BMO chief risk officer sees US macro outlook improving

BMO chief risk officer sees US macro outlook improving

Bank of Montreal (BMO) Chief Risk Officer, Robert St. John, expressed confidence in the improving U.S. macroeconomic outlook during a recent earnings call. St. John's comments come as the bank reported strong earnings for the quarter ending July 31, 2025, with loan loss provisions significantly lower than analysts' estimates [1].

The quarter saw BMO set aside C$797 million in loan loss provisions, which was C$141.5 million less than the average analyst estimate of C$948.5 million. This reduction reflects an improvement in the economic scenario and a healthier U.S. commercial loan book, according to the bank [1]. St. John attributed the positive outlook to the ongoing economic recovery and the resolution of trade tensions between Canada and the United States.

BMO's earnings were bolstered by a C$3.23 per share on an adjusted basis, surpassing analysts' estimates of C$2.95. The bank also announced a new share buyback program, totaling C$30 million, or 4.2% of its outstanding shares, replacing a previously announced 20 million share buyback program [1].

The positive outlook from BMO's chief risk officer is in line with the broader trend of Canadian banks reporting improved earnings and lower provisions due to a more stable economic environment. Scotiabank, another major Canadian lender, also reported strong earnings, with adjusted earnings of C$1.88 per share, beating the average estimate of C$1.73 [1].

The improving macroeconomic outlook is a significant factor in the financial health of Canadian banks, especially those with substantial U.S. exposures. BMO's U.S. market accounts for about a third of its income, while international markets, including the United States, Mexico, and South America, account for more than a quarter of Scotiabank's earnings [1].

As the U.S. economy continues to recover from the COVID-19 pandemic, Canadian banks are likely to benefit from increased lending and reduced defaults. The outlook from BMO's chief risk officer suggests that the economic recovery is gaining momentum, which is positive for the financial sector and investors alike.

References:

[1] Reuters. (2025, August 26). Canadian lenders BMO, Scotiabank beat earnings, lower provisions. Retrieved from https://www.reuters.com/markets/us/canadian-lenders-bmo-scotiabank-beat-earnings-lower-provisions-2025-08-26/