BMO on right path in its U.S. foray: CEO
Bank of Montreal’s chief executive officer says he doesn’t need to make another acquisition to meaningfully lift earnings from the U.S.
“If we continue doing the things that we’re doing organically, I could see a third of the bank coming from U.S. earnings,” Darryl White, 47, said in an interview at Bloomberg’s New York headquarters. “To get beyond that you’d have to resume the M&A agenda.”
The U.S. contributions could reach a third of the Toronto-based lender’s overall earnings within three to five years, underpinned by stronger economic growth, he said.
That’s up from 24 per cent in fiscal 2017, before White took over, and 28 per cent for the three months ended July 31.
Bank of Montreal’s U.S. lender, BMO Harris Bank, alone earned $1.02 billion in the fiscal year’s first three quarters, and is on pace for an annual record.
“We’ll produce well through $1 billion of earnings from our U.S. operations this year, and that’s been a conscious acceleration,” said White, who took over as CEO in November.
Canada’s oldest bank made its first U.S. foray in 1818 by opening an agency office in New York.
Its main U.S. push began in 1984 when it acquired Chicago-based Harris Bank, starting a decades-long expansion fuelled by acquisitions across the U.S. Midwest.
The lender has also boosted wealth management and investment banking south of the Canadian border.
White says he sees greater opportunity for growth in the U.S. than in Canada.
Bank of Montreal has personal and commercialbanking business in 10 major U.S. cities, as well as wealthmanagement and capitalmarkets operations across the country.
White said he sees no need to push to become a “Top 10” player in U.S. investment banking, a goal that Royal Bank of Canada has pursued for the past eight years.
“We would have to consciously change our strategy, and that’s not our intention,” he said. “To have an objective of Top 10 would be a very different strategy and you’d have to, in my view, sacrifice profitability along the way.”
The U.S. provides opportunity for Bank of Montreal regardless of the outcome of talks among Canada, the U.S. and Mexico to renew the North American Free Trade Agreement, White said. He said he expects the talks to succeed, though even if they fail it wouldn’t be a disaster.