Well, good morning, everyone. On behalf of BMO's executive team, it is my pleasure to welcome you to BMO's 2026 Investor Day. I'm Christine Viau, Head of Investor Relations. This year, I'll be celebrating my 30th anniversary with BMO, and 10 of those I've had the privilege of serving in investor relations. It's just so wonderful to see so many of you in the room today. Before we begin our formal program, I would like to recognize the home traditional territories treaties of the First Peoples. We acknowledge that the land has been the traditional territory for Indigenous nations, including the Huron-Wendat, the Haudenosaunee, the Anishinaabe, the Mississaugas of the Credit, signatory to Treaty 13. Toronto is now home to many First Nations peoples, the Inuit, Métis, and all people who reside are treaty people committed to meaningful reconciliation.
Today, we gather at BMO Academy within BMO Place in Toronto. BMO Academy is a place of education through inclusion, awareness, and understanding, a place where indigenous art hangs proudly. We very much appreciate you taking the time to join us in person here in Toronto and online via the webcast. We have a full agenda today covering all of the bank's diversified businesses. Our first segment this morning will begin with Darryl White, BMO CEO, who will lay out our strategy, competitive advantage, and how across the bank we're elevating returns and accelerating growth. Followed by our group heads for U.S. Banking, Aron Levine, and Capital Markets, Alan Tannenbaum. Then we will have our first Q&A session.
After a short break, we'll move to the next segment, Sharon Haward-Laird, who will spotlight our differentiated treasury and payment solutions business, as well as Canadian Commercial Banking, followed by Matt Mehrotra, Group Head, Canadian Personal and Business Banking. Matt and Sharon co-lead Canadian Personal and Commercial Banking together. We'll wrap up this session with Deland Kamanga, Group Head, BMO Wealth Management. After a short break, we will hear from our Chief Risk Officer, Piyush Agrawal, and our Chief Financial Officer, Rahul Nalgirkar. We'll conclude with a final Q&A session and closing remarks from Darryl. We hope you will then join us for lunch and spend some time at our technology and AI showcase. Also with us today are executive committee members and business leaders who you will have the opportunity to meet at the end of the formal presentations.
Before we begin, I would remind you that today's presentations include forward-looking statements, which, as noted on the screen, involve assumptions that have inherent risks and uncertainties. Actual results and conditions could differ materially from the expectations expressed today. I would also note that the bank uses non-GAAP financial measures to arrive at adjusted results. Management measures performance on a reported and adjusted basis and considers both to be useful in assessing underlying business performance. All presenters today will be referring to adjusted results. Now, if you haven't already, I would ask that you please silence your phones and we will begin with a short video and then welcome Darryl to the stage. Thank you.
At BMO, we're building a bank for the future, grounded in trust, shaped by change, and focused on long-term value. For more than 200 years, we've built relationships one client at a time. That commitment has never changed, even as the world around us evolves. Our ambition is clear, creating value for our clients, colleagues, communities, and shareholders through expert advice that helps clients adapt, grow, and thrive, bringing the full strength of BMO's capital, expertise, and solutions to every relationship. We have a position of strength. As the 8th largest bank in North America, we deliver real financial progress to nearly 13 million clients across Canada, the United States, and select markets globally. In Canada, we serve clients in every province and territory, combining award-winning digital and payment platforms with deep local expertise.
As the country's first bank, we helped build Canada's first transcontinental railway, and for 209 years, we've enabled the economy-defining infrastructure that powers our communities. In the U.S., BMO's story begins in our earliest days. The Midwest is the foundation of our growth strategy, and our expansion into the West marked the next step in establishing a highly competitive, diversified North American platform.
BMO has arrived.
This is strength you can measure. The size and scale to deliver world-class client experiences, profitable growth, a winning culture and talent, strong risk management, consistent top-tier shareholder returns. Our digital and AI strategy is focused, disciplined, and delivering results, bringing data, insight, and innovation together to create a real-world advantage for our clients and momentum for the future. Our purpose: to boldly grow the good in business and life, and our engaged and high-performing winning culture guides how we serve clients and communities. BMO has donated over $ 436 million to non-profit organizations over the past five years, and we show up in communities in meaningful ways, including as the Bank of Soccer, supporting everything from grassroots programs to professional leagues, creating lasting connections with fans and communities across North America.
We invest in our people, empowering teams to execute with accountability, care, and commitment, driving stronger relationships, continuous innovation, and long-term value creation. BMO is a purpose-driven, future-ready bank, stronger, more profitable, focused on elevating returns and accelerating growth.
Thank you, Christine, and good morning everyone. Welcome to BMO's 2026 Investor Day and welcome to BMO Academy. [Non-English content].
We're pleased to host you here at our flagship learning and development ecosystem in the heart of downtown Toronto. This space was, in fact, designed to bring colleagues and clients together to collaborate, to learn, and to connect, because as you've just seen in the video, and as you'll see over the course of today, we are building a stronger, a more connected, and a future-ready bank. Let me start by saying thank you to all of you for taking the better part of your day, whether you're here in the room or you're online, and spending your time with us. BMO has never been stronger, more agile, and better positioned to elevate returns and accelerate growth than it is today. For 209 years, BMO has helped clients, communities, and shareholders make real financial progress.
Today, we're the 8th largest bank in North America with $1.5 trillion in assets, proudly serving 13 million customers. With you today, we'll be sharing our strategic vision, our progress against that vision, and our commitment to delivering sustainable long-term value for you, our shareholders. We're executing against a consistent and a differentiated strategy. Commercial banking remains at the core of our franchise, and it is a structural advantage. It's long been a strength at BMO, and it's been a defining ability for us to deliver performance. You'll hear from Sharon and from Aron how this business on both sides of the border generates stable, attractive returns supported by scale, deep client relationships, and integrated platforms. This business is now positioned better than ever to drive value for all lines of business.
In the United States, we've built a leading foundation with a unified go-to-market strategy for improved profitability, enhancing ROE, and expanding our growth opportunities. Our U.S. business enhances both the quality and the diversification of our earnings. Aron will be sharing with you how our transformed strategy is already delivering results and positions us well for the future. Here in Canada, our retail and our wealth businesses are strong, they're profitable, and they're high-return businesses. Matt will expand on our focus on delivering human and digital experiences that support relationship depth, high-quality deposit bases, and opportunities for further growth. Deland will share our client-centric focus on innovation and trust that's positioning BMO to grow client relationships everywhere we choose to. Our North American leading capital markets business continues to be a growth engine for us.
As you'll hear from Alan, our alignment with secular trends is a structural advantage. We're executing on a connected One Client strategy that brings together that commercial strength with wealth, with capital markets, and personal and business banking. BMO's success combines that collaboration, trust, and a data-driven approach to serve clients holistically and improve returns per client with limited incremental capital. Across BMO, our approach to AI-powered digital-first solutions is driving value today, which we'll demonstrate and will in the future. Today, we'll show you how we're deepening client engagement, enhancing efficiency, and capturing revenue opportunities already. Our disciplined management of expenses, risk, and capital, and the stewardship of all of these is a core operational strength at BMO. We're investing strategically, we're sustaining a strong dividend, we're returning excess capital to shareholders, and we're holding ourselves to a very high bar on any potential acquisitions.
Piyush and Rahul will bring all of this together for you in their presentation. Taken together, these strategies are designed to elevate returns and accelerate growth. We're executing on this combination with pace to deliver differentiated value for you, our shareholders. Sustainable ROE of 15% + and resilient and profitable earnings growth. That's what you will hear today. BMO's strategy is long-term, and it's built for success across a range of economic outcomes. I think it is important to recognize today that the rapidly evolving geopolitical environment in which our clients work, in which we work, is indeed very dynamic. We've successfully managed the bank through many periods of disruption and change, and we've consistently supported our clients.
In fact, this is often a time when we provide the greatest value to our clients through deepening trust and advice and guidance through our relationships. All right, let's dive in. Our resilience comes from diversification across three dimensions. By business segments with a differentiated mix, by geography, with over 40% of our earnings from the U.S., and by client, with the highest weighting of business client revenue among our peers. BMO is competitively differentiated by our market positioning and by our proven capabilities, including our flagship commercial business that ranks in the top five in North America, and our U.S. franchise with over 200 years serving clients in both established and in growing markets.
We have a top-tier and competitively advantaged business mix across retail, wealth, and capital markets, and award-winning digital capabilities built on consistent investment to drive value, increasingly powered by AI to enable those world-class client experiences. Underpinning all of this is really strong risk management that has protected our bank for more than 200 years. Let's focus on the commercial banking franchise for a minute, which is one of BMO's most important long-term value drivers. For investors evaluating the strength, the resilience, and the quality of our earnings, this business is central to our value proposition. Generating $10 billion in revenues in fiscal 2025, contributing over 25% of the bank's revenue and 40% of the bank's earnings, it is our powerhouse. This is not new, but as you'll hear today, it's now enabled.
It's now enabled by structure, by data, and AI tools, increasingly enabling it to become a revenue enhancer to each of our lines of business. What drives this performance is both the depth of our client relationship and the scale of our North American reach, which leverages the power and the efficiency of single technologies and product platforms, including our award-winning treasury and payment solutions. Critically, commercial banking represents an increasingly attractive One Client revenue opportunity, unlocking significant cross-bank value for BMO. Commercial clients, if you think about it, touch all parts of the bank. You've got the business that often also needs capital market services. You've got the business owner who has wealth and personal and business banking needs. You've got the company's employees who also have wealth and personal banking needs.
This makes the commercial hub at BMO a strategic engine for both growth and ROE expansion, as you'll see today. Our U.S. presence is also a key competitive advantage. As you know, we've had a long history in the United States, and we've grown steadily through a combination of organic and strategic expansion. Our combined operations in the U.S. today, which include our U.S. banking businesses and U.S. capital markets, has grown to contribute over 40% of the bank's earnings. As you'll hear today from Aron, our U.S. franchise is now very well-positioned to unlock its full earnings potential. This is a top-tier U.S. bank with the scale to compete and win everywhere we choose to do business.
We've integrated our U.S. personal and business banking, commercial, and wealth businesses under one unified structure to strengthen client connectivity across our teams, to accelerate our go-to-market strategies, and to build and bring the full value of BMO to our clients. ROE and ROTCE for our combined U.S. operations are up meaningfully from last year and are gaining ground on our competitors. In 2025, we increased ROE by 160 basis points to 8.3%. This compares to the U.S. average of 7% to 13%. Our destination is 12%, the equivalent of an 18% ROTCE, which when we get there, will compete with the very best in the industry. With a strong and recognized brand, exposure to highly attractive markets, and a fully aligned structure now in place, we're really well-positioned to gain share in the world's largest economy.
Our evolution is not limited to the United States. We've reshaped the bank over the last few years with purpose in four key ways. We've optimized our portfolio through disciplined execution with strategic clarity, which has liberated $5 billion of capital to redeploy. We've invested and scaled through strategic acquisitions. We've modernized our technology, building top-tier capabilities with AI-ready foundations. We've strengthened our winning culture, making BMO an employer of choice. We're not the same bank we were five years ago. The results of our transformation have been a step change in our financial performance, which has been top-tier over the past five years. The data on this chart tells a really clear story across nearly every financial metric, growth in revenue, PPPT, NIAT, operating leverage, and TSR, we have outperformed peer averages.
The bottom line is we're a stronger, more profitable, and better-positioned bank than ever before as we look forward to the next five years. Our teams are focused and committed to carry this positive momentum forward. Now, even with this strong performance, ROE has been below the peer average and below our medium-term objectives, and we have taken deliberate actions to address this gap. Many of you will recall we laid out a clear plan in the fourth quarter of 2024. Our number one imperative is achieving and sustaining a 15%+ ROE. Our biggest opportunity is improving our U.S. banking's ROE to 12%. We also identified opportunities in three key areas. Core operating performance and sustaining positive operating leverage across all lines of business, normalizing PCLs to the mid-30s, and optimizing capital.
We'll dive into all of these today, but our report card so far is that five quarters in, we are delivering against that promise. In fiscal 2025, against our peers, we delivered the highest ROE improvement at 150 basis points and the strongest growth in EPS of 26%. That momentum carried into Q1 of 2026. Excluding our severance charge, ROE increased 180 basis points to 13.1% over last year with EPS growth of 21%. Improvement has primarily been driven by core operating performance across the bank. U.S. Banking ROE increased 170 basis points. We achieved 4.3% operating leverage and 18% PPPT growth in 2025 at the total bank level. In Q1 of 2026, we then saw record revenue and PPPT.
While impaired PCLs remained stable at approximately 46 basis points in fiscal 2025, with performing loan losses trending lower, normalization benefits are still to come. This confirms the actions that we set in motion five quarters ago, refocusing on our core strengths, reallocating capital, and sustaining operating discipline, and they're translating into meaningful earnings power and strengthening the underlying engine of the bank. We're confident, and we're well-positioned to continue elevating ROE to 15% as we exit fiscal 2027 and accelerating growth across the franchise. We've got a clear path, as you'll hear throughout the course of today. We're anchoring this performance on three really clear enterprise priorities. First, growing and deepening client relationships. We're delivering world-class experience grounded in what we call One Client Advice and Guidance.
Second, innovating for business value through digital-first AI-powered solutions and innovative products targeted to meet real client needs. Third, optimizing performance through effective resource deployment and discipline management of risk and capital. We are hyper-focused on where resources are allocated, staying disciplined, agile, and ensuring every decision we make reflects risk, return, and strategic alignment. Together, these priorities form a future-ready plan to elevate the client experience, to ensure that we're at the forefront of innovation, and to sharpen how we deploy those resources. One Client is how we bring the full value of the bank to every client, and it's critical. With the strategy itself not necessarily being unique, the terminology, putting the client at the center, and our approach, as you'll see today, is we have embedded a client-centric approach across wealth, capital markets, Canadian P&C, and U.S. Banking with shared priorities, incentives, and scorecards.
We've built a data-driven 360-degree view of clients that we did not have before. It provides leaders with actionable insights leading to improved decision-making and tailored actions that anticipate our clients' needs. Our One Client strategy allows us to grow and to deepen relationships in ways that individual business lines simply can't achieve alone. Our clients tell us that we're differentiated in how we come together holistically to meet their needs as one bank, creating seamless and exceptional experiences that they expect and pay for. NPS scores are consistently higher when we serve clients across more than one line of business. As a result, their success is how we measure our success. A unique advantage at BMO is not only our approach, but the size of the opportunity with, you guessed it, business owners.
The strength and the differentiated scale of our commercial franchise creates significant One Client opportunities and revenue pools that others simply don't have to the same extent. Commercial banking represents a critical relationship between the bank and the clients, and a bridge to bringing the whole value of the bank together. Mid-market businesses create the majority, in fact, of M&A activity in Canada, where our capital markets team is really well-positioned. Business owners hold more than 3x the average household wealth. That makes this segment a powerful connection to our wealth advisors who provide wealth and guidance. As a trusted partner, we can offer our clients' employees access to everyday banking and wealth solutions through our Bank at Work programs on both sides of the border. The results are clear. The more we deepen relationships, the more meaningful the uplift.
ROE increases 1.5 x when commercial wealth and capital markets are engaged together versus commercial alone. This is another reason why our commercial franchise is a clear advantage in our mix. It's a scaled business with a greater share of total bank mix than others, and we're now positioned to bring the full breadth of BMO together around these clients, which unlocks the unique value that only BMO can deliver. Switching gears to our innovation advantage, which is focused on driving business value. You'll hear me say that over and over again. Consistent investment has been deployed into a robust technology foundation that delivers meaningful business value for our clients and for our teams. We've advanced capabilities across every dimension of our digital architecture.
Now operating with cloud-based infrastructure that gives us scalable on-demand computing power and connected data platforms that integrate information across the enterprise to unlock better insights and faster decision-making. We've delivered measurable outcomes over the past five years, doubling digital sales in personal and business banking, reducing commercial account opening times by 50%. We've prioritized talent, bringing industry leaders to BMO and upskilling our workforce, recognized by Evident AI as the global leader in AI talent development. This is the foundation that will continue to deliver long-term benefits, not just for speed and efficiency, but for client experience, product differentiation, and sustained growth. We're applying the same formula to our implementation and our scaling of AI. AI represents one of the most significant value creation opportunities for BMO, and we're approaching it with the discipline, the clarity, and the purpose that we can deliver.
This includes leveraging digital capabilities from experienced technology partners and deploying AI responsibly and in line with our risk appetite. It starts by putting AI in the hands of every employee. Why? Because embracing new technologies and diffusing that confidence is the first step in driving progress at scale. Our AI strategy is focused on three very clear priorities. First, personalizing client experiences. We've got, of course, a tremendous amount of data, and we're using it to drive better risk outcomes, pricing decisions, tailored advice, products, offers, and effectively shaping how we go to market. We've been using sophisticated machine learning models for a long time to deliver insights and strengthen engagement. What we're accelerating at BMO is the ability to combine machine intelligence with deep sector expertise that our teams can then more effectively use to help their clients make better decisions. Second, we're augmenting our own teams.
We're leveraging Gen AI to accelerate code development, supporting employees with intelligent service tools, and elevating productivity. As a regulated financial services institution, the policy and compliance processes are both critical and really time-consuming. Augmenting our teams to navigate these processes efficiently is driving significant benefits. Third, automating our own businesses. Already, agentic AI is being embedded in client services and credit decisioning, and it's expanding rapidly across the functions, freeing capacity, allowing teams to focus on higher value work and delivering better outcomes for clients. We're now digitizing processes that were previously too costly to even digitize, given legacy banking platforms, and huge opportunities are now presenting themselves for us to unlock value. We're already delivering significant value. AI assistants and frontline chatbots are helping our teams and clients, driving productivity gains.
Among our 2,000+ software developers, we're targeting a 20%-30% productivity uplift, and AI is fundamentally accelerating the speed at which we build, we modernize, and we innovate. On the client side, enhanced personalization of leads and client offers improves client experience and is already generating revenue. Enterprise-wide employee AI adoption is over 96%. This enables that idea creation and new ways of working to accelerate human innovation. With expanding use cases and measurable savings already in hand, we are confident in our ability to accelerate our leverage of AI to drive productivity, long-term performance, and value. By fiscal 2030, we have line of sight to over $1 billion of PPPT, underscoring the scale of the opportunity and the strength of the foundation that we have already built. We're integrating and scaling AI and redeploy
Redesigning processes all through the company to unlock speed, productivity, and deliver greater value to clients and to our teams. The priority areas are here on the slide, capacity creation to drive revenue growth, streamline technology delivery, efficiency gains, lower operational costs, and automating and optimizing our risk and control framework. As an early investor in other technologies like quantum computing, we know this evolution is just getting started. The third key driver of our ROE journey is optimization. We do this in three key ways, capital, credit, and cost. Over the last five years, we've taken a return-driven, disciplined approach to capital optimization, reallocating capital to the areas of highest return and positioning the bank for long-term success. Our discipline in capital allocation is a strategic advantage. Our deployment priorities continue to be focused on profitable organic business growth as a top priority.
When appropriate, retaining the optionality for highly strategic inorganic growth that supports and does not detract from our return objectives, share buybacks and consistent dividends. We continue to deliver the longest dividend payout record of any company in Canada, a record we are fiercely proud of. In fact, our dividend has grown at an average rate of 9% over the last five years, which is a full 2% higher than the average of our peers. That's what capital allocation and optimization looks like at BMO. It's decisive, it's strategic, and it's always focused on delivering long-term value for you, our shareholders. Credit and superior risk management are areas where BMO has consistently been disciplined and proactive. Our track record through all economic cycles is time-tested. This speaks to the strength of our underwriting, our portfolio construction, and the rigor of our risk culture.
In 2024, we experienced a combination of environmental headwinds and specific client outcomes that led to a short period of elevated PCLs. Through disciplined credit actions and ongoing optimization, we're now prudently managing from the mid-40s today to a target of the mid-30s. We're managing risk and return with the same consistency that has defined BMO for decades. Expense and discipline around efficiency management have also been a core strength at BMO, and we see further opportunities here. We've delivered consistent operating leverage in nine out of the last 10 years, and we've improved our efficiency ratio at a peer-leading pace, significantly narrowing the gap to those peers. We are not done.
We expect continued savings from AI and digital adoption, real estate optimization, and capturing opportunities in our scaled and unified U.S. platform, as you'll hear shortly, to sustain our ongoing commitment to positive operating leverage and fuel the investment opportunities for long-term growth. Bringing our strategic priorities together, the message here is clear. At BMO, we are positioned to elevate and sustain returns across every operating segment. Our fiscal 2028 ROE targets reinforce both our ambition and my confidence in exiting fiscal 2027 at 15% and sustaining that over the long term. I wanna bring the message back to the essentials. BMO has a clear and actionable path forward. Our differentiated commercial engine is driving deeper client relationships across all business lines and in every market, leading to greater returns over time.
Our scaled and our unified U.S. franchise is now positioned to unlock their full earnings potential. Our AI strategy is ambitious, it's disciplined, and it's already delivering real value across the bank. We've got a really strong culture powering our execution with top-tier talent driving the returns that investors crave, and we have a clear line of sight to 15% ROE, and we're confident that we can achieve it. As we deliver on ROE, we're also accelerating growth in each of our businesses. We expect to be at or above our EPS growth objective of 7%-10% over the next three years. Simply put, we know what we have to do. We have the track record to deliver it, and we have the right strategy, talent, and leadership to reach it. [Non-English content]
We have an incredible leadership team, and you'll hear from them today, and you'll get a chance to meet all of them if you haven't already. I couldn't be more confident in this team guiding BMO in this moment. Now, with that, I'm very pleased to introduce Aron Levine, our Group Head and President of U.S. Banking. Aron joined BMO in July from Bank of America, where he spent 30 years building and executing strategies across commercial, wealth, and mass affluent. His impact here is already delivering results, and I've got full confidence in Aron's strategy for the next chapter of our U.S. performance. Welcome, Aron.
Okay, thanks so much, Darryl. Good morning, everyone. It's great to be here. I'm Aron Levine, President of BMO U.S. and Group Head of U.S. Banking. I am very excited to talk to you today about our U.S. Banking organization and our plan to achieve 12% ROE and targeted sustained profitable growth. I really wanna start this morning with talking about how we're built to win and our differentiating strengths. As Darryl highlighted, we are a top 10 commercial bank with industry-leading treasury payments and capital markets offerings. We have a fully integrated model, bringing the strength of BMO to every business and individual client.
We are focused on key markets and industry sectors, and importantly, we currently hold leading positions in the Midwest and have the opportunity to grow with our scale in the West from the Bank of the West acquisition. Now, one of the reasons why I joined, and many others have over the past twelve months, is our winning culture. We are focused on delivering for our clients and the communities we serve. Of course, we are investing for sustained growth. Those differentiators really underlie our clear strategic priorities. First and foremost, we will leverage our strengths to deepen existing client relationships. We will also acquire new clients through our investments in people and our densified physical network. We will support all of our work with continued investment in digital and AI capabilities, and we will manage our expenses and risk to deliver sustained profitable growth.
It is based on these strengths and this strategic focus that I am very confident we are on a path to deliver 12% ROE by the fourth quarter of 2027. Let's take a look at the business. Today, U.S. Banking is comprised of commercial, personal business banking, and private wealth, serving clients as one integrated platform. This provides us with greater scale as we invest in markets and serve clients holistically, which better positions us to capture share across all three lines of business. We do have scale. We are a top 10 commercial lender. We have over 850 financial centers, and most importantly, 12,000 team members who show incredible commitment to our clients and our communities. We are a key contributor to BMO's success. We delivered over $8 billion in 2025 revenue.
I should also note that all the numbers I'm using today will be in U.S. dollars. In addition to our U.S. scale, the BMO brand is actually well known across our markets. As Darryl said, BMO first opened its doors in the U.S. over 200 years ago, but we've had significant presence in the Midwest for over 40 years. We have an established brand connected to the community, as you can see, and we have already begun building awareness in the West. Our campaigns and sponsorships of the LA Football Club and the LA Stadium have brought strong awareness that we are leveraging. What we're doing is working.
We've increased California consideration by around 40%, and in two years, as you see, we've achieved three times awareness, and 2x to 3x more consideration, especially with the mass affluent segment, which is a key area of growth that I'll talk about more later. Now when I joined last mid-2025, it was clear we had a very strong foundation from which to serve clients. We had some areas that needed to be improved, some low returning portfolios. We had to change our deposit mix. There was technology investments that needed to be done, and operational improvements to drive efficiency and enhance productivity. What have we done? We've optimized our loan deposit book with non-core exits and sold financial centers in non-core markets. We've improved our deposit mix, increasing our percent of core operating accounts.
We've managed our credit book back towards normalized levels, and we've exercised disciplined expense management to support key investments in digital capabilities and increase the number of client-facing teammates. From an operational perspective, we consolidated all of commercial banking under one leader who joined BMO in early 2025. I think most important of what we've done is across all areas, we've established new business systems around performance management, risk management, and One Client execution. These actions have driven results. We've improved our margins, we've increased our fee revenue, and we have driven ROE 170 basis points. All of that simply represents the initial phase of our path to 12%. How do we get from 8%, where we are now, to 12% ROE? Here's how we're gonna do it.
With the changes in optimization mostly completed in 2025, we will now first grow revenue, NII and NIR by deepening relationships with a focus on commercial treasury payments and capital markets. We will continue our investment in client-facing talent. We will execute on programs that drive primary relationships with both personal and business clients, and we will expand our personal and business relationships to include wealth across all segments, from mass affluent to ultra-high net worth. Of course, we'll also open new financial centers that add density in key markets. Next, we'll improve our operating efficiency by maintaining expense discipline as we self-fund investments for future growth. Finally, by optimizing risk and capital with thoughtful client selection and to grow within our risk appetite, and by allocating capital where we earn the highest returns.
Together, this is a winning model for executing our growth plan to achieve our targets. Mid-single digit revenue growth, 10% PPBT growth, low 50% efficiency, and 12% ROE. That's an overview. I want to dive deeper into how we're going to deliver these results through the three strategic priorities that Darryl mentioned earlier. Growing and deepening our client relationships, innovating for business value, and optimizing performance. Let's start with where U.S. Banking is. It serves both business and consumer clients in a segment model in order to deliver on the specific needs of each client, as well as support clients as their needs change over time. We'll start right now with a focus on our business clients, and we serve clients from small businesses to large commercial.
BMO's U.S. commercial franchise is nationally recognized and has been a top franchise in the U.S. Our strength lies in our industry expertise delivered locally through in-market relationship-driven coverage with a team of over 2,300 delivering leading industry, product, and advisory expertise across diverse sectors and specialty areas. We have clear opportunities to drive profitable loan and deposit growth with this terrific team. Remember, commercial is where we have scale and deep client relationships built over decades, and is a key source of One Client value across the enterprise. Now we've taken steps to reduce or eliminate lower return relationships. We've also been focused on how we're going to grow. Our growth strategy includes the following. One, we're increasing alignment to fully leverage industry strength with a new one commercial bank coverage model, both on a regional market basis and an industry vertical basis.
Second, we are investing in expanding talent. On our path to adding 20% more bankers, we've already hired over 50 revenue-generating professionals from leading firms, primarily in California. It's important to note, 80% of future hires will be in California, where we aim to become a leading player in commercial banking, just like we are in the Midwestern markets. We've got to drive our emerging middle market. Now, these are defined as clients generally with sales between $10 million and $100 million. This represents a key client acquisition accelerant. We've added new leadership. We've refocused partnerships to capture more of this segment, which delivers opportunity to the commercial bank and to our capital markets partners. Together, we expect these efforts to lead to an increase in profitable loans and deposits in the mid-single digits.
As I've previously stated, we expect to see loan growth begin in the second half of this year. In addition to loan and deposit growth, we will continue to build off the great momentum we have in 2025 in fee income by ensuring more of our lending clients benefit from our full capabilities. As you can see on this slide, we have significant opportunity to deepen existing relationships with our 22,000 commercial clients and 265,000 business banking clients. Again, it starts with industry expertise at being a trusted advisor to our clients. With strong relationships that we have as a starting point, we now have the opportunity to introduce our treasury management, investment banking, and global markets capabilities far more consistently.
We're deploying wealth advisors across U.S. Banking to serve all financial needs of both the business owners and their employees. Our target in the medium term from this work is 10% NIR growth. We've already seen early momentum with an 8% growth rate in 2025 and have identified many clients where we know we can capture greater share of wallet. I want to turn to the next slide and highlight a key example, one of our real strengths, which is treasury and payment solutions. This is a demonstration. The strong results that we've achieved really demonstrates over the past year what we can do here. Now, my colleague Sharon Haward-Laird leads this area. She does a fantastic job. She'll be on stage later to discuss TPS in more detail, but I really want to illustrate the opportunity.
Last year, we launched Business Works. This is a tailored solution for business banking and emerging middle market clients. It's a bundle of cash management solutions with transparent, easy-to-understand pricing tiers. It brings together digital banking with liquidity payments and fraud protection. In business banking, that Business Works offer has resulted in 45% increase in TPS sales since launch. In our emerging middle markets area, there's been a 60% increase in client acquisition since its launch. When we talk about our larger, more complex clients, we already offer an award-winning, fully customizable enterprise cash management platform. We've added talent and really increased management focus on this offering, which has led to a 23% increase in U.S. TPS fee revenue year-over-year.
Now, whether it was the bankers that were already here or the many bankers that have joined us from leading firms, everyone says this offer competes with anyone, including the largest U.S. banks. Commercial TPS penetration is already up from 55% to 57% since last year, but our target is 70% + by fiscal 2028. Now, it's important to note, and again, as Sharon will discuss later, our top BMO markets are already at 80%. So there's that further supports my view that we can grow this to at least 70%. To get there, we'll do the following. We'll continue to add sales force. We will align relationship managers in TPS and commercial bankers more closely. We are focusing on pricing strategies, how we scorecard, and sales training.
Of course, we'll continue to invest in the platform and develop new products, and enhance those we have, like we did with Business Works. That's TPS. Let me turn to another good example of full firm delivery, and the income growth opportunity is in alignment with our capital markets team. Alan is going to follow me on stage and provide greater detail, but I want to highlight this critical partnership and the actions we have already taken to better align and deliver for clients. We have aligned sector coverage to win in key areas such as industrials, consumer and retail, and business services. We have built a deep bench of more than 100 capital market bankers dedicated to the middle market.
We further drove alignment by creating a unified M&A team back in December. This collaboration has already led to doubled investment banking revenue from commercial clients over the last two years, and we've expanded deal flow by 33% year-over-year. Overall, in commercial banking, our history and depth of relationships, our increased investments in talent, and our unified U.S. banking model positions us to deliver on our medium-term targets. I want to shift now to the consumer side of U.S. banking and how we'll bring this same relationship deepening model to our individual clients. We serve nearly four million U.S. clients through our financial center network and digital capabilities. A key segment within our client base is our over 1.2 million that we define as mass affluent. That's generally clients that have investable assets over $250,000.
This represents a significant opportunity to grow through our highly scalable premier banking and BMO Investment Services platforms. I'll talk about more of that in a minute. Further, we deliver exceptional service and advice to our high net worth and ultra-high net worth clients through our private bankers and their teammates. Let me turn now first to our footprint and talk about that. Our consumer business is well-positioned across the Midwest and the West, and we are focused on the opportunity to grow share in the markets we serve. We operate in 20 of the top 50 deposit MSAs, including Chicago, Los Angeles, and San Francisco, three of the top six deposit markets in the U.S. We already have top positions in Chicago and Milwaukee, where we are number two in total deposits at 18% and 14% respectively.
Our clear opportunity here is to densify in the markets that we have acquired from Bank of the West across California. We already have 220 financial centers supported by award-winning digital capabilities. We are executing on our plan to build 150 new financial centers. As you've seen in a recent press release, 90% of those locations are in key submarkets across California, with the remainder being in Arizona, another growth market for us. It's important to note that in addition, we continue to invest in renovations and relocations across our entire footprint, and we are always evaluating other markets for investment. Think about Oregon and Washington, where we can capitalize on our strength and scale that we have in Canada. Now, clearly, density matters. It is a proven playbook. Let me show you what I mean about that.
In markets where we have scale and a unified model, we see stronger growth, deeper relationships, and better returns. If you take Illinois and Wisconsin, we have a proven playbook through deep community engagement alongside sponsorship and brand, and an integrated go-to-market offering. This leads to a productive network earning our fair share of retail deposits. In Chicago, we have 8% branch share, and we have 7% retail share, deposit share. In Wisconsin, we have 10% branch share and 13% retail deposit share. Now look at California. This is a highly attractive market. It offers 2.5 x more potential retail deposits than the Midwest markets. Today, currently, our deposit share in California is only half of what our Midwestern branch share does. Our retail deposits per financial center trail our regional competitors.
Through densification, driving best practice client acquisition, investments in digital, and improving execution across our network, we can exceed our ratio of 1/1 deposits to branches in the Midwest, and most importantly, we can drive to achieve that 1/1 ratio in the West. Let me talk a little bit more about densification. If you could see in Illinois and Wisconsin, our strong position is backed by a network of 320 financial centers. Together, importantly, with more than 750 specialists serving our clients across business lines. In California, we're gonna take the network from 220 to over 360, and we're gonna grow our frontline banker coverage by 1.5 x. Think premier bankers, wealth advisors, and commercial bankers.
We are targeting 6%-10% branch share over the medium term in those markets we're focused on. More importantly, the goal is to build deposit share in line with our branch share. Our starting point, our first milestone, is an expectation to achieve $50 million-$60 million in retail deposits per new de novo financial center by year three after opening. Our consumer strategy is highly focused, and we are densifying in markets where we have a strong commercial banking presence, as it's known that consumer and commercial businesses work in tandem to serve clients and the community. While it's critical to be focused on where we'll invest to grow, it's equally important to focus on specific opportunities to grow primary relationships. If you can see on the left, we've identified six areas of growth opportunities.
There are others, but those are six important ones. I want to spend a minute, further describing one of the most significant, relationship deepening opportunities, and that's mass affluent, where we have a proven model to scale. If you look in the center of the slide, you can see that over one million mass affluent clients have an existing banking relationship with us today. However, only 11% of that existing mass affluent or near mass affluent client base is currently covered by our premier or private banking teams. When you look at the significant impact covering a client has on balances, on reducing attrition, and on investment penetration, it's very clear how significant opportunity for growth mass affluent really presents.
Now, if you know a little bit about my background, I have been focused on this segment for the last decade in my previous role, and we had quite a bit of success. What I've seen here at BMO, and what I know to be true, is we have all the right pieces in place to be equally successful. We have brought together BMO's banking and investment teams and capabilities across both physical and digital channels. Importantly, we have a highly scalable model with access to leading technology, regulatory supervision expertise, and service support. Therefore, our direct investments are focused on simply adding bankers and advisors to that scalable platform. Based on the focus and efforts to support, our medium-term targets here are very clear.
We're gonna add 3% growth in our checking accounts, 5%+ growth in personal core deposit balances, and bringing mass affluent AUM from $25 billion to over $40 billion. Scaling mass affluent, capturing greater share of wallet requires great human advice, but it also has to be amplified by great digital experiences. One of the ways we differentiate ourselves is by helping every client make real financial progress through both our people and our digital channels. Bringing human and digital together is how we drive more business per client. We already offer a leading mobile banking app with high engagement. My Financial Progress, for example, is a needs-based planning tool, which in 2025 alone, produced over 330,000 planning conversations and recorded more than 640,000 client goals.
We have a variety of other tools and content centered on financial wellness education. In digital, it's key to continually raise the bar and add new features and capabilities focused on improving the client experience. That's what it's all about. We've enhanced our mobile onboarding for privacy and adoption, and we just recently announced we're the first to work with a fintech DollarGPS to provide clients with a robust planning tool for better understanding their financial well-being. A great example of that would be the tool can calculate how reducing a mortgage payment will affect the client's net worth over the next 20-30 years. Really providing clients that ability to understand and visualize and have a higher level of financial awareness. We're very focused on the mass affluent, but it is also critical that we deliver personalized advice to private wealth clients.
Our wealth management platform, as you see on the next slide, provides holistic solutions to serve clients across the entire wealth spectrum. As I've discussed, BMO Investment Services serves the mass affluent client segment, but our great private bank focuses on the broader needs of high net worth clients from $2 million-$50 million. Our family office serves the highly specific and far more complex needs of those clients with greater than $50 million in assets. We are already seeing positive momentum and have a clear plan to scale here. Over the past 12 months, we have added over 85 client-facing positions in the wealth business. We have terrific new leadership, and with our unified U.S. banking model, we are seeing momentum coming out of fiscal year 2025. We captured over $2 billion in net new assets.
We drove over 12% growth in wealth fees. Where we've leveraged our position in the West, we've seen a 50% increase year- over- year in trust and investment sales and over $ 1.1 billion in net new assets. We're gonna grow this business by doing the following. Continuing to add top talent aligned to our key segments. We're gonna modernize our digital experiences, and critically, we're gonna leverage introductions from our commercial and business banking client base. When we do all that, our medium-term targets are to go 1.3 x more NIR growth, add $ 20 billion+ in investment AUM, move our investment penetration for our private banking clients from 40%-65%+, and as I said, we wanna drive at least 15% growth in commercial to wealth introductions.
With that, I'm gonna move to our second theme, innovating for business value. We are making significant investments to enhance the digital client experience, modernize core platforms, and deploy new capabilities. Our fiscal 2026 investment in this area is up 70%. These investments are critical steps to allow us to ultimately fully leverage AI capabilities, which I'll describe more in a moment. Now, when I say modernized frontline systems, what that ultimately means is we are improving speed, reducing complexity, and offering a better client experience end to end. That's what it's all about. Two quick examples to illustrate that point. First, we're upgrading our frontline sales and service platform to remove manual work and release capacity for more time providing guidance to clients.
Whether it's enhancing banker capacity or reducing time to open an account, we see over $30 million in run rate efficiencies supporting our op leverage and our path to 12% ROE. Second, My Wealth Portal will create a differentiated experience for both the client and advisor in private wealth. We expect the benefits here to be very client-centric. Five points at least of improved Net Promoter Score. About 35% of our processes will be simplified, and ultimately, we will reduce time to open an account by as much as 50%. I think it's important I should mention, it's not on the slide, but in commercial banking, significant work is being done on the credit platform to drive speed to response as well. This is work being done on a North American basis, and I think Sharon will make some comments on that later.
Modernization of tech and data is foundational to AI, which we are leaning into as a driver of value. We're using AI to improve client delivery and streamline operations. Again, a couple specific examples of how we're deploying AI today. We're enhancing client delivery by personalizing experiences, providing clients with the right offer at the right time. In our commercial banking business, our next best offer engine has led to over 18,000 leads since launch. That drives our pipeline, which ultimately drives increased revenue. Second, we're augmenting our teams. We're automating self-service delivery of BMO policies to our frontline through Gen AI chatbots. The Lexi chatbot automates financial center frontline knowledge management of over 600 policy directives, which truly automates the work of what used to be 28 FTEs on a call center.
Our Nova chatbot does something very similar, over 650 commercial credit risk policies we can get to our frontline faster. I'm now gonna turn to our third theme, optimizing performance. Cost discipline, and balance risk return to fund growth and protect returns. Bringing together the plans and investments that I've discussed today requires precise execution. I've got to start this conversation with our winning culture. Everything we do is powered by our dedicated, engaged U.S. Banking team. Our culture is clearly highly attractive to industry talent, both long-standing BMO colleagues and all the new ones who've joined us. Talent translates into high-touch relationships and trust, and those are things that AI cannot replicate. We are committed to both attracting and developing talent, and you need both to drive multi-year share gains.
We have elevated internal and external experts into leadership positions and added talent in key markets and segments. We will continue to add talent in priority markets in the coming years that will support our ROE uplift with additional sales capacity. BMO's development programs drive execution, provide flexibility, so we continue to build out our next generation of leaders. In addition to talent, we've got to maintain a disciplined approach to expense management. That is another key part of our culture. We're committed to supporting investments through a self-funding model, where discipline creates capacity to fund investments in talent, tech, and brand. We have a consistent track record of growing revenue while managing expenses. It's driven by our operational excellence. Medium-term, we aim to achieve low-50s efficiency by managing expense to low single digits by consistently creating capacity for reinvestment through cost takeout priorities.
Those are things that we'll do such as simplifying our operating and organizational model. We'll rationalize platform and technology, and we will optimize third-party vendors. More than 80% of our cost takeout target is already under execution with actions defined today. As we add bankers and wealth advisors, we expect these cost reductions across the platform to enable us to remain essentially flat on employee headcount over time. Efficiency is half the equation. Returns also depend on balancing risk and capital. We are continuously improving how we drive growth within our risk appetite by managing these four key areas. Credit, we've added origination controls, we've integrated portfolio monitoring, and new collection strategies and tools. On the operations side, we're scaling our automated risk and control testing to mitigate fraud and other losses. For capital, we continue to expand stress testing capabilities to quickly rebalance risk and reward.
Finally, as I mentioned earlier, liquidity. We continue to focus on growing core deposits. With that, let me close this morning by reiterating why we have such confidence in our path to accelerate growth and achieve our medium-term goals. U.S. Banking has a clear path to deliver sustainable, profitable growth and achieve our 12% ROE objective. We have a clear operating model with a very talented leadership team. We have a clear execution plan, and we have a clear path to profitable growth within BMO's risk appetite. It's why I'm very excited to have joined this company. It's why I'm very excited to be leading the U.S. Banking team. There is so much talent, so much capabilities, and quite frankly, so much potential in front of us. I thank you for your time today.
It is now my pleasure to hand over to my great colleague, Alan Tannenbaum, Group Head of Capital Markets, who is a key partner in delivering on our U.S. banking goals. Thanks very much.
Thank you so much, Aaron. Good morning, everybody. I'm Alan Tannenbaum. I lead the capital markets business. I've had the privilege of being part of this business for 16 years and have served as group head for the past two. We provide strategic advice, capital raising, and execution services to clients across BMO Financial Group, serving corporate and investor clients with comprehensive solutions. We are a growth engine for the bank and a strong contributor to the bank's ROE objectives. We've invested in and expanded our business in both human and financial capital, building leading capabilities across industry verticals and asset classes. The next phase of our growth is to deepen those capabilities, capture higher share of wallet, and further enhance our returns.
We have a powerful franchise with clear competitive advantages that shape our strategic priorities. First, we're a leading Canadian investment bank serving clients of all sizes across all asset classes. Second, our scaled U.S. platform is fully integrated with our Canadian franchise to deliver a North American platform with leading capabilities in targeted sectors and asset classes. Third, we have a proven track record of building businesses organically and through thoughtful acquisitions. These competitive advantages drive our strategic priorities, which center on deepening our client relationships, leveraging the One Client operating model to deliver more holistic solutions for clients of both Capital Markets and the Commercial Bank. We're utilizing AI and cutting-edge technology solutions to drive growth and scale. We're gaining share as we deliver better advice, allocate capital more efficiently, and manage risk more effectively. This is a snapshot of our franchise.
We run a well-diversified business, having made deliberate choices about where we compete. In fiscal 2025, that translated into $7.4 billion of revenue and approximately $3 billion of PBT. Roughly 40% of our revenue comes from Canada, 50% from the U.S., and 10% internationally. Our model prioritizes depth over breadth, focusing on where we have the right to win and can generate strong returns through the cycle. Turning now to our strong track record of growth. Over the past five years, we've delivered strong ROE and a high revenue to RWA ratio, reflecting peer leading capital efficiency. We've grown revenue by $2 billion and delivered a 6% PPBT compound annual growth rate while keeping annualized RWA growth to just 2%. This is disciplined, high-quality growth and sets the foundation for our next phase of value creation.
Let's drill down now on how we delivered that growth. We've consistently invested in areas aligned to client demand that deliver attractive returns, and then integrated those capabilities across the platform. You can see that in some of the businesses where we've outperformed. Our metals and mining business, our treasury and payment solutions business, electronic trading and equities, and our structured products business. Our mining franchise is a clear example where building deep sector expertise and a full suite of capabilities translates into BMO as the market leader. I'll spend more time on this business shortly. Our treasury and payment solutions business leverages technology from across the bank, as you heard from Aaron, to deepen our corporate client relationships and deliver recurring revenue streams that are growing as a percentage of our overall business.
Our Clearpool acquisition leapfrogged our electronic trading capabilities and now powers electronic execution across global markets. The acquisition of KGS-Alpha elevated BMO into the top tier of U.S. securitized products dealers. The outperformance of these businesses reflects a deliberate mix of both organic and inorganic investments, accelerating our scale and breadth of capabilities. Looking ahead, our focus is on delivering profitable growth and strong returns. Over the medium term, we're targeting ROE of 15%+, up from around 13% over the past three years. High single-digit PPBT growth while continuing to improve our efficiency ratio to below 58%. Now let's move on to how we'll deliver on those objectives. Our business has a solid foundation and we're accelerating growth. First, we're growing and deepening our client relationships by delivering the One Client approach everywhere.
Second, we're innovating and enhancing our capabilities centered on an AI and technology-enabled business model. This is a key element of improving our efficiency. Third, we're optimizing the performance of our resources. Now let's go through each of those elements. The client. Everything starts with our client and our focus on being their trusted advisor. We have a broad, diversified client base, and we grow by deepening those existing relationships. Our One Client approach ensures that we're delivering all of our capabilities and not just one-off products. Our clients tell us that they value integrated end-to-end solutions. Solving clients' challenges will result in delivering more products to achieve higher share of wallet and accelerate our growth. Next, I want to focus on how we're well-positioned to continuing to deepen those client relationships by capitalizing on three key megatrends: AI-enabled infrastructure, commodities, and energy.
These areas continue to attract significant investment and represent significant opportunity for us and our clients. In AI infrastructure, we're financing and providing risk management solutions for the build-out of data centers, networks, and associated power demand. In commodities, our long-standing leadership provides clients with trading, financing, risk management, and balance sheet support through the cycles. In energy, we bring together deep sector knowledge, expertise in sustainable finance, and an integrated advisory capabilities. In all three, the need for strategic advice, capital raising, hedging, and risk mitigation tools means a robust fee pool for us to capitalize on. Again, a deep focus in areas where we have the right to win. Let's now focus on our metals and mining franchise as a blueprint for what we're delivering across capital markets.
We recently hosted our largest global metals and mining conference and were named the world's best investment bank in the sector for the 17th year in a row. Developing mines is a complex, capital-intensive process. Our clients demand deep expertise and fully integrated solutions. We, BMO Financial Group, are the leader. Our global platform brings together advisory, lending, capital raising, and risk management. We support our clients and finance our clients' inventory, hedge their production, and move and store their bullion, delivering multi-product outcomes. That integration drives results. Since 2018, we've more than tripled our revenue in this franchise. This model of deep sector expertise, combined with integrated product solutions, yields market-leading results. We're replicating this proven playbook across key sectors like insurance and industrials, where we see similar opportunities. This is a natural transition to our One Client focus.
Building on what my partner Aron shared earlier, forging an even closer partnership between capital markets and the commercial bank is a clear path to high margin growth. This is already a key strength for us in Canada, and this partnership represents our most significant growth vector in the U.S. We deliver high-value capabilities across M&A, ECM, DCM, FX, interest rate hedging, and commodity hedging. We've made investments by embedding our personnel in the regions closer to the commercial teams with dedicated capabilities to support these efforts. The result is that we're accelerating this high-quality, high margin revenue. Next, let me turn to our U.S. platform. Scaling this platform has been a core strategic priority for the past decade, and we've made meaningful progress.
Over the past five years, U.S. capital markets revenue has grown at an 8% compound annual growth rate, and today represents 50% of our revenue. That growth reflects intentional choices focused on building capabilities that grow and deepen client relationships. The way we've scaled the U.S. also shapes our approach to growth in our international businesses. We become increasingly effective at distributing our content and products outside North America. Over the past five years, international capital markets revenue has grown at a 12% compound annual growth rate, increasing that contribution from 9% to 11% of total revenue. We start by exporting proven North American products and content, particularly in rates, equities, securitization, and structured products. We've invested selectively in local capabilities where it enhances client relevance, primarily across the U.K., Europe, and Asia Pacific. Our international platform i s an increasingly material contributor with a clear opportunity to continue growing.
Now let's talk about our two core operating businesses within Capital Markets. I'll start with Global Markets, a key growth engine. Last year, Global Markets generated $4.6 billion in revenue across a diversified set of asset classes. We've invested in expanding our product set, building capabilities in rates, commodities, and prime brokerage, while deepening our leadership in Canadian equities, Canadian equity derivatives, and structured products. As we've expanded our product breadth, we're now focused on deepening client penetration and increasing wallet share. This growth is anchored in continued investment in technology, best-in-class electronic trading, scalable trading architecture, and strong risk management tools. Over the next three years, there are tangible opportunities to drive more than $1 billion of incremental revenue at returns that are accretive to the bank.
Now on to Investment and Corporate Banking, which generated $ 2.8 billion of revenue last year. Our strategy here is to translate platform strength into incremental market share. This means driving more revenue through our integrated verticals, bringing together advisory, financing, and markets to deliver cross-platform solutions. We focus on key clients, particularly in the U.S., where the opportunity set is vast and prioritization is critical. We continue to leverage sector leadership in financial sponsors, for example, to win mandates across multiple products and drive repeat business. We are the leading advisory firm in Canada with an expanding presence in the U.S. and a clear focus on building a leading U.S. M&A franchise, again, leveraging the strength and client breadth of our commercial bank.
Together, these initiatives will drive over $0.5 billion of incremental revenue over the next three years, with the goal of achieving market share in the U.S. of approximately 2%. The story for I&CB is about getting more out of the platform we already have, driving sustainable share gains and expanding margins. As I've just described, we have an ambitious growth agenda. A critical enabler of that agenda is how we're using AI across our franchise. We're focused on three areas. One, we're enhancing client value. We're using AI tools to mine our data and content to deliver more relevant insights, support richer engagement with higher velocity and accuracy. Two, we're elevating employee productivity and in creating efficiencies by embedding AI across our daily workflows. Three, we see opportunity to use AI to create new adjacent revenue streams, untapped opportunities from an AI-first approach.
AI helps us serve better clients, serve our clients better, operate more efficiently, and extend the reach of our platform. Moving on to optimizing performance across our platform. As we grow and innovate, performance discipline becomes even more important. One area to highlight that dynamic is how we've optimized our lending book in the corporate bank. This is about actively managing our balance sheet to improve the quality of returns, not simply growing assets. Our loan book reflects that approach. It's well-diversified, aligned to where we see the best risk-adjusted opportunities, and balanced across Canada and the U.S. With investment-grade exposure at 77% of our portfolio, our leverage loan exposure remains a modest portion of authorizations. We actively recycle capital, redeploying roughly 25% of our RWA since 2020 from lower returning relationships to higher returning opportunities.
This discipline, combined with a strong risk culture and robust controls, delivers a high-quality loan book positioned to drive revenue with above-hurdle client ROEs. Let me close by bringing this back to performance and returns. What you've seen today is a capital markets franchise built around clients and strategically scaled with clear positive momentum and a well-defined path forward. We're growing by deepening client relationships, leveraging a fully integrated North American platform, and focusing on the sectors, products, and geographies where we have a clear right to win. We're expanding with discipline, scaling our U.S. and international businesses deliberately, and using technology and AI to enhance productivity, increase client relevance, and deliver operating leverage. All of this is underpinned by strong capital and risk management, reflected in the quality of our returns and our ability to perform through the cycle.
That translates into medium-term targets that are clear and achievable. Capital Markets plays an important role in serving all the bank's clients with a powerful franchise positioned to deliver consistent, high-quality growth and accretive returns. Thank you all for your attention this morning. With that, I'll turn it back to Christine.
You need to go the other way. Go back that way. Thank you, Darryl, Aron, and Alan. We will now move to the first Q&A session. I'm also going to invite Piyush and Rahul up onto the stage to join them. Now, I know that you've all flipped ahead in the deck, and you know that Piyush and Rahul have presentations later. I would ask you to focus your questions for this session on our current presenters. You will have an opportunity to ask Rahul and Piyush questions on their presentations in the second Q&A session. I would also ask you to raise your hand if you have a question. We will bring a microphone to you, and if you could please state your name and your firm name, before you ask your question. Go in the front row here. Number three. Ebrahim.
Ebrahim Poonawala, Bank of America. I guess two questions. It's interesting that your first presentation was the U.S. with Aron. Maybe one question for you, Darryl, and then for Aron, for you. You've been CEO for nine years. What on paper, BMO should have been super successful in the U.S. competing with the regional banks. Was it the org structure, not having the right people, not having the right strategy? Like, what led to the relative underperformance, which I think you would agree with. I guess, Aron, for you, California is the most dense markets in terms of the big three banks. Just talk to us in terms of how you think BMO can differentiate, given that it's been very challenging for some of the super regionals.
Yeah.
Yeah, it's a good question, Ebrahim, and thank you for it. I'll start, and you can.
Yeah.
You can come in on California. So look, I think you have to think about the stages of a journey, right? We've been building, I would say, to this moment for a long time in terms of our ability to unlock the full potential of the franchise. When I say unlock, you have to think about what arguably has been locked. If I go back 10 years, if I go back 20 years, I think it's really difficult to compete in the U.S. market with a $50 billion or $100 billion bank. I think it's pretty hard. Some have done it well, but it's pretty difficult. If you're gonna do it really, really well, you have to be hyper-focused on the regional scale and densification, but it's difficult to grow.
In our case, we focused on growing the scale of that franchise over the 20 year period, the last 10 year period, in part by acquisition, in part by organic growth, to develop that scale so that we could compete with the capabilities of anybody in the marketplace, and that takes investment, right? We had to make those investments, and the investments come in a lot of ways. It comes in NICS, it comes in goodwill, it comes in some of the scale-building activities that we've undertaken. That's number one.
Number two, when we had a hard look at where we were post-integration of Bank of the West, so I'm taking you guys back about a year and a half now, we came to the view that we had done a really nice job building the scale, building the capabilities, but what we were lacking was the integration in country. What I mean by that is, for those of you who followed us for a while, it was absolutely the right structure and strategy at the time when we had smaller scale to say, "Where are you gonna get synergies? You'll get them from the North-South platform." We ran all of our businesses with North American mandates. Which is great because you can extract some synergies out of a smaller U.S. franchise that is competing with smaller banks.
What you're missing when you do that is when you come to the point of view, which I did, which is that you need a unified go-to-market strategy in regional markets in the United States, which are defined competitively differently than they are in Canada. Market structure is different, and your position in the market is different. It was time to change how we go to market. We made the decision about a year ago to change the structure, put the businesses under a unified structure, called U.S. Banking. Then I met Aron. I asked Aron if he would come and take on the challenge of running that combination. You know, he said, "What's the job?" I said, "8-12. That's the job." We're gonna go from 8-12.
Yeah.
We're gonna do this. Aaron said.
Yeah.
I think I can do it." We didn't hoodwink each other. You had all the blueprints at the time. You knew what we were getting into. You know, I would say it's been a journey, and it kind of comes to this point, right? Today, we've talked to you all about the second quarter of this year, getting through the second quarter, turning the corner, third base, whatever the analogy is on our optimization, and then driving on those returns. Arguably, through the course of that build, we weren't ready for that type of performance. Today, we bloody well are. That's where we are. You wanna talk about California?
Yeah, absolutely. Sorry. I wanna break your question into two parts, 'cause on the commercial banking side, right where we've had strength in the U.S. for many, many years, we have. Well, that was great what I found when I got here, right? Unbelievable industry expertise, both from legacy BMO and Bank of the West. We have a treasury platform second to none, which is critical to be successful in business. We have a great capital markets business. We've added tremendous leadership. Tony, who's in the room, is doing a great job. We've brought in a lot of new talent. We can compete with anyone at any time across commercial. On the consumer side, I'd give you sort of three ways in which I think about it. First, we showed you it's a $1.1 trillion market.
If you take out the big three, there's still $475 billion split across 165 banks. BMO is as good or not, if not better, than those 165 banks. We can compete with any of them. I think we can.
That's just California.
That's just California. That's one. That's a big one. Okay, now the big three. A year ago, when you asked me how we were doing, I'd be very proud to tell you we've only 3% attrition in the operations. All the big three banks will say roughly the same, 3%-6%. Well, with their scale, that's literally four million in motion clients every year, and in California is a big chunk of that. No matter how good they are, there are still clients that opt to say, "That's not the platform I want." It's enormous scale. Even at 3%, 4%, 5%, it's millions of clients that are in motion that I think a top bank like BMO can attract. The third thing I'd say is, there's real financial progress.
This focus that we have both in the U.S., and Matt will talk about in Canada, around making sure we're thinking about clients' life priorities, giving them advice on wealth, our whole wealth spectrum, that is a competitive model, with our premier bankers, how we're set up, that can compete with anyone. I think in addition to sort of getting clients that already had chosen to leave, we can take some clients that maybe hadn't quite made that decision yet. The fourth thing I'd say in the U.S. markets, you know, clients open up accounts in more than one place these days because it's pretty easy digitally. The key is how do you become primary? It's that combination of core operating account plus investments that's increasingly important, and our model is really well set up to take advantage of that.
For all those reasons, I feel very good about competing, and I was very excited that Darryl gave me this opportunity.
Can I go here? Number one?
Hey, good morning. Mike Rizvanovic at Scotiabank. For Aron, wanted to ask about the pathway of going from, I guess, 8.5% latest quarter to 12% on the ROE. What caught my attention on this waterfall chart is that the majority is new client growth. When I think about new client growth, there's either two things happening. There's robust demand in the market or you're gaining market share. I'm suspecting it's probably more so the latter. If that's the case, is it not fair to assume that new clients are not as profitable initially? You know, there's probably an element of pricing that you need to get the market share gains, and then beyond that, developing that more holistic relationship takes time. In the short period that you have here in about seven quarters, moving your profitability by, you know, upwards of 40% is a pretty meaningful move.
Just wondering how you sort of see that dynamic of new client growth? Why would it not take longer than just seven quarters?
Yeah. I think whenever you're talking about new client growth versus deepening, they're a little bit blended. You know, we have lots of clients that may have an existing relationship with us, but they don't have the treasury part or they don't have capital markets. There is this component of new client to one part of BMO versus another, and I think that's wrapped into the overall view. There's no question as you bring in new clients, certainly in the consumer space, that it takes time as they ramp up and you get more and more of their balances and you drive.
That's why having both the consumer model and the investment model is so important because then you can attract more of their balances, more of their deposits more quickly because you're not relying on just the build-out of their checking or savings. You're attracting them in that way, and then you're immediately bringing more of their assets. On the commercial side, where we have deep relationships, there is real opportunity there to grow, with new talent coming in, having new relationships. The way we've set up the model to be very unified, a new client for wealth may not be a new client for BMO. We can drive a lot of new clients in our private bank, in our family office, in our mass affluent by leveraging the existing commercial clients.
I think it is very much a combination of truly new to bank, which we have to attract, and I think where we can do it the most quickly is through our commercial business. Then it's new to one of the areas, new wealth client, new consumer client that happens with existing relationships, and it's that combination that I feel confident can move quicker than you're right if you're purely just trying to attract brand new to bank clients.
Great. Thank you. Number one over here. Three, sorry. Number three.
Hi, thanks. Matthew Lee, Canaccord Genuity. We'll keep it on Aaron. If your medium-term revenue CAGR is mid-single digits and your non-interest revenue target is at 10%, doesn't that kind of imply that NII growth would be low to mid-single digits? Can you reconcile that against, you know, above industry average loan growth? Does that mean that NIM is gonna tighten? Is that the view?
No. You know, again, I think when you look at our loan growth of about mid-single digit and our deposit growth, you know, that's our current case that allows us to get to 12%, right? We have our model says if we can drive mid-single digit loan growth and deposit growth and 10% fee growth, that gets us to 12%. If, you know, there's more opportunity, there's no loans that we wanna work with a client, that they wanna work with us, that we're not gonna go after aggressively and win. It's really just setting up what do we believe is a fair, reasonable estimate of what we're gonna do over the next couple of years that allows us to achieve our goals. If the market's growing faster than that, then you may see some faster growth.
It's really a conservative base case view that says mid-single digit within our risk appetite, sustainable long-term growth, which I think is really important for our. We wanna grow over the next couple of years, not just grow fast and then later it's gonna be sustainable. Three years from now, five years from now, we're just talking about a continued onward growth pattern. I don't know if Rahul wants to add to anything, but.
No, I think.
That's how I think about it.
No, I think he placed it well. The one thing I would add on to him is also the deposit mix improvement, which is embedded in there, which gives the lift to NII. I think that is one part which is when you look at it doesn't become evident. You know, I'll probably talk more about it in the details later, but it's a deposit mix also.
Thank you. Can I get number two here in the front?
Thanks. Paul Holden, CIBC. When I think about the importance you've placed on strategy intensification in California, the first thing that might come to my mind is, well, that sounds like an acquisition strategy. I know Darryl, you talked about high hurdles to acquisition. Two parts to the question. One is, why not more of an emphasis on acquisitions to achieve those objectives? And two, what are the hurdles you'd look at?
Yeah. Paul, the frame that I put this question in always is what is our strategy? What are the most efficient levers to achieve that strategy? If you look at what we've done in the last two, three years in the U.S., we took a pretty hard look at where the returns come from. I think I've talked to many of you about this. We took a look at how they map very, very closely by geography, where we're densifying across at least three lines of businesses. Sometimes there's actually even four. You can imagine the R squared is very, very high against places where you're not going to market together. Geographically, I'm talking in the United States. Different map, obviously, in Canada.
The output of that, you saw that we announced the sale of 138 unique branches, for example, in sort of mountain territories where there's not a lot of people. The oth er, the more important point was t here are not a lot of other BMO businesses there, right?
We decided we're gonna remove our chips on the board from places where we're not competing across the lines of business. We're gonna put chips on the board where we are. You heard the strategy today, I won't reiterate it. We know empirically, measurably that we can do it, the market's done it, but we can do it in places where we employ that strategy. The question becomes, how fast do you wanna go, and do you need M&A to get you there? The answer to that question is no. You don't need M&A to get you there. The market is active. We all know the market is active. We get calls all the time and all the rest of it.
The reality is, we built a business plan that says we can get from here to there by optimizing, by densifying in California in particular. We've had great people who have been with us for a very long time in both markets and in the Midwest, and the business plan that we've got, I've got high confidence in. I don't have a lot of appetite to go and chase growth at the expense of returns. In fact, I have none. I have said we leave the door open a sliver for something that comes along, and I'll leave it here on your question, that fits in exactly what I just said. We've done other things in the past where we're adding capabilities or we're adding scale. We don't need to add capabilities. We don't need to add scale.
If something came along and said, "I can accelerate your path to that densification strategy in market," and it doesn't detract from the timing of the ROE delivery that we're working on by like one minute, all right, we'll take the call. But that's a pretty narrow universe I just defined for you. Organic first.
Paul, I'm gonna come back to you because I know you had a follow-up, but I'll go to Darko here in the front, number two, please. Or one, sorry. Number one.
Hi, thank you. It's Darko from RBC. My question's for Alan. Couple of things here. First, I wanted to talk about your targets versus what you've actually accomplished over the last five years. When I look at 7% revenue growth and 6% PPPT growth over the last five years, and you're looking for mid-single-digit or high single-digit PPPT growth. What stands out to me is the very low RWA growth over the last five years. You don't talk about that, though. Conceptually, should I be thinking about more RWA growth for your business over the course of the next five years?
Thanks, Darko. You touch on key elements there, which is how do we think about growth and what are the drivers of growth? Again, to review, the drivers of growth for us have been expanding our product set and investments that we've made, while being really rational about our capital usage. We see that as continuing over the next phase of our growth. While we'll continue to deploy capital, we're doing it in a rational way. I, again, wouldn't underemphasize some of the recycling that we've been doing and optimizing our capital. Our focus has been on growth with a view to an ROE outcome that we feel really good about.
When you put those elements together, we feel that the PPPT and revenue targets are realistic and reasonable, and the RWA usage grows in a measured fashion alongside of that. We feel like that's very much aligned with the targets that we've set for ourselves.
If I may, Christine, before you go to the next one. Darko, your question, I'm gonna take the liberty of scaling it a little bit because it's a little bit of a preview. When we hear Rahul come up later, you're gonna hear about how we're thinking about that optimization on RWA, ROA. You know, one of the things I think that's been pretty impressive in the capital markets trajectory over the last five years is that chart that showed you the rate of RWA growth relative to the rate of income growth, which has been impressive. We're expanding that ratio. As a consequence, the delivery of the 17% ROE that you see in the capital markets business is as good as anybody in the business, which is part of the plan going forward.
If we can grab 10% top line growth and continue to deliver that, we'll give it, but we're not gonna grab 10% top line growth instead of 8% if we're sacrificing the RORWA at the same time.
Great. Ebrahim. Number two in the front, please.
Thank you. Two questions. One, I guess maybe for Alan. When we think about AI, there's a lot of conversation about scale and data scale. Given your experience pre and post and now at BMO, when you think about just the BMO franchise in the U.S., is there a competitive advantage for the largest banks because of the data scale that they have relative to your franchise?
Yeah.
I guess a question for Alan. You talked about the financial sponsors as an expanding opportunity. Just talk to us how you assess what's going on with the private credit markets.
Mm.
whether this can bleed into private equity at some point tied to investments made from a few years ago, and just how worried or not worried you are about that space. Thank you.
Sure. Yeah. I can take the first part. I don't think it's a competitive advantage. They certainly have a dollar spend advantage, for sure. I think the way BMO has approached AI, incredibly thoughtful with really good leadership, bringing in expertise, and then having a very thoughtful approach to what exactly adds value and driving programs, some of the ones that I highlighted, you'll hear some more in the afternoon, that are really getting at some very fundamentally important things. One, first and foremost, is efficiency and helping us drive efficiency, which is not uncommon. A lot of people are using that. I think then the big question is how do we turn that AI to more of a revenue-focused model. We're starting to do that. There's some things that we talked about with next personalization and next gen lead generation.
We're doing some work on how to think about retention. I think that it's about how a lot, there's a lot of advantage in having a lot of money, and sometimes that isn't an advantage. For us, it's you have to be very deliberate, very focused, and I think there's been a real consistency at the level, the management team level from Darryl down about how we go about leveraging AI in the most effective way. There's some great things that you'll hear this afternoon that the team has done that we can ultimately leverage in the U.S. I don't think it's, I feel very strongly that we have the right model there, that we can ultimately be nimble and take some advantage ourselves over time.
I'll pick up on private credit financial sponsors, which we could spend hours on, but I'll break it down into three dimensions that we think about, Ebrahim. First, capital at risk. When we look at our portfolio, our overall exposure to this asset class is under 1%, right? Very manageable. And it's collateralized, and it's highly diversified. We're comfortable with the risk there. Of course, we watch it very closely, but comfortable with the risk. That's the risk element. The second, which is what you touched on, which is what does this mean for the largest users of that source of capital, which has been the private equity community writ large. We're clearly starting to see a bit of a slowdown in that community.
When there's less availability of capital, they tend to be less aggressive, and the financing markets are less robust. I'm gonna go to the third one, which is opportunity, right? We see this as a fantastic opportunity for us. As you know well, the industry has given up market share to private credit over the last, I'm gonna say decade. It's accelerated, and we see this as an opportunity to go back to those very same clients and remind them that the syndicated underwritten market is robust and available, and that fee wallet, which has been compressed meaningfully, we see as expanding. While we're focused on managing the risk and mitigating it, we see this as a really phenomenal opportunity for us.
Thank you. Any other questions?
Some over here.
Number three.
Hi, good morning. This is Shalabh from Veritas Investment Research. I'm wondering how the loosening of capital requirements in the U.S., impacts BMO. Does it help you? Does it add to the hurdles of competing with the larger U.S. banks, super regionals, or does it actually help you?
Yeah, you, Rahul, you should come in.
Yeah, sure. Just looking at the NPR, I think we're gonna experience similar benefits as most of the other banks will in terms of the capital requirements for the U.S. entities. I think we'll closely monitor how it evolves in terms of the competitive landscape. Usually, the transactions are more market-driven, the structures are more market-driven, and the market's fairly rational. I think we'll closely evolve in terms of where it heads. You know, we expect similar kind of benefits in our U.S. entity.
We should point out, Shalabh, it's related to your question, the outcomes that we put in front of you today, whether it's the 12% in the U.S. or the 15% of the total company, do not depend on a tailwind there.
Okay.
They depend on constant capital levels. If something helps us along the way, that would end up being net new benefit.
Positive, yeah.
Great. Thank you. Any other questions in the room? Okay, wonderful. We are gonna take a break then, and I would ask you all to be back by 10:50 A.M.
Welcome back everyone. For this next part of the agenda, Sharon Haward-Laird will begin with a spotlight on our North American Treasury and Payment Solutions business, as well as our growth strategies for Canadian and commercial banking. At this time, I would like to welcome Sharon to the stage.
Good morning, everyone. I'm Sharon Haward-Laird, and I have the privilege of leading Canadian Commercial Banking, as well as North American Integrated Solutions. North American Integrated Solutions includes treasury and payment solutions, retail payments, BMO Virtual Connect, which is our call centers, and the sustainability office. Together, these businesses enable BMO to fully leverage the advantages of our North American platform while staying closely aligned to local client needs. I'm really excited to be here today to talk about how our strategy has delivered a premium Canadian and commercial banking franchise and the opportunities that we see ahead for accelerated growth in strategic areas. One of the clearest advantages for our commercial bank is our North American Treasury and Payment Solutions, which we refer to as TPS. TPS strengthens client retention, grows fee revenue, and supports a high-quality deposit base across both Canada and the United States.
Much like a checking account in personal banking, TPS is the anchor of our commercial banking relationships and the digital deposit engine of commercial banking, making it one of BMO's most important sources of funding and fee growth. That's why we've decided to highlight TPS here today. We have built a truly differentiated business by listening closely to our clients and delivering the capabilities that they have told us they need from their bank to grow and scale their business. Since listening to our clients has been so key to our success in TPS, let's start with a short video that brings to life how TPS serves clients across BMO.
At Treasury and Payment Solutions, we don't just move money. We move North American businesses forward, powering progress across small, medium, and large business clients from modern digital platforms to expert advice. We do it through one integrated sales, service, product, and technology ecosystem. JBS Foods has over 230 locations around the world with roughly $80 billion in revenue. For over 23 years, we've supported their growth in North America. Today, with 26 accounts across 14 entities, we are the backbone of their treasury operations in the U.S. and Canada.
As JBS Foods grew from $2 billion to almost $83 billion, our treasury became much more complex in North America and globally. BMO has demonstrated the scale, the technology, and also the capability to support our growth and also customize what we need in each stage of our cycle. BMO understands, and they advise us in really knowing our culture and how to better support our needs is the key for the success of this relationship that has been built over the last 20 years.
Just like we support global enterprises at scale, we also fuel modernization for fast-moving digital innovators. Consignaction manages the deposit refund system in Quebec, and they wanted a more modern payment experience for their users. We integrated our e-Transfer API directly into their app. Now, residents can request payouts anytime, and our API sends real-time cashless refunds straight to their bank accounts.
[Non-English content].
Treasury and Payment Solutions delivers the unified North American capabilities that help clients grow. We power today's priorities, and we accelerate tomorrow's possibilities.
As you heard there, TPS is the gateway to unlocking the full opportunity and driving returns across all of BMO's commercial businesses. This is a clear competitive advantage for BMO. We have built TPS on distinctive strengths. It is deeply embedded in each of our B2B businesses, including business banking, commercial banking, and corporate banking. We operate TPS on a fully integrated North American platform that connects technology, product, and all aspects of client delivery end-to-end. Most importantly, TPS is growing rapidly and profitably across each of our businesses. Momentum is strong with a long runway ahead as we deepen relationships and continue to win new ones. Together, these strengths position TPS as a durable and a scalable growth engine right at the core of our commercial businesses. One of TPS's defining strengths is the power and efficiency that is generated by having a single technology and product platform.
That platform makes TPS the connective tissue across all of our client relationships. It helps us win clients early, deepen economics over time, and serve those clients consistently as they scale from small business to middle market up to large corporate. Working side by side with our bankers, TPS delivers a seamless cross-border experience grounded in our knowledge of the realities of running a business cross-border. The result of all of this is a stable base of core operating deposits and recurring fee revenue delivered efficiently through a build once and then personalize across segments model. The efficiencies that this model delivers are reinvested into intuitive digital solutions for our small and medium-sized clients and innovative products and solutions for larger clients all on the same platform. This drives strong retention, depth of relationship, and over time, a bigger share of wallet.
The complete integration of our TPS platform, product, sales, and service is a meaningful differentiator for BMO. We recognized this advantage early, and we built it ahead of the market. In 2010, BMO launched our North/South B2B digital platform, Online Banking for Business. Over the next decade, we built an enterprise payments hub, including moving to a fully integrated North American wires platform. This is something that many banks are only investing in now. I had the opportunity to lead this amazing business for five years while we were building these digital capabilities, and I learned that a horizontally integrated TPS business is not something that you can just go out and buy. You need to build it. We continue to extend our market advantage by innovating and building on our strong foundation.
Over the past five years, we've invested over $500 million in advancing our technology and digital capabilities focused on reducing complexity, accelerating transaction speed, and freeing up capacity to support growth. For example, we were the first Canadian bank to offer an enterprise resource planning or ERP solution through BMO Sync. BMO Sync embeds online banking directly into our clients' own workflows, adapting banking to how our clients want to run their business. Operationally, our lending, treasury, sales, and client service teams are aligned by segments, supported by an always-on servicing and onboarding model, along with dedicated product, business, and technology expertise. This is like an ecosystem that enables us to get to market faster with product innovation while improving efficiency and scalability through AI-enabled processes. This innovation has been recognized externally.
BMO is the first bank in Canada and the United States to receive a Red Dot design award for our reimagined Online Banking for Business experience for small and medium-sized clients. These credentials are important as a growth accelerator because they reinforce to our clients that they can trust us to help them grow their businesses. During the break, you can stop by the tech showcase where we have a booth that highlights our Online Banking for Business platform and our embedded finance solutions. This slide illustrates the breadth and the scale of this $6 billion revenue business, which is spread across our clients and our businesses. Today, TPS serves more than 138,000 small, medium, and large enterprise clients, a number which has grown at a consistent double-digit CAGR.
Last year alone, TPS processed $68 trillion in payments, and that number has more than doubled over the last three years. BMO ranks as a top 15 U.S. automated clearing house or ACH originator, underscoring the true strength of our North American payment capability. We have more than 350,000 digital users that rely on this platform for their day-to-day work and operations, and the satisfaction scores from those clients on this page speak for themselves. That performance translates to the bottom line, making TPS a meaningful contributor to bank earnings, representing roughly 40% of enterprise deposits and about 10% of enterprise fee revenue. Now, to clarify, TPS results are reported in each of our B2B businesses, with revenue split roughly evenly between Canada and the U.S., and that really demonstrates our differentiated North American scale.
As Aron noted earlier, we see a significant opportunity ahead to deepen TPS penetration within our growing U.S. commercial client base, particularly in the emerging middle market segment, as we continue to tailor and simplify products for those clients, as well as our mid-market clients in Canada. As TPS continues to grow, we're extending our advantage further by embedding API-based experience across all of our client segments, building market leading solutions like Business Works that Aron spoke about, as well as virtual accounts and cards that are tailored to industries and segments. Our leading solutions position us well to be a first mover in next gen capabilities, such as AI-enabled agents optimizing digital banking solutions and tokenized deposits.
As an early developer of these capabilities, the investments that we are making now are reinforcing a platform that is already advantaged while the market continues to build towards our existing model. Let's turn to an example of innovation that we just announced. We believe tokenized cash and other digital asset capabilities will become important in parts of the financial system, particularly in those segments where clients need faster, always-on settlement. BMO, our long-term client, the CME Group, and Google Cloud have partnered to introduce a tokenized cash solution for CME's institutional clients, providing near-instant 24/7 settlement between participating accounts using Google Cloud Universal Ledger. Tokenized assets deliver secure and private money movement without currency volatility risk.
This capability that we've developed is important to BMO strategically as it positions us as a credible and active participant in next-gen market infrastructure, building trust with our institutional clients as real-time settlement models evolve and expanding access to new clients through the CME ecosystem. TPS's strategy and execution has resulted in five years of strong growth in both core deposits and fees, as well as improved efficiency while we're sustaining investment for future growth. Penetration now stands at 67% across medium and large enterprises and 13% in business banking, alongside a meaningful shift towards higher core deposit mix. Over the next two years, I am very confident that we will continue to deepen penetration into the mid-70s for medium and large enterprises and over 20% for business banking, acknowledging that clients with simpler needs are often better supported through our retail platforms.
Having shown how TPS differentiates BMO and accelerates growth, I'll now turn to Canadian Commercial Banking franchise, where TPS capabilities are fully embedded and serve as a critical enabler of our growth strategy. As you heard earlier, BMO is the second-largest commercial bank in Canada, and together with our U.S. commercial bank that Aron spoke about, we are a top five North American commercial franchise. Canadian Commercial Banking, which we refer to as CCB, is a premium franchise built through disciplined execution with the very best talent on the street and long-standing loyal customers. The good news about this premium franchise is that we have proven playbooks. The even better news is that we have clear opportunities for continued growth and market share gains. Our coverage model is relationship-led and locally anchored, and it's powered by enterprise capabilities across TPS, capital markets, and wealth.
This highly connected model helps us win new clients, deepen existing relationships, improve returns as our clients scale, and reinforce BMO as a long-term partner that understands the Canadian and the U.S. markets and the realities for businesses that are operating cross-border. We're now deliberately building on our strengths to extend our market leadership by expanding coverage and allocating capital to priority sectors and markets where we see strong opportunities for growth, deepening client relationships by bringing more of the bank to each client, and embedding digital and AI across all our client journeys to accelerate speed to market with new products and capabilities that reduce sales cycle time. Today, Canadian Commercial Banking generates about $ 3.5 billion in revenue, and we have a top-tier efficiency ratio in the low- 30s.
Our team of 1,800 sales professionals serves over 34,000 commercial clients across Canada with $ 120 billion in loans and $ 104 billion in deposits. We have held and grown a strong market position, ranking third in deposit market share, progressing towards our fair share of deposits over the past five years, while continuing to maintain a strong number two market share for loans. We look at our commercial business as two distinct but seamlessly connected segments. For middle market clients, we serve them with digital-led solutions and local relationship coverage. While our core commercial clients require tailored offerings, which are augmented by deep industry and advisory expertise. Across all of our segments, our go-to-market approach is built around our full TPS offering that we spoke about.
This diversification supports resilience across economic cycles while providing flexibility to allocate capital strategically towards higher return opportunities. It also enables us to balance scale, risk discipline, and growth. Key to our risk discipline is having a well-diversified loan portfolio, both by industry and by geography, as you can see on the screen. Our geographic footprint closely mirrors Canada's GDP, providing strength from coast to coast while allowing us to tailor coverage to regional demand and growth potential. What truly sets CCB apart is the combination of our unique coverage model, our deep sector expertise, and the scale of our North American operations. We operate over 180 commercial locations across Canada. Our relationship managers average over a decade of experience with deep expertise, and they can bring in the right experts for tailored solutions and advice.
Our One Client approach brings the full breadth of BMO's capabilities to every relationship, driving strong adoption of wealth and capital market solutions. This integrated approach supports our growth, and it has contributed to a 96% client retention rate. More than half of our clients have been with us for over a decade, but many have been with us across multiple generations, some dating back more than two centuries, right to when BMO was incorporated, a testament to the trust and the value of a bank that has grown with clients through multiple cycles. Our strategy is focused, and we are growing by building those full client relationships to drive high-quality deposit growth and strong ROE in attractive sectors and markets. We're accelerating fee growth through TPS as well as through M&A, and we're expanding relationships cross-border and across the bank. We're operating from a position of strength.
Since 2022, we have been number one in total and operating deposit growth, and we've delivered double-digit fee and cross-border revenue growth over the same period. We still see further upside through deeper penetration of TPS and cross-selling more solutions across our client base. The true test of the effectiveness of a strategy is whether it has produced strong, consistent results, and Canadian Commercial Banking has done just that. Over the past five years, our strong balance sheet growth has delivered 9% annual revenue growth and roughly a 500 basis point improvement in efficiency. This performance reflects both the strength of the franchise and the discipline of our execution. Our strong track record matters, but what matters even more is the greater opportunity in front of us.
We are confident that our medium-term strategy will deliver mid to high single-digit revenue CAGR, driven by mid single-digit balance sheet growth across both loans and deposits, maintaining our low-30s efficiency ratio while continuing to invest in our business and our people. PPPT growth will be driven by a combination of client growth and increased frontline productivity. Our top opportunity for growth is from deepening our existing BMO client relationships, while we also use our strong Net Promoter scores and recognized market leadership to acquire new clients. I'll now turn to how we support the enterprise strategic priorities that Darryl spoke about. As I mentioned earlier, our growth strategy is deliberate and it's focused.
We will maintain our strong presence right across Canada, but we will invest where Canada's economy is growing faster than GDP and where we can deliver outsized returns, particularly in markets and sectors that offer attractive deposit, TPS, and full client relationship opportunities. In some cases, our focus will be geographic, and I'll give you an example. In the Greater Toronto Area, by increasing our frontline capacity and investing in productivity, we moved from fifth to second in deposit market share between 2022 and 2025, driven by deeper client relationships. At other times, our focus is sector-led. For example, professional services is growing at nearly twice the pace of GDP. We have tailored solutions for law and accounting firms that have delivered a significant increase in loan market share with strong returns, fee opportunities, and excellent One Client potential.
Indigenous banking is another priority area for BMO, highly aligned to our purpose and supported by deep community-based relationships. We continue to see solid year-over-year balance growth in this portfolio, underpinned by our local presence and integrated BMO capabilities. Looking ahead, we will continue to build on this strategy, adding close to 300 frontline employees over the next three years, deploying them into markets and sectors where we see strong growth potential. For example, geographically, we will prioritize high GDP growth regions where economic momentum is strong, for example, the Fraser Valley, and where we have an opportunity to gain market share. We also see opportunities in national investment engines such as defense and infrastructure. As the official bank of the Canadian Defense Community, our knowledge and relationships in this industry make this a natural area for us to grow.
I'd also point out the public sector is another important focus for us because it is a deep source of deposits and a TPS-rich segment with significant One Client capital market opportunities. With a scaled national team focused on municipalities, universities, and hospitals, we now bank some of the largest Canadian names, offering them unique solutions. Taken together, this disciplined approach about where and how we invest reinforces the strength of our franchise and supports sustainable, high-quality growth. Another area where we see the potential for outsized growth is the mid-market. It is one of the most important segments for BMO's growth agenda, and it is a critical pillar of the Canadian economy that feeds into our core commercial franchise and other parts of BMO. For this segment, we leverage leading and tailored digital solutions to drive strong client acquisition and One Client opportunities.
Complemented with local relationship management and excellent self-serve capabilities, clients can be fully onboarded on multiple products within just a few days. Our AI-powered solutions for mid-market clients enable personalized advice and faster risk decisions. These strengths are delivering results. Over the past three years, we have grown our mid-market client base at greater than a 10% CAGR. Going forward, over the medium term, we're continuing to target double-digit client growth. I spend a significant portion of my personal time on our One Client strategy because it is where Canadian Commercial Banking can deliver outstanding value both to our clients and outstanding returns for the enterprise. As our commercial clients grow, their needs expand across personal banking, wealth, treasury, and capital markets. When we bring the full bank to those relationships, we deepen loyalty, we increase fee revenue, and we lift ROE for the enterprise.
We have identified more than $250 million of annual incremental revenue opportunity tied to leveraging BMO's advantaged commercial mix. I'd also note that full relationship clients consistently demonstrate stronger economics for the bank with 1.5 x higher ROE as well as higher client satisfaction and loyalty scores. We report ROE at an operating group level, and Matt is going to cover the combined ROE targets for Canadian Personal and Commercial Banking at the end of his presentation. Canadian Commercial Banking's most important contribution to our enterprise target is to leverage the relationships in our commercial bank by delivering the best of the bank to all of our clients, which will drive fee revenue in capital markets and in wealth management.
Another area on which we are focused is building on the success of our digital approach that I spoke about in TPS and applying it to our lending process. We have been transforming our lending platform to improve our speed to market and client experience by streamlining our product suite, enhancing our lending platform with self-serve capabilities, and deploying pricing discipline tools while we enhance risk monitoring. By fiscal 2028, this focus on our clients' credit journey will reduce our credit underwriting time by roughly 50%, with 70% of all commercial processes being powered by AI. We're using the same AI capabilities for commercial banking in Canada and in the United States, and many of these are already embedded in our business. Today, 95% of our teams use AI daily, and that adoption is translating into real outcomes.
AI-driven insights are helping to close growth opportunities 1.5 x more often, which lifts revenue per client. At the same time, we're using greater automation in deal preparation, annual reviews, and portfolio monitoring. We're getting strong satisfaction on those results, and we're freeing up our bankers to focus on client acquisition. From here, the opportunity is about scale. We're expanding these capabilities across a number of areas like prospecting, pricing, underwriting, onboarding, fraud detection. We are embedding AI deeper and more broadly into how we operate. These capabilities are being built jointly with Aron and Alan's teams to maximize impact, returns, and productivity. I'll move now to our approach to optimizing performance through disciplined capital management. As I mentioned, we are prioritizing capital towards strategic growth sectors in the Canadian economy where we have strong full relationship opportunities and can maintain our top-tier efficiency.
We are strengthening risk management, fraud monitoring, and cash flow predictability. Together, these actions support lower PCLs and more consistent returns with an expected 50 basis point improvement in return on risk-weighted assets over the medium term. To close, Canadian Commercial Banking is a premium franchise with proven execution, strong market positions, and clear avenues for future growth. We are building upon our sector expertise, our North American capabilities, our digital leadership, and our One Client model to grow high-quality relationships, improve productivity, and deliver durable returns. Thank you. I'm now pleased to turn it over to my colleague, Matt Mehrotra, to discuss the opportunity in personal and business banking in Canada.
Good morning, everyone. My name is Matt Mehrotra. I'm the Group Head of Canadian Personal and Business Banking and Co-Head of Canadian P&C, and I'm really pleased to be here with all of you today. I've been with BMO for nearly 16 years in a variety of roles, including my last role as our North American Chief Digital Officer and Head of Canadian Retail Products. My experience has given me strong conviction on the value creation that comes from combining the power of human and digital, enabled by data and AI, to unlock the full potential of our business and client franchise. To start, I'll frame the discussion with a few key takeaways. As you heard earlier from Darryl, we have a sustained track record of driving market-leading deposit client growth with full relationships, delivering benefit for this business and BMO Financial Group as a whole.
Behind that strength, it is an efficient growth engine, leading digital sales, a differentiated value proposition, and a highly productive financial center network. Next, our business banking segment is a key way that we extend and scale our commercial strength into this business and equally support that strength through client referral flow. As we look ahead, we have a clear and achievable plan focused on accelerating that client growth momentum, deepening relationships, translating our market-recognized strength in digital to unlock the full potential of AI, and optimizing the risk-adjusted returns of our business from both an efficiency and a credit risk perspective. All of this will add up to financial outcomes that support BMO's overall ROE objectives, driven by competitive revenue growth, increased share in priority areas, an improved efficiency ratio, and normalized credit outcomes. Let's start off with some context on the business.
Canadian Personal and Business Banking is a critical business to BMO from a financial, client, and market presence perspective. As the face of our bank to clients across the country, Canadian Personal and Business Banking plays a foundational role in BMO Financial Group, driving the profitable growth, stable deposits, and scaled lending that underpin our business. Equally, the business is critical from a client flow perspective, driving robust, high-quality client growth with benefits to our wealth and our commercial franchises. The last several years have been marked by the transformation of our business. The approach we've taken is to combine the best of human and digital, supported by the power of data with a distinct value proposition, more on that in a moment, to drive efficient, sustainable, and ROE accretive growth. The results speak for themselves.
Our net deposit account growth is double the market, with strong overall quality and full relationships. We grew digital sales by 70%. At the same time, we drove strong growth in assisted sales and increased colleague sales productivity. We transformed our digital experience from a growth and a client experience perspective. Critically, behind this performance sits a differentiated value proposition. We help clients make real financial progress. We saw white space in the market here five years ago, a proposition that helps clients get ahead and stay ahead, and we built a client experience and a prospect brand that aligns to that white space. What this means is aligning all aspects of our business, the digital experience, the financial center experience, the products, the offers, the brand, in ways that reinforce the commitment to both clients and prospects. The business results have been incredible.
Very strong client momentum backed by meaningful shifts in how clients perceive our business from both a distinctiveness and a convenience perspective. This is one key source of sustainable competitive advantage for us. This is how we deliver real financial progress at scale. The resulting financial outcomes we've achieved have been very strong. We've added over $3 billion in revenue and roughly $2 billion in PPBT over the last five years, while significantly improving our efficiency ratio. We've grown market share in areas consistent with our strategy to drive leading primary client growth with full relationships. Most critically, operating deposit share in our personal business has risen consistently, supporting growth in the overall franchise, including our home financing and our mutual fund businesses.
As we look ahead, we see a path to adding roughly $1 billion in PPBT by the end of fiscal 2028, supported by continued growth of our client franchise, deeper relationships, and the digital and AI-enabled transformation of our business. This PPBT growth will be underpinned by mid-single-digit revenue growth, market share expansion in operating deposits, mutual funds, and home financing, and continued improvements in our efficiency ratio. We also anticipate normalization in our credit performance, which will show up in our overall Canadian P&C returns and ROE, which I'll cover towards the end of this segment. As Darryl outlined earlier, I'll now go deeper on our three key forward focus areas. Number one, growing and deepening client relationships. Number two, innovating for business value. Number three, optimizing performance from both a cost and a credit perspective. We'll start on client growth.
Over the last five years, we have dramatically accelerated net client growth. Deposit-led net client growth is up 70% since fiscal 2020. This performance has been consistently above market with a strong and widening premium. We've done this while driving improved overall quality. This is the growth that fuels our business, primary clients that start a relationship with BMO that we can build upon over time with benefits in the P&BB business and for BMO Financial Group as a whole. Looking ahead, we're committed to sustaining this momentum. Our playbook builds on what's working, accelerating our already strong digital and financial center sales productivity, unlocking the full potential of strategic partnerships, and supporting all channels with differentiated offers aligned to a real financial progress value proposition. While we've been growing our client base, we've also increased overall primacy anchored in the deposit relationship.
These are clients that consider us their main bank, and that primacy translates to direct financial benefit in terms of relationship depth and loyalty. As we look ahead, we see continued opportunity to drive even deeper relationships, particularly in three areas. Number one, investments. Number two, home financing. Number three, premium cards. The single biggest opportunity in our business is to grow our investment share wallet. You can see the opportunity clearly with about 20% AUM upside with our most valuable clients. You can imagine how critical this is given our value proposition and the flows and benefits into our wealth business.
While we've made good progress here driving improved market share backed by consistent investment in distribution product and offers, we see significant upside ahead as we translate strong deposit client primacy into investment relationships supported by continued growth of our sales force, translation of our clear strength in digital into this domain, and continued market leadership on offers. Our key target here is to increase investment penetration by 400 basis points by 2028. This will translate into 20% growth in our mutual fund business, provide the basis for growth in other adjacent product categories, and accelerate client flows into the wealth management business. Moving on to home financing. These clients are among our most valuable, with many graduating into our wealth business over time.
We've made deliberate investments here to meet clients where they are, including expanding our sales force, entering the broker business, simplifying and digitizing our experience, and really sharpening a focus on full relationships. Those investments have delivered consistent market share gains over the past several years and provide a foundation for growth. Looking ahead, we remain committed to above-market growth in this business, enabled by continued execution of this playbook and the unlock of the full potential of digital data and further simplification. Our focus right now is on the generational renewal opportunity in front of us. By combining strong offers, targeted pricing, and a coordinated approach across digital, branch, and our contact center, we are seeing a strong renewal rate with relationship deepening, and we are committed to maintaining that strength for the cohorts ahead.
Our key target here is driving above-market growth with full relationships supported by even stronger renewal performance. In our cards business, we have transformed the franchise over the past several years, moving away from single service, becoming a dual issuer, and establishing critical partnerships. Where we see the most opportunity is accelerating our growth in premium, where our balance mix is below industry average by 10%. We will drive that acceleration through full monetization of our Porter partnership. They have about 1.2 million active collectors, targeted offers to our 350,000 premium-ready clients across retail and wealth, and further strengthening of our overall value proposition. Our key target here is dramatically accelerating premium account growth, which will drive strong risk-adjusted returns and long-term sustainable growth.
Underpinning our growth is the unlock of the full potential of AIR MILES, now Blue Rewards with prospects and existing clients. Key here is the clear value that we see from turning members into clients and clients into members. Our strategy to do this is to deepen integration with BMO, continue adding to our strong partner base, and aligning the full experience to our My Financial Progress value proposition. We see this program as key to driving acquisition and client loyalty and deepening engagement with the clients powered by rich beyond banking data, particularly important in an open banking world. Early results are very positive. Collectors are happy with where we're headed, as are our partners, and most importantly, tests we've run bringing AIR MILES closer to BMO have demonstrated extremely strong uptake from clients.
After the presentations, you can see firsthand how we're integrating Blue Rewards into a seamless mobile experience for our clients at the tech showcase in the reception area. Now, let's move on to business banking. BMO takes a differentiated approach to this segment, translating our strength in commercial to this part of the business. The result is we punch above our weight here, driving 17% deposit share and 18% lending share, capturing benefits in our personal business, and driving flows into our flagship commercial business. These clients typically have lending needs under $1 million and revenues under $10 million, and we serve these clients in our branches and with dedicated RMs at the upper end.
As we look ahead, we're committed to continued market share momentum through translation of our digital strength into this key segment in parallel to continuing to unlock the full potential of our sales force through simplified products, platforms, and processes. Now we'll shift gears to continued upside we see from digital and the application of AI in our business. We are a market leader in digital. When I was building and leading the digital team starting in 2017, we set off on a mission to drive a value-oriented digital transformation, and we were very successful. That experience, I'm sure you can see, has meaningfully shaped the strategy for the business overall. Since 2019, we grew digital sales by 70%, significantly increased engagement, nearly halved our assisted transaction volume, and transformed our client experience. Our strength is recognized by our clients and the market regularly.
We are the only full-service bank in North America in the last 12 years to win Fast Company's Most Innovative Company Award in Financial Services. Our mobile and digital money management experience are routinely recognized as best in class, and we receive multiple awards annually for our value-oriented and client-centric innovation approach. Moving forward, we continue to see so much upside as we lean into our leadership on digital sales and accelerate client engagement. Our approach is grounded in being truly mobile first, unlocking the full potential of data to enable hyper-personalization and continuing to lead the market in digital money management aligned with our value proposition. Key targets here are linked to cementing our digital sales leadership position while driving engagement and self-service core to the efficient growth we are committing to for the business overall.
On AI, we have great momentum and upside as we translate our digital leadership and track record of driving business value from technology to the opportunity ahead of us. Our specific focus with AI is on personalizing our experience, augmenting our people, and automating our business. Work to date in these areas has been very impactful. Machine learning drove over 260,000 sales from 1.6 billion conversations in the last year alone. We've realized tangible cost saving from the deployment of GenAI into our workforce, and we have increasingly strong conviction on the opportunity from deployment of agents to drive scaled automation. We see so much upside as we scale this technology broadly and deeply into our business. To showcase the power of this technology, I wanna go deeper on Lumi, our GenAI-powered assistant in our financial centers.
We started with a focus on knowledge management, answering questions about policy and process. The results have been amazing. Nearly 80% adoption used multiple times per day, 60% reduction in calls to our internal help desk, and $4 million in annual cost savings. Now we're taking this tool and bringing it to other channels and applying it to new use cases. A good example of how augmentation will unlock value in our business. You can also see Lumi in action at our tech showcase today after the presentations. I'll now shift gears to cover our third priority, the work we are doing to optimize the business from both a cost and a credit perspective. On cost, we have a good track record. Efficiency has improved significantly over the past five years.
What's key here is that our focus on digital and AI, coupled with the deliberate drive to simplify our business and maintain cost discipline, has delivered results. This is about a business that's efficient by design, where gains come from changes in client behavior and a deliberate focus on driving low-value cost out of our environment, as opposed to a one-and-done cost program. That's a big driver in our ROE outlook as we commit to a mid-40s efficiency ratio. Moving on to credit. We have a high-quality lending portfolio with very strong fundamentals. Assuming improved macro conditions, including reduced unemployment and stable inflation, we see a clear path to credit normalization as we return to a low- 40s impaired PCL ratio in our consumer portfolio by fiscal 2028. That normalization will be a driver of improved ROE.
Our conviction on this outlook is built on the deliberate actions we've taken to manage exposure in our book, improve collections outcomes, and ensure good growth in our low-risk home financing and premium card businesses. As I finish off the Canadian Personal and Business Banking portion, I wanna leave you with five key takeaways. Number one, we have a strong and healthy client franchise that is growing at leading levels. We are committed to sustaining that momentum. Number two, we see upside on share of wallet in a few key areas, and particularly investments. Number three, we are a leader on unlocking value from digital, and that leadership will translate into the AI era. Number four, our business banking franchise is a differentiated extension of our market-leading commercial business and will continue to deliver outsized returns.
Number five, we are deliberate on the optimization of cost and credit, which will further support our ROE and profit growth objectives. On behalf of Sharon and I'll now just bring it back together briefly to share our combined personal and commercial ROE outlook. The personal and commercial businesses together drive significant, highly ROE accretive growth for BMO Financial Group. On an integrated basis, these businesses represent our scaled client franchise in Canada and the source of the strong and stable deposits and lending that serve as the foundation of our business. Delivering against the strategies that Sharon and I laid out on an integrated basis will deliver greater than 25% ROE, driven by the growth in our combined client base, deeper relationships, normalization of credit, and continued positive operating leverage.
We are both very optimistic about the path ahead and the continued potential to unlock client, balance sheet, and cost efficiencies as a combined business. Thank you so much for your attention today. I'll now turn it over to my colleague, Deland.
Good morning, everyone. I'm Deland Kamanga, Group Head of Wealth Management. It's a pleasure to be here. You know, the way we sit within the bank, it's our honor to really connect the clients, the teams, and the capabilities of the bank, and we really are a true driver of revenue growth as well as ROE. It's my privilege to spend the next few minutes talking to you a little bit about what we do. I'm really excited about the distinctive strengths that we have in wealth, and we won't be able to talk about everything, but we'll go through a few of our priorities with you today.
The nature of our business, we build some of the strongest and longest-lasting client relationships, and that spans personal banking, commercial banking, capital markets, the entire enterprise. This unique position allows us to connect clients to BMO seamlessly and consistently. It allows us to create experiences that make it easier for clients to do business with us regardless of how they enter into our ecosystem. We wanna meet them where they are and connect them to the entire enterprise. We think about wealth in this way. We say to ourselves that it's built on a simple truth. When clients experience the full strength of BMO, when we can deliver that with our deep expertise, continuity, and care, they stay with us, and equally as important, they tell their friends.
Right now, we serve more than one million customers for the bank. Darryl had mentioned he's got 13 million customers, and one million of them are already with Wealth. AUM has grown now to over $ 700 billion. Last year, we generated $ 5.4 billion of revenue. Importantly, we continue to grow. Last year, we delivered the fastest asset growth among bank-owned managers, and we delivered resilient, durable earnings for the bank. 65% of our revenue is fee-based, so making us one of the most effective uses of capital at the bank. We're supported by over 5,300 wealth professionals. We bring together advisory, banking, insurance, and asset management, and we deliver that digitally as well through hybrid solutions. We again try to meet clients exactly where they are.
We've taken deliberate actions over the last number of years to reposition wealth for sustainable growth. We've changed how we work together through One Client. We've modernized our platforms. We've invested with discipline and innovation and talent. As you can see on the slide, these choices are delivering tangible results for us already. Beyond the numbers, though, this reflects real transformation. We're deepening our partners' trust. Innovation is now embedded in our culture and everything that we do. We've optimized the portfolio for maximum effect, and we've renewed leadership talent who really have sharpened the focus on driving returns for the entire institution. As you can see on the slide, these results are compounding. Across wealth, we've delivered 9% net client growth, a 10+ point increase in NPS, and 25% growth in flows. That's internally with our bank partners.
Clear proof that our One Client model is working. The combined strengths of these deliberate actions, and I wish I'd put it in red or flashing signs right at the bottom there. It's a 2,200 basis point increase in ROE over the last five years. I'm very proud of the team has done, and that's truly great work by the team. Since 2020, we've delivered a consistent track record of strong results across the financial metrics, as you can see. We're driving momentum at both the top line and the bottom line, supported by double-digit growth in assets, reflecting robust client demand and the strength of our diversified model. I'm very proud of the progress that we're making as a more efficient and scalable business.
We're continuing to improve our efficiency ratio through disciplined execution, balancing investment in client experience and strong cost and risk management. Our discipline is translating into leading efficiency improvement versus our peers, reinforcing our confidence that this performance is not short term, it's durable, and it's absolutely built to last. This is reflected in our sustained top-tier returns. Our path to 40%+ organic ROE starts with growing and deepening client relationships. By expanding coverage and equipping our frontline professionals with better tools and integrated solutions, we drive higher share of wallet, stronger client retention, and sustainable revenue growth. At the same time, we're innovating for business value. We're investing in AI advisor enablement tools that increase personalization and improve productivity, allowing our advisors to do what they do best, which is spend more time solving problems for their clients.
Now, I'll speak to each of our three priorities, starting with how it all comes together through One Client, followed by innovative solutions that prepare us for future growth and create opportunities to provide overall top-tier client service. We're operating in an absolutely historic period of money in motion. All of us have never seen the amount of money in motion that's happening right now. Our focus at BMO is to show up in the right moments with the right advice. We're seeing that momentum across our priority segments. The largest piece of this is the intergenerational wealth transfer. It's a defining opportunity for all of us in this business. Planning-led advice is deepening trust as families navigate what they're going to realize are more and more complex transitions of this massive wealth transition.
Today, Private Wealth has a next-gen connection with more than half of our current client households. We did this deliberately. We realized how important it was to get that connection with that next generation household, so we could position ourselves to retain assets and grow with the next generation. For high net worth business owners, same thing. Succession planning is critical. We delivered over 1,200 succession plans, strengthening loyalty and outcomes. When commercial and private wealth work together, the impact is clear. It actually drives 2.5x higher private wealth revenue when those two teams work together. In the women investor segment, advocacy is strong, with NPS of 80, driven by trusted advice across BMO Private Wealth, BMO for Women, and Burgundy Asset Management's long-standing leadership with women investors and advisors.
Importantly, you may be surprised to know what kind of momentum we're having with younger clients. Actually, in Private Wealth, where we have an older advisor profile, our highest NPS scores are with clients under the age of 35. Also, within InvestorLine, our fastest-growing segment is clients under the age of 35. Our offerings are resonating with the younger client base. You've heard from all of us that One Client is foundational to how BMO serves our clients and drives growth. It's how we connect clients' deposits, investments, lending, and advice into a single expanding relationship. This creates better outcomes for clients and more value for the bank. Across personal banking right now, there are approximately 4.7 million customers who do not have a wealth relationship, but have deposits and accounts with BMO.
What does that represent in dollars? 4.7 million customers, that's a lot of people. It's $ 110 billion of personal deposits that are currently on our books, not currently invested with BMO Wealth. These are existing clients where the institution has already established trust, where we can introduce some core investment solutions, and then over time, advice and planning that deepens the relationship and grows the share of wallet. The opportunity is just as compelling we see in across business banking, commercial, as well as capital markets. In those three groups, there are 600,000 business entities linked to BMO, and within that, at least 900,000 associated role players, people like the owners, the executives, decision-makers at these shops, where there's not currently a BMO Wealth relationship in place.
We've got one million customers, and we have one million high-value relationships already on the books that we can continue to help and solve more problems for and provide more solutions for. We know the impact of capturing these opportunities. Shared relationships drive deeper engagement and stronger loyalty. You heard Darryl say that we can see the loyalty scores increase. I can actually quantify that for you with a wealth relationship. We actually increase NPS by 30 points when we're able to add the wealth relationship. This is One Client at work. It's a compounding model that strengthens every business and reinforces wealth's role as a growth engine for the entire bank. We're absolutely deliberately scaling, and I'll give you a few examples of how we're doing that. We'll start with InvestorLine.
We have found that InvestorLine is a powerful front door into wealth and a proven catalyst for deeper relationships and stronger growth across the bank. It delivers high digital engagement and creates natural pathways into advice and planning as clients realize over time that their needs evolve. The impact is material. When we see a retail client add an InvestorLine account, in the very first year, we see 90% increase in asset growth. When those InvestorLine clients add Private Wealth, we see a 110% increase in asset growth, again, in the very first year. The takeaway is simple for us. Digital entry creates choice, shared relationship creates growth, and of course, we get One Client wins as a result. Over time, clients do need more complex solutions.
When that happens, they want trusted, personalized advice from professionals who understand their full financial picture and equally as importantly, can bring the entire breadth of the bank to bear. This is where our BMO Private Wealth has truly fundamentally differentiated themselves. We have built one of the most scaled and trusted private wealth franchises in North America, serving more than 450,000 clients right now through 1,500 frontline professionals. We proudly hold a 15 year track record as the number one private bank in Canada and the number two market share in private banking and private investment counsel. Clients experience this through our client promise with the wealth plan at its core. For us, we feel the wealth plan is not just an overlay or an extra, but it's actually a catalyst for us.
It allows us to identify needs, align solutions, and then coordinate the delivery of those solutions across the wealth platform and the bank. What differentiates us is the plan, but it's also the plan and how we effectively follow up on the needs identified by the plan and do it in a fulsome and integrated fashion. The impact is clear. Households with the financial plan deliver 22 points in higher NPS and represent a +20% advantage in share of wallet. To deliver consistently on our client promise, we're investing deliberately in our front line and the tools that support them. Our teams can spend less time navigating complexity and more time focused on what they do best and what they enjoy doing, which is helping our clients and solving problems. Of course, talent is central to this strategy.
We're adding advisor support, professional investment planners, estate and insurance advisors, and our recent acquisition of Burgundy as additional top-tier talent, enhancing our ability to serve clients from emerging wealth to ultra-high net worth. I'll now turn to how innovation powers this model and where global asset management and insurance truly excel. Global asset management is a clear engine of innovation and performance for us. We deliver winning solutions at scale, are the fastest-growing mutual fund provider with a leading position in alternatives. In FY 2025 alone, we launched more new solutions than any other Canadian competitor, demonstrating both speed to market. It's not easy to bring that many new ideas to market, so we've got to be fast, but also disciplined, relevant product development. That innovation is translating into results as performance continues to strengthen.
The share of AUM in the top two performance quartiles increased from 66% to 84%, while total AUM has grown 18% annually since FY 2022. Now, you might say that's fine. The market's been great. You grew 18%. Good for you. What are your net flows? Well, in FY 2025, net flows were 12% of beginning AUM. Now that's well above global industry standards, not just Canada, and top quartile growers. Meaningfully ahead of every one of our competitors, none of whom, in fact, exceeded 7% net flows in FY 2025. We're very proud of the team and their work. This performance differentiates the entire wealth franchise because those solutions will equip advisors with market-aligned solutions across passive, active, and institutional-grade offerings. Our investment solutions consistently deliver award-winning outcomes. They're being recognized externally.
We earned 12 Lipper Fund Awards last year and 27 FundGrade A+ awards. We're growing assets. Your next question might be, are you doing that profitably? We are capturing value. The combination of performance, product breadth, and disciplined innovation allows us to grow profitable AUM. For example, right now we're neck and neck on AUM revenue for number one, for ETF AUM revenue, even though the number one position assets are 24% higher than ours. Our ROA is higher than even our top competitors. Turning to insurance. Innovation is embedded in our DNA with industry firsts, including Canada's first financial institution-led pet insurance offering. We launched this through our new insurance retail marketplace, a scalable self-serve platform that expands our direct-to-consumer model.
We see significant upside in new growth channels, particularly through brokers and Blue Rewards, where affinity-based pricing and partnerships drive profitable market share expansion. Innovation becomes our competitive advantage when we solve client problems at scale, and that's where asset management and insurance are focused. In asset management, we accelerate growth by designing solutions to solve for identified client needs. Insurance uses a similar playbook. With a digital-first distribution model, we're scaling differentiated solutions across retail and workplace channels while modernizing underwriting and workflows to unlock capacity. This is how we scale innovation, leading with client needs, defining clear priorities, and setting measurable targets. We'll turn to AI. Across wealth, AI is already transforming how we work and improving how we serve clients. AI is taking friction out of workflows.
It's allowing advisors to offload lower-value manual work and focus more time deepening relationships, solving complex problems, and growing their practices. For us, AI is not about replacing human advice. Trust and relationships absolutely remain central to what we do. AI is about amplifying advisor capacity, productivity, and effectiveness. We're seeing this in action. Tools like Nexa and Rovr give advisors and insurance agents real-time access to policy process and underwriting intelligence, enabling more personalized advice, but at scale. AI is also curating needs-based offers, targeting approximately a 10% uplift in acceptance rates, enhancing credit risk reviews, and automating workflows, underwriting, and credit triage. Importantly, some of these initiatives are already expected to return dollars this year. Across wealth, AI tools are delivering more than 400,000 assisted hours a year.
For Nesbitt Burns teams, we're already freeing up roughly one full working day per month. In key areas, we're targeting two times capacity for account opening and material reductions in manual processing. Our objective is clear, better client experiences, strong advisor productivity, scalable efficiency across the wealth platform. Rovr is a clear example of AI delivering real value in BMO Wealth. It's an AI-powered digital assistant that gives insurance advisors real-time access to policy, process, and underwriting intelligence. Very proud to say that this was developed 100% in-house and is the first to market in Canada. It's now available to 100% of our insurance advisors. So far, it's already supported over 10,000 advisor queries. The result is tangible for us.
Faster turnaround times for our advisors, more confident client conversations with their clients, and better outcomes for the clients and for us. Rovr has supported record levels of premiums for BMO and contributed to market share gains already. Please take some time today at the tech showcase to see Rovr. It's featured there, and they'll be happy to walk you through how it works. For us at BMO Wealth, optimizing is always on, and it's intentional. We simplify and re-engineer to recreate capacity. We then reinvest that capacity into growth, technology, and better outcomes. Over the past several years, we've reduced complexity by streamlining leadership roles, consolidating centers of excellence, and digitizing workflows. The biggest step forward is our wealth re-platforming. We're replacing more than 40 legacy systems with a simple, modern, cloud-based platform.
The result will be more time for advisors to spend with clients, more consistent advice, and new capacity to grow while making sure that we protect margins and ROE. This is how we optimize to reinvest, simplify today, modernize for the future, and sustain value creation over the long term. In summary, we've built a business anchored in world-class client experience. Our teams are deeply connected to each other, enabling us to deliver integrated solutions for all our clients. Our sole purpose is to simplify complexity for clients, make it easy to access all of BMO, while making it equally easy for our teams to deliver coordinated, high-quality solutions and advice. That clarity of purpose underpins everything that we do. It's what allows wealth to act as a catalyst for the bank to deepen relationships, build trust, and to consistently create value for clients and for the bank.
We will contribute to the bank's strategic agenda by directly improving our already strong ROE, but also through compounded profitable growth and increasing the contribution of wealth to the enterprise's overall earnings pool. We succeed in our wealth business by building trust through expert advice and innovative solutions, resulting in enduring relationships. That is how we compound value for clients and how BMO Wealth continues to grow enterprise value. Thank you very much.
Thank you, Sharon, Matt, and Deland. We are going to take another short break here. We're gonna start promptly at 11:40 A.M. with Piyush, then Rahul, and our last Q&A session. Please help yourself to some refreshments just outside the door. Thank you. All right. Welcome back everyone. I made them wait. That's one of my favorite songs. We are now gonna wrap up the day with risk management and our financial overview. As you're sitting down, I'll give you a couple minutes, and then I will invite Piyush Agrawal to the stage.
Thank you, Christine. Good morning, and it is great to see everyone today. I'm Piyush Agrawal, and I've been Chief Risk Officer for BMO since November 2022. Prior to this role, I spent more than two decades in global financial services, leading large-scale operations and enterprise risk management across multiple regions. From day one in this role, we've been very focused. We've made targeted investments to strengthen our risk management capabilities, which has served the bank well in navigating a dynamic current environment. Our balance sheet has grown to $ 1.5 trillion. This is a source of strength and scale, providing the foundation for ROE expansion. The deployment of our assets is guided and supported by a strong risk framework and capital discipline that are foundational to how we run the bank. Risk appetite guides how we consistently allocate capital, construct portfolios, and pursue disciplined growth.
We operate with an integrated approach where capital allocation is grounded in returns, liquidity, and risk appetite. Over the last several years, we've built a rich toolbox that we deploy proactively to assess and manage exposures and emerging risks. We've invested meaningfully in core capabilities, including emerging risk identification, stress testing, risk mitigation tools, modeling, and AI. Increasingly, data-driven insights are enhancing both our ability to manage risk and loss potential and our ability to optimize risk-return decisions across the portfolio. All of which strengthen our ability to effectively manage risk through different environments. At the heart of everything you have seen and heard today from my colleagues, and fundamental to our confidence in delivering sustainable growth, is a strong risk culture, which is built on accountability that lives with everyone at BMO. Risk ownership is equally explicit and embedded.
Every business, as you saw today, owns the risk in their portfolio, supported by a strong second-line challenge and transparent escalation. This shared ownership enables risks to be identified early and managed with discipline. Our loan portfolio is deliberately and well diversified across provinces and states, with 58% in Canada and 40% in the U.S., and it's further diversified across businesses, segments, and products. Disciplined underwriting and robust portfolio management underpins consistent through-the-cycle earnings power. We are focused on long-term sustainable growth, and our growth has been strategic, not concentrated, ensuring that our decisions today support resilient performance through all environments. The bank is well capitalized and reserved for even the harshest events, including severe tail risk scenarios where demand for capital is not allowed to exceed the supply.
This level of resilience is reflected in the enduring strength of our portfolios, particularly in commercial banking, where we have a long-standing position and deep expertise that differentiates us. We're a top five commercial lender in North America, serving 56,000 commercial clients, and more than half of our wholesale portfolio is investment-grade. We differentiate through deep sector expertise in high-value verticals such as commercial real estate, food and ag, dealer finance, and financial institutions, and through top-tier products and advisory solutions including asset-based lending, equipment finance, and mid-market M&A. This commercial strength reflects who we are, a bank that has strong underwriting standards, makes deliberate portfolio choices, and supports clients through cycles over decades and, in some, over 100 years.
Our performing allowance stands at $4.6 billion, providing strong coverage for our performing loans above peer average, and our impaired book remains stable at 1%. Following elevated PCLs in 2024, the credit normalization path towards a long-term average PCL in the mid-30s is well underway, driven by proactive, targeted actions. These actions include agile portfolio management and selective de-risking in certain segments, the deployment of risk transfer transactions to actively manage concentrations and tail risk-informed capital optimization, and a proactive and strong workout process led by our specialized teams with deep industry and restructuring expertise. These actions are delivering results. We are seeing positive migration trends, lower watchlist levels, and reduced impaired formations. The U.S. economy continues to demonstrate resilience anchored by expansionary fiscal policies and supportive monetary policies and AI investments.
In Canada, there have been meaningful steps to strengthen trade relations with important world economies. Additionally, the Canadian policy agenda is focused on stimulating economic growth through national priorities, particularly defense spending and large-scale strategic projects. These initiatives have the ability to drive investment, job creation, and demand across multiple sectors. Uncertainty in the outcome of the Middle East conflict and resulting oil disruption over the last few weeks has the potential to impact the global economy, particularly if the situation is prolonged. We are closely monitoring these developments, and we continuously refresh our established stress testing scenarios to incorporate the latest dynamics. As this economic trajectory stabilizes and improves, combined with the enhancements we've made, we are well-positioned to get to our mid-30s PCL over the medium term, in line with our 30+ year record of strong credit performance.
Beyond credit, we've invested meaningfully in operational resiliency, not just to protect the bank and our customers from threats, but also as a strategic enabler for a growing organization. Operational resilience is fully integrated into our operational risk framework, and we've strengthened our capabilities across all key risk domains. As part of this progress, we've advanced automation and digitization across our non-financial risk programs, accelerating our risk assessment and testing, and improving the speed and our consistency and reliability of risk oversight. A significant part of our evolution involves AI-enabled risk management. We are leveraging AI in areas such as AML, where digital workers and agentic AI are being deployed to accelerate pace. This augmentation is already reshaping our AML processes, reducing false positives, improving coverage of client activity, and supporting higher risk clients and transaction monitoring.
We're also deploying AI across fraud and cybersecurity, enhancing our ability to protect both the bank and our clients. We see our non-financial risk management as a competitive strength. It is embedded in our culture and our risk appetite framework, and our investments have strengthened operational resilience and had a positive financial impact. Net income has benefited from lower operational losses, which are consistently down 40% over the past five years, and our capital reflects a lower than peer internal loss multiplier of 0.8x. To conclude, BMO has strong frameworks and programs to manage current and emerging risks effectively. Our risk discipline supports three key outcomes. Lower credit volatility, more stable capital generation, and stronger through the cycle ROE. At the center of this is our risk culture based on a commitment to doing what's right.
I will now turn this presentation to Rahul. He and I and our risk and finance teams work closely together to oversee and maintain strong capital, strong liquidity, both of which are the foundation for strong and stable returns. Thank you.
Thank you, Piyush. Good morning, everyone, and thank you for joining us here today. I'll wrap up the day by walking through our clear and sustainable path to 15% ROE exiting 2027, which is grounded in execution as demonstrated over the past year and designed to be resilient through the cycle. I'll focus on three things. First, the progress which we have made so far. Second, the specific levers to achieve our target of 15%. Lastly, why we are confident that the target is sustainable. Our path to 15% ROE is driven by six reinforcing elements.
First, we've made strong progress in 2025 as that builds the momentum, and it matters because it all starts with results. Second, a resilient balance sheet is at the foundation of all our business strategies. Third, as you've heard from all the business leaders, we are driving diversified revenue growth across all businesses and not relying on a single engine. Fourth, we are building on our long-standing track record of cost discipline to reinvest in growth and improve efficiency. Fifth, we have taken deliberate actions to ensure that we deliver a consistent credit performance. Finally, higher returns translate to stronger capital generation, giving us flexibility to deploy capital for growth and return to shareholders. Let me start with execution.
We set clear ROE targets at the end of 2024, and in 2025, we have delivered peer-leading ROE improvement of 150 basis points year-over-year and EPS growth of 26%. More importantly, majority of this improvement was driven by strong core operating performance, including the optimization efforts in the U.S. banking, as you heard. Performing PCLs were lower as we built reserves in 2024, and we generated almost 90 basis points of CET1, which pressured returns, but it reflects impact of capital optimization of segments and relationships that didn't meet our risk-adjusted return expectations. This positive momentum has continued in the first quarter of this year with the underlying ROE of 13.1%, up 180 basis points year-over-year, largely from core operating performance as well. As we look ahead, we have a clear path for achieving sustainable 15% ROE exiting 2027 and manifesting all those benefits in 2028 and beyond.
This path depends primarily on BMO specific execution levers, which you've heard from all the business leaders. These levers are the building blocks of the ROE walk on this page, and they are core operating performance, PCL normalization, buybacks, net of capital generated. Core operating performance is expected to deliver about 250 basis points of ROE improvement, almost half of which is from U.S. Banking, and is driven by PP&T CAGR of about 8%. Our PP&T growth is led by U.S. Banking profitability improvement, consistent performance by Canadian P&C, capital markets, and wealth, and positive operating leverage. This is made up of 6% revenue CAGR, 4% expense CAGR, resulting in efficiency ratio below 54%. Impaired PCL normalization to mid-30s is approximately 100 basis points of ROE benefit. Our ROE enhancement doesn't factor in meaningful performing PCL release or build.
Buybacks net of capital generated will contribute to about 50 basis points of ROE improvement as we continue with our buyback program, offset by higher capital generated while maintaining a strong CET1 ratio. In the following pages, I'll spend some more time giving details of each of these building blocks. Our path is sustainable and reinforced by our control on these levers and will generate low double-digit EPS growth in the near term. Our sensitivity analysis, as you can see on the right side of this page, shows the impact of these levers on ROE, and we have pressure tested business plans for potential risks and identified mitigating actions to manage the ROE building blocks with flexibility to achieve 15% ROE exiting 2027. In summary, this ROE improvement is primarily driven by core operating performance and ROA improvement.
As a result, it leads to sustainability of earnings as it comes from foundational enhancements like deposit mix, recurring fee penetration, disciplined capital allocation, and cost management. Before moving into the details of our ROE building blocks, it's important to recognize that U.S. Banking is the largest building block of our path to 15%. Aaron shared earlier the U.S. Banking strategy, which will lead to improvement in three specific areas. First, revenue growth, driven by loan and deposit growth in our priority markets and improved fee penetration and deposit mix. Second is efficiency. As we scale our U.S. business and optimize the unified structure, the efficiency moves towards low -50s. Third, disciplined risk and capital allocation with PCLs moderating to mid-30s and more efficient RWA usage.
A combination of these levers will deliver 12% ROE for U.S. Banking in the medium term, which is equivalent of about 18% ROTCE, which is top quartile among the U.S. peers. As we earn through our goodwill, it is important to measure return on marginal capital for which ROTCE is a good metric over the longer term. Our strategies are anchored on a strong, diversified, and stable balance sheet, which provides resilience, flexibility, and higher returns through the cycle. We have grown our balance sheet over the past years, both organically and inorganically, with deposit growth outpacing loan growth. These strategies are deliberately designed to deliver improving core deposit funding mix and reduce reliance on wholesale funding.
Our business and risk strategies are focused on achieving a highly diverse loan portfolio across sectors and geographies, and is at the core of capital allocation during our planning process to enhance risk-adjusted returns through the cycle. We've maintained our liquidity and capital ratios comfortably above our regulatory minimums and at levels where we manage the balance sheet and capital efficiently and keeps us well-positioned through the cycle. We have strong allowance coverage, and that will support expanded loan growth. In summary, this balance sheet strength enables growth and higher returns while staying disciplined on risk, capital, and liquidity. Now, let me unpack each of the building blocks of our ROE walk. I will start with the first subset of core operating performance, revenue, NII, NIR, expenses, and then I'll go to credit and capital.
Starting with revenue, each of our businesses are executing well-defined strategies to accelerate revenues for the same dollar of capital deployed, including deliberate weighting towards non-interest revenue. We aim to grow revenues at about 6% CAGR through fiscal 2028. Growth is broad-based across NII and NIR, with meaningful contributions from each of the businesses. Balance and fee mix expansion in U.S. Banking, capturing money in motion via One Client in wealth, deposit-led primacy and advice-based penetration in Canadian P&C, and expanding fee pools and commercial anchored One Client in capital markets. This diversification supports sustainable profitability for the franchise. On non-interest income, growth is driven by two primary levers, balance sheet growth and modest margin expansion. We have positive momentum exiting fiscal 2025, and we expect to achieve mid-single digit CAGR through 2028 for NII. Our key growth levers for NII are clear.
Re-accelerating loan growth now that portfolio optimization is largely behind us, driven by new client acquisition and expanded coverage model. We are growing core operating deposits through targeted coverage in priority markets and client segments. You heard earlier today from Matt, Sharon, and Aron about our enhanced focus on new client acquisition and deepening existing relationships to acquire core, sticky, granular deposits. We continue to optimize margins through ladder reinvestments, deposit mix improvement, disciplined pricing, and proactive interest rate risk management. These actions should lead to sustainable and modest NIM expansion over the medium term and reflects the business improvement in deposit mix. Having said that, our guiding principle for interest rate risk management continues to be NIM stability through the cycle. As a result, the NII growth is a volume, mix, and discipline story.
Non-interest revenue growth is based on our strategy to deepen existing client relationships and new relationships with advice and solutions to deliver exponential financial returns on the capital deployed. This creates durable revenues, and we expect mid-single digit CAGR through fiscal 2028. Execution priorities are focused along the themes which you've heard earlier today. The core here is One Client, converting commercial and personal clients into wealth relationships and deepening commercial relationships into capital markets. We have industry-leading product capabilities in treasury and payment solutions, reflecting success of deliberate investments in this space over many years. These capabilities will scale TPS fees as we offer these products to our new clients and higher penetration with existing clients. Lastly, as we scale fee pools in investment banking and wealth management businesses. Moving on to the last subset of core operating performance, that's cost management.
We have delivered positive operating leverage in nine out of the past 10 years, demonstrating disciplined cost management across cycles. We are leveraging this long track record to optimize cost to reinvest in talent and technology, and simultaneously improve efficiency through positive operating leverage. Our optimization efforts are focused on structural cost improvement, including increased automation through AI and digital adoption, middle and back-office optimization, and additional efficiencies from a scaled U.S. platform. We expect expenses to grow at about 4% CAGR through 2028, and these actions will enable us to deliver 2% operating leverage and drive efficiency ratio below 54% by fiscal 2028. Turning to the second lever of our ROE path, and that's credit. Our focus is consistency and discipline.
For years, credit risk management has been our differentiator, and we are confident that our deliberate actions will deliver a consistent credit performance through the cycle. As Piyush detailed earlier, we expect impaired PCLs to moderate to mid-30 basis points in the medium term. Importantly, risk discipline is embedded in how we allocate capital and how we develop business strategies to maximize risk-adjusted returns through the cycle. Now, the last lever, and that's capital. Higher ROEs and disciplined capital allocation are expected to drive stronger capital generation. Organic capital generation increases from approximately 90 basis points annually to about 125-135 basis points, or roughly $2 billion of additional deployable capital each year. Now, that gives us additional flexibility to support organic growth, pursue selective inorganic opportunities, execute buybacks, and maintain sustained dividend payout of 40%-50%.
In addition, we have elevated our rigor to regularly recycle capital away from low returning relationships to opportunities which meet our risk-adjusted return expectations. This capital strength and flexibility are foundational to our operating model. In our path to 15%, we expect CET1 to be between 12.5% and 13% exiting 2027, giving us additional flexibility to deliver our ROE target. Now, this page highlights that each of our businesses play a defined role in our journey to enhance returns and accelerate EPS growth. While all of them contribute to higher returns and growth, but as we think about them as a portfolio, each of them has a primary role to play. Some businesses are primarily ROE enhancers. They generate strong returns and anchor our overall profitability.
Canadian P&C and Wealth, our highest returning businesses and delivering over 50% of the bank's PPPT, primarily fall in this category. Some businesses are primarily EPS accelerators. They scale earnings efficiently and drive positive operating leverage. U.S. Banking and Capital Markets fall in this category, given their strong growth potential in their targeted footprint. Together, they work as a portfolio. We allocate capital and resources, manage risk, and drive execution so that the combination delivers strong EPS growth and higher ROEs for our shareholders. This balance underpins our confidence in achieving 15% ROE exiting 2027.
To recap, we are confident in delivering 15% ROE and 18% ROTCE exiting 2027, given our control on the levers, balanced assumptions, and flexibility in our path. Our ROE building blocks of core operating performance, credit, and capital, our U.S. banking path to 12% ROE, 8% PPPT growth, less than 54% efficiency, mid-30 basis points PCL impaired, and strong commitment to capital ratios to support profitable RWA growth and share buybacks, resulting in an EPS growth of low double-digit in the near term while remaining committed to our medium-term objective range of 7%-10%. In closing, BMO has a differentiated franchise, strong execution plan, and a clear path to deliver 15% ROE and 18% ROTCE exiting 2027. I'm confident that our strategies and execution plan, coupled with differentiated value proposition, will enhance and sustain shareholder value through the cycle. With that, I'm gonna hand things back to Christine.
Great. Thank you, Rahul. We're just going to get set up now. I'm going to invite Darryl, Sharon, Matt, Deland, Piyush, and Rahul back to the stage for our last Q&A session. I'll remind you again if you could raise your hand and wait for the microphone to come to you. State your name and your firm name before you ask the question. We'll just give them a couple minutes here to get seated.
We don't need a couple minutes.
Yeah.
A couple of minutes seconds.
All right. Thank you. I'll go over here, please. Number one.
Thanks. A couple questions. Steve Boland from Raymond James. The first question is on, I guess, for risk AI, you know, large discussion today, obviously a big focus. I'm just curious on the adjudication. When you, I guess, parallel run your models, how long is that? And when you back test, and I know this would be difficult to quantify, but what's the success rate, when you do back test the models once they're implemented?
This is AI across the bank? That's the question you
No, you're talking about the portfolio, right?
Portfolio.
Yeah. Mostly adjudication, so loans and mortgages, things of that sort.
Yeah. Certainly. Let me begin. You know, across the board, disruption risk and obsolescence is part of the underwriting ethos in any credit. That's been going on well before AI. As technology changes have been coming, those have been part of the credit work happening. That's accelerated with what you're seeing in the news across. If I narrow that down, we've been using AI to give us more insights. The work is started. It's not complete by any chance. We're seeing success in some parts I'll talk about. Just on the portfolio piece, our software business, which has really been the target in some of the media, is very small. It's less than 1%. In fact, all of these are companies who've been clients of ours for many, many years.
These are companies we are all familiar with, cash flow positive. As our bankers talk to these clients, what you're seeing is that the clients themselves are using AI to improve their own businesses. This obsolescence risk, in my view today, is a little overdone. This is gonna help businesses over time. It may accelerate, but overall, I don't see that as an immediate impact into PCLs in any way, given that small size portfolio. I do want to touch on one more piece just to give you a risk management view. All of us, as you heard today, are using AI, bringing it in, testing it out. We've got a whole risk framework around how we introduce AI to our clients or internally. But just in the risk space, I'll give you a financial crime example. AML, I talked about that, a few minutes ago.
There are so many pieces of an AML where AI has been fantastically useful. One, we get lots of alerts through our algorithm. AI has been able to take down the number of false alerts already by about 10%. Now, that's minor. I'll give you a bigger example, is when these alerts go into case dispositions, you have to do an adverse media search. That used to take about 180 minutes per search. That time has come down to 20 minutes. You can see the effectiveness of AI through different realms. Again, there is large amounts of work happening across the bank risk business as we roll out more AI. I gave you the software portfolio piece, but I also wanted to compound that with some of the AI successes we are seeing.
Great. Thank you. Mike, here in the front panel one.
Mike Rizvanovic, Scotiabank. Starting with Matt, I wanted to ask you about the ROE upside potential that you have. It looks like most of it's just PCL normalization, but I'm surprised that there isn't more of a focus on the cost side. The reason is because we've seen digitization come such a long way. You know, you're talking about AI changing the business. Is there maybe an opportunity to gradually cut some of the branches that you have in your network in Canada? I'm just surprised that, you know, if the revenue side doesn't amplify or grow as expected, maybe that's where the shift to the cost might start to become a bit more apparent. But what are your thoughts on the cost opportunity on the branch network, just given the digitization?
I'm sure you benchmarked versus some of your international peers, in terms of other jurisdictions, what they've done on the branch side, which hasn't really come into Canada yet, but might in the future. One for Deland, if I may. Maybe just talk a little bit about the like you mentioned how your net promoter score is very strong on the under 35s. Are you concerned at all at some of these non-bank platforms that are making some headway in the Canadian market, and why or why not?
Yeah. I'll start off with your first question. The way I would break this down is, number one, if you do look at our ROE walk, there's really three big drivers within that. One is consistent revenue growth, the second is sustained positive operating leverage, and the third, as you point out, is credit normalization. That's obviously off a strong base. The returns for the business right now are strong and will get stronger over the course of time, consistent with what we shared. When you go to the cost story in particular, I'd say a couple things. Number one, you heard me start off by saying our focus is the power of human and digital. The two things together combined are how we deliver on our value proposition and commitment to our clients.
That remains front and center and will continue to remain front and center. You've asked about branches specifically. Branches are really at the heart of that, proposition and that commitment to that value proposition for our clients. When we think about the cost picture overall, there is a lot of cost in what I would describe as middle and back office and cost associated with routine servicing. As that adoption curve scales and as the AI usage scales, that's where you'll see those benefits, which will be deployed in two ways. One, of course, is to support the operating leverage, but the second, and probably the thing I'm most excited about, is better conversations with our clients, where our people are focused on advice and guidance delivery, as opposed to, in some cases, routine servicing like what you'd see today.
On the question on the competitors. It's a great question because it is something that we are concerned about but became concerned about a number of years ago. We've had time to react. We've been reacting. If you go back four years, if you looked at the App Store for InvestorLine, we would've had a 1.5 score 'cause we just weren't focused necessarily on getting ahead of some of these things. We dramatically changed how we approach the clients and how we interact with the clients. Our App Store score now is over 4.5. We invested heavily in our active trader platform.
If you look on our active trader platform, you go on our five-star, you're gonna have a beautiful black background like you're on Bloomberg, and it's the best active trader platform in the country. We're seeing take-up on that. Is it resulting in net new asset growth? Yes. If you look at Q1, we actually had positive net new asset growth in our InvestorLine platform. Linking what we've done with InvestorLine to improve the experience for the client and being much more aggressive now with Matt and his team on the funnel, making sure that we're getting in front of that. I mentioned those 4.7 million clients. Many of those people are in the funnel into the InvestorLine platform. We are now marketing together with Matt's team to get that funnel going. We feel good.
Okay. I'm gonna go over here, number one. Gabe?
Thanks. Actually, just a few questions for Rahul, I guess. I'll wrap it, fire them. The core Tier 1 assumption underlying your ROE targets is at 12.5%. Second, I see mid-single digit loan growth is contemplated in this plan. Would the number be the same for risk-weighted asset growth, or are you anticipating lower risk density in that mid-single digit loan growth? Then lastly, for the U.S., because it's the biggest contributor to the ROE expansion, is there a reason why the ROTCE expansion, like it's around 450-460 basis points is higher than the ROE expansion?
The three-part question. I'll start off with the CET1 ratio. What I mentioned was we expect our CET1 to be between 12.5% and 13% as we exit 2027. Our management operating target remains 12.5%. However, as we've looked at this path and optimized this path, at this point it looks like we'll be between 12.5% and 13%. That's point number one, and that gives us additional flexibility in our ROE path. Looking at the capital, you know, we look at a lot of things. It's an output. We look at the growth demand from the businesses. We look at our own capital management, which is buybacks and capital position, what's happening in the environment. We look at all those things. We've looked at all our ROE path and feel 12.5%-13% is the range we think we'll be exiting 2027. Your second question was about RWA density.
Yeah. About mid-single digit loan growth, the RWA density is gonna be in the same neighborhood. We've been very cautious, and the reason for that is our path is very much focused on ROA and EPS improvement and more focused on share of wallet and deposits and fees. In that fashion, it's an optimal level of loan growth, which is reflected in an optimal level of RWA growth. Very correlated. Your third question was the ROTCE. Do you mind just repeating that again? Is it the correlation between U.S. ROTCE and ROE?
Yeah. It's slide 152. Just I'm doing 2028 minus 2025 adjusted, and it's almost 100 basis points higher, the expansion for ROTCE.
Yeah. I think that's a matter which probably I can take you offline and walk you through. I understand. I think what happens is ideally you would have thought over a period of time that gap should shrink, but also as you are generating profitability. The gap between ROE and ROTCE only on the U.S. basis will actually expand. Maybe it'll be easier for me to just draw it and explain it in a math to you.
I like pictures.
Trust me, my team. When we showed me that was my first question. I'll probably have to walk you through after.
All right, great. Thanks.
Number two here. Paul?
Thanks. Paul Holden, CIBC. A couple questions for Sharon. First in the presentation, I was a little bit surprised to see the deposit share in Canada versus the loan share. The loan share part wasn't surprising, the deposit share was. You kind of highlighted roughly a 600 basis point gap. What's the background behind that? And then why not a little bit more of an aggressive deposit growth expectation versus the mid-single digits there? And then second question, I think the tokenization part you highlighted is interesting. There's a lot of talk around stable coin and change in payment system in the U.S. more broadly. Is this a little bit of a first step in terms of getting ahead of that trend? Maybe you can give us some flavor on what you would expect in terms of how that, the payment and deposit ecosystem in the U.S. may evolve.
Sure. Thanks for the question. On the deposit market share, starting with the market share, we actually have been quite ambitious in growing. We've narrowed the gap to number two by, like, 600 basis points over the last five years as a result of a deliberate strategy. When you look at the mid-single digit going forward, that's more an assumption around the fact that as the economy improves and businesses start to invest, a lot of people are holding excess deposits right now, keeping their, you know, powder dry. Once they start to deploy that industry-wide, we don't expect deposits to grow at as high of a rate.
What I would say is if they do, we'll get our share of those, particularly in the operating deposit space, where we're number one in operating deposit growth over the last five years by a country mile. We're really excited. First I want to say on the CME, the reason that they picked us for that project is because of the strength of the relationship. It's a Chicago-based client. We have an excellent business, and Aron and Tony is here, years of dealing with them as a trusted partner. That's what gave us the opportunity and for us, first of all, being integrated into that ecosystem where many of our clients are partners of the CME.
This is going to be a bigger part, tokenized assets in all of businesses, not just deposit businesses, is gonna become increasingly important. It's really important for us to take an innovative approach to this, and we have a strong team working on this, both you would refer to the U.S., but I would say also in Canada. Primarily, we think the focus will be on starting probably interbank exchanges or things like real-time settlement. The other one you hear is cross-border payments. I think there's other ways that might be easier to solve that, but I think tokenized deposits will be more prevalent than stablecoin in North America would be my kind of base case view of the future. It's really exciting.
Like, it's gonna revolutionize how companies can mana ge their treasury, so it's a natural place for us to show leadership.
Great. Thank you. Panel two down here at the front.
Thank you. Ebrahim, Bank of America. I guess maybe one question, Darryl, for you. When we look at the ROE targets, a lot depends on positive operating leverage, PPBT growth of 8%. For any number of reasons, if the revenue growth environment turns out to be worse, just talk to us across the businesses, what's the flex, or would that potentially delay the timing of achieving some of those?
Yeah, look, it's a good frame to think about the plan. If you go back, you know, I mean, Rahul had a page 151, if you're looking to nerd out on more data at this point, that I always sort of ground myself in and look at where the degrees of freedom are in the ultimate delivery of the plan. I hope that when people look at it, 'cause we certainly, you know, maybe up until a quarter or two ago, we would've had people say to us, "It's pretty ambitious, and I can't make my model work. I can't get from basically 10 to 15," if you go back to the end of 2024.
I look at it now and say the credibility of a plan depends, in some instances, at least any plan that people present to me, on proof of concept, right? Where's my proof of concept? We had 12 quarters to deliver 500 basis points. I'm rounding, but it's pretty damn close to 500 basis points. Five quarters in, we've delivered 300 basis points. I'm rounding. I'm 60% of the way through in 40% of the time. Can I get the other 40% in 60% of the time? Pretty sure I can. Point one, point two, does it depend on big tailwind assumptions and heroic growth? We have mid-single digit loan growth. We have 6% revenue growth, which drives out 8% PPPT with some positive operating leverage. Does that feel like I'm pushing hard on a plan in order to get there?
Not really, when we've delivered po sitive operating leverage nine times out of ten over the last decade. You know, I say that as a frame because while your question says, "Well, what could go wrong?" I want people to realize, like, we didn't put in heroic assumptions in order to get to that 15%. We tried to give you the paint by numbers as to how we get there with pretty reasonable assumptions. You know, if revenues slow down and reminder, that means we can't deliver 6% revenue growth, right? If revenues slow down, we can't deliver 6% revenue growth. Can we respond in other areas? I think we've shown pretty clearly we respond pretty well on costs. Credit will be what credit is. We're managing it super well, but we respond pretty well on costs.
Ultimately, if that still isn't enough and we're in a really bad environment from a revenue perspective across the diversified businesses, well, then does it become a timing issue? Maybe. But the destination is firm.
I guess maybe one for Sharon. When we think about the overlap between tokenization and AI. I think there is a case to be made that it removes a lot of friction from the system.
Yes.
Even in Alan's business in terms of capital markets, collateral liquidity, etc. , just talk to us when you think about that, does all of this create a risk to lower cost deposits for banks and for BMO, but generally for banks? Because, over time, like, do you think financial services sector in certain ways are rent extractors? As more efficiency comes in, do you see a risk of just revenue and margins coming under pressure across a range of businesses?
Thanks for the question. You know, my view on AI and tokenized deposits, generally stable coins, is actually that they if they solve real client problems, and you can help the client use this technology either to deliver for them better or to solve a problem for them like you saw with Consignaction with our API, we're solving a real problem. Even you can be a net winner in this because if you can react faster, and that's why going back to the previous question, so important for us to be involved in these things because people will, you know, pick who they're going to work with early, and you can actually gain clients. You know, for history, is it gonna end up with lower margins?
I don't actually think so because I think it'll be so much more productive, and our costs will go down at the same time. To me, I see this as an opportunity, both vis-à-vis competitors, but also just for the industry.
Matt, you were leaning forward. Did you wanna get in on the consumer side?
No, I think it was really, really well covered, and I think you asked a question about the connection between AI and this framework specifically and to me, that's just another enabler to that frictionless commerce that I think you're alluding to. I think to Sharon's point, that is direct client value, and these systems are run efficiently today. What that means, it's gonna be even more efficient for a wider set of use cases tomorrow.
Great. Thank you. Panel one here. Darko at the front.
Thank you. I wanted to nerd out on something that Piyush had said.
Let's go.
Forgive me. If this is too complicated, and you'd want to talk about this separately, I completely understand. I wanted to double-click on your commentary regarding private credit. The way you whittle it down to 1%, I just want to better understand that exposure. Do you mean 1% of the entire loan book is with sponsored private credit activity versus what you actually do in the trenches on private credit?
Sure.
Can you maybe just double-click on that for a moment?
Yeah.
I'll probably have a follow-up one or two, but I don't want to hog the puck here or anything.
Mm-mm.
If this becomes too laborious.
I'll try the short version if that's okay, in the interest of time. It's not a nerdy answer. It's actually, I know there is some misunderstanding or mischaracterization. People look at the NBFI exposure that we've disclosed, and they think that's private credit. No, that's not private credit. The headline, the way you've said it, I'm gonna acknowledge less than 1%, and it does not keep me up at night in the way we've managed our private credit exposure. A little bit expansion. We have $68 billion. It goes between $65 billion and $70 billion of non-bank exposure, depending on client utilizations. Half of that is a equity call subscription business that the bank has been for 30 years with zero losses, and it's gonna be in the business forever, hopefully with the zero losses.
It's a low risk, high return business and at the epicenter of the One Client business we do. That's half of that. The next leg we call finance companies. In the finance companies, you've got mortgage finance companies, well secured by mortgages, primarily Fannie Mae, Freddie Mac in the U.S., as an example. You've got consumer finance companies and then some business finance companies. It is this business finance companies that I'm pulling out that we do through either few BDCs, but mainly through our private credit partners. We've publicly disclosed. We've got a partnership with Canal Road, before that, Oak Hill. The highlight of this 1%, of my confidence in the 1% and the quality is the structure, the collateral. We re-underwrite almost 80% of the loans they have. We've got concentration limits generally in what they can hold.
These have performed very well through the cycle. The coverage I have, the bank has, is exceptionally high. That's a strategic choice. We could have expanded into many more. We do that business of lending to mid-market through what you heard today. We're doing that ourselves, so therefore we do very little of it through our private credit partners that we've selected, which is what that 1% is. I just wanted to give you that comfort around the private credit. I do not expect we'll take any PCLs in that private credit setup as you think forward. I'll come back more and I'm happy to go through the nerdy answer if there's more to it afterwards.
Yeah. There's gonna be some more nerdy stuff we'll talk about later on.
Mm-hmm.
I mean, conceptually, when we think about the entire private credit market, the reason why it exists and what many other U.S. banks will tell us is, "Look, the returns aren't there. It's a high RWA business. The ROEs are low." Here you are in the trenches doing it. I mean, that's the one thing that I can't connect the dots, is that you're actually doing mid-market lending without private credit sort of intermediary and somehow getting a higher ROE on it. That's-
Yeah.
Probably a discussion for another.
That's what you would have seen. You know, Sharon can talk about the business is mainly in the U.S., but mid-market lending i s the center of the relationship, then the TPS, then the M&A, the Capital Markets, t he Wealth Connection. Automatically the ROE goes up.
Yeah, you're not wrong, Darko. I mean, if you were purely a mid-market lending only business, bank or otherwise, and you said, "That's what I have to offer," against a core cost structure that includes distribution, includes the intellectual capacity, includes the products, doesn't make sense. Why are the ROEs where they are? That's what's different from private credit. It's because 70% of the time we do the TPS, a high share of the time we do all those other things, and that's how you drive. The private credit only. Some of the private credit where we, quote unquote, "lost business" over the course of the last 10 years as a result of market share taken was because someone would come along and say, "I can chase a yield.
I don't have to worry about any of those other things, and I'll go and take the asset, but I can't do anything else." We would then turn around and say to the client, "Well, I don't have to hold the asset. Can I still do all the other things?" They would say, "Yeah, that's fine." I'd say, "That's good. My ROE just went up." Now we're in this phase of the cycle where we'll see what happens, right? Like we'll see if there's a shakeout and we take some of that market share back. We're only gonna do it if we're following loan growth. People ask me about loan growth. What's the growth objective in loan growth? The growth objective is the ROA enhancement and the EPS delivery.
The loan growth itself, inclusive of taking back share from private credit, if we do, is not the end. It's the means to an end. It's part of the formula. Does that help?
Thank you very much for entertaining that. Real quick question for Matt. I just want to understand what your end goal or objective is with the Blue Rewards. I think that's the thing that's missing for me, is if you really wanna make a strong cards push into cards, you need that premium rewards program.
Mm-hmm.
I don't think I grasped it. Is this going to be a primarily travel kind of card? What is the premium nature of this offering that you're bringing? I guess midsummer or summer, I guess.
Midsummer is when you'll really see it in action in our franchise, but I'll go to the very top of this thing. The goal of Blue Rewards fundamentally when you think about our client base is to make real financial progress real every day, not just for card clients, but for everyday banking clients and for prospects, a program that will appeal to non-customers as well. It's not specifically for the premium segment. It's for the whole population. There are aspects of it that will support the premium growth strategy, but equally, there are aspects of it that will start to reinforce the day-to-day value we deliver to Canadians. You're asking what's the macro objective. Macro objective number one is there's a number of Blue Rewards collectors today that aren't currently our clients. The way-
A big number.
A very big number. The way the program is being defined right now is in such a way that it will deliver incremental value to those collectors if and when they become our clients. That's sort of source of value number one. Source of value number two, of course, is that we have a number of clients that are collectors. We want to entrench those clients deeply into our franchise. The more we can deliver them value beyond their banking, the more likely we are to do that. Ultimately, how this all transitions. I referenced open banking when I was talking through the pages. What we're really trying to do here is drive more engagement day to day with our clients through a fulsome offering that includes obviously all of our core product lines, but also the value we deliver through Blue Rewards.
When you allude to summer, the thing we're really excited about is plugging it into our app, plugging it into our experience, and our clients will really see that power.
Great. Thank you. Any other questions? Another one. Number two, please, down at the front.
You got one over there.
I guess just maybe, Darryl, for you, there's been a lot of macro volatility over the last month. Just address for us, one, when you think about Canada, are you seeing any escape velocity in middle-market businesses? Are they gaining more confidence to invest and hire? Like will we truly have a better 2027 versus 2026? On the U.S. side, have you seen any loss of momentum in activity? I know it's very recent, but over the last three to four weeks around decision-making around M&A, IPOs, or even, clients, borrowing.
Yeah. I think it's early, Ebrahim. If you look back before the 29th of February, if you asked me this question on the 28th of February, I would have said we're seeing some r isk on behavior, some capital formation, some confidence in sort of putting aside the noise of if you look at Canada, U.S., for example, the trade tariff, negotiation, and let's get on with it, right? I think you've maybe heard me say that, and we were feeling that and continue to feel that. We're whatever we are now, three or four weeks into this new phase. I think it's too early for me to adjust that view. I can't tell you that I can look in our pipeline and say it's been reduced or there's a whole bunch of pausing going on. I can't say that today.
If you ask me that question in another month from now, two months from now, if we're still where we are today, I think you probably could guess. We could all probably guess that the answer would be there will be some moderation. At this point, we haven't seen it. At this point, there's a lot going on in the active traded markets every day, but in terms of real commercial activity every day, it continues pretty much as was with maybe a little bit of, "Gee, what's gonna happen as I go into the back half of." Were you gonna add to that in terms of the commercial, your clients' activity?
I would just say for us, this is when it's really important for us to be out and talking to our clients, and this is where you can really add value in relationships. You know, our clients are really used to working through volatility from what they've seen recently. What I said on the last analyst call is still the same. The pipelines are very strong. We're starting to see the lower end of the middle market moving and we feel really good about as we accelerate into the back part of the year. As Darryl said, if things are prolonged for longer, what I can say is we feel good about our relative position and how we're showing up in the market right now.
Great. Thanks. There was one last question over here, and then I think we're out of time, so I'm gonna take one last question on this side, if that's okay.
Thanks. Just have a question on residential mortgages and the mortgage broker channel. I think you're three years into your, you know, coming back to that channel. I know you have partnerships with a couple of the large, you know, companies in the channel. What I'm curious about, and again, I don't know if there's a regulatory burden, but, you know, why not own that distribution? It's been very successful in the property casualty insurance. They continue to grab insurance brokers. Why not buy the mortgage brokers or franchises?
It's a good question. We're not quite three years in. We're like a year and a half, but we're off to a great start. I'll start at the top on this one. We've entered the channel to meet clients where they are, right? 40% of the market has moved here, in particular first-time home buyers, people that are earlier in their home buying journey, urban centers, etc . That's where that market tends to be concentrated. We're there with a focus on full relationships, and we're getting those full relationships. Ultimately, clients go to brokers for a variety of reasons, right? One is oftentimes the bank or the real estate agent that they're working with has an affiliation with a broker, right? They're referred to the broker in that context.
In some cases, they're looking for the broker service, comparing offers across a range of different institutions. Their value proposition is contingent to some degree on their ability to shop across multiple organizations, and I think that would be consistent in the future, which is why we're participating in the channel as opposed to owning it. I think that's a pretty consistent view of the market and for our clients as well.
Okay.
Okay. I'll maybe follow up.
Great. Thank you everyone very much for your questions and engagement today. It's been an absolutely fantastic day. Thank you so much for being here. I'm going to invite Darryl to come and close our session today. I will also say that there is an incredible, you've heard it mentioned a few times already, an incredible technology showcase that is outside out of these doors next to the lunch, so you can be fed and also see the amazing work that the teams are doing here. Please take some time to walk through and see that. Thank you.
Great. Thank you, Christine. I'll take a minute to thank everybody in the room and all of you that are online for the time that you've spent with us today. [Non-English content]. We appreciate all the time that you've spent with us, not only today, but every other day of the year as you engage with BMO. [Non-English content] .
Today, we reinforced a really clear message. BMO is a purpose-driven, future-ready bank with the scale, with the diversification, and the proven capabilities to elevate returns and accelerate growth. I hope what you joine d me in seeing today was we are not the largest bank in the land, but we may well be the highest quality franchise in the land as we continue to build the business and as we continue to invest in the depth of the management team. The diversification that we talked about across businesses, across geographies, and clients does position us to compound growth through the cycle.
The strategy that we talked about today is grounded in durable earnings, disciplined growth, and strong capital returns. It's underpinned by a risk culture that is the bedrock of that profitable growth plan. Commercial banking, we talked about as a differentiated core earnings engine and a structural advantage which helps us drive significant and differentiated One Client opportunities. The scaled U.S. franchise that we showed you today is positioned now to unlock its full potential. The Canadian retail and wealth businesses provide stability, growth, and a really strong deposit foundation. This is all enhanced by the leading North American capital markets platform that Alan walked you through, which continues to be a growth engine. We've made, over the course of the last few years, meaningful progress transforming the bank through portfolio optimization and through digital transformation.
Now we're leveraging AI to personalize those client experiences, to augment our teams, and to automate our businesses. Why? To deliver real business value. The opportunity is real, and it's already in motion. The leadership team and I are absolutely confident in our path to the 15%+ on the ROE, and we're executing a plan to deliver it while accelerating growth and delivering long-term sustainable value to shareholders. A lot of people put a lot of work into getting us organized today for all of you, and I wanna give a shout-out to Christine and her amazing investor relations team, and to Courtney and the amazing events team who helped us put this together. Thank you all. Please join us for lunch and conversation. There is lunch, conversation, and further digital showcases just outside those doors. Thanks, folks.