquidity pools are funded largely with wholesale term funding.
(typically two to ten years) that will support the effective term to maturity of these assets. Secured and unsecured wholesale funding for liquid trading assets is largely shorter term (maturing in one year or less), is aligned with the liquidity of the assets being funded and is subject to limits on aggregate maturities across different periods. Supplemental liquidity pools are funded largely with wholesale term funding.
We maintain a large and stable base of customer deposits that, in combination with our strong capital position, is a source of strength. This supports the maintenance of a sound liquidity position and reduces reliance on wholesale funding. Customer deposits totalled $703.0 billion as at January 31, 2026, decreasing from $715.0 billion as at October 31, 2025, primarily due to the impact of the weaker U.S. dollar.
Total secured and unsecured wholesale funding outstanding, which largely consists of negotiable marketable securities, was $253.6 billion as at January 31, 2026, with $69.2 billion sourced as secured funding and $184.4 billion sourced as unsecured funding. Wholesale funding outstanding decreased from $258.6 billion as at October 31, 2025, due to net maturities during the current quarter. The mix and maturities of BMO’s wholesale term funding are outlined in the following table. Additional information on deposit maturities can be found in the Contractual Maturities of Assets and Liabilities and Off-Balance Sheet Commitments section. We maintain a sizeable portfolio of unencumbered liquid assets, totalling $367.0 billion as at January 31, 2026, that can be monetized to meet potential funding requirements, as described in the Unencumbered Liquid Assets section above.
BMO Financial Group First Quarter Report 2026 31
Wholesale Funding Maturities (1)
| TABLE 32 | ||||||||||||||||||||||||||||||||
| As at January 31, 2026 | As at October 31, 2025 | |||||||||||||||||||||||||||||||
| Less than | 1 to 3 | 3 to 6 | 6 to 12 | Subtotal less | 1 to 2 | Over | ||||||||||||||||||||||||||
| (Canadian $ in millions) | 1 month | months | months | months | than 1 year | years | 2 years | Total | Total | |||||||||||||||||||||||
| Deposits from banks | 1,652 | 956 | 1,263 | 2,069 | 5,940 | – | – | 5,940 | 4,403 | |||||||||||||||||||||||
| Certificates of deposit and commercial paper | 6,882 | 14,772 | 26,454 | 31,586 | 79,694 | 1,727 | – | 81,421 | 89,662 | |||||||||||||||||||||||
| Bearer deposit notes | 1,759 | 1,487 | 994 | 570 | 4,810 | – | – | 4,810 | 5,799 | |||||||||||||||||||||||
| Asset-backed commercial paper (ABCP) | 1,405 | 5,042 | 6,990 | 2,009 | 15,446 | – | – | 15,446 | 15,277 | |||||||||||||||||||||||
| Senior unsecured medium-term notes | – | 1,750 | 5,473 | 10,226 | 17,449 | 18,306 | 30,922 | 66,677 | 64,725 | |||||||||||||||||||||||
Senior unsecured structured notes (2) | 147 | 2 | 177 | 565 | 891 | 650 | 15,644 | 17,185 | 17,335 | |||||||||||||||||||||||
Secured funding | ||||||||||||||||||||||||||||||||
| Mortgage and HELOC securitizations | – | 200 | 497 | 1,851 | 2,548 | 1,997 | 13,212 | 17,757 | 18,383 | |||||||||||||||||||||||
| Covered bonds | – | 3,104 | 3,225 | 8,839 | 15,168 | 2,513 | 6,587 | 24,268 | 24,053 | |||||||||||||||||||||||
Other asset-backed securitizations (3) | – | – | – | – | – | – | 4,026 | 4,026 | 5,711 | |||||||||||||||||||||||
| Federal Home Loan Bank advances | – | 4,765 | 170 | 1,359 | 6,294 | – | 1,405 | 7,699 | 4,741 | |||||||||||||||||||||||
| Subordinated debt | – | – | – | – | – | – | 8,411 | 8,411 | 8,499 | |||||||||||||||||||||||
| Total | 11,845 | 32,078 | 45,243 | 59,074 | 148,240 | 25,193 | 80,207 | 253,640 | 258,588 | |||||||||||||||||||||||
| Of which: | ||||||||||||||||||||||||||||||||
| Secured | 1,405 | 13,111 | 10,882 | 14,058 | 39,456 | 4,510 | 25,230 | 69,196 | 68,165 | |||||||||||||||||||||||
| Unsecured | 10,440 | 18,967 | 34,361 | 45,016 | 108,784 | 20,683 | 54,977 | 184,444 | 190,423 | |||||||||||||||||||||||
Total (4) | 11,845 | 32,078 | 45,243 | 59,074 | 148,240 | 25,193 | 80,207 | 253,640 | 258,588 | |||||||||||||||||||||||
(1)Wholesale unsecured funding primarily includes funding raised through the issuance of negotiable marketable securities. Wholesale funding excludes repo transactions which are disclosed in the Contractual Maturities of Assets and Liabilities and Off-Balance Sheet Commitments section, and also excludes ABCP issued by certain ABCP conduits that are not consolidated for financial reporting purposes.
(2)Includes structured notes issued to institutional investors and exchange-traded notes.
(3)Includes credit card loan securitizations.
(4)Total wholesale funding comprised Canadian‑dollar‑denominated funding totalling $53.8 billion ($54.3 billion as at October 31, 2025) and U.S.‑dollar‑denominated and other foreign‑currency‑denominated funding totalling $199.8 billion as at January 31, 2026 ($204.3 billion as at October 31, 2025).
Diversification of our wholesale funding sources is an important part of our overall liquidity management strategy. BMO’s wholesale funding activities are well-diversified by jurisdiction, currency, investor segment, instrument type and maturity profile. BMO maintains ready access to long-term wholesale funding through various borrowing programs, including a European Note Issuance Program, Canadian, Australian and U.S. Medium-Term Note programs, Canadian and U.S. mortgage securitizations, Canadian credit card loans and home equity line of credit (HELOC) securitizations, covered bonds, and Canadian and U.S. senior unsecured deposits.
Our wholesale funding plan seeks to ensure sufficient funding capacity is available to execute our business strategies. The funding plan considers expected maturities, as well as asset and liability growth projected for our businesses in our forecasting and planning processes, and assesses funding needs in relation to the sources available. The funding plan is reviewed annually by the senior management committees with specific related responsibilities and approved by the Risk Review Committee, and is regularly updated to reflect actual results and incorporate updated forecast information.
Additional information on Liquidity and Funding Risk governance can be found in the Liquidity and Funding Risk section of BMO’s 2025 Annual Report. Please also see the Risk Management section.
Credit Ratings
The credit ratings assigned to BMO’s short-term and senior long-term debt securities by external rating agencies are important in raising both capital and funding to support the bank’s business operations. Maintaining strong credit ratings allows us to access the wholesale markets at competitive pricing levels. Should BMO’s credit ratings experience a downgrade, our cost of funding may increase and our access to funding and capital through the wholesale markets could be constrained. A material downgrade of BMO’s ratings could also have other consequences, including those set out in Note 7 of the audited annual consolidated financial statements of BMO’s 2025 Annual Report.
The credit ratings assigned to BMO’s senior debt by rating agencies are indicative of high-grade, high-quality issues.
| TABLE 33 | |||||||||||||||||||||||
| As at January 31, 2026 | |||||||||||||||||||||||
Rating agency (1) | Short-term debt | Senior debt (2) | Long-term deposits/legacy senior debt (3) | Subordinated debt (NVCC) | Outlook | ||||||||||||||||||
| Moody’s | P-1 | A2 | Aa2 | Baa1 (hyb) | Stable | ||||||||||||||||||
| S&P | A-1 | A- | A+ | BBB+ | Stable | ||||||||||||||||||
| Fitch | F1+ | AA- | AA | A | Stable | ||||||||||||||||||
| DBRS | R-1 (high) | AA (low) | AA | A (low) | Stable | ||||||||||||||||||
(1)Credit ratings are not recommendations to purchase, hold or sell a financial obligation and do not address the market price or suitability for a particular investor. Ratings are subject to revision or withdrawal at any time by the rating organization.
(2)Subject to conversion under the Bank Recapitalization (Bail-In) Regime.
(3)Long-term deposits/Legacy senior debt includes senior debt issued prior to September 23, 2018, and senior debt issued on or after September 23, 2018 that is excluded from the Bank Recapitalization (Bail-In) Regime.
We are required to deliver collateral to certain counterparties in the event of a downgrade of BMO’s current credit rating. The incremental collateral required is based on mark-to-market exposure, collateral valuations and collateral threshold arrangements, as applicable. As at January 31, 2026, we would be required to provide additional collateral to counterparties totalling $327 million, $677 million and $1,598 million, as a result of a one-notch, two-notch and three-notch downgrade, respectively.
32 BMO Financial Group First Quarter Report 2026
Liquidity Coverage Ratio
The Liquidity Coverage Ratio (LCR) is calculated on a daily basis as the ratio of the stock of High-Quality Liquid Assets (HQLA) held to total net stressed cash outflows over the next 30 calendar days, in accordance with OSFI’s LAR Guideline, as summarized in the table below. BMO’s HQLA primarily comprises cash, highly-rated debt issued or backed by governments, highly-rated covered bonds and non-financial corporate debt, and non-financial equities that are part of a major stock index. Net cash flows include outflows from deposits, secured and unsecured wholesale funding, commitments and potential collateral requirements, offset by permitted inflows from loans, securities lending activities and other non-HQLA debt maturing over
a 30-day horizon. Weightings prescribed by OSFI are applied to cash flows and HQLA to arrive at the weighted values and the LCR. The LCR does not reflect liquidity in BMO Financial Corp. (BFC) in excess of 100%, because of limitations on the transfer of liquidity between BFC and the parent bank. Canadian domestic systemically important banks (D-SIBs), including BMO, are required to maintain a minimum LCR of 100%. The average daily LCR for the quarter ended January 31, 2026, was 126%, equivalent to a surplus of $52.1 billion above the regulatory minimum. The LCR decreased 6% from 132% in the prior quarter, due to an increase in net cash outflows. While banks are required to maintain an LCR of greater than 100% in normal conditions, they are also expected to be able to utilize HQLA during a period of stress, which may result in an LCR of less than 100% during such a period. The LCR is only one measure of a bank’s liquidity position and does not fully capture all of its liquid assets or the funding alternatives that may be available during a period of stress. BMO’s total liquid assets are shown in the Liquid Assets table.
a 30-day horizon. Weightings prescribed by OSFI are applied to cash flows and HQLA to arrive at the weighted values and the LCR. The LCR does not reflect liquidity in BMO Financial Corp. (BFC) in excess of 100%, because of limitations on the transfer of liquidity between BFC and the parent bank. Canadian domestic systemically important banks (D-SIBs), including BMO, are required to maintain a minimum LCR of 100%. The average daily LCR for the quarter ended January 31, 2026, was 126%, equivalent to a surplus of $52.1 billion above the regulatory minimum. The LCR decreased 6% from 132% in the prior quarter, due to an increase in net cash outflows. While banks are required to maintain an LCR of greater than 100% in normal conditions, they are also expected to be able to utilize HQLA during a period of stress, which may result in an LCR of less than 100% during such a period. The LCR is only one measure of a bank’s liquidity position and does not fully capture all of its liquid assets or the funding alternatives that may be available during a period of stress. BMO’s total liquid assets are shown in the Liquid Assets table.
| TABLE 34 | |||||||||||
| For the quarter ended January 31, 2026 | |||||||||||
| (Canadian $ in billions, except as noted) | Total unweighted value (average) (1) (2) | Total weighted value (average) (2) (3) | |||||||||
| High-Quality Liquid Assets | |||||||||||
| Total high-quality liquid assets (HQLA) | * | 252.9 | |||||||||
| Cash Outflows | |||||||||||
| Retail deposits and deposits from small business customers, of which: | 303.9 | 21.6 | |||||||||
| Stable deposits | 141.1 | 4.2 | |||||||||
| Less stable deposits | 162.8 | 17.4 | |||||||||
| Unsecured wholesale funding, of which: | 340.7 | 146.6 | |||||||||
| Operational deposits (all counterparties) and deposits in networks of cooperative banks | 173.5 | 42.9 | |||||||||
| Non-operational deposits (all counterparties) | 144.9 | 81.4 | |||||||||
| Unsecured debt | 22.3 | 22.3 | |||||||||
| Secured wholesale funding | * | 36.7 | |||||||||
| Additional requirements, of which: | 266.9 | 62.5 | |||||||||
| Outflows related to derivatives exposures and other collateral requirements | 43.0 | 14.8 | |||||||||
| Outflows related to loss of funding on debt products | 3.8 | 3.8 | |||||||||
| Credit and liquidity facilities | 220.1 | 43.9 | |||||||||
| Other contractual funding obligations | 0.8 | – | |||||||||
| Other contingent funding obligations | 568.4 | 12.3 | |||||||||
| Total cash outflows | * | 279.7 | |||||||||
| Cash Inflows | |||||||||||
| Secured lending (e.g., reverse repos) | 205.4 | 36.7 | |||||||||
| Inflows from fully performing exposures | 17.5 | 9.7 | |||||||||
| Other cash inflows | 34.0 | 32.5 | |||||||||
| Total cash inflows | 256.9 | 78.9 | |||||||||
| For the quarter ended January 31, 2026 | Total adjusted value (4) | ||||||||||
| Total HQLA | 252.9 | ||||||||||
| Total net cash outflows | 200.8 | ||||||||||
Liquidity Coverage Ratio (%) (2) | 126 | ||||||||||
| For the quarter ended October 31, 2025 | Total adjusted value (4) | ||||||||||
| Total HQLA | 252.1 | ||||||||||
| Total net cash outflows | 191.4 | ||||||||||
Liquidity Coverage Ratio (%) | 132 | ||||||||||
* Disclosure is not required under the LCR disclosure standard.
(1)Unweighted values are calculated at market value (for HQLA) or as outstanding balances maturing or callable within 30 days (for inflows and outflows).
(2)Values are calculated based on the simple average of the daily LCR over 61 business days in the first quarter of fiscal 2026.
(3)Weighted values are calculated after the application of the weights prescribed under OSFI’s LAR Guideline for HQLA and cash inflows and outflows.
(4)Adjusted values are calculated based on total weighted values after applicable caps, as defined by the LAR Guideline.
BMO Financial Group First Quarter Report 2026 33
Net Stable Funding Ratio
The Net Stable Funding Ratio (NSFR) is a regulatory liquidity metric that assesses the stability of a bank’s funding profile in relation to the liquidity value of its assets, calculated in accordance with OSFI’s LAR Guideline. Unlike the LCR, which is a short-term metric, the NSFR assesses a bank’s medium-term and long-term resilience. The NSFR is defined as the ratio of the amount of available stable funding (ASF) to the amount of required stable funding (RSF). ASF represents the proportion of own and third-party resources that are expected to be reliably available over a one-year horizon (including customer deposits, long-term wholesale funding, and capital). The stable funding requirements for each institution are set by OSFI based on the liquidity and maturity characteristics of its on-balance sheet assets and off-balance sheet exposures. Weightings prescribed by OSFI are applied to notional asset and liability balances to determine ASF, RSF and the NSFR. Canadian D-SIBs, including BMO, are required to maintain a minimum NSFR of 100%. BMO’s NSFR was 116% as at January 31, 2026, equivalent to a surplus of $105.0 billion above the regulatory minimum. The NSFR decreased from 117% in the prior quarter, due to both an increase in required stable funding and a decrease in available stable funding.
| TABLE 35 | |||||||||||||||||
| For the quarter ended January 31, 2026 | |||||||||||||||||
Unweighted value by residual maturity | Weighted value (2) | ||||||||||||||||
| (Canadian $ in billions, except as noted) | No maturity (1) | Less than 6 months | 6 to 12 months | ||||||||||||||
| Over 1 year | |||||||||||||||||
| Available Stable Funding (ASF) Item | |||||||||||||||||
| Capital: | 88.3 | – | – | 8.3 | 96.6 | ||||||||||||
| Regulatory capital | 88.3 | – | – | 8.3 | 96.6 | ||||||||||||
| Other capital instruments | – | – | – | – | – | ||||||||||||
| Retail deposits and deposits from small business customers: | 244.8 | 54.3 | 28.8 | 60.9 | 361.4 | ||||||||||||
| Stable deposits | 120.1 | 24.8 | 12.0 | 12.0 | 161.0 | ||||||||||||
| Less stable deposits | 124.7 | 29.5 | 16.8 | 48.9 | 200.4 | ||||||||||||
| Wholesale funding: | 338.3 | 284.0 | 76.2 | 88.9 | 281.0 | ||||||||||||
| Operational deposits | 160.9 | 0.1 | – | 0.5 | 81.0 | ||||||||||||
| Other wholesale funding | 177.4 | 283.9 | 76.2 | 88.4 | 200.0 | ||||||||||||
| Liabilities with matching interdependent assets | – | 0.6 | 1.0 | 14.9 | – | ||||||||||||
| Other liabilities: | 8.1 | * | * | 97.4 | 40.9 | ||||||||||||
| NSFR derivative liabilities | * | * | * | 4.8 | – | ||||||||||||
| All other liabilities and equity not included in the above categories | 8.1 | 50.9 | 1.7 | 40.0 | 40.9 | ||||||||||||
| Total ASF | * | * | * | * | 779.9 | ||||||||||||
| Required Stable Funding (RSF) Item | |||||||||||||||||
| Total NSFR high-quality liquid assets (HQLA) | * | * | * | * | 20.9 | ||||||||||||
| Deposits held at other financial institutions for operational purposes | – | – | – | – | – | ||||||||||||
| Performing loans and securities: | 203.0 | 218.5 | 65.8 | 339.9 | 516.4 | ||||||||||||
| Performing loans to financial institutions secured by Level 1 HQLA | – | 99.6 | 0.8 | – | 2.3 | ||||||||||||
Performing loans to financial institutions secured by non-Level 1 HQLA and unsecured | |||||||||||||||||
| performing loans to financial institutions | 26.1 | 53.4 | 6.4 | 16.5 | 51.7 | ||||||||||||
Performing loans to non-financial corporate clients, loans to retail and small business | |||||||||||||||||
| customers, and loans to sovereigns, central banks and public sector entities, of which: | 132.3 | 35.6 | 34.1 | 166.9 | 289.1 | ||||||||||||
With a risk weight of less than or equal to 35% under the Basel II standardized | |||||||||||||||||
| approach for credit risk | – | – | – | – | – | ||||||||||||
| Performing residential mortgages, of which: | 13.9 | 25.5 | 24.1 | 131.3 | 123.4 | ||||||||||||
With a risk weight of less than or equal to 35% under the Basel II standardized | |||||||||||||||||
| approach for credit risk | 13.9 | 25.5 | 24.1 | 131.3 | 123.4 | ||||||||||||
Securities that are not in default and do not qualify as HQLA, | |||||||||||||||||
| including exchange-traded equities | 30.7 | 4.4 | 0.4 | 25.2 | 49.9 | ||||||||||||
| Assets with matching interdependent liabilities | – | 0.6 | 1.0 | 14.9 | – | ||||||||||||
| Other assets: | 43.7 | * | * | 138.7 | 115.8 | ||||||||||||
| Physical traded commodities, including gold | 5.4 | * | * | * | 4.6 | ||||||||||||
Assets posted as initial margin for derivative contracts and contributions to | |||||||||||||||||
| default funds of central clearing parties | * | * | * | 22.6 | 19.2 | ||||||||||||
| NSFR derivative assets | * | * | * | 4.3 | – | ||||||||||||
| NSFR derivative liabilities before deduction of variation margin posted | * | * | * | 15.3 | 0.8 | ||||||||||||
| All other assets not included in the above categories | 38.3 | 51.9 | 0.5 | 44.1 | 91.2 | ||||||||||||
| Off-balance sheet items | * | * | * | 631.2 | 21.8 | ||||||||||||
| Total RSF | * | * | * | * | 674.9 | ||||||||||||
Net Stable Funding Ratio (%) | * | * | * | * | 116 | ||||||||||||
| Weighted Value (2) | |||||||||||||||||
| For the quarter ended October 31, 2025 | |||||||||||||||||
| Total ASF | 783.3 | ||||||||||||||||
| Total RSF | 668.8 | ||||||||||||||||
Net Stable Funding Ratio (%) | 117 | ||||||||||||||||
* Disclosure is not required under the NSFR disclosure standard.
(1)Items in the no maturity column do not have a stated maturity. These may include, but are not limited to, capital with perpetual maturity, non-maturity deposits, short positions, open maturity positions,
non-HQLA equities, physical traded commodities and demand loans.
non-HQLA equities, physical traded commodities and demand loans.
(2)Weighted values are calculated after the application of the weights prescribed under the OSFI LAR Guideline for ASF and RSF.
34 BMO Financial Group First Quarter Report 2026
Contractual Maturities of Assets and Liabilities and Off-Balance Sheet Commitments
The tables below show the remaining contractual maturities of on-balance sheet assets and liabilities and off-balance sheet commitments. The contractual maturity of financial assets and liabilities is an input to, but is not necessarily consistent with, the expected maturity of assets and liabilities used in the management of liquidity and funding risk. We forecast asset and liability cash flows, under both normal market conditions and a number of stress scenarios, to manage liquidity and funding risk. Stress scenarios incorporate assumptions for loan repayments, deposit withdrawals, credit commitment and liquidity facility drawdowns by counterparty and product type. Stress scenarios also consider the time horizon over which liquid assets can be monetized and the related discounts (“haircuts”) and potential collateral requirements that may arise from both market volatility and credit rating downgrades, among other assumptions.
| TABLE 36 | ||||||||||||||||||||||||||||||||
| January 31, 2026 | ||||||||||||||||||||||||||||||||
| 0 to 1 | 1 to 3 | 3 to 6 | 6 to 9 | 9 to 12 | 1 to 2 | 2 to 5 | Over 5 | No specific | ||||||||||||||||||||||||
| (Canadian $ in millions) | month | months | months | months | months | years | years | years | maturity | Total | ||||||||||||||||||||||
| Assets | ||||||||||||||||||||||||||||||||
| Cash and cash equivalents | 65,103 | – | – | – | – | – | – | – | 2,275 | 67,378 | ||||||||||||||||||||||
| Interest bearing deposits with banks | 2,591 | 205 | 67 | – | – | 7 | – | – | – | 2,870 | ||||||||||||||||||||||
| Securities | 5,855 | 4,263 | 8,791 | 9,299 | 19,137 | 27,041 | 85,784 | 194,703 | 66,458 | 421,331 | ||||||||||||||||||||||
Securities borrowed or purchased under | ||||||||||||||||||||||||||||||||
resale agreements | 92,377 | 9,954 | 6,584 | 727 | 83 | – | – | – | – | 109,725 | ||||||||||||||||||||||
Loans (1) | ||||||||||||||||||||||||||||||||
| Residential mortgages | 2,424 | 6,750 | 13,332 | 12,678 | 8,319 | 45,280 | 71,141 | 33,818 | 347 | 194,089 | ||||||||||||||||||||||
| Consumer instalment and other personal | 667 | 1,901 | 3,895 | 3,231 | 2,751 | 11,685 | 21,964 | 18,434 | 27,313 | 91,841 | ||||||||||||||||||||||
| Credit cards | – | – | – | – | – | – | – | – | 12,120 | 12,120 | ||||||||||||||||||||||
| Business and government | 11,786 | 15,145 | 23,517 | 18,476 | 16,884 | 59,116 | 96,718 | 35,968 | 97,642 | 375,252 | ||||||||||||||||||||||
| Allowance for credit losses | – | – | – | – | – | – | – | – | (5,067) | (5,067) | ||||||||||||||||||||||
| Total loans, net of allowance | 14,877 | 23,796 | 40,744 | 34,385 | 27,954 | 116,081 | 189,823 | 88,220 | 132,355 | 668,235 | ||||||||||||||||||||||
Other assets | ||||||||||||||||||||||||||||||||
| Derivative instruments | 7,880 | 12,066 | 6,887 | 5,696 | 7,008 | 8,655 | 11,432 | 9,774 | – | 69,398 | ||||||||||||||||||||||
Customers’ liability under acceptances | 1,081 | – | – | – | – | – | – | – | – | 1,081 | ||||||||||||||||||||||
| Receivable from brokers, dealers and clients | 45,203 | – | – | – | – | – | – | – | – | 45,203 | ||||||||||||||||||||||
| Other | 4,171 | 822 | 592 | 16 | 7 | 14 | 12 | 7,823 | 59,454 | 72,911 | ||||||||||||||||||||||
Total other assets | 58,335 | 12,888 | 7,479 | 5,712 | 7,015 | 8,669 | 11,444 | 17,597 | 59,454 | 188,593 | ||||||||||||||||||||||
Total assets | 239,138 | 51,106 | 63,665 | 50,123 | 54,189 | 151,798 | 287,051 | 300,520 | 260,542 | 1,458,132 | ||||||||||||||||||||||
| TABLE 37 | ||||||||||||||||||||||||||||||||
| January 31, 2026 | ||||||||||||||||||||||||||||||||
| 0 to 1 | 1 to 3 | 3 to 6 | 6 to 9 | 9 to 12 | 1 to 2 | 2 to 5 | Over 5 | No specific | ||||||||||||||||||||||||
| (Canadian $ in millions) | month | months | months | months | months | years | years | years | maturity | Total | ||||||||||||||||||||||
| Liabilities and Equity | ||||||||||||||||||||||||||||||||
Deposits (2) (3) | 33,543 | 50,392 | 73,124 | 54,115 | 51,066 | 51,619 | 66,522 | 30,656 | 543,752 | 954,789 | ||||||||||||||||||||||
Other liabilities | ||||||||||||||||||||||||||||||||
| Derivative instruments | 8,058 | 9,452 | 6,908 | 5,236 | 6,337 | 7,948 | 11,922 | 9,531 | – | 65,392 | ||||||||||||||||||||||
| Acceptances | 1,081 | – | – | – | – | – | – | – | – | 1,081 | ||||||||||||||||||||||
Securities sold but not yet purchased (4) | 47,409 | – | – | – | – | – | – | – | – | 47,409 | ||||||||||||||||||||||
Securities lent or sold under repurchase | ||||||||||||||||||||||||||||||||
agreements (4) | 111,927 | 16,412 | 720 | – | – | 3,221 | – | – | – | 132,280 | ||||||||||||||||||||||
| Securitization and structured entities’ liabilities | 44 | 199 | 480 | 1,387 | 884 | 3,174 | 9,590 | 41,051 | – | 56,809 | ||||||||||||||||||||||
| Insurance-related liabilities | 81 | 76 | 28 | 22 | 32 | 93 | 222 | 744 | 19,906 | 21,204 | ||||||||||||||||||||||
| Payable to brokers, dealers and clients | 43,335 | – | – | – | – | – | – | – | – | 43,335 | ||||||||||||||||||||||
| Other | 11,032 | 5,413 | 316 | 114 | 2,914 | 1,043 | 2,649 | 2,573 | 15,616 | 41,670 | ||||||||||||||||||||||
Total other liabilities | 222,967 | 31,552 | 8,452 | 6,759 | 10,167 | 15,479 | 24,383 | 53,899 | 35,522 | 409,180 | ||||||||||||||||||||||
Subordinated debt | – | – | – | – | – | – | 25 | 8,387 | – | 8,412 | ||||||||||||||||||||||
Total equity | – | – | – | – | – | – | – | – | 85,751 | 85,751 | ||||||||||||||||||||||
Total liabilities and equity | 256,510 | 81,944 | 81,576 | 60,874 | 61,233 | 67,098 | 90,930 | 92,942 | 665,025 | 1,458,132 | ||||||||||||||||||||||
(1)Loans receivable on demand have been included under no specific maturity.
(2)Deposits payable on demand and payable after notice have been included under no specific maturity.
(3)Deposits totalling $27,258 million as at January 31, 2026, have a fixed maturity date; however, they can be redeemed early (either fully or partially) by customers without penalty. These are classified as payable on a fixed date due to their stated contractual maturity date.
(4)These are presented based on their earliest maturity date.
| TABLE 38 | ||||||||||||||||||||||||||||||||
| January 31, 2026 | ||||||||||||||||||||||||||||||||
| 0 to 1 | 1 to 3 | 3 to 6 | 6 to 9 | 9 to 12 | 1 to 2 | 2 to 5 | Over 5 | No specific | ||||||||||||||||||||||||
| (Canadian $ in millions) | month | months | months | months | months | years | years | years | maturity | Total | ||||||||||||||||||||||
| Off-Balance Sheet Commitments | ||||||||||||||||||||||||||||||||
Commitments to extend credit (1) | 2,444 | 6,545 | 13,711 | 14,594 | 14,890 | 54,914 | 130,844 | 6,600 | – | 244,542 | ||||||||||||||||||||||
Letters of credit (2) | 2,414 | 4,369 | 6,337 | 5,809 | 6,933 | 2,253 | 3,707 | 71 | – | 31,893 | ||||||||||||||||||||||
| Backstop liquidity facilities | – | 416 | 2,432 | 2,565 | 1,716 | 10,523 | 1,100 | – | – | 18,752 | ||||||||||||||||||||||
Other commitments (3) | 76 | 93 | 156 | 149 | 211 | 615 | 1,294 | 298 | – | 2,892 | ||||||||||||||||||||||
(1)Commitments to extend credit exclude personal lines of credit and credit cards that are unconditionally cancellable at BMO’s discretion. A large majority of these commitments expire without being drawn upon. As a result, the total contractual amounts may not be representative of the funding likely to be required for these commitments.
(2)Letters of credit can be drawn down at any time. These are classified based on their stated contractual maturity.
(3)Other commitments comprise purchase obligations and lease commitments for leases signed but not yet commenced.
BMO Financial Group First Quarter Report 2026 35
| TABLE 39 | ||||||||||||||||||||||||||||||||
| October 31, 2025 | ||||||||||||||||||||||||||||||||
| 0 to 1 | 1 to 3 | 3 to 6 | 6 to 9 | 9 to 12 | 1 to 2 | 2 to 5 | Over 5 | No specific | ||||||||||||||||||||||||
| (Canadian $ in millions) | month | months | months | months | months | years | years | years | maturity | Total | ||||||||||||||||||||||
| Assets | ||||||||||||||||||||||||||||||||
| Cash and cash equivalents | 65,232 | – | – | – | – | – | – | – | 2,252 | 67,484 | ||||||||||||||||||||||
| Interest bearing deposits with banks | 2,461 | 328 | 47 | 2 | – | – | – | – | – | 2,838 | ||||||||||||||||||||||
| Securities | 4,613 | 5,026 | 7,358 | 6,635 | 11,121 | 43,792 | 84,041 | 190,809 | 70,081 | 423,476 | ||||||||||||||||||||||
Securities borrowed or purchased under | ||||||||||||||||||||||||||||||||
resale agreements | 105,268 | 15,571 | 6,399 | 1,880 | 303 | – | – | – | – | 129,421 | ||||||||||||||||||||||
Loans (1) | ||||||||||||||||||||||||||||||||
| Residential mortgages | 2,596 | 6,037 | 10,583 | 14,475 | 13,025 | 46,764 | 66,853 | 35,365 | 335 | 196,033 | ||||||||||||||||||||||
| Consumer instalment and other personal | 691 | 1,584 | 3,079 | 4,292 | 3,376 | 12,991 | 20,184 | 19,079 | 27,465 | 92,741 | ||||||||||||||||||||||
| Credit cards | – | – | – | – | – | – | – | – | 12,649 | 12,649 | ||||||||||||||||||||||
| Business and government | 11,283 | 14,430 | 18,395 | 23,398 | 20,399 | 61,935 | 98,451 | 36,768 | 95,729 | 380,788 | ||||||||||||||||||||||
| Allowance for credit losses | – | – | – | – | – | – | – | – | (5,050) | (5,050) | ||||||||||||||||||||||
| Total loans, net of allowance | 14,570 | 22,051 | 32,057 | 42,165 | 36,800 | 121,690 | 185,488 | 91,212 | 131,128 | 677,161 | ||||||||||||||||||||||
Other assets | ||||||||||||||||||||||||||||||||
| Derivative instruments | 6,336 | 10,429 | 5,146 | 4,122 | 3,997 | 7,688 | 10,420 | 9,013 | – | 57,151 | ||||||||||||||||||||||
Customers’ liability under acceptances | 711 | – | – | – | – | – | – | – | – | 711 | ||||||||||||||||||||||
| Receivable from brokers, dealers and clients | 43,167 | – | – | – | – | – | – | – | – | 43,167 | ||||||||||||||||||||||
| Other | 3,752 | 1,155 | 455 | 26 | 8 | 15 | 14 | 7,990 | 61,978 | 75,393 | ||||||||||||||||||||||
Total other assets | 53,966 | 11,584 | 5,601 | 4,148 | 4,005 | 7,703 | 10,434 | 17,003 | 61,978 | 176,422 | ||||||||||||||||||||||
Total assets | 246,110 | 54,560 | 51,462 | 54,830 | 52,229 | 173,185 | 279,963 | 299,024 | 265,439 | 1,476,802 | ||||||||||||||||||||||
| TABLE 40 | ||||||||||||||||||||||||||||||||
| October 31, 2025 | ||||||||||||||||||||||||||||||||
| 0 to 1 | 1 to 3 | 3 to 6 | 6 to 9 | 9 to 12 | 1 to 2 | 2 to 5 | Over 5 | No specific | ||||||||||||||||||||||||
| (Canadian $ in millions) | month | months | months | months | months | years | years | years | maturity | Total | ||||||||||||||||||||||
| Liabilities and Equity | ||||||||||||||||||||||||||||||||
Deposits (2) (3) | 37,399 | 65,186 | 66,458 | 58,424 | 49,572 | 55,403 | 68,983 | 29,023 | 545,754 | 976,202 | ||||||||||||||||||||||
Other liabilities | ||||||||||||||||||||||||||||||||
| Derivative instruments | 5,789 | 9,844 | 6,317 | 4,517 | 4,264 | 7,180 | 10,924 | 9,894 | – | 58,729 | ||||||||||||||||||||||
| Acceptances | 711 | – | – | – | – | – | – | – | – | 711 | ||||||||||||||||||||||
Securities sold but not yet purchased (4) | 54,876 | – | – | – | – | – | – | – | – | 54,876 | ||||||||||||||||||||||
Securities lent or sold under repurchase | ||||||||||||||||||||||||||||||||
agreements (4) | 113,549 | 17,158 | 762 | – | – | 3,498 | – | – | – | 134,967 | ||||||||||||||||||||||
| Securitization and structured entities’ liabilities | 1 | 2,375 | 200 | 481 | 1,377 | 2,980 | 10,287 | 33,861 | – | 51,562 | ||||||||||||||||||||||
| Insurance-related liabilities | 90 | 82 | 21 | 23 | 33 | 91 | 220 | 745 | 19,131 | 20,436 | ||||||||||||||||||||||
| Payable to brokers, dealers and clients | 45,170 | – | – | – | – | – | – | – | – | 45,170 | ||||||||||||||||||||||
| Other | 11,733 | 5,244 | 222 | 339 | 120 | 2,567 | 2,784 | 2,659 | 11,881 | 37,549 | ||||||||||||||||||||||
Total other liabilities | 231,919 | 34,703 | 7,522 | 5,360 | 5,794 | 16,316 | 24,215 | 47,159 | 31,012 | 404,000 | ||||||||||||||||||||||
Subordinated debt | – | 25 | – | – | – | – | 25 | 8,450 | – | 8,500 | ||||||||||||||||||||||
Total equity | – | – | – | – | – | – | – | – | 88,100 | 88,100 | ||||||||||||||||||||||
Total liabilities and equity | 269,318 | 99,914 | 73,980 | 63,784 | 55,366 | 71,719 | 93,223 | 84,632 | 664,866 | 1,476,802 | ||||||||||||||||||||||
(1)Loans receivable on demand have been included under no specific maturity.
(2)Deposits payable on demand and payable after notice have been included under no specific maturity.
(3)Deposits totalling $27,819 million as at October 31, 2025, have a fixed maturity date; however, they can be redeemed early (either fully or partially) by customers without penalty. These are classified as payable on a fixed date due to their stated contractual maturity date.
(4)These are presented based on their earliest maturity date.
| TABLE 41 | ||||||||||||||||||||||||||||||||
| October 31, 2025 | ||||||||||||||||||||||||||||||||
| 0 to 1 | 1 to 3 | 3 to 6 | 6 to 9 | 9 to 12 | 1 to 2 | 2 to 5 | Over 5 | No specific | ||||||||||||||||||||||||
| (Canadian $ in millions) | month | months | months | months | months | years | years | years | maturity | Total | ||||||||||||||||||||||
| Off-Balance Sheet Commitments | ||||||||||||||||||||||||||||||||
Commitments to extend credit (1) | 2,889 | 4,405 | 10,029 | 15,588 | 22,066 | 55,191 | 130,267 | 6,417 | – | 246,852 | ||||||||||||||||||||||
Letters of credit (2) | 2,372 | 5,167 | 6,192 | 5,787 | 5,982 | 2,530 | 3,807 | 76 | – | 31,913 | ||||||||||||||||||||||
| Backstop liquidity facilities | 429 | 72 | – | 2,304 | 2,845 | 4,543 | 7,804 | 361 | – | 18,358 | ||||||||||||||||||||||
Other commitments (3) | 59 | 92 | 154 | 144 | 136 | 444 | 805 | 256 | – | 2,090 | ||||||||||||||||||||||
(1)Commitments to extend credit exclude personal lines of credit and credit cards that are unconditionally cancellable at BMO’s discretion. A large majority of these commitments expire without being drawn upon. As a result, the total contractual amounts may not be representative of the funding likely to be required for these commitments.
(2)Letters of credit can be drawn down at any time. These are classified based on their stated contractual maturity.
(3)Other commitments comprise purchase obligations and lease commitments for leases signed but not yet commenced.
Caution
This Liquidity and Funding Risk section contains forward‑looking statements. Please refer to the Caution Regarding Forward‑Looking Statements.
36 BMO Financial Group First Quarter Report 2026
Glossary of Financial Terms
Adjusted Earnings and Measures are non-GAAP and exclude certain specified items from revenue, non-interest expense, provision for credit losses and income taxes that may not reflect ongoing business performance. Management considers both reported and adjusted results to be useful in assessing underlying ongoing performance, as set out in the Non-GAAP and Other Financial Measures section.
Allowance for Credit Losses represents an amount deemed appropriate by management to absorb credit-related losses on loans and acceptances and other credit instruments, in accordance with applicable accounting standards.
Allowance on Impaired Loans is maintained to reduce the carrying value of individually identified impaired loans to the expected recoverable amount.
Allowance on Performing Loans is maintained to cover impairment in the existing portfolio for loans that have not yet been individually identified as impaired.
Allowance on Performing Loans Ratio is calculated as the allowance for credit losses on performing loans as a percentage of gross performing loans and acceptances.
Allowance for Credit Losses Ratio is calculated as the allowance for credit losses on impaired loans as a percentage of gross impaired loans and acceptances.
Assets under Administration (AUA) refers to the assets administered by the bank, including assets under custody, that are beneficially owned by clients and therefore not reported on the bank’s consolidated balance sheet. BMO provides administrative services for these assets, including safekeeping, recordkeeping, income collection and distribution, and reporting.
Assets under Management (AUM) refers to the total market value of assets beneficially owned by clients and managed by the bank. Services provided in respect of AUM include the provision of investment advice and discretionary portfolio management. AUM is not reported on the bank’s consolidated balance sheet.
Asset-Backed Commercial Paper (ABCP) is backed by assets such as trade receivables, and is generally used for short-term financing needs.
Average Earning Assets represents the daily average balance of deposits at central banks, deposits with other banks, securities borrowed or purchased under resale agreements, securities and loans over a period.
Bankers’ Acceptances (BAs) are bills of exchange or negotiable instruments drawn by a borrower for payment at maturity and accepted by a bank. BAs constitute a guarantee of payment by the issuer’s bank for a fee and can be traded in the money market.
Basis Point is one one-hundredth of a percentage point.
Book Value per Share represents common shareholders’ equity divided by the number of common shares at the end of a period.
Collateral is assets pledged as security to secure loans or other obligations.
Collateralized Mortgage Obligations (CMOs) are debt securities with multiple tranches, issued by structured entities and collateralized by a pool of mortgages. Each tranche carries different terms, interest rates and risks.
Common Equity Tier 1 (CET1) Capital comprises common shareholders’ equity, including applicable contractual service margin, less regulatory deductions for goodwill, intangible assets, pension assets, certain deferred tax assets and other items, which may include a portion of expected credit loss provisions or a shortfall in allowances or other specified items.
Common Equity Tier 1 (CET1) Ratio is calculated as CET1 Capital divided by risk-weighted assets. The CET1 Ratio is calculated in accordance with OSFI’s Capital Adequacy Requirements (CAR) Guideline.
Common Shareholders’ Equity is the most permanent form of capital. For regulatory capital purposes, common shareholders’ equity comprises common shareholders’ equity, net of capital deductions.
Contractual Service Margin (CSM) represents the unearned profit of a group of insurance contracts that we expect to recognize in the income statement as services are provided.
Credit Valuation Adjustment (CVA) represents fair value adjustments to capture counterparty credit risk in our derivative valuations.
Derivatives are contracts, requiring no or little initial investment, with a value that is derived from movements in underlying interest or foreign exchange rates, equity or commodity prices, or other indices. Derivatives are used to transfer, modify or reduce current or expected risks from changes in rates and prices.
Dividend Payout Ratio represents common share dividends as a percentage of net income available to common shareholders. It is calculated by dividing dividends per share by basic earnings per share.
Dividend Yield is calculated as dividends per common share divided by the closing share price.
Earnings per Share (EPS) is calculated by dividing net income available to common shareholders, after deducting preferred share dividends and distributions on other equity instruments, by the average number of common shares outstanding. Diluted EPS, which is BMO’s basis for measuring performance, adjusts for possible conversions of financial instruments into common shares if those conversions would reduce EPS.
Earnings Sensitivity is a measure of the impact of potential changes in interest rates on the projected 12-month pre-tax net income from a portfolio of assets, liabilities and off-balance sheet positions in response to prescribed parallel interest rate movements, with interest rates floored at zero.
Economic Capital is an expression of the enterprise’s capital demand requirement relative to its view of the economic risks in its underlying business activities. It represents management’s estimate of the likely magnitude of economic losses that could occur should severely adverse situations arise. Economic capital is calculated for various types of risk, including credit, market (trading and non-trading), operational non-financial, business and insurance, based on a one-year time horizon using a defined confidence level.
Economic Value Sensitivity is a measure of the impact of potential changes in interest rates on the market value of a portfolio of assets, liabilities and off-balance sheet positions in response to prescribed parallel interest rate movements, with interest rates floored at zero.
Effective Tax Rate is a percentage calculated as provision for income taxes divided by income before provision for income taxes.
Efficiency Ratio (or Expense-to-Revenue Ratio) is a measure of productivity. It is a percentage calculated as non-interest expense divided by total revenue (on a taxable equivalent basis in the operating segments).
Fair Value is the amount of consideration that would be agreed upon in an arm’s-length transaction between knowledgeable, willing parties, who are under no compulsion to act, in an orderly market transaction.
BMO Financial Group First Quarter Report 2026 37
Forwards and Futures are contractual agreements to either buy or sell a specified amount of a currency, commodity, interest-rate-sensitive financial instrument or security at a specified price and date in the future. Forwards are customized contracts transacted in the over-the-counter market. Futures are transacted in standardized amounts on regulated exchanges and are subject to daily cash margin requirements.
Gross Impaired Loans and Acceptances (GIL) is calculated as the credit impaired balance of loans and customers’ liability under acceptances.
Gross Impaired Loans and Acceptances (GIL) Ratio is calculated as gross impaired loans and acceptances as a percentage of gross loans and acceptances.
Guarantees and Standby Letters of Credit represent our obligation to make payments to third parties on behalf of a customer if the customer is unable to make the required payments or meet other contractual requirements.
Hedging is a risk management technique used to neutralize, manage or offset interest rate, foreign currency, equity, commodity or credit risk exposures arising from normal banking activities.
High-Quality Liquid Assets (HQLA) are cash or assets that can be converted into cash with little or no loss in value to meet short-term liquidity needs.
Impaired Loans are loans for which there is no longer a reasonable assurance of the timely collection of principal or interest.
Insurance Investment Results represent net returns on insurance-related assets and the impact of the change in discount rates and financial assumptions on insurance contract liabilities.
Insurance Service Results represent insurance revenue, insurance service expenses and reinsurance results.
Leverage Exposures (LE) consist of on-balance sheet items and specified off-balance sheet items, net of specified adjustments.
Leverage Ratio is a Basel III regulatory measure calculated as Tier 1 Capital divided by LE, in accordance with OSFI’s Capital Adequacy Requirements (CAR) Guideline.
Liquidity and Funding Risk is the potential for financial loss if the bank is unable to meet its financial commitments in a timely manner at reasonable prices as they come due. Financial commitments include liabilities to depositors and suppliers, as well as lending, investment and pledging commitments.
Liquidity Coverage Ratio (LCR) is a Basel III regulatory metric calculated as the ratio of high-quality liquid assets to total net stressed cash outflows over a thirty-day period under a stress scenario, in accordance with guidelines issued by OSFI.
Market Risk is the potential for financial loss as a result of the impact to capital
and earnings from adverse changes in market variables that may affect the bank’s trading, underwriting and banking book positions, such as interest rates, foreign exchange rates, credit spreads, equity and commodity prices and their implied volatilities.
and earnings from adverse changes in market variables that may affect the bank’s trading, underwriting and banking book positions, such as interest rates, foreign exchange rates, credit spreads, equity and commodity prices and their implied volatilities.
Mark-to-Market represents the valuation of financial instruments at fair value as of the balance sheet date.
Master Netting Agreements are agreements between two parties designed to reduce the credit risk of multiple derivative transactions through the provision of a legal right to offset exposure in the event of default.
Net Interest Income comprises earnings on assets, such as loans and securities, including interest and certain dividend income, less interest expense paid on liabilities, such as deposits. Net interest income, excluding Global Markets, is presented on a basis that excludes Global Markets net interest income.
Net Interest Margin is the ratio of net interest income to average earning assets, expressed as a percentage or in basis points.
Net Interest Margin, excluding Global Markets and Insurance is the ratio of net interest income, excluding net interest income from our Global Markets business in Capital Markets to average earning assets, excluding Global Markets and Insurance average earning assets, expressed as a percentage or in basis points.
Net Stable Funding Ratio (NSFR) is a regulatory liquidity measure that assesses
the stability of a bank’s funding profile in relation to the liquidity value of its assets, calculated in accordance with OSFI’s Liquidity Adequacy Requirements (LAR) Guideline.
the stability of a bank’s funding profile in relation to the liquidity value of its assets, calculated in accordance with OSFI’s Liquidity Adequacy Requirements (LAR) Guideline.
Notional Amount refers to the principal amount used to calculate interest and other payments under derivative contracts. The principal amount does not change hands under the terms of a derivative contract, except in the case of cross-currency swaps.
Off-Balance Sheet Financial Instruments comprise a variety of financial arrangements offered to clients, including credit derivatives, written put options, backstop liquidity facilities, standby letters of credit, performance guarantees, credit enhancements, commitments to extend credit, securities lending, documentary and commercial letters of credit, and other indemnifications.
Office of the Superintendent of Financial Institutions (OSFI) is the government agency responsible for regulating banks, insurance companies, trust companies, loan companies and pension plans in Canada.
Operating Leverage is the difference between the growth rates of revenue and non-interest expense.
Options are contractual agreements that convey to the purchaser the right but not the obligation to either buy or sell a specified amount of a currency, commodity, interest-rate-sensitive financial instrument or security at a fixed future date or at any time within a fixed future period.
Pre-Provision, Pre-Tax Earnings (PPPT) is a non-GAAP measure, calculated as income before provision for income taxes and provision for (recovery of) credit losses. We use PPPT on both a reported and an adjusted basis to assess our ability to generate sustained earnings growth excluding credit losses, which are impacted by the cyclical nature of a credit cycle.
Provision for Credit Losses (PCL) is a charge to income that represents an amount deemed adequate by management to provide for impairment in a portfolio of loans and acceptances and other credit instruments, given the composition of the portfolio, the probability of default, the economic outlook and the allowance for credit losses already established. PCL can comprise both a provision for credit losses on impaired loans and a provision for credit losses on performing loans.
Provision for Credit Losses (PCL) Ratio is calculated as the annualized total provision for credit losses as a percentage of average net loans and acceptances.
Provision for Credit Losses (PCL) Impaired Loans Ratio is calculated as the annualized total provision for credit losses on impaired loans as a percentage of average net loans and acceptances.
Provision for Credit Losses (PCL) Performing Loans Ratio is calculated as the annualized provision for credit losses on performing loans as a percentage of average net loans and acceptances.
Return on Assets (ROA) is calculated as net income, as a percentage of average assets.
Return on Equity or Return on Common Shareholders’ Equity (ROE) is calculated as net income, less preferred dividends and distributions on other equity instruments, as a percentage of average common shareholders’ equity. Common shareholders’ equity comprises common share capital, contributed surplus, accumulated other comprehensive income (loss) and retained earnings.
38 BMO Financial Group First Quarter Report 2026
Return on Tangible Common Equity (ROTCE) is calculated as net income available to common shareholders, adjusted for the amortization of acquisition-related intangible assets and any impairments, as a percentage of average tangible common equity.
Risk-Weighted Assets (RWA) are on- and off-balance sheet exposures adjusted by a regulatory risk-weighted factor to a comparable risk level, in accordance with guidelines issued by OSFI.
Securities Borrowed or Purchased under Resale Agreements are low-cost, low-risk instruments, often supported by the pledge of cash collateral, which arise from transactions that involve the borrowing or purchasing of securities.
Securities Lent or Sold under Repurchase Agreements are low-cost, low-risk liabilities, often supported by cash collateral, which arise from transactions that involve the lending or selling of securities.
Securitization is the practice of selling pools of contractual debts, such as residential mortgages and credit card debt obligations, to third parties or trusts, which then typically issue a series of asset-backed securities to investors to fund the purchase of the contractual debts.
Structured Entities (SEs) include entities for which voting or similar rights are not the primary factor in determining control of the entity. BMO is required to consolidate a SE if it controls the entity by having power over the entity, exposure to variable returns as a result of its involvement and the ability to exercise power to affect the amount of those returns.
Structural (Non-Trading) Market Risk comprises interest rate risk arising from banking activities (loans and deposits) and foreign exchange risk arising from foreign currency operations and exposures.
Swaps are contractual agreements between two parties to exchange a series of cash flows based on notional amounts over a specified period.
Tangible Common Equity is calculated as common shareholders’ equity, less goodwill and acquisition-related intangible assets, net of related deferred tax liabilities.
Taxable Equivalent Basis (teb): Operating segment revenue is presented on a taxable equivalent basis (teb). Net interest income, total revenue and provision for income taxes in Capital Markets and U.S. Banking are increased on tax-exempt securities to an equivalent pre-tax basis to facilitate comparisons of income between taxable and tax-exempt sources, and are reflected in the key metrics. The offset to operating segment teb adjustments is reflected in Corporate Services net interest income, revenue and provision for (recovery of) income taxes.
Tier 1 Capital comprises CET1 Capital and Additional Tier 1 (AT1) Capital. AT1 Capital consists of preferred shares, limited recourse capital notes, less regulatory deductions.
Tier 2 Capital comprises subordinated debentures and may include certain credit loss provisions, less regulatory deductions.
Total Capital comprises Tier 1 and Tier 2 Capital.
Total Loss Absorbing Capacity (TLAC) comprises Total Capital and senior unsecured debt subject to the Canadian Bail-In Regime, less regulatory deductions, in accordance with guidelines issued by OSFI.
Total Loss Absorbing Capacity (TLAC) Ratio is calculated as TLAC divided by risk-weighted assets.
Total Loss Absorbing Capacity (TLAC) Leverage Ratio is calculated as TLAC divided by leverage exposures.
Total Shareholder Return (TSR) represents the average annual total return earned on an investment in BMO common shares made at the beginning of the respective period. It includes the change in share price and assumes dividends received were reinvested in additional common shares.
Trading-Related Revenue comprises net interest income and non-interest revenue earned from on-balance sheet and off-balance sheet positions undertaken for trading purposes. The management of these positions typically includes marking them to market on a daily basis.
Value-at-Risk (VaR) measures the maximum loss likely to be experienced in the trading and underwriting portfolios, measured at a 99% confidence level over a one-day holding period. VaR is calculated for specific classes of risk in BMO’s trading and underwriting activities related to interest rates, foreign exchange rates, credit spreads, equity and commodity prices and their implied volatilities.
BMO Financial Group First Quarter Report 2026 39
Investor and Media Information
Investor Presentation Materials
Interested parties are invited to visit BMO’s website at www.bmo.com/investorrelations to review the 2025 Annual MD&A and audited annual consolidated financial statements, quarterly presentation materials and supplementary financial and regulatory information package.
Quarterly Conference Call and Webcast Presentations
Interested parties are also invited to listen to our quarterly conference call on Wednesday, February 25, 2026, at 8:00 a.m. (ET). The call may be accessed by telephone at 647-557-5533 (from within Toronto) or 1-888-440-4121 (toll-free outside Toronto), entering Passcode: 89709#. A replay of the conference call can be accessed until March 25, 2026, by calling 647-362-9199 (from within Toronto) or 1-800-770-2030 (toll-free outside Toronto) and entering Passcode: 89709#.
A live webcast of the call can be accessed on our website at www.bmo.com/investorrelations. A replay can also be accessed on the website.
Upcoming Events
•BMO Investor Day March 26, 2026
•Annual Meeting of Shareholders April 15, 2026
•Q2-2026 Earnings Release May 27, 2026
•Q3-2026 Earnings Release August 25, 2026
•Q4-2026 Earnings Release December 2, 2026
Media Relations Contact
John Fenton, Head, Public Relations, john.fenton@bmo.com, 416-867-3996
Investor Relations Contacts
Christine Viau, Head, Investor Relations, christine.viau@bmo.com, 416-867-6956
Bill Anderson, Managing Director, Investor Relations, bill2.anderson@bmo.com, 416-867-7834
Shareholder Dividend Reinvestment and Share Purchase Plan (DRIP) Common shareholders may elect to have their cash dividends reinvested in common shares of the bank, in accordance with the bank's DRIP. More information about the Plan and how to enrol can be found at www.bmo.com/investorrelations. For dividend information, change in shareholder address or to advise of duplicate mailings, please contact Computershare Trust Company of Canada 320 Bay Street, 14th Floor Toronto, Ontario M5H 4A6 Telephone: 416-263-9200 Fax: 1-888-453-0330 E-mail: service@computershare.com | For other shareholder information, please contact Bank of Montreal Shareholder Services Corporate Secretary’s Department 1 First Canadian Place, 9th Floor Toronto, Ontario M5X 1A1 Telephone: 416-867-6785 E-mail: corp.secretary@bmo.com For further information on this document, please contact Bank of Montreal Investor Relations Department P.O. Box 1, 1 First Canadian Place, 37th Floor Toronto, Ontario M5X 1A1 | ||||
BMO’s 2025 Annual MD&A, audited consolidated financial statements, Annual Information Form and annual report on Form 40-F (filed with the U.S. Securities and Exchange Commission) are available online at www.bmo.com/investorrelations and at www.sedarplus.ca. Printed copies of the bank’s complete 2025 audited consolidated financial statements are available free of charge upon request at 416-867-6785 or corp.secretary@bmo.com.
® Registered trademark of Bank of Montreal
62 BMO Financial Group First Quarter Report 2026
Interim Consolidated Financial Statements
Consolidated Statement of Income
| (Unaudited) (Canadian $ in millions, except as noted) | For the three months ended | ||||||||||
| January 31, | October 31, | January 31, | |||||||||
| 2026 | 2025 | 2025 | |||||||||
| Interest, Dividend and Fee Income | |||||||||||
| Loans | $ | $ | $ | ||||||||
Securities (Note 2) | |||||||||||
| Securities borrowed or purchased under resale agreements | |||||||||||
| Deposits with banks | |||||||||||
| Interest Expense | |||||||||||
| Deposits | |||||||||||
| Securities sold but not yet purchased and securities lent or sold under repurchase agreements | |||||||||||
| Subordinated debt | |||||||||||
| Other liabilities | |||||||||||
| Net Interest Income | |||||||||||
| Non-Interest Revenue | |||||||||||
| Securities commissions and fees | |||||||||||
| Deposit and payment service charges | |||||||||||
Trading revenues | |||||||||||
| Lending fees | |||||||||||
| Card fees | |||||||||||
| Investment management and custodial fees | |||||||||||
| Mutual fund revenues | |||||||||||
| Underwriting and advisory fees | |||||||||||
Securities gains, other than trading (Note 2) | |||||||||||
| Foreign exchange gains, other than trading | |||||||||||
Insurance service results (Note 5) | |||||||||||
Insurance investment results (Notes 2 and 5) | |||||||||||
| Share of profit in associates and joint ventures | |||||||||||
| Other revenues | |||||||||||
| Total Revenue | |||||||||||
Provision for Credit Losses (Note 3) | |||||||||||
| Non-Interest Expense | |||||||||||
| Employee compensation | |||||||||||
| Premises and equipment | |||||||||||
| Amortization of intangible assets | |||||||||||
| Advertising and business development | |||||||||||
| Communications | |||||||||||
| Professional fees | |||||||||||
| Association, clearing and annual regulator fees | |||||||||||
| Other | |||||||||||
| Income Before Provision for Income Taxes | |||||||||||
Provision for income taxes (Note 11) | |||||||||||
| Net Income | $ | $ | $ | ||||||||
| Attributable to: | |||||||||||
| Bank shareholders | $ | $ | $ | ||||||||
| Non-controlling interest in subsidiaries | ( | ||||||||||
| Net Income | $ | $ | $ | ||||||||
Earnings Per Common Share (Canadian $) (Note 10) | |||||||||||
| Basic | $ | $ | $ | ||||||||
| Diluted | |||||||||||
| Dividends per common share | |||||||||||
The accompanying notes are an integral part of these interim consolidated financial statements.
40 BMO Financial Group First Quarter Report 2026
Interim Consolidated Financial Statements
Consolidated Statement of Comprehensive Income
| (Unaudited) (Canadian $ in millions) | For the three months ended | ||||||||||
| January 31, | October 31, | January 31, | |||||||||
| 2026 | 2025 | 2025 | |||||||||
| Net Income | $ | $ | $ | ||||||||
Other Comprehensive Income (Loss), net of taxes | |||||||||||
| Items that will subsequently be reclassified to net income | |||||||||||
Net change in unrealized gains on fair value through OCI debt securities | |||||||||||
Unrealized gains on fair value through OCI debt securities arising during the period (1) | |||||||||||
Reclassification to earnings of (gains) during the period (2) | ( | ( | ( | ||||||||
| Net change in unrealized gains (losses) on derivatives designated as cash flow hedges | |||||||||||
Gains (losses) on derivatives designated as cash flow hedges arising during the period (3) | ( | ||||||||||
Reclassification to earnings of losses on derivatives designated as cash flow hedges during the period (4) | |||||||||||
| ( | |||||||||||
Net gains (losses) on translation of net foreign operations | |||||||||||
Unrealized gains (losses) on translation of net foreign operations | ( | ||||||||||
Unrealized gains (losses) on hedges of net foreign operations (5) | ( | ( | |||||||||
| ( | |||||||||||
| Items that will not be subsequently reclassified to net income | |||||||||||
Net unrealized (losses) on fair value through OCI equity securities arising during the period (6) | ( | ( | |||||||||
Net gains on remeasurement of pension and other employee future benefit plans (7) | |||||||||||
Net gains (losses) on remeasurement of own credit risk on financial liabilities designated at fair value (8) | ( | ( | |||||||||
| ( | ( | ||||||||||
| Total Other Comprehensive Income (Loss), net of taxes | ( | ||||||||||
| Total Comprehensive Income | $ | $ | $ | ||||||||
| Attributable to: | |||||||||||
| Bank shareholders | $ | $ | $ | ||||||||
| Non-controlling interest in subsidiaries | ( | ||||||||||
| Total Comprehensive Income | $ | $ | $ | ||||||||
(1)Net of income tax (provision) of $(73 ) million, $(52 ) million, $(45 ) million for the three months ended.
(2)Net of income tax provision of $3 million, $12 million, $2 million for the three months ended.
(3)Net of income tax (provision) recovery of $221 million, $(324 ) million, $(148 ) million for the three months ended.
(4)Net of income tax (recovery) of $(67 ) million, $(96 ) million, $(129 ) million for the three months ended.
(5)Net of income tax (provision) recovery of $(205 ) million, $80 million, $208 million for the three months ended.
(6)Net of income tax recovery of $1 million, $nil million, $4 million for the three months ended.
(7)Net of income tax (provision) of $(21 ) million, $(34 ) million, $(8 ) million for the three months ended.
(8)Net of income tax (provision) recovery of $93 million, $(4 ) million, $34 million for the three months ended.
The accompanying notes are an integral part of these interim consolidated financial statements.
BMO Financial Group First Quarter Report 2026 41
Interim Consolidated Financial Statements
Consolidated Balance Sheet
| (Unaudited) (Canadian $ in millions) | As at | |||||||
| January 31, | October 31, | |||||||
| 2026 | 2025 | |||||||
| Assets | ||||||||
| Cash and Cash Equivalents | $ | $ | ||||||
| Interest Bearing Deposits with Banks | ||||||||
Securities (Note 2) | ||||||||
| Trading | ||||||||
| Fair value through profit or loss | ||||||||
| Fair value through other comprehensive income | ||||||||
| Debt securities at amortized cost | ||||||||
| Securities Borrowed or Purchased Under Resale Agreements | ||||||||
Loans (Note 3) | ||||||||
| Residential mortgages | ||||||||
| Consumer instalment and other personal | ||||||||
| Credit cards | ||||||||
| Business and government | ||||||||
Allowance for credit losses (Note 3) | ( | ( | ||||||
| Other Assets | ||||||||
| Derivative instruments | ||||||||
Customers’ liability under acceptances | ||||||||
| Premises and equipment | ||||||||
Goodwill | ||||||||
Intangible assets | ||||||||
| Current tax assets | ||||||||
| Deferred tax assets | ||||||||
| Receivable from brokers, dealers and clients | ||||||||
| Other | ||||||||
| Total Assets | $ | $ | ||||||
| Liabilities and Equity | ||||||||
Deposits (Note 4) | $ | $ | ||||||
| Other Liabilities | ||||||||
| Derivative instruments | ||||||||
| Acceptances | ||||||||
| Securities sold but not yet purchased | ||||||||
| Securities lent or sold under repurchase agreements | ||||||||
Securitization and structured entities’ liabilities | ||||||||
Insurance-related liabilities (Note 5) | ||||||||
| Payable to brokers, dealers and clients | ||||||||
| Other | ||||||||
Subordinated Debt (Note 4) | ||||||||
| Total Liabilities | ||||||||
| Equity | ||||||||
Preferred shares and other equity instruments (Note 6) | ||||||||
Common shares (Note 6) | ||||||||
| Contributed surplus | ||||||||
| Retained earnings | ||||||||
| Accumulated other comprehensive income | ||||||||
| Total shareholders’ equity | ||||||||
Non-controlling interest in subsidiaries | ||||||||
| Total Equity | ||||||||
| Total Liabilities and Equity | $ | $ | ||||||
The accompanying notes are an integral part of these interim consolidated financial statements.
42 BMO Financial Group First Quarter Report 2026
Interim Consolidated Financial Statements
Consolidated Statement of Changes in Equity
| (Unaudited) (Canadian $ in millions) | For the three months ended | |||||||
| January 31, | January 31, | |||||||
| 2026 | 2025 | |||||||
Preferred Shares and Other Equity Instruments (Note 6) | ||||||||
| Balance at beginning of period | $ | $ | ||||||
| Redeemed during the period | ( | ( | ||||||
Balance at end of period | ||||||||
Common Shares (Note 6) | ||||||||
| Balance at beginning of period | ||||||||
| Issued under the Stock Option Plan | ||||||||
Treasury shares purchased | ( | ( | ||||||
| Purchased for cancellation | ( | ( | ||||||
Issued for acquisition (Note 13) | ||||||||
Balance at end of period | ||||||||
| Contributed Surplus | ||||||||
| Balance at beginning of period | ||||||||
| Stock option expense, net of options exercised | ||||||||
Net premium (discount) on sale of treasury shares | ( | |||||||
Balance at end of period | ||||||||
| Retained Earnings | ||||||||
| Balance at beginning of period | ||||||||
| Net income attributable to bank shareholders | ||||||||
| Dividends on preferred shares and distributions payable on other equity instruments | ( | ( | ||||||
| Dividends on common shares | ( | ( | ||||||
Common shares purchased for cancellation (Note 6) | ( | ( | ||||||
Balance at end of period | ||||||||
Accumulated Other Comprehensive Income (Loss) on Fair Value through OCI Securities, net of taxes | ||||||||
| Balance at beginning of period | ( | ( | ||||||
Unrealized gains on fair value through OCI debt securities arising during the period | ||||||||
Unrealized (losses) on fair value through OCI equity securities arising during the period | ( | ( | ||||||
Reclassification to earnings of (gains) during the period | ( | ( | ||||||
Balance at end of period | ( | |||||||
| Accumulated Other Comprehensive Income (Loss) on Cash Flow Hedges, net of taxes | ||||||||
| Balance at beginning of period | ( | |||||||
Gains (losses) on derivatives designated as cash flow hedges arising during the period | ( | |||||||
Reclassification to earnings of losses on derivatives designated as cash flow hedges during the period | ||||||||
Balance at end of period | ( | |||||||
| Accumulated Other Comprehensive Income on Translation of Net Foreign Operations, net of taxes | ||||||||
| Balance at beginning of period | ||||||||
Unrealized gains (losses) on translation of net foreign operations | ( | |||||||
| Unrealized gains (losses) on hedges of net foreign operations | ( | |||||||
Balance at end of period | ||||||||
Accumulated Other Comprehensive Income on Pension and Other Employee Future Benefit Plans, net of taxes | ||||||||
| Balance at beginning of period | ||||||||
Gains on remeasurement of pension and other employee future benefit plans | ||||||||
Balance at end of period | ||||||||
Accumulated Other Comprehensive (Loss) on Own Credit Risk on Financial Liabilities Designated at Fair Value, net of taxes | ||||||||
| Balance at beginning of period | ( | |||||||
(Losses) on remeasurement of own credit risk on financial liabilities designated at fair value | ( | ( | ||||||
Balance at end of period | ( | ( | ||||||
| Total Accumulated Other Comprehensive Income | ||||||||
| Total Shareholders’ Equity | ||||||||
Non-Controlling Interest in Subsidiaries | ||||||||
| Balance at beginning of period | ||||||||
Net income (loss) attributable to non-controlling interest in subsidiaries | ( | |||||||
| Other | ( | |||||||
Balance at end of period | ||||||||
| Total Equity | $ | $ | ||||||
The accompanying notes are an integral part of these interim consolidated financial statements.
BMO Financial Group First Quarter Report 2026 43
Interim Consolidated Financial Statements
Consolidated Statement of Cash Flows
(Unaudited) (Canadian $ in millions) | For the three months ended | |||||||
| January 31, | January 31, | |||||||
| 2026 | 2025 | |||||||
Cash Flows Provided by Operating Activities | ||||||||
| Net Income | $ | $ | ||||||
Adjustments to determine net cash flows provided by operating activities: | ||||||||
Securities (gains), other than trading (Note 2) | ( | ( | ||||||
| Depreciation of premises and equipment | ||||||||
| Depreciation of other assets | ||||||||
| Amortization of intangible assets | ||||||||
Provision for credit losses (Note 3) | ||||||||
| Deferred taxes | ||||||||
Share of (profit) in associates and joint ventures | ( | ( | ||||||
| Changes in operating assets and liabilities: | ||||||||
Trading securities | ( | ( | ||||||
Derivative assets | ( | ( | ||||||
Derivative liabilities | ||||||||
| Current income taxes | ( | |||||||
Accrued interest receivable and payable | ( | ( | ||||||
| Insurance-related liabilities | ||||||||
Brokers, dealers and clients receivable and payable | ( | |||||||
| Other items and accruals, net | ( | |||||||
Deposits | ( | ( | ||||||
| Loans | ( | |||||||
Securities sold but not yet purchased | ( | |||||||
Securities lent or sold under repurchase agreements | ||||||||
| Securities borrowed or purchased under resale agreements | ||||||||
Securitization and structured entities’ liabilities | ||||||||
Net Cash Provided by Operating Activities | ||||||||
Cash Flows (Used in) Financing Activities | ||||||||
Net increase (decrease) in liabilities of subsidiaries | ( | |||||||
Repayment of subordinated debt (Note 4) | ( | |||||||
Redemption of preferred shares (Note 6) | ( | ( | ||||||
Net proceeds from issuance of common shares (Note 6) | ||||||||
Net purchase of treasury shares | ( | ( | ||||||
Common shares repurchased for cancellation (Note 6) | ( | ( | ||||||
| Cash dividends and distributions paid | ( | ( | ||||||
| Repayment of lease liabilities | ( | ( | ||||||
| Net Cash (Used in) Financing Activities | ( | ( | ||||||
Cash Flows Provided by Investing Activities | ||||||||
| Interest bearing deposits with banks | ( | |||||||
| Purchases of securities, other than trading | ( | ( | ||||||
| Maturities of securities, other than trading | ||||||||
| Proceeds from sales of securities, other than trading | ||||||||
| Net purchases of premises and equipment and software | ( | ( | ||||||
Acquisition (Note 13) (1) | ( | |||||||
Net Cash Provided by Investing Activities | ||||||||
| Effect of Exchange Rate Changes on Cash and Cash Equivalents | ( | |||||||
Net increase (decrease) in Cash and Cash Equivalents | ( | |||||||
| Cash and Cash Equivalents at Beginning of Period | ||||||||
Cash and Cash Equivalents at End of Period (2) | $ | $ | ||||||
| Supplemental Disclosure of Cash Flow Information | ||||||||
| Net cash provided by operating activities includes: | ||||||||
Interest paid in the period (3) | $ | $ | ||||||
| Income taxes paid in the period | ||||||||
| Interest received in the period | ||||||||
| Dividends received in the period | ||||||||
(1) This amount is net of $13 million cash and cash equivalents acquired as part of the acquisition of Burgundy Asset Management Ltd. (Burgundy) for the three months ended January 31, 2026.
(2) We are required to maintain reserves or minimum balances with certain central banks, regulatory bodies and counterparties, totalling $87 million as at January 31, 2026 ($108 million as at October 31, 2025).
(3) Includes dividends paid on securities sold but not yet purchased.
The accompanying notes are an integral part of these interim consolidated financial statements.
44 BMO Financial Group First Quarter Report 2026
Notes to Interim Consolidated Financial Statements
January 31, 2026 (Unaudited)
Note 1: Basis of Presentation
Bank of Montreal (the bank or BMO) is a chartered bank under the Bank Act (Canada) and is a public company incorporated in Canada. We are a highly diversified financial services company, providing a broad range of personal and commercial banking, wealth management and investment banking products and services. The bank’s head office is at 129 rue Saint Jacques, Montreal, Quebec. Our executive offices are at 100 King Street West, 1 First Canadian Place, Toronto, Ontario. Our common shares are listed on the Toronto Stock Exchange (TSX) and the New York Stock Exchange.
These condensed interim consolidated financial statements have been prepared in accordance with International Accounting Standard (IAS) 34, Interim Financial Reporting as issued by the International Accounting Standards Board (IASB) using the same accounting policies as disclosed in our annual consolidated financial statements for the year ended October 31, 2025, except as outlined below. These condensed interim consolidated financial statements should be read in conjunction with the notes to our annual consolidated financial statements for the year ended October 31, 2025. We also comply with interpretations of International Financial Reporting Standards (IFRS) by our regulator, the Office of the Superintendent of Financial Institutions (OSFI). These interim consolidated financial statements were authorized for issue by the Board of Directors on February 25, 2026.
Use of Estimates and Judgments
The preparation of the interim consolidated financial statements requires management to make estimates and judgments that affect the carrying amounts of certain assets and liabilities, certain amounts reported in net income and other related disclosures.
The most significant assets and liabilities for which we must make estimates and judgments include the allowance for credit losses (ACL); financial instruments measured at fair value; pension and other employee future benefits; impairment of securities and investments in associates and joint ventures; income taxes and deferred tax assets; goodwill and intangible assets; insurance contract liabilities; provisions including legal proceedings and severance charges; transfers of financial assets and consolidation of structured entities. We make judgments in assessing the business model for financial assets as well as whether substantially all risks and rewards have been transferred in respect of transfers of financial assets and whether we control structured entities. If actual results were to differ from the estimates, the impact would be recorded in future periods.
The economic outlook is subject to several risks that could lead to a less favourable outcome for the North American economy. The most immediate threat stems from further escalation of U.S. tariffs. Canadian businesses face longer-term risks if renegotiation of the United States-Mexico-Canada Agreement (USMCA) is unsuccessful, as significant tariffs could then apply to more goods exported to the U.S., potentially leading to a recession in Canada. If the USMCA is renegotiated, some tariffs are likely to persist, which could result in slower growth. Other risks include an escalation of the Russia-Ukraine war; heightened tensions between the U.S. and Iran that could destabilize the Middle East; and a potential escalation of the U.S.’s involvement in Venezuela. Elevated equity valuations also pose the risk of a destabilizing correction. Longer term, substantial business spending to develop and adopt AI systems, while providing material support to the economy, presents new challenges for workers and industries, such as software. Although AI has not yet led to significant job losses, it could increasingly affect hiring decisions and drive significant shifts in workforce composition, requiring displaced workers to learn new skills. The impact on our business, results of operations, reputation, financial performance and condition, including the potential for credit, counterparty and mark-to-market losses, our credit ratings and regulatory capital and liquidity ratios, as well as the impacts to our customers and competitors, will depend on future developments, which remain uncertain. By their very nature, the estimates and judgments we make for the purposes of preparing our consolidated financial statements relate to matters that are inherently uncertain. However, we have detailed policies and internal controls in place that are intended to ensure the judgments made in estimating these amounts are well controlled and independently reviewed, and that our policies are consistently applied from period to period. We believe that our estimates of the value of our assets and liabilities are appropriate as at January 31, 2026.
Allowance for Credit Losses
As detailed further in Note 1 of our annual consolidated financial statements for the year ended October 31, 2025, ACL consists of allowances on impaired loans, which represent estimated losses related to impaired loans in the portfolio provided for but not yet written off, and allowances on performing loans, which is our best estimate of impairment in the existing portfolio for loans that have not yet been individually identified as impaired.
The expected credit losses (ECL) model requires the recognition of credit losses generally based on 12 months of expected losses for performing loans and the recognition of lifetime losses on performing loans that have experienced a significant increase in credit risk since origination.
The determination of a significant increase in credit risk takes into account many different factors and varies by product and risk segment. The bank’s methodology for determining a significant increase in credit risk is based on the change in probability of default between origination, and reporting date, assessed using probability-weighted scenarios as well as certain other criteria, such as 30 days past due and watchlist status. The assessment of a significant increase in credit risk requires experienced credit judgment.
In determining whether there has been a significant increase in credit risk and in calculating the amount of ECL, we must rely on estimates and exercise judgment, based on what we know at the end of the reporting period, regarding matters for which the ultimate outcome is unknown. These judgments include changes in circumstances that may cause future assessments of credit risk to be materially different from current assessments, which could require an increase or a decrease in the ACL. The calculation of ECL includes the explicit incorporation of forecasts of future economic conditions. We have developed models incorporating specific macroeconomic variables that are relevant to each portfolio. Key economic variables for our retail portfolios include our primary operating markets of Canada, the United States and regional markets, where considered significant. Forecasts are developed internally by our Economics group, considering external data and our view of future economic conditions. We exercise experienced credit judgment to incorporate multiple economic forecasts, which are probability-weighted, in the determination of the final ECL. The allowance is sensitive to changes in both economic forecasts and the probability weight assigned to each forecast scenario.
Additional information regarding the ACL is included in Note 3.
BMO Financial Group First Quarter Report 2026 45
Note 2: Securities
Classification of Securities
The following table summarizes the carrying amounts of the bank’s securities by classification:
| (Canadian $ in millions) | January 31, 2026 | October 31, 2025 | ||||||
Trading securities (1) | $ | $ | ||||||
Fair value through profit or loss securities (FVTPL) | ||||||||
FVTPL securities mandatorily measured at fair value | ||||||||
FVTPL investment securities held by Insurance subsidiaries designated at fair value | ||||||||
Total FVTPL securities | ||||||||
Fair value through other comprehensive income (FVOCI) securities (2) | ||||||||
Amortized cost securities (3) | ||||||||
Total | $ | $ | ||||||
(1)Trading securities include interests of $41,679 million as at January 31, 2026 ($32,048 million as at October 31, 2025) in Collateralized Mortgage Obligations (CMO). We receive CMO in return for our sales of Mortgage Backed Securities (MBS) to certain structured vehicles that we do not consolidate. When we subsequently sell these CMO to third parties, but do not transfer substantially all risks and rewards of ownership to the third-party investor, or we maintain an interest in the sold instrument, we retain these CMO on our Consolidated Balance Sheet. Refer to Note 6 of our annual consolidated financial statements for the year ended October 31, 2025 for further discussion on these vehicles.
(2)As these securities are presented at fair value on the Balance Sheet, ACL of $5 million ($6 million as at October 31, 2025) is included in Accumulated Other Comprehensive Income.
(3)Amounts are net of ACL of $2 million ($4 million as at October 31, 2025).
Amortized Cost Securities
The following table summarizes the carrying value and fair value of amortized cost debt securities:
| (Canadian $ in millions) | January 31, 2026 | October 31, 2025 | ||||||||||||
| Carrying value | Fair value | Carrying value | Fair value | |||||||||||
| Issued or guaranteed by: | ||||||||||||||
| Canadian federal government | $ | $ | $ | $ | ||||||||||
| Canadian provincial and municipal governments | ||||||||||||||
| U.S. federal government | ||||||||||||||
| U.S. states, municipalities and agencies | ||||||||||||||
| Other governments | ||||||||||||||
NHA MBS, U.S. agency MBS and CMO (1) | ||||||||||||||
| Corporate debt | ||||||||||||||
| Total | $ | $ | $ | $ | ||||||||||
(1)These amounts are either supported by insured mortgages or issued by U.S. agencies and government-sponsored enterprises. NHA refers to the National Housing Act.
The carrying value of securities that are part of fair value hedging relationships are adjusted for related gains (losses) on hedge contracts.
Unrealized Gains and Losses on FVOCI Securities
The following table summarizes the unrealized gains and losses on FVOCI securities:
| (Canadian $ in millions) | January 31, 2026 | October 31, 2025 | ||||||||||||||||||||||||
Cost or | Gross | Gross | Cost or | Gross | Gross | |||||||||||||||||||||
amortized | unrealized | unrealized | amortized | unrealized | unrealized | |||||||||||||||||||||
| cost | gains | losses | Fair value | cost | gains | losses | Fair value | |||||||||||||||||||
| Issued or guaranteed by: | ||||||||||||||||||||||||||
| Canadian federal government | $ | $ | $ | ( | $ | $ | $ | $ | ( | $ | ||||||||||||||||
| Canadian provincial and municipal governments | ( | ( | ||||||||||||||||||||||||
| U.S. federal government | ( | ( | ||||||||||||||||||||||||
| U.S. states, municipalities and agencies | ( | ( | ||||||||||||||||||||||||
| Other governments | ( | ( | ||||||||||||||||||||||||
| NHA MBS, U.S. agency MBS and CMO | ( | ( | ||||||||||||||||||||||||
| Corporate debt | ( | ( | ||||||||||||||||||||||||
| Corporate equity | ||||||||||||||||||||||||||
| Total | $ | $ | $ | ( | $ | $ | $ | $ | ( | $ | ||||||||||||||||
Unrealized gains (losses) may be offset by related (losses) gains on hedge contracts.
Interest Income on Debt Securities
The following table presents interest income calculated using the effective interest method:
| (Canadian $ in millions) | For the three months ended | |||||||
| January 31, 2026 | January 31, 2025 | |||||||
| FVOCI securities | $ | $ | ||||||
| Amortized cost securities | ||||||||
| Total | $ | $ | ||||||
46 BMO Financial Group First Quarter Report 2026
Non-Interest Revenue
Net gains and losses from securities, excluding gains and losses on trading securities, have been included in our Consolidated Statement of Income as
follows:
| (Canadian $ in millions) | For the three months ended | |||||||
| January 31, 2026 | January 31, 2025 | |||||||
| FVTPL securities | $ | $ | ||||||
FVOCI securities - net realized gains (1) | ||||||||
| Impairment on FVOCI and amortized cost securities | ||||||||
| Securities gains, other than trading | $ | $ | ||||||
(1)Gains are net of (losses) on hedge contracts.
Interest and dividend income and gains on securities held in our Insurance business are recorded as a component of non-interest revenue, insurance investment results, in our Consolidated Statement of Income as follows:
| (Canadian $ in millions) | For the three months ended | |||||||
| January 31, 2026 | January 31, 2025 | |||||||
| Interest and dividend income | $ | $ | ||||||
Gains (losses) from securities designated at FVTPL (1) | ( | |||||||
| Realized gains from FVOCI securities | ||||||||
| Total interest and dividend income and gains held in our Insurance business | $ | ( | $ | |||||
Note 3: Loans and Allowance for Credit Losses
Allowance for Credit Losses
The ACL recorded in our Consolidated Balance Sheet is maintained at a level we consider adequate to absorb credit-related losses on our loans and other credit instruments. The ACL amounted to $5,753 million as at January 31, 2026 ($5,739 million as at October 31, 2025) of which $5,067 million ($5,050 million as at October 31, 2025) was recorded in loans and $686 million ($689 million as at October 31, 2025) was recorded in other liabilities in our Consolidated Balance Sheet. Changes in gross balances, including originations, maturities, sales, write-offs and repayments in the normal course of operations, impact the ACL.
The following tables show the continuity in the loss allowance by product type for the three months ended January 31, 2026 and January 31, 2025. Transfers represent the amount of ECL that moved between stages during the period, for example, moving from a 12-month (Stage 1) to lifetime (Stage 2) ECL measurement basis. Net remeasurements represent the ECL impact due to transfers between stages, as well as changes in economic forecasts and credit quality. Model changes include the ECL impact of new calculation models or methodologies.
BMO Financial Group First Quarter Report 2026 47
| (Canadian $ in millions) | ||||||||||||||||||||||||||
| For the three months ended | January 31, 2026 | January 31, 2025 | ||||||||||||||||||||||||
| Stage 1 | Stage 2 | Stage 3 (1) | Total | Stage 1 | Stage 2 | Stage 3 (1) | Total | |||||||||||||||||||
| Loans: Residential mortgages | ||||||||||||||||||||||||||
| Balance as at beginning of period | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||
| Transfer to Stage 1 | ( | ( | ( | ( | ||||||||||||||||||||||
| Transfer to Stage 2 | ( | ( | ( | ( | ||||||||||||||||||||||
| Transfer to Stage 3 | ( | ( | ||||||||||||||||||||||||
| Net remeasurement of loss allowance | ( | ( | ||||||||||||||||||||||||
| Loan originations | ||||||||||||||||||||||||||
| Derecognitions and maturities | ( | ( | ( | ( | ( | ( | ||||||||||||||||||||
Total PCL (2) | ( | |||||||||||||||||||||||||
Write-offs (3) | ( | ( | ( | ( | ||||||||||||||||||||||
| Recoveries of previous write-offs | ||||||||||||||||||||||||||
| Foreign exchange and other | ( | ( | ( | ( | ( | |||||||||||||||||||||
| Balance as at end of period | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||
| Loans: Consumer instalment and other personal | ||||||||||||||||||||||||||
| Balance as at beginning of period | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||
| Transfer to Stage 1 | ( | ( | ( | ( | ||||||||||||||||||||||
| Transfer to Stage 2 | ( | ( | ( | ( | ||||||||||||||||||||||
| Transfer to Stage 3 | ( | ( | ( | ( | ||||||||||||||||||||||
| Net remeasurement of loss allowance | ( | ( | ||||||||||||||||||||||||
| Loan originations | ||||||||||||||||||||||||||
| Derecognitions and maturities | ( | ( | ( | ( | ( | ( | ||||||||||||||||||||
Total PCL (2) | ( | ( | ||||||||||||||||||||||||
Write-offs (3) | ( | ( | ( | ( | ||||||||||||||||||||||
| Recoveries of previous write-offs | ||||||||||||||||||||||||||
| Foreign exchange and other | ( | ( | ( | ( | ( | |||||||||||||||||||||
| Balance as at end of period | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||
| Loans: Credit cards | ||||||||||||||||||||||||||
| Balance as at beginning of period | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||
| Transfer to Stage 1 | ( | ( | ||||||||||||||||||||||||
| Transfer to Stage 2 | ( | ( | ||||||||||||||||||||||||
| Transfer to Stage 3 | ( | ( | ( | ( | ||||||||||||||||||||||
| Net remeasurement of loss allowance | ( | ( | ||||||||||||||||||||||||
| Loan originations | ||||||||||||||||||||||||||
| Derecognitions and maturities | ( | ( | ( | ( | ( | ( | ||||||||||||||||||||
Total PCL (2) | ( | ( | ||||||||||||||||||||||||
Write-offs (3) | ( | ( | ( | ( | ||||||||||||||||||||||
| Recoveries of previous write-offs | ||||||||||||||||||||||||||
| Foreign exchange and other | ( | ( | ( | ( | ( | ( | ||||||||||||||||||||
| Balance as at end of period | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||
| Loans: Business and government | ||||||||||||||||||||||||||
| Balance as at beginning of period | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||
| Transfer to Stage 1 | ( | ( | ( | ( | ||||||||||||||||||||||
| Transfer to Stage 2 | ( | ( | ( | ( | ||||||||||||||||||||||
| Transfer to Stage 3 | ( | ( | ( | ( | ||||||||||||||||||||||
| Net remeasurement of loss allowance | ( | ( | ||||||||||||||||||||||||
| Loan originations | ||||||||||||||||||||||||||
| Derecognitions and maturities | ( | ( | ( | ( | ( | ( | ||||||||||||||||||||
Total PCL (2) | ( | ( | ||||||||||||||||||||||||
Write-offs (3) | ( | ( | ( | ( | ||||||||||||||||||||||
| Recoveries of previous write-offs | ||||||||||||||||||||||||||
| Foreign exchange and other | ( | ( | ( | ( | ( | |||||||||||||||||||||
| Balance as at end of period | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||
| Total as at end of period | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||
| Comprising: Loans | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||
Other credit instruments (4) | ||||||||||||||||||||||||||
(1)Includes changes in the allowance for purchased credit impaired (PCI) loans.
(2)Excludes PCL on other assets of $(5 ) million for the three months ended January 31, 2026 ($(7 ) million for the three months ended January 31, 2025).
(3)Generally, we continue to seek recovery on amounts that were written off during the year, unless the loan is sold, we no longer have the right to collect or we have exhausted all reasonable efforts to collect.
(4)Other credit instruments, including off-balance sheet items, are recorded in other liabilities in our Consolidated Balance Sheet.
48 BMO Financial Group First Quarter Report 2026
Credit Risk Exposure
The following table sets out our credit risk exposure for all loans carried at amortized cost, FVOCI or FVTPL as at January 31, 2026 and October 31, 2025. Stage 1 represents performing loans carried with up to a 12-month ECL, Stage 2 represents performing loans carried with a lifetime ECL, and Stage 3 represents loans with a lifetime ECL that are credit impaired.
| (Canadian $ in millions) | ||||||||||||||||||||||||||
| For the three months ended | January 31, 2026 | October 31, 2025 | ||||||||||||||||||||||||
Stage 1 | Stage 2 | Stage 3 (1) | Total | Stage 1 | Stage 2 | Stage 3 (1) | Total | |||||||||||||||||||
Loans: Residential mortgages (2) | ||||||||||||||||||||||||||
| Exceptionally low | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||
| Very low | ||||||||||||||||||||||||||
| Low | ||||||||||||||||||||||||||
| Medium | ||||||||||||||||||||||||||
| High | ||||||||||||||||||||||||||
Not rated (3) | ||||||||||||||||||||||||||
| Impaired | ||||||||||||||||||||||||||
| Gross residential mortgages | ||||||||||||||||||||||||||
| ACL | ||||||||||||||||||||||||||
| Carrying amount | ||||||||||||||||||||||||||
| Loans: Consumer instalment and other personal | ||||||||||||||||||||||||||
| Exceptionally low | ||||||||||||||||||||||||||
| Very low | ||||||||||||||||||||||||||
| Low | ||||||||||||||||||||||||||
| Medium | ||||||||||||||||||||||||||
| High | ||||||||||||||||||||||||||
Not rated (3) | ||||||||||||||||||||||||||
| Impaired | ||||||||||||||||||||||||||
| Gross consumer instalment and other personal | ||||||||||||||||||||||||||
| ACL | ||||||||||||||||||||||||||
| Carrying amount | ||||||||||||||||||||||||||
Loans: Credit cards (4) | ||||||||||||||||||||||||||
| Exceptionally low | ||||||||||||||||||||||||||
| Very low | ||||||||||||||||||||||||||
| Low | ||||||||||||||||||||||||||
| Medium | ||||||||||||||||||||||||||
| High | ||||||||||||||||||||||||||
Not rated (3) | ||||||||||||||||||||||||||
| Impaired | ||||||||||||||||||||||||||
| Gross credit cards | ||||||||||||||||||||||||||
| ACL | ||||||||||||||||||||||||||
| Carrying amount | ||||||||||||||||||||||||||
Loans: Business and government (2) (5) | ||||||||||||||||||||||||||
| Acceptable | ||||||||||||||||||||||||||
| Investment grade | ||||||||||||||||||||||||||
| Sub-investment grade | ||||||||||||||||||||||||||
| Watchlist | ||||||||||||||||||||||||||
| Impaired | ||||||||||||||||||||||||||
| Gross business and government | ||||||||||||||||||||||||||
| ACL | ||||||||||||||||||||||||||
| Carrying amount | ||||||||||||||||||||||||||
| Total gross loans and acceptances | ||||||||||||||||||||||||||
| Total net loans and acceptances | ||||||||||||||||||||||||||
| Commitments and financial guarantee contracts | ||||||||||||||||||||||||||
| Acceptable | ||||||||||||||||||||||||||
| Investment grade | ||||||||||||||||||||||||||
| Sub-investment grade | ||||||||||||||||||||||||||
| Watchlist | ||||||||||||||||||||||||||
| Impaired | ||||||||||||||||||||||||||
| Gross commitments and financial guarantee contracts | ||||||||||||||||||||||||||
| ACL | ||||||||||||||||||||||||||
Carrying amount (6) (7) | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||
(1)Includes PCI loans.
(2)Includes $60 million ($79 million as at October 31, 2025) of residential mortgages and $15,125 million ($13,231 million as at October 31, 2025) of business and government loans that are classified and measured at FVTPL, and not subject to ECL.
(3)Includes purchased portfolios and certain cases where an internal risk rating is not assigned. Alternative credit risk assessments, rating methodologies, policies and tools are used to manage credit risk for these portfolios.
(4)Credit card loans are immediately written off when principal or interest payments are 180
(5)Includes customers’ liability under acceptances.
(6)Represents the total contractual amounts of undrawn credit facilities and other off-balance sheet exposures, excluding personal lines of credit and credit cards, which are unconditionally cancellable at our discretion.
(7)Certain commercial borrower commitments are conditional and may include recourse to counterparties.
BMO Financial Group First Quarter Report 2026 49
Loans Past Due Not Impaired
Loans that are past due but not classified as impaired are loans where our customers have failed to make payments when contractually due but for which we expect the full amount of principal and interest payments to be collected. The following table presents loans that are past due but not classified as impaired as at January 31, 2026 and October 31, 2025. Loans for which payment is less than 30 days past due are excluded as they are not generally representative of the borrower’s ability to meet their payment obligations.
| (Canadian $ in millions) | January 31, 2026 | October 31, 2025 | ||||||||||||||||||
| 30 to 89 days | 90 days or more (1) | Total | 30 to 89 days | 90 days or more (1) | Total | |||||||||||||||
| Residential mortgages | $ | $ | $ | $ | $ | $ | ||||||||||||||
| Credit cards, consumer instalment and other personal | ||||||||||||||||||||
| Business and government | ||||||||||||||||||||
| Total | $ | $ | $ | $ | $ | $ | ||||||||||||||
(1) Fully secured loans with amounts over 90 days past due that we have not classified as impaired totalled $12 million as at January 31, 2026 ($7 million as at October 31, 2025).
ECL Sensitivity and Key Economic Variables
The ECL model requires the recognition of credit losses generally based on 12 months of expected losses for performing loans and the recognition of lifetime losses on performing loans that have experienced a significant increase in credit risk since origination.
The allowance for performing loans is sensitive to changes in both economic forecasts and the probability weight assigned to each forecast scenario. Many of the factors have a high degree of interdependency, although there is no single factor to which loan loss allowances as a whole are sensitive.
The upside scenario as at January 31, 2026 assumes a stronger economic environment than the base case forecast, with lower unemployment rates.
As at January 31, 2026, our base case scenario depicts a moderate economic recovery over the medium term as trade policy uncertainty diminishes and interest rates decline further in the U.S. Our base case forecast as at October 31, 2025 broadly depicted a weaker economic environment.
If we assumed a 100 % weight on the base case forecast and included the impact of loan migration by restaging, with other assumptions held constant, including the application of experienced credit judgment, the allowance on performing loans would be approximately $2,925 million as at January 31, 2026 ($3,125 million as at October 31, 2025), compared to the reported allowance for performing loans of $4,609 million ($4,709 million as at October 31, 2025).
As at January 31, 2026, our downside scenario involves a sharp contraction in the Canadian and U.S. economies in the near term, followed by a relatively slow recovery. Our severe downside scenario depicts an even deeper contraction in the Canadian and U.S. economies than in the downside scenario. The severe downside scenario as at October 31, 2025 broadly depicted a similar economic environment over the projection period. If we assumed a 100 % weight on the severe downside forecast and included the impact of loan migration by restaging, with other assumptions held constant, including the application of experienced credit judgment, the allowance on performing loans would be approximately $7,950 million as at
January 31, 2026 ($7,975 million as at October 31, 2025), compared to the reported allowance for performing loans of $4,609 million ($4,709 million as at October 31, 2025).
Actual results will differ as our portfolio will change through time due to migration, growth, changes in geopolitical risks, risk mitigation actions and other factors. In addition, our allowance will reflect the four economic scenarios used in assessing the allowance, with often unequal weightings attached to each scenario, which can change through time.
The following tables show the key economic variables used to estimate the allowance for performing loans forecast over the next 12 months or lifetime measurement period. The variables as at January 31, 2026 include the impact of tariffs and trade policy uncertainty on the economic outlook. While the values disclosed below are national variables, we use regional variables in the underlying models and consider factors impacting particular industries where appropriate.
| As at January 31, 2026 | ||||||||||||||||||||||||||
Scenarios | ||||||||||||||||||||||||||
| All figures are average annual values | Upside | Base | Downside | Severe downside | ||||||||||||||||||||||
| First 12 | Remaining | First 12 | Remaining | First 12 | Remaining | First 12 | Remaining | |||||||||||||||||||
| months | horizon (1) | months | horizon (1) | months | horizon (1) | months | horizon (1) | |||||||||||||||||||
Real GDP growth rates (2) | ||||||||||||||||||||||||||
| Canada | ( | ( | ||||||||||||||||||||||||
| United States | ( | ( | ||||||||||||||||||||||||
| Corporate BBB 10-year spread | ||||||||||||||||||||||||||
| Canada | ||||||||||||||||||||||||||
| United States | ||||||||||||||||||||||||||
| Unemployment rates | ||||||||||||||||||||||||||
| Canada | ||||||||||||||||||||||||||
| United States | ||||||||||||||||||||||||||
Housing Price Index (2) | ||||||||||||||||||||||||||
Canada (3) | ( | ( | ( | ( | ( | |||||||||||||||||||||
United States (4) | ( | ( | ( | ( | ||||||||||||||||||||||
(1)The remaining forecast period is two years.
(2)Real gross domestic product (GDP) and housing price index are averages of quarterly year-over-year growth rates.
(3)In Canada, we use the Housing Price Index Benchmark Composite.
(4)In the United States, we use the National Case-Shiller House Price Index.
50 BMO Financial Group First Quarter Report 2026
| As at October 31, 2025 | ||||||||||||||||||||||||||
| Scenarios | ||||||||||||||||||||||||||
| All figures are average annual values | Upside | Base | Downside | Severe downside | ||||||||||||||||||||||
| First 12 | Remaining | First 12 | Remaining | First 12 | Remaining | First 12 | Remaining | |||||||||||||||||||
| months | horizon (1) | months | horizon (1) | months | horizon (1) | months | horizon (1) | |||||||||||||||||||
Real GDP growth rates (2) | ||||||||||||||||||||||||||
| Canada | ( | ( | ||||||||||||||||||||||||
| United States | ( | ( | ||||||||||||||||||||||||
| Corporate BBB 10-year spread | ||||||||||||||||||||||||||
| Canada | ||||||||||||||||||||||||||
| United States | ||||||||||||||||||||||||||
| Unemployment rates | ||||||||||||||||||||||||||
| Canada | ||||||||||||||||||||||||||
| United States | ||||||||||||||||||||||||||
Housing Price Index (2) | ||||||||||||||||||||||||||
Canada (3) | ( | ( | ( | ( | ( | |||||||||||||||||||||
United States (4) | ( | ( | ( | ( | ||||||||||||||||||||||
(1)The remaining forecast period is two years.
(2)Real gross domestic product (GDP) and housing price index are averages of quarterly year-over-year growth rates.
(3)In Canada, we use the Housing Price Index Benchmark Composite.
(4)In the United States, we use the National Case-Shiller House Price Index.
The ECL approach requires the recognition of credit losses generally based on 12 months of expected losses for performing loans (Stage 1) and the recognition of lifetime expected losses for performing loans that have experienced a significant increase in credit risk since origination (Stage 2). Under our current probability-weighted scenarios, if all of our performing loans were in Stage 1, our models would generate an allowance for performing loans of approximately $3,350 million ($3,375 million as at October 31, 2025), compared to the reported allowance for performing loans of
$4,609 million ($4,709 million as at October 31, 2025).
Note 4: Deposits and Subordinated Debt
Deposits
| Payable on demand | ||||||||||||||||||||
| Non-interest | Payable | Payable on a | ||||||||||||||||||
| (Canadian $ in millions) | Interest bearing | bearing | after notice (1) | fixed date (2) (3) | January 31, 2026 | October 31, 2025 | ||||||||||||||
| Amortized cost deposits by: | ||||||||||||||||||||
Banks (4) | $ | $ | $ | $ | $ | $ | ||||||||||||||
Business and government (5) | ||||||||||||||||||||
Individuals (5) | ||||||||||||||||||||
| Total amortized cost deposits | ||||||||||||||||||||
| Deposits at FVTPL | ||||||||||||||||||||
Total (6) | $ | $ | $ | $ | $ | $ | ||||||||||||||
| Booked in: | ||||||||||||||||||||
| Canada | $ | $ | $ | $ | $ | $ | ||||||||||||||
| United States | ||||||||||||||||||||
| Other countries | ||||||||||||||||||||
| Total | $ | $ | $ | $ | $ | $ | ||||||||||||||
(1)Includes $44,615 million of non-interest bearing deposits as at January 31, 2026 ($43,766 million as at October 31, 2025).
(2)Includes $63,575 million of senior unsecured debt as at January 31, 2026 subject to the Bank Recapitalization (Bail-In) regime ($62,843 million as at October 31, 2025). The Bail-In regime provides certain statutory powers to the Canada Deposit Insurance Corporation, including the ability to convert specified eligible shares and liabilities into common shares if the bank becomes non-viable.
(3)Deposits totalling $27,258 million as at January 31, 2026 ($27,819 million as at October 31, 2025) can be redeemed early, either fully or partially, by customers without penalty. These are classified as payable on a fixed date, based on their remaining contractual maturities.
(4)Includes regulated and central banks.
(5)The carrying value of deposits that are part of fair value hedging relationships are adjusted for related gains (losses) on hedge contracts.
The following table presents deposits payable on a fixed date and greater than one hundred thousand dollars:
| (Canadian $ in millions) | Canada | United States | Other | Total | ||||||||||
| As at January 31, 2026 | $ | $ | $ | $ | ||||||||||
| As at October 31, 2025 | ||||||||||||||
The following table presents the maturity schedule for deposits payable on a fixed date greater than one hundred thousand dollars, which are booked in Canada:
| (Canadian $ in millions) | Less than 3 months | 3 to 6 months | 6 to 12 months | Over 12 months | Total | ||||||||||||
| As at January 31, 2026 | $ | $ | $ | $ | $ | ||||||||||||
| As at October 31, 2025 | |||||||||||||||||
BMO Financial Group First Quarter Report 2026 51
Subordinated Debt
On December 15, 2025, $25 million of the $150 million Subordinated Debentures Series 20 matured. $25 million will mature December 15 every three years starting 2025 with the final maturity in 2040.
Note 5: Insurance
Insurance Results
Insurance service results in our Consolidated Statement of Income are as follows:
| (Canadian $ in millions) | For the three months ended | |||||||
| January 31, 2026 | January 31, 2025 | |||||||
| Insurance revenue | $ | $ | ||||||
| Insurance service expenses | ( | ( | ||||||
| Net income (expenses) from reinsurance contracts | ( | |||||||
| Insurance service results | $ | $ | ||||||
Insurance investment results in our Consolidated Statement of Income are as follows:
| (Canadian $ in millions) | For the three months ended | |||||||
| January 31, 2026 | January 31, 2025 | |||||||
| Investment return | $ | ( | $ | |||||
| Insurance finance income (expense) from insurance and reinsurance contracts held | ( | |||||||
| Movement in investment contract liabilities | ( | |||||||
| Insurance investment results | $ | $ | ||||||
Insurance Contract Liabilities
Insurance contract liabilities by remaining coverage and incurred claims comprise the following:
| (Canadian $ in millions) | For the three months ended January 31, 2026 | For the three months ended January 31, 2025 | ||||||||||||||||||
| Liabilities for | Liabilities for | Liabilities for | Liabilities for | |||||||||||||||||
| remaining coverage | incurred claims | Total | remaining coverage | incurred claims | Total | |||||||||||||||
| Insurance contract liabilities, beginning of period | $ | $ | $ | $ | $ | $ | ||||||||||||||
| Insurance service results | ( | ( | ( | ( | ||||||||||||||||
| Net finance expenses from insurance contracts | ( | ( | ||||||||||||||||||
| Total cash flows | ( | ( | ||||||||||||||||||
| Other changes in the net carrying amount of the insurance contract | ( | ( | ( | |||||||||||||||||
Insurance contract liabilities, end of period (1) | $ | $ | $ | $ | $ | $ | ||||||||||||||
(1) The liabilities for incurred claims relating to insurance contracts in our creditor and reinsurance business were $98 million as at January 31, 2026 and $116 million as at January 31, 2025.
Contractual service margin (CSM) from contracts issued was $63 million for the three months ended January 31, 2026 ($18 million for the three months ended January 31, 2025). Total CSM for insurance contracts issued and reinsurance contract held was $1,653 million and $345 million, respectively, as at January 31, 2026 ($1,528 million and $312 million, respectively, as at October 31, 2025). Onerous contract losses for the three months ended January 31, 2026 and 2025 were not material.
We use the following rates for discounting fulfilment cash flows for our insurance contract liabilities, which are based on a risk-free yield adjusted for an illiquidity premium that reflects the liquidity characteristics of the liabilities:
Portfolio duration: | January 31, 2026 | October 31, 2025 | ||||||
| 1 year | % | % | ||||||
| 3 years | % | % | ||||||
| 5 years | % | % | ||||||
| 10 years | % | % | ||||||
| 20 years | % | % | ||||||
| 30 years | % | % | ||||||
| Ultimate | % | % | ||||||
52 BMO Financial Group First Quarter Report 2026
Insurance Risk Management
The table below reflects the estimated immediate impact on, or sensitivity of, income before taxes to certain changes in interest rates, and includes the estimated impact of hedging arrangements and our exposure to equity price risk arising from our investment in equity securities.
(Canadian $ in millions) | For the three months ended | |||||||
| January 31, 2026 | January 31, 2025 | |||||||
Interest Rate Sensitivity (1) (2) | ||||||||
| 50 basis point increase | $ | ( | $ | |||||
50 basis point decrease | ( | |||||||
Equity Market Sensitivity (3) | ||||||||
| 10% increase | $ | $ | ||||||
| 10% decrease | ( | ( | ||||||
(1)Estimated impact on, or sensitivity of, income before taxes to a 50 basis point increase or decrease in interest rates.
(2)Interest rate sensitivities assume a parallel shift in assumed interest rates across the entire yield curve as at the end of the period with no change in the ultimate risk-free rate.
Note 6: Equity
Preferred and Common Shares Outstanding and Other Equity Instruments (1)
| (Canadian $ in millions, except as noted) | January 31, 2026 | October 31, 2025 | ||||||||||||||||||||||||
| Number | Dividends declared | Number | Dividends declared | |||||||||||||||||||||||
| of shares | Amount | per share (2) | of shares | Amount | per share (2) | Convertible into | ||||||||||||||||||||
| Preferred Shares – Classified as Equity | ||||||||||||||||||||||||||
| Class B – Series 44 | $ | $ | $ | $ | Class B - Series 45 | (3) (4) | ||||||||||||||||||||
| Class B – Series 50 | Not convertible | (4) | ||||||||||||||||||||||||
| Class B – Series 52 | Not convertible | (4) | ||||||||||||||||||||||||
| Preferred Shares – Classified as Equity | $ | $ | ||||||||||||||||||||||||
| Recourse to | ||||||||||||||||||||||||||
| Other Equity Instruments | ||||||||||||||||||||||||||
| $ | $ | – | (4) (5) (6) | |||||||||||||||||||||||
| – | (6) | |||||||||||||||||||||||||
| Preferred Shares Series 49 | (4) (6) (8) | |||||||||||||||||||||||||
| Preferred Shares Series 51 | (4) (6) (8) | |||||||||||||||||||||||||
Preferred Shares Series 53 | (4) (6) (8) | |||||||||||||||||||||||||
Preferred Shares Series 54 | (4) (6) (8) | |||||||||||||||||||||||||
Preferred Shares Series 55 | (4) (6) (8) | |||||||||||||||||||||||||
| Other Equity Instruments | ||||||||||||||||||||||||||
| Preferred Shares and Other Equity Instruments | ||||||||||||||||||||||||||
Common Shares | $ | $ | $ | $ | (9) (10) (11) (12) | |||||||||||||||||||||
(1)For additional information refer to Notes 16 and 20 of our annual consolidated financial statements for the year ended October 31, 2025.
(2)Represents year-to-date dividends declared per share as at reporting date. Non-cumulative dividends on preferred shares are payable quarterly as and when declared by the Board of Directors, except for Class B – Series 50 and 52 preferred share dividends, which are payable semi-annually.
(3)If converted, the holders have the option to convert back to the original preferred shares on subsequent redemption dates, subject to certain conditions.
(4)The instruments issued include a NVCC provision, which is necessary for the preferred shares, AT1 Notes and by virtue of the recourse to the Preferred Shares Series 49, Preferred Shares Series 51, Preferred Shares Series 53, Preferred Shares Series 54 and Preferred Shares Series 55 (collectively, the LRCN Preferred Shares) for LRCNs, Series 2, Series 3, Series 4, Series 5 and Series 6 (collectively, the LRCNs), respectively, to qualify as regulatory capital under Basel III. As such, they are convertible into a variable number of our common shares if OSFI announces that the bank is, or is about to become, non-viable or if a federal or provincial government in Canada publicly announces that the bank has accepted or agreed to accept a capital injection, or equivalent support, to avoid non-viability. In such an event, each preferred share, including the LRCN Preferred Shares and AT1 Notes, is convertible into common shares pursuant to an automatic conversion formula and a conversion price based on the greater of: (i) a floor price of $5.00 and (ii) the current market price of our common shares based on the volume weighted average trading price of our common shares on the TSX. The number of common shares issued is determined by dividing the value of the preferred share or other equity instrument, including declared and unpaid dividends, by the conversion price and then applying the multiplier.
(5)The notes had an initial interest rate of 4.800 % and reset on August 25, 2024 to 6.709 %.
(6)The rates represent the annual interest rate percentage applicable to the notes issued as at the reporting date.
(7)On November 12, 2025, we redeemed the $1,250 million 4.300 % Limited Recourse Capital Notes, Series 1 (NVCC) and the corresponding $1,250 million Preferred Shares Series 48.
(8)Non-deferrable interest is payable semi-annually on the LRCNs, Series 2 and Series 3, and quarterly on the LRCNs, Series 4, Series 5 and Series 6 at the bank’s discretion. Non-payment of interest will result in a recourse event, with the noteholders’ sole remedy being the holders’ proportionate share of trust assets, which comprises the LRCN Preferred Shares, each series of which is issued concurrently with the corresponding LRCNs and are eliminated on consolidation. In such an event, the delivery of the trust assets will represent the full and complete extinguishment of our obligations under the LRCNs. In circumstances where the LRCN Preferred Shares are converted into common shares of the bank under the NVCC provision, the LRCNs would be redeemed and the noteholders’ sole remedy would be their proportionate share of trust assets, which would then comprise common shares of the bank received by the trust on conversion.
(9)The stock options issued under the Stock Option Plan are convertible into 5,854,625 common shares as at January 31, 2026 (5,699,134 common shares as at October 31, 2025) of which 2,706,330 are exercisable as at January 31, 2026 (2,245,942 as at October 31, 2025).
(10) During the three months ended January 31, 2026, we issued 608,909 common shares under the Stock Option Plan (474,410 common shares during the three months ended January 31, 2025).
(11) Common shares are net of 42,560 treasury shares as at January 31, 2026 (nil treasury shares as at October 31, 2025).
(12) As part of the acquisition of Burgundy on November 1, 2025, we issued 2,723,726 common shares with an aggregate value of $481 million to shareholders of Burgundy. Refer to Note 13 for more
information.
BMO Financial Group First Quarter Report 2026 53
Other Equity Instruments
The AT1 Notes and existing LRCNs are compound financial instruments that have both equity and liability features. On the date of issuance, we assigned an insignificant value to the liability components of both instruments and, as a result, the full amount of proceeds has been classified as equity and forms part of our additional Tier 1 Capital. Distributions on the AT1 Notes and LRCNs are recognized as a reduction in equity when payable. The AT1 Notes and LRCNs are subordinate to the claims of the depositors and certain other creditors in right of payment.
Common Shares
We have a normal course issuer bid (NCIB) to purchase up to 30 million of our common shares for cancellation which commenced on September 5, 2025 and ending no later than September 4, 2026. The timing and amount of purchases under the NCIB are determined by management, based on factors such as market conditions and capital levels. During the three months ended January 31, 2026, we purchased for cancellation 6 million common shares under the NCIB, at an average price of $178.05 per share for a total amount of $1,088 million, including tax. The bank has purchased a total of 11.8 million common shares for cancellation under the NCIB as at January 31, 2026.
Shareholder Dividend Reinvestment and Share Purchase Plan
Until further notice, common shares under the Shareholder Dividend Reinvestment and Share Purchase Plan will be purchased on the open market without a discount.
Note 7: Fair Value Measurements
Fair Value of Financial Instruments Not Carried at Fair Value on the Balance Sheet
Set out in the following table are the amounts that would be reported if all financial instruments not currently carried at fair value were reported at their fair values. Refer to Note 17 of our annual consolidated financial statements for the year ended October 31, 2025 for further discussion on the determination of fair value.
| (Canadian $ in millions) | January 31, 2026 | October 31, 2025 | ||||||||||||
| Carrying value | Fair value | Carrying value | Fair value | |||||||||||
Securities (1) | ||||||||||||||
| Amortized cost | $ | $ | $ | $ | ||||||||||
Loans (1) (2) | ||||||||||||||
| Residential mortgages | ||||||||||||||
| Consumer instalment and other personal | ||||||||||||||
| Credit cards | ||||||||||||||
| Business and government | ||||||||||||||
Deposits (3) | ||||||||||||||
Securitization and structured entities' liabilities (4) | ||||||||||||||
Other liabilities (5) | ||||||||||||||
| Subordinated debt | ||||||||||||||
This table excludes financial instruments with a carrying value approximating fair value, such as cash and cash equivalents, interest bearing deposits with banks, securities borrowed or purchased under resale agreements, certain other assets, certain other liabilities and securities lent or sold under repurchase agreements.
(1)Carrying value is net of ACL.
(2)Excludes $60 million of residential mortgages classified as FVTPL, $15,125 million of business and government loans classified as FVTPL and $2 million of business and government loans classified as FVOCI
($79 million, $13,231 million and $14 million, respectively, as at October 31, 2025).
(3)Excludes $50,471 million of structured note liabilities, $604 million of money market deposits, $2,125 million of embedded options related to structured deposits carried at amortized cost and $4,600 million of metals deposits measured at fair value ($49,093 million, $1,129 million, $1,967 million and $3,973 million, respectively, as at October 31, 2025).
(4)Excludes $38,857 million of securitization and structured entities’ liabilities classified as FVTPL ($31,351 million as at October 31, 2025).
(5)Other liabilities include certain investment contract liabilities in our insurance business measured at amortized cost, as well as certain other liabilities of subsidiaries.
Fair Value Hierarchy
We use a fair value hierarchy to categorize assets and liabilities carried at fair value according to the inputs we use in valuation techniques to measure fair value.
Valuation Techniques and Significant Inputs
We determine the fair value of assets and liabilities using quoted prices in active markets (Level 1) when these are available. When quoted prices in active markets are not available, we determine the fair value of financial assets and liabilities using models such as discounted cash flows with observable market data for inputs, such as yields or broker quotes and other third-party vendor quotes (Level 2). Fair value may also be determined using models where significant market inputs are not observable due to inactive markets or minimal market activity (Level 3). We maximize the use of observable market inputs to the extent possible.
Our Level 2 trading securities are primarily valued using discounted cash flow models with observable spreads or broker quotes. The fair value of Level 2 FVOCI securities is determined using discounted cash flow models with observable spreads or third-party vendor quotes. Level 2 structured note liabilities are valued using models with observable market information. Level 2 derivative assets and liabilities are valued using industry standard models and observable market information.
54 BMO Financial Group First Quarter Report 2026
The extent of our use of actively quoted market prices (Level 1), internal models using observable market information as inputs (Level 2) and models using one or more significant unobservable inputs (Level 3) in the valuation of securities, loans classified as FVTPL and FVOCI, other assets, fair value liabilities, derivative assets and derivative liabilities is presented in the following table:
| (Canadian $ in millions) | January 31, 2026 | October 31, 2025 | ||||||||||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | Level 1 | Level 2 | Level 3 | Total | |||||||||||||||||||
| Trading Securities | ||||||||||||||||||||||||||
| Issued or guaranteed by: | ||||||||||||||||||||||||||
| Canadian federal government | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||
| Canadian provincial and municipal governments | ||||||||||||||||||||||||||
| U.S. federal government | ||||||||||||||||||||||||||
| U.S. states, municipalities and agencies | ||||||||||||||||||||||||||
| Other governments | ||||||||||||||||||||||||||
| NHA MBS, and U.S. agency MBS and CMO | ||||||||||||||||||||||||||
| Corporate debt | ||||||||||||||||||||||||||
| Trading loans | ||||||||||||||||||||||||||
| Corporate equity | ||||||||||||||||||||||||||
| FVTPL Securities | ||||||||||||||||||||||||||
| Issued or guaranteed by: | ||||||||||||||||||||||||||
| Canadian federal government | ||||||||||||||||||||||||||
| Canadian provincial and municipal governments | ||||||||||||||||||||||||||
| U.S. federal government | ||||||||||||||||||||||||||
| NHA MBS, and U.S. agency MBS and CMO | ||||||||||||||||||||||||||
| Corporate debt | ||||||||||||||||||||||||||
| Corporate equity | ||||||||||||||||||||||||||
| FVOCI Securities | ||||||||||||||||||||||||||
| Issued or guaranteed by: | ||||||||||||||||||||||||||
| Canadian federal government | ||||||||||||||||||||||||||
| Canadian provincial and municipal governments | ||||||||||||||||||||||||||
| U.S. federal government | ||||||||||||||||||||||||||
| U.S. states, municipalities and agencies | ||||||||||||||||||||||||||
| Other governments | ||||||||||||||||||||||||||
| NHA MBS, and U.S. agency MBS and CMO | ||||||||||||||||||||||||||
| Corporate debt | ||||||||||||||||||||||||||
| Corporate equity | ||||||||||||||||||||||||||
| Loans | ||||||||||||||||||||||||||
| Residential mortgages | ||||||||||||||||||||||||||
| Business and government loans | ||||||||||||||||||||||||||
Other Assets (1) | ||||||||||||||||||||||||||
Fair Value Liabilities (2) | ||||||||||||||||||||||||||
Deposits (3) | ||||||||||||||||||||||||||
| Securities sold but not yet purchased | ||||||||||||||||||||||||||
Other liabilities (4) | ||||||||||||||||||||||||||
| Derivative Assets | ||||||||||||||||||||||||||
| Interest rate contracts | ||||||||||||||||||||||||||
| Foreign exchange contracts | ||||||||||||||||||||||||||
| Commodity contracts | ||||||||||||||||||||||||||
| Equity contracts | ||||||||||||||||||||||||||
| Credit default swaps | ||||||||||||||||||||||||||
| Derivative Liabilities | ||||||||||||||||||||||||||
| Interest rate contracts | ||||||||||||||||||||||||||
| Foreign exchange contracts | ||||||||||||||||||||||||||
| Commodity contracts | ||||||||||||||||||||||||||
| Equity contracts | ||||||||||||||||||||||||||
| Credit default swaps | ||||||||||||||||||||||||||
(1)Other assets include precious metals, segregated fund assets and investment properties in our insurance business, carbon credits, certain receivables and other items measured at fair value.
(2)Interest expense for liabilities carried at fair value is $871 million for the three months ended January 31, 2026 ($720 million for the three months ended January 31, 2025). Interest expense for liabilities carried at amortized cost is $8,649 million for the three months ended January 31, 2026 ($10,505 million for the three months ended January 31, 2025).
(3)Deposits include structured note liabilities, money market and metals deposits designated at FVTPL and certain embedded options related to structured deposits carried at amortized cost.
(4)Other liabilities include certain investment contract liabilities and segregated fund liabilities in our insurance business, certain securitization and structured entities’ liabilities measured at FVTPL, as well as the contingent consideration liability from the acquisition of Burgundy Asset Management Ltd. Refer to Note 13 for more information.
BMO Financial Group First Quarter Report 2026 55
Quantitative Information about Level 3 Fair Value Measurements
The table below presents the fair values of our significant Level 3 financial instruments measured at fair value on a recurring basis, the valuation techniques used to determine their fair values and the value ranges of significant unobservable inputs used in the valuations. We have not applied any other reasonably possible alternative assumptions to the significant Level 3 categories of private equity investments, as the net asset values are provided by the investment or fund managers.
(Canadian $ in millions, except as noted) | January 31, 2026 | |||||||||||||||||||
| Reporting line in fair | Significant | Range of input values (1) | ||||||||||||||||||
| value hierarchy table | Fair value of assets | Valuation techniques | unobservable inputs | Low | High | |||||||||||||||
| Private equity | Corporate equity | $ | Net asset value | Net asset value | na | na | ||||||||||||||
| EV/EBITDA | Multiple | |||||||||||||||||||
| Investment properties | Other assets | Income approach | Capitalization rate | % | % | |||||||||||||||
Burgundy contingent consideration (2) | Other liabilities | Income approach | Discount rate | na | na | |||||||||||||||
| Forecasted assets under management | na | na | ||||||||||||||||||
(1)The low and high input values represent the lowest and highest actual level of inputs used to value a group of financial instruments in a particular product category. These input ranges do not reflect the level of input uncertainty, but are affected by the specific underlying instruments within each product category. The input ranges will therefore vary from period to period based on the characteristics of the underlying instruments held at each balance sheet date.
(2)Range of inputs not applicable as the value is modeled using a Monte Carlo simulation.
na - not applicable
Significant Transfers
Our policy is to record transfers of assets and liabilities between fair value hierarchy levels at their fair values as at the end of each reporting period, consistent with the date of the determination of fair value. Transfers between Level 1 and Level 2 are dependent on the recency of issuance and availability of quoted market prices in the active market. There were no significant transfers between Level 1 and Level 2 during the three months ended January 31, 2026 and 2025.
Changes in Level 3 Fair Value Measurements
The tables below present a reconciliation of all changes in Level 3 financial instruments for the three months ended January 31, 2026 and
2025, including realized and unrealized gains (losses) included in earnings and other comprehensive income as well as transfers into and out of Level 3. Transfers from Level 2 into Level 3 were due to an increase in unobservable market inputs used in pricing the securities. Transfers out of Level 3 into Level 2 were due to an increase in observable market inputs used in pricing the securities.
56 BMO Financial Group First Quarter Report 2026
| Change in fair value | Movements | Transfers | ||||||||||||||||||||||||||||||
| Change in | ||||||||||||||||||||||||||||||||
| unrealized gains | ||||||||||||||||||||||||||||||||
| Included | (losses) recorded | |||||||||||||||||||||||||||||||
| Fair Value | in other | Transfers | Transfers | Fair Value | in income | |||||||||||||||||||||||||||
| For the three months ended January 31, 2026 | as at October 31, | Included in | comprehensive | Issuances/ | Maturities/ | into | out of | as at January 31, | for instruments | |||||||||||||||||||||||
| (Canadian $ in millions) | 2025 | earnings | income (1) | Purchases | Sales | Settlement | Level 3 | Level 3 | 2026 | still held (2) | ||||||||||||||||||||||
| Trading Securities | ||||||||||||||||||||||||||||||||
| Corporate equity | $ | $ | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||
| Total trading securities | ||||||||||||||||||||||||||||||||
| FVTPL Securities | ||||||||||||||||||||||||||||||||
| Corporate debt | ||||||||||||||||||||||||||||||||
| Corporate equity | ( | ( | ( | ( | ( | |||||||||||||||||||||||||||
| Total FVTPL securities | ( | ( | ( | ( | ( | |||||||||||||||||||||||||||
| FVOCI Securities | ||||||||||||||||||||||||||||||||
| Corporate equity | ( | na | ||||||||||||||||||||||||||||||
| Total FVOCI securities | ( | na | ||||||||||||||||||||||||||||||
| Business and Government Loans | ( | |||||||||||||||||||||||||||||||
| Other Assets | ( | ( | ( | |||||||||||||||||||||||||||||
| Derivative Assets | ||||||||||||||||||||||||||||||||
| Foreign exchange contracts | ( | ( | ||||||||||||||||||||||||||||||
| Commodity contracts | ( | ( | ||||||||||||||||||||||||||||||
| Equity contracts | ( | |||||||||||||||||||||||||||||||
| Total derivative assets | ( | ( | ( | |||||||||||||||||||||||||||||
| Other Liabilities | ||||||||||||||||||||||||||||||||
| Derivative Liabilities | ||||||||||||||||||||||||||||||||
| Foreign exchange contracts | ||||||||||||||||||||||||||||||||
| Commodity contracts | ||||||||||||||||||||||||||||||||
| Equity contracts | ( | |||||||||||||||||||||||||||||||
| Credit default swaps | ||||||||||||||||||||||||||||||||
| Total derivative liabilities | ( | |||||||||||||||||||||||||||||||
| Change in fair value | Movements | Transfers | ||||||||||||||||||||||||||||||
| Change in | ||||||||||||||||||||||||||||||||
| unrealized gains | ||||||||||||||||||||||||||||||||
| Included | (losses) recorded | |||||||||||||||||||||||||||||||
| Fair Value | in other | Transfers | Transfers | Fair Value | in income | |||||||||||||||||||||||||||
| For the three months ended January 31, 2025 | as at October 31, | Included in | comprehensive | Issuances/ | Maturities/ | into | out of | as at January 31, | for instruments | |||||||||||||||||||||||
| (Canadian $ in millions) | 2024 | earnings | income (1) | Purchases | Sales | Settlement | Level 3 | Level 3 | 2025 | still held (2) | ||||||||||||||||||||||
| Trading Securities | ||||||||||||||||||||||||||||||||
| Corporate equity | $ | $ | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||
| Total trading securities | ||||||||||||||||||||||||||||||||
| FVTPL Securities | ||||||||||||||||||||||||||||||||
| Corporate debt | ( | ( | ( | |||||||||||||||||||||||||||||
| Corporate equity | ( | |||||||||||||||||||||||||||||||
| Total FVTPL securities | ( | ( | ||||||||||||||||||||||||||||||
| FVOCI Securities | ||||||||||||||||||||||||||||||||
| Corporate equity | ( | na | ||||||||||||||||||||||||||||||
| Total FVOCI securities | ( | na | ||||||||||||||||||||||||||||||
| Business and Government Loans | ( | |||||||||||||||||||||||||||||||
| Other Assets | ( | ( | ( | |||||||||||||||||||||||||||||
| Derivative Assets | ||||||||||||||||||||||||||||||||
| Foreign exchange contracts | ||||||||||||||||||||||||||||||||
| Commodity contracts | ||||||||||||||||||||||||||||||||
| Equity contracts | ||||||||||||||||||||||||||||||||
| Total derivative assets | ||||||||||||||||||||||||||||||||
| Other Liabilities | ||||||||||||||||||||||||||||||||
| Derivative Liabilities | ||||||||||||||||||||||||||||||||
| Foreign exchange contracts | ||||||||||||||||||||||||||||||||
| Commodity contracts | ( | ( | ||||||||||||||||||||||||||||||
| Equity contracts | ||||||||||||||||||||||||||||||||
| Credit default swaps | ||||||||||||||||||||||||||||||||
| Total derivative liabilities | ( | ( | ||||||||||||||||||||||||||||||
(1) Foreign exchange translation on assets and liabilities held by foreign operations is included in other comprehensive income, net foreign operations.
(2) Changes in unrealized gains (losses) on Trading and FVTPL securities still held on January 31, 2026 and January 31, 2025 are included in earnings for the period.
Unrealized gains (losses) recognized on Level 3 financial instruments may be offset by (losses) gains on economic hedge contracts.
na – not applicable
BMO Financial Group First Quarter Report 2026 57
Note 8: Capital Management
Our objective is to maintain a strong capital position in a cost-effective structure that is appropriate given our target regulatory capital ratios and our internal assessment of required economic capital; underpins our operating segments’ business strategies and considers the market environment; supports depositor, investor and regulator confidence, while building long-term shareholder value; and is consistent with our target credit ratings.
As at January 31, 2026, we met OSFI’s target capital ratio requirements, which include a 2.5 % Capital Conservation Buffer, a 1.0 % Common Equity Surcharge for Domestic Systemically Important Banks (D-SIBs), a Countercyclical Buffer and a 3.5 % Domestic Stability Buffer (DSB) applicable to D-SIBs. On December 18, 2025, OSFI announced that the DSB will remain at 3.5 %. Our capital position as at January 31, 2026 is further detailed in the Capital Management section of our interim Management’s Discussion and Analysis.
Regulatory Capital and Total Loss Absorbing Capacity Measures, Risk-Weighted Assets and Leverage Exposures (1)
| (Canadian $ in millions, except as noted) | January 31, 2026 | October 31, 2025 | ||||||
| CET1 Capital | $ | $ | ||||||
| Tier 1 Capital | ||||||||
| Total Capital | ||||||||
| TLAC | ||||||||
| Risk-Weighted Assets | ||||||||
| Leverage Exposures | ||||||||
| CET1 Ratio | % | % | ||||||
| Tier 1 Capital Ratio | % | % | ||||||
| Total Capital Ratio | % | % | ||||||
| TLAC Ratio | % | % | ||||||
| Leverage Ratio | % | % | ||||||
| TLAC Leverage Ratio | % | % | ||||||
(1)Calculated in accordance with OSFI’s Capital Adequacy Requirements Guideline, Leverage Requirements Guideline and Total Loss Absorbing Capacity (TLAC) Guideline.
Note 9: Employee Compensation
Stock Options
During the three months ended January 31, 2026, we granted a total of 764,400 stock options (716,633 stock options during the three months ended January 31, 2025) with a weighted-average fair value of $32.09 per option ($18.46 per option for the three months ended January 31, 2025).
To determine the fair value of the stock option tranches (i.e. the portion that vests each year) on the grant date, the following ranges of values were used for each option pricing assumption:
| For stock options granted during the three months ended | January 31, 2026 | January 31, 2025 | ||||||
| Expected dividend yield | % | |||||||
| Expected share price volatility | % | |||||||
| Risk-free rate of return | % | % | ||||||
| Expected period until exercise (in years) | ||||||||
| Exercise price ($) | ||||||||
Changes to the input assumptions can result in different fair value estimates.
Pension and Other Employee Future Benefit Expenses
Pension and other employee future benefit expenses are determined as follows:
| (Canadian $ in millions) | ||||||||||||||
Pension plans | Other employee future benefit plans | |||||||||||||
| For the three months ended | January 31, 2026 | January 31, 2025 | January 31, 2026 | January 31, 2025 | ||||||||||
| Current service cost | $ | $ | $ | $ | ||||||||||
Net interest (income) expense (1) | ( | ( | ||||||||||||
| Impact of plan amendments | ( | |||||||||||||
| Administrative expenses | ||||||||||||||
| Benefits expense | ||||||||||||||
Government pension plans expense (2) | ||||||||||||||
| Defined contribution expense | ||||||||||||||
Total pension and other employee future benefit expenses | ||||||||||||||
| recognized in our Consolidated Statement of Income | $ | $ | $ | $ | ||||||||||
(1) Net interest (income) expense is increased by $nil million for pension benefit plans and $1 million for other employee future benefit plans for the three months ended January 31, 2026 ($nil million for pension benefit plans and $nil million for other employee future benefit plans for the three months ended January 31, 2025) as a result of assets written down through other comprehensive income due to the asset ceiling.
(2) Includes Canada Pension Plan, Quebec Pension Plan and U.S. Federal Insurance Contribution Act.
58 BMO Financial Group First Quarter Report 2026
Note 10: Earnings Per Share
Basic earnings per share is calculated by dividing net income attributable to bank shareholders, after deducting dividends payable on preferred shares and distributions payable on other equity instruments, by the daily average number of fully paid common shares outstanding throughout the period.
Diluted earnings per share is calculated in the same manner, with further adjustments made to reflect the dilutive impact of instruments convertible into our common shares.
The following tables present our basic and diluted earnings per share:
Basic Earnings Per Common Share
| (Canadian $ in millions, except as noted) | For the three months ended | |||||||
| January 31, 2026 | January 31, 2025 | |||||||
| Net income attributable to bank shareholders | $ | $ | ||||||
| Dividends on preferred shares and distributions on other equity instruments | ( | ( | ||||||
| Net income available to common shareholders | $ | $ | ||||||
| Weighted-average number of common shares outstanding (in thousands) | ||||||||
| Basic earnings per common share (Canadian $) | $ | $ | ||||||
Diluted Earnings Per Common Share
| (Canadian $ in millions, except as noted) | For the three months ended | |||||||
| January 31, 2026 | January 31, 2025 | |||||||
| Net income available to common shareholders | $ | $ | ||||||
| Weighted-average number of common shares outstanding (in thousands) | ||||||||
Dilutive impact of stock options (1) | ||||||||
Stock options potentially exercisable | ||||||||
| Common shares potentially repurchased | ( | ( | ||||||
| Weighted-average number of diluted common shares outstanding (in thousands) | ||||||||
| Diluted earnings per common share (Canadian $) | $ | $ | ||||||
(1)The dilutive effect of stock options was calculated using the treasury stock method. In computing diluted earnings per share, we excluded average stock options outstanding of 515,139 with a weighted-average exercise price of $203.51 for the three months ended January 31, 2026 (482,948 with a weighted-average exercise price of $153.89 for the three months ended January 31, 2025), as the average share price for the periods did not exceed the exercise price.
Note 11: Income Taxes
Tax Assessments
Canadian tax authorities have reassessed us for additional income tax and interest in an amount of approximately $1,465 million in respect of certain 2011–2018 Canadian corporate dividends. These reassessments denied certain dividend deductions on the basis that the dividends were received as part of a “dividend rental arrangement”. In general, the tax rules raised by the Canadian tax authorities were prospectively addressed in the 2015 and 2018 Canadian federal budgets. We filed Notices of Appeal with the Tax Court of Canada and the matter is in litigation. We remain of the view that our tax filing positions were appropriate and intend to challenge all reassessments. However, if such challenges are unsuccessful, the additional expense would negatively impact our net income.
BMO Financial Group First Quarter Report 2026 59
Note 12: Operating Segmentation
Operating Segments
We conduct our business through four operating segments, each of which has a distinct mandate. Our operating segments are Canadian Personal and Commercial Banking (Canadian P&C), U.S. Banking, Wealth Management and Capital Markets, along with a Corporate Services unit.
For additional information refer to Note 25 of our annual consolidated financial statements for the year ended October 31, 2025.
Our results and average assets, grouped by operating segment, are as follows:
| (Canadian $ in millions) | ||||||||||||||||||||
| Canadian | Wealth | Capital | Corporate | |||||||||||||||||
| For the three months ended January 31, 2026 | P&C | U.S. Banking (1) | Management | Markets (1) | Services (1) (2) | Total | ||||||||||||||
Net interest income | $ | $ | $ | $ | $ | ( | $ | |||||||||||||
| Non-interest revenue | ||||||||||||||||||||
| Total Revenue | ( | |||||||||||||||||||
| Provision for credit losses on impaired loans | ||||||||||||||||||||
| Provision for (recovery of) credit losses on performing loans | ( | ( | ( | |||||||||||||||||
Total provision for credit losses | ( | |||||||||||||||||||
| Depreciation and amortization | ||||||||||||||||||||
| Non-interest expense | ||||||||||||||||||||
| Income (loss) before taxes and non-controlling interest in subsidiaries | ( | |||||||||||||||||||
| Provision for (recovery of) income taxes | ( | |||||||||||||||||||
| Reported net income (loss) | $ | $ | $ | $ | $ | ( | $ | |||||||||||||
| Non-controlling interest in subsidiaries | $ | $ | ( | $ | $ | $ | $ | ( | ||||||||||||
| Net income (loss) attributable to bank shareholders | $ | $ | $ | $ | $ | ( | $ | |||||||||||||
Average assets (3) | $ | $ | $ | $ | $ | $ | ||||||||||||||
| Canadian | Wealth | Capital | Corporate | |||||||||||||||||
| For the three months ended January 31, 2025 | P&C | U.S. Banking (1) | Management | Markets (1) | Services (1) (2) | Total | ||||||||||||||
Net interest income | $ | $ | $ | $ | $ | ( | $ | |||||||||||||
| Non-interest revenue | ||||||||||||||||||||
| Total Revenue | ( | |||||||||||||||||||
| Provision for credit losses on impaired loans | ||||||||||||||||||||
| Provision for (recovery of) credit losses on performing loans | ( | ( | ||||||||||||||||||
Total provision for (recovery of) credit losses | ||||||||||||||||||||
| Depreciation and amortization | ||||||||||||||||||||
| Non-interest expense | ||||||||||||||||||||
| Income (loss) before taxes and non-controlling interest in subsidiaries | ( | |||||||||||||||||||
Provision for (recovery of) income taxes | ( | |||||||||||||||||||
| Reported net income (loss) | $ | $ | $ | $ | $ | ( | $ | |||||||||||||
| Non-controlling interest in subsidiaries | $ | $ | $ | $ | $ | $ | ||||||||||||||
| Net income (loss) attributable to bank shareholders | $ | $ | $ | $ | $ | ( | $ | |||||||||||||
Average assets (3) | $ | $ | $ | $ | $ | $ | ||||||||||||||
(1) Operating segments report on a taxable equivalent basis (teb). Net interest income, revenue and the provision for income taxes are increased on tax-exempt securities to an equivalent before-tax basis to facilitate comparisons of income between taxable and tax-exempt sources. The offset to the groups’ teb adjustments is reflected in Corporate Services net interest income, revenue and provision for income taxes.
(2) Corporate Services includes Technology and Operations.
(3) Included within average assets are average earning assets, which comprise deposits with other banks, deposits at central banks, securities borrowed or purchased under resale agreements, loans and securities. Total average earning assets for the three months ended January 31, 2026 are $1,334,388 million, including $344,866 million for Canadian P&C, $224,843 million for U.S. Banking, and $764,679 million for all other operating segments including Corporate Services (for the three months ended January 31, 2025 - Total: $1,319,541 million, Canadian P&C: $339,325 million, U.S. Banking: $243,645 million and all other operating segments: $736,571 million).
Certain comparative figures have been reclassified to conform with the current period’s presentation.
Note 13: Acquisition
Burgundy Asset Management Ltd.
On November 1, 2025, we completed the acquisition of Burgundy Asset Management Ltd., a leading independent wealth manager in Canada, providing discretionary investment management for private clients, foundations, endowments, pensions and family offices. Burgundy operates as a wholly-owned subsidiary of BMO. The purchase price of $654 million comprised $61 million in cash, $481 million in shares of a wholly-owned subsidiary of BMO that were exchanged into BMO common shares on close, and $112 million of contingent consideration payable in similarly exchangeable shares. The $112 million of contingent consideration represents the fair value of a holdback to be paid subject to Burgundy maintaining certain assets under management 18 months post-close and the fair value of a potential earn-out, payable in the future based on the achievement of certain growth targets. The acquisition was accounted for as a business combination, and the acquired business and corresponding goodwill are included in our Wealth Management reporting segment.
As part of this acquisition, we acquired customer relationship intangible assets valued at $375 million and goodwill of $319 million. Customer relationship intangible assets will be amortized over 12 years. Goodwill primarily reflects the expected future economic benefits from expanding our wealth advice and private investment counsel offering and is not deductible for tax purposes.
60 BMO Financial Group First Quarter Report 2026
The fair values of the assets acquired and liabilities assumed at the date of acquisition are as follows:
| (Canadian $ in millions) | |||||
| November 1, 2025 | |||||
Customer relationship intangible assets | $ | ||||
| Other assets | |||||
| Total assets | |||||
Deferred tax liabilities | |||||
Other liabilities | |||||
Total liabilities | |||||
Goodwill | |||||
Purchase price | $ | ||||
The purchase price allocation for Burgundy is subject to refinement as we complete the valuation of the assets acquired and liabilities assumed.
Contingent consideration is remeasured at fair value each reporting period. During the quarter, the fair value of contingent consideration was remeasured to $128 million and the resulting $16 million increase was recorded as a reduction in non-interest revenue, other revenues. Changes in the fair value of the contingent consideration are not recognized for tax purposes.
BMO Financial Group First Quarter Report 2026 61
Exhibit 99.3
CONSOLIDATED CAPITALIZATION OF BANK OF MONTREAL
The following table sets forth the consolidated capitalization of the Bank as at January 31, 2026.
| As at | |||||
| January 31, 2026 | |||||
| (in millions of Canadian dollars) | |||||
Subordinated Debt | 8,412 | ||||
Total Equity | |||||
Preferred Shares(1) and Other Equity Instruments(2) | 7,706 | ||||
Common Shares | 23,708 | ||||
Contributed Surplus | 379 | ||||
Retained Earnings | 47,718 | ||||
Accumulated Other Comprehensive Income | 6,194 | ||||
Total Shareholders’ Equity | 85,705 | ||||
Non-controlling Interest in Subsidiaries | 46 | ||||
Total Equity | 85,751 | ||||
Total Capitalization | 94,163 | ||||
Notes:
(1)Preferred Shares classified under Total Equity consist of Class B Preferred Shares Series 44, 50 and 52. For more information on the classification of Preferred Shares, please refer to Note 6 of the unaudited interim consolidated financial statements of Bank of Montreal for the three months ended January 31, 2026.
(2)The Other Equity Instruments described under Total Equity consist of Additional Tier 1 Capital Notes and Limited Recourse Capital Notes, Series 2, 3, 4, 5 and 6. Please refer to Note 6 of the unaudited interim consolidated financial statements of Bank of Montreal for the three months ended January 31, 2026.
DC_LAN01:249201.1
FAQ
How did BMO (BMO) perform financially in the first quarter of 2026?
BMO reported net income of $2,489 million, up 16% from $2,138 million a year earlier. Adjusted net income reached $2,551 million. Revenue increased to $9,824 million, reflecting stronger net interest income and higher fee-based revenue across operating segments.
What happened to BMO (BMO) earnings per share in Q1 2026?
Diluted EPS rose to $3.39 in Q1 2026 from $2.83 a year earlier, a 20% increase. Adjusted diluted EPS was $3.48, up 15% from $3.04, driven by higher revenue, lower credit losses, and continued expense discipline despite severance charges.
How did BMO (BMO) credit losses change in the first quarter of 2026?
Total provision for credit losses was $746 million, down from $1,011 million in Q1 2025. The total PCL-to-average net loans and acceptances ratio improved to 0.44%, mainly due to lower provisions in U.S. Banking and reduced performing loan provisions.
What was BMO (BMO) return on equity in Q1 2026?
Reported return on equity was 12.1%, up from 10.6% a year earlier. Adjusted ROE reached 12.4%, versus 11.3% in Q1 2025, reflecting stronger profitability on a broadly stable common equity base and improved operating performance.
What is BMO (BMO) saying about capital strength and regulatory ratios?
BMO reported a Common Equity Tier 1 Ratio of 13.1%, slightly below 13.6% a year earlier but still well above regulatory minimums. The Total Capital Ratio was 16.9% and the TLAC Ratio 29.1%, indicating a solid capital and loss-absorbing capacity position.
Did BMO (BMO) change its dividend in the first quarter of 2026?
BMO declared a quarterly dividend of $1.67 per common share for the second quarter of 2026, unchanged from the prior quarter. This represents an increase of $0.08, or 5%, from the prior year, equivalent to an annual dividend of $6.68 per share.
Is BMO (BMO) repurchasing its own shares in 2026?
Yes. Under its normal course issuer bid, BMO purchased 6.0 million common shares for cancellation in the quarter at an average price of $178.05 per share. Total consideration was $1,088 million, contributing to capital management and per-share metrics.
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