Bank of Montreal (TSX:BMO)

Investor Day 2018

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Oct 24, 2018

Morning, everybody. Thank you for joining us. I am Jill Homenuk, Head of Investor Relations. We are happy to have you here with us for our 2018 All Bank Investor Day. We have an action-packed agenda today with all of our businesses being covered and a number of our senior executives who are presenting today. In terms of the agenda, we are going to run until about 10:00 A.M., and then we are going to have about a 20-minute break, and then we will run until about noon after that. I also want to welcome our viewers on the webcast. Thank you also for joining us today. On behalf of those speaking today, I would like to note that forward-looking statements may be made during this presentation. Actual results could differ materially from forecasts, projections, or conclusions in these statements. I would also remind you that the bank uses non-GAAP financial measures to arrive at adjusted results. Management assesses its performance on both a reported and adjusted basis and considers both to be useful in assessing underlying business performance. Our presenters will generally be referring to adjusted results. Additional information on adjusting items, the bank's reported results, and factors and assumptions related to forward-looking information can be found in our annual report and our third quarter report to shareholders. As a reminder, the Q&A portion is at the end of the agenda, so we would ask you to hold your questions until then. At that point, we will also be taking questions from the webcast. Okay. Let's get started. Before I pass it over to our Chief Executive Officer, Darryl White, I would like to show a short video, so if you could just please turn your attention to the screen. The Bank of Montreal, a corporate record for U.S. business. Last year, we bought back 10 million shares. We increased our earnings by 10%. We improved our efficiency ratio, and we started spending against our tech agenda at a rate that we have not in the past. Our plan is to pilot Nivity in three of our markets. 70% of corporate customers have cross-border banking needs, a client segment that is untapped essentially by our competition. The largest commitment we have ever made to a community partner. All right. Welcome, everyone, and thank you for joining us today here in the room, and for those of you on the webcast as well. That video, as I watched it, reminded me of what an action-packed year it has been as we continue to invest in our foundation. Today, we are going to talk about how we pivot from that foundation into our future agenda. So I have got two main objectives for the day. The first is to make sure that we are all clear on what is at the center of our priority list at the Bank of Montreal, what is at center ice for our executive team. Secondly, that you have the opportunity to get to know in further detail, in a lot of detail, frankly, our senior management team, my team of partners who are executing those strategies and delivering the results that we have talked about. I have had a lot of opportunity to spend time with most of you, frankly, over the course of the last couple of years. Today, you'll have the opportunity to spend a lot of time with all the leaders of the bank who are executing on those strategies. Speaking of the team, we have had some exciting announcements, haven't we, in the last couple of weeks. Each of Surjit Rajpal and Gilles Ouellette have announced their intentions to retire in 2019. We have announced that Surjit will be succeeded by Pat, who's here today. Pat, in turn, will be succeeded by Dan Barclay, who is also here today. When Jill retires, Joanna Rotenberg will expand her current responsibilities beyond the wealth management businesses to the global asset management businesses. We're excited about these changes. We take transition pretty seriously around here, and we've got a plan that will be absolutely flawless as we go through it. All right. I'm going to hit some of the key points. I need a slide changer, please, so that I can change the slides. Where is it, Jill? There it is, on the side of the chair. Anybody else need to know where your slide changer is, it's on the side of the chair. These are the key themes for the day. I'm going to hit the high points of what we call our strong foundation. I'm going to talk to you about why we believe we have truly differentiated strengths at the Bank of Montreal, and we're going to talk about how we're using those strengths to accelerate into the financial performance that we've been talking to you about through the course of the year. As each of the presentations come up one by one, you'll see that they all ladder up to these key themes and to what we talk about as our one bank, one team, one strategy approach. A reset on the strategic priorities, a reminder on the strategic priorities that we just haven't changed. When we think about how we execute against these strategic priorities, we are now leaning in with an execution focus around operational excellence, and whether it's the customer experience, whether it's the digital innovation, which we're going to hear a lot about today, the efficiency agenda, which we're going to hear a lot about today, the North American platform, and of course, our tried-and-true risk management platform. In every case, the lens that we're taking against the strategic priorities is one of a competitive mindset where we drive superior financial performance over the long run. We spend a fair bit of time talking about the foundation, and this is for good reason. These on this slide are the bricks on which this house is built. We continue to invest in these bricks, and we continue to invest in the house. I'm not going to touch down on all of them, but I will hit a couple of them to get us started here today. We'll start in the middle and build out. When we talk about our diversified and attractive earnings mix, those are deliberate words, diversified and attractive, diversified by geography, diversified by business segment. We skew commercial, we skew U.S. relative to some of our peers. As far as our business segments are concerned geographically, if you look at our business, these are round numbers. We'll get into some more detail as we go through it, but you can think roughly about 60% of our income coming from Canada, close to 30% coming from the U.S., and about 10% coming internationally, 60/30/10. We like that mix. We think it sets us up well for the future and the environment that we're in right now. So diversified and attractive earnings mix. Top left, eighth largest bank in North America. Why does this matter? There are over 5,000 banks in North America. Bank of Montreal is the eighth largest bank in North America. We have the scale and we have the size to ensure that we're making the right investments at the right time in our digital agenda, in our technology agenda overall, in our regulatory agenda, in our brand spend, in our marketing spend overall. This matters relative to many of the competitors that we've got in many of the markets that we feel in. Below that, respected brand. Again, intentional language. The brand is really important. It's consistent everywhere we go. We've got a brand that's recognized, whether we're here coast to coast in Canada or in Toronto, or if you went with me to Chicago or Milwaukee or Indianapolis or St. Louis or Minneapolis or our outer markets in Atlanta or in Ohio, for example, you would see that the brand is recognized, and we continue to invest in it. But we choose the word respected quite intentionally, and you'll see that come to life through the course of the presentations today. But one example of that I would give you right here right now is that in the most recent American Banker awards, when American Banker did a study along with the Reputation Institute to source consumer opinion on the most respected bank brands in America, BMO's brand ranked number 2 of the 40 largest banks in the United States as far as being respected. That matters, and we think that that will matter a lot more as we go forward. By the way, number 1 was USAA, so the bank of the U.S. military. So we're in pretty good company there. Last one I'll hit on before I move off of this slide is consistent and effective risk management. Again, deliberate language, consistent and effective. We have been very good risk managers at the Bank of Montreal for a very long time. It's important to say it. Our risk posture has not changed. Our risk appetite has not changed. We are challenging ourselves every day to make sure that where appropriate, we execute and we operate at the full extent of our risk appetite. We are good risk managers in large part because we are very good relationship managers, and we manage risk with our clients through the cycle, and we're continuing to manage risk with our clients through the cycle. When we look back in 5 years from now, 10 years from now, 15 years from now, our objective is that we'll be able to do a look back and say that all through the piece, we will always have been considered world-class risk managers. It's a differentiated strength of the bank. It's not the only differentiated strength of the bank. There are a number of others. When I go through these, I want you to know that we've been very thoughtful about thinking about and asking ourselves the question and asking some of you the question, what makes BMO unique? What makes BMO unique? I will go through these in a little bit of detail, and I think you will see them come to life through the various presentations that we have going on through the morning today. When we talk about a well-established U.S. presence, first transaction in the United States for the Bank of Montreal was in 1818. We bought the Harris Bank in 1984. We continually invested over time in our business in the United States. In 2010, 3% of the bank's earnings came from our U.S. operations. In 2011, 11% of the bank's earnings came from our U.S. operations. Year to date, as we told you this year, 28% of our earnings are coming from our U.S. operations. That is a mix we like. That is a mix that will continue to increase as we go forward. Core strengths in commercial and wealth management. We are very proud of our core strengths in these businesses. You are going to hear from our leaders today. Joanna, Gilles will talk about wealth management. Our commercial bankers, you are going to hear from Dave. You are going to hear from a panel of commercial bankers who will talk to you about the work that we are doing on both sides of the border. We believe we are as good at these businesses as anybody that we compete with in any market, and we are proud of it, and we are leaning in. Unique approach to cross-border banking. Why do we talk about it as a unique approach? Because a lot of people do talk about cross-border banking, don't they? We are the only bank, best we can tell, that operates in every one of our lines of business. So whether it be personal banking, commercial banking, business banking, wholesale banking, Capital Markets, wealth management, or asset management on both sides of the border and do it in every case on an integrated basis. Why does this matter? I will give you a couple of examples. When we polled our wholesale customers and we asked them if they either currently are or intending to transact and do business on both sides of the U.S. border, 70% of them said that they were. We are set up to help them wherever they are doing business across that 70% and the 30% who are operating independently on either side of the border. Another example in our Capital Markets business, when we talk about an integrated cross-border strategy, the value to our Canadian clients of our U.S. franchise is increasingly important. When we talk to our U.S. clients, the value of our Canadian franchise is, in fact, increasingly important. If you look back at our sub-pac over the last number of quarters, you can go back 2 years, 3 years. What you will see if you look at our underwriting and advisory revenues is more often than not, we have more investment banking revenues in the United States than we do in Canada. It is a balance that we like, and it is a balance that is reflective of the unique approach that I am talking about. I think you will see that as you go through the day through various presentations that we have got. You will see it from Pat and Dan in Capital Markets. You'll see it from the commercial bankers in the panel that I talked about. Next, creating what we call sustainable efficiency. We've talked for a number of years with many of you about the efficiency agenda that we've got here at the bank. We're going to talk about it again today. The key message here is that we're accelerating into that agenda. We've created a new function at the center of the bank. Luke Seabrook is leading that function. He's going to take you through some of the initiatives that we've got going on and the work that we call EI3. It's really important work. We're just getting going. We've got a lot of great initiatives that I'm personally really excited about, and I've asked Luke to share them with you today. It's not just about design. It's about design and execution. It's not just about cost. It's about revenue performance as well as cost efficiency, and we'll go through that today. On the digital investment and innovation, this is absolutely in the last but not least category. There will be some things today that I think will surprise you. We're not taking a backseat to anybody on the digital agenda, and we're going to reveal some of the work that we've been doing on the digital agenda here today. So when I put this together as a platform and ask myself whether this is a collection of assets that makes BMO unique, we believe it is, and we hope that you'll agree with us when we go through the day. One thing that's absolutely unique and measurable is what we call our cornerstone asset, which is our differentiated culture. At BMO, wherever we go, and I spend a lot of time with all of my partners on this, wherever we go, we find that this is true, consistent among geographies, consistent among business lines. When I look at employee satisfaction, ethics, human values, collaborations, the way this chart works, if you didn't squint at the legend, is that the dark blue bars are BMO, and this is comparing us not just to FIs, the financial institutions, but to leading companies in the world. So this is based on 90% participation of the entire workforce of 35,000 people at BMO against leading companies in the world. This matters. Why does it matter? Because this is the foundation on which the one bank, one strategy, one team is built. This is it. Frankly, when we talk about accelerating our performance and growing off the foundation, I don't know how you do that if you don't have this bedrock of a foundation. We're very proud of it, and we talk about it all the time, and we talk about it as something that around here can never change. All right. Accelerating the performance. Performance is what you came for. So to take you through the journey, this talks a little bit about where we've been and where we're going. So if I give you a bit of the from to, it looks a little bit like this. Tom will unpack this a little bit more for you at the end of the day. But when we think about what we've delivered, we talked to you a couple of years ago about delivering 2% operating leverage. We did that in 2016. We did it in 2017. The forecast for you is that going forward, that target will remain 2% over time, and we'll continue to work hard at delivering that. The efficiency ratio. on the operating leverage, I should point out, it's obvious everyone knows how to do the calculation, but we talk about this very actively at our management committee. We talk about making sure we're incenting all of our people to think deeply about how do we grow revenues at a faster rate than we grow our costs. Simply put, that's what our operating leverage agenda is. It's more complex than that, as you know. We're going to get into the details as we go through it today. That drives out the efficiency ratio. We've taken 340 basis points off our efficiency ratio over the course of the last two and a half years. We've had work to do on that, and we continue to have work to do on that, and we've got opportunities. The consequence of driving 2% operating leverage for the next two years is that we will deliver a 58% efficiency ratio or better by the end of 2021. That's from the 62% ratio that we're showing you today. So that's where we're traveling on that, and it's important to point out that the efficiency ratio is an outcome. It's not the driver. The driver is our focus on the operating leverage. Important also to point out that we're not suggesting to you that we will do that in lieu of making smart investments. In particular, on the technology agenda, we're spending over $2 billion, well through $2 billion of technology spend at the Bank of Montreal. We've been increasing that over the last two years at a double-digit rate, and we expect to see that increase at a double-digit rate for the foreseeable future. The important point here is row three and row one on the chart are not in conflict. At this place, we operate and say that we have to deliver for you, our shareholders, both of these. U.S. growth, I touched on it a moment ago. You'll hear others touch on it as we go through the day. 28% of our earnings. We could see that number traveling to a third of our earnings over the course of the next five years organically through the initiatives that we've got in place. It's not just because the environment is good. We do think the environment is good and constructive, and we've got a backdrop that works well against our business. But it's also because we believe that we can compete with anybody in the market, and we're taking share, and we're beating the market in the businesses where we're choosing to compete in the United States. The output of all of that is our EPS growth. We've talked to you about 7%-10% EPS growth over the medium term as a target. We've achieved 8% over the last couple of years, and as we look forward, that doesn't change either. As I think about the likelihood of being at the bottom end or the top end of that range, I would say to you, assuming continued constructive markets, both personal and commercial, and assuming the capital markets cooperate, we would be more comfortable at the top end of that range. But those are some assumptions that we'll have to see as time goes on. All right. One team, one bank, one strategy. This is important for a lot of reasons. This is important because it is at the core of our agenda today. I do not want to take you through all of the reasons that I think it is important. I would like you to judge it by the end of the day so that you can spend a lot of time seeing our teams in action, seeing the growth plans that we have in place, seeing how we are executing against our agenda, and seeing how we are sticking to ensuring that we do all of that within the risk appetite that we have said is very important to the Bank of Montreal. I hope that you will agree with me when we get through the end of today that this is differentiation in action. I have spent the last two years examining, studying, spending time in every corner of the bank, and I can tell you that everywhere I go, this pops. Lots of times you will hear that this is important. I am telling you that this pops everywhere in the Bank of Montreal. Before I turn it over, just a reminder, the key takeaways today, the foundation is really strong and getting stronger. We are using that foundation to really emphasize to our customers, to our communities, to our employees, and to you, our shareholders, that these are truly differentiated strengths at the Bank of Montreal. Those differentiated strengths in turn drive the performance agenda that we talk about and the outcomes that we talk about from a financial perspective. We do it with the approach that I have talked about in terms of one bank, one team, one strategy. When you listen to the others speak today, you can do it with the knowledge that I am going to be sitting over there in the corner with complete confidence in the strategy, in the team, in the leaders, my partners who are up on the stage executing those strategies, and that we feel really good about the future. All right. The next segment, and I am going to hand over this so it does not end up on the chair where I found it. I am going to hand it over to Brett. The next segment is really important. We have got two executives who have each well over 20 years of experience in technology and in digital banking. Brett Pitts joined us earlier this year from Wells Fargo, where he was the Group Head of Digital at Wells. He came to us from Wells and is driving really aggressive change here at BMO. We are really excited about that. Steve Tennyson, who is our Chief Technology and Operations Officer, are going to present to you together how the foundation of the technology stack meets the innovations that we are talking about on the technology side. Guys, over to you. Thank you, Darryl. Morning, everybody. As Darryl mentioned, Steve and I are grizzled veterans in the digital banking space, some more grizzled than others. I can say it about ourselves. We have each been in the digital banking space for upwards of about 20 years each, and in the broader technology space for considerably longer than that. As you know, over that period of time, we have seen enormous amounts of change in terms of business models and ways of working. Certainly, the technologies that we have at our disposal to be able to provide best-in-class customer experiences, and the velocity of change has done nothing but increase over that period of time. That has caused banks across the world, and certainly including BMO, to Darryl's points, to invest significant sums of money over the course of that time to make sure that we were meeting competitive changes. I think more importantly, again, to make sure that we were providing the best experiences possible to our customers and to our teams. As we close out 2018, and we start thinking about 2019 with internal stakeholders and external stakeholder groups like you, there are certainly lots of understandable questions about how do we assess our current performance, where do we think we are from a digital perspective now, what are we thinking about in 2019 in terms of features and roadmap, and then for the next 3 to 5 years, how are we confident that we are setting BMO up to be successful in the future? Those are some of the things that we are going to take you through. Thematically, you will see a lot of consistency with a lot of the points that Darryl just made. From a digital perspective, we are oriented entirely around creating customer and business value in demonstrable ways that we can prove on both dimensions. We have lots of themes that our teams on a daily basis are running decisions through, including things like, does this demonstrably improve the customer experience? Increasingly, as we talk with our teams and think about digital tools, data that can make them more productive, ways that we can better support them in providing best-in-class service to our customers using digital. We are taking that feedback and making sure that we are applying many of the same techniques and principles to the tools that they have access to as the ones that we also deliver to our customers. We are actively embracing the opportunities presented by open banking. It provides so many new chances for us to be with our customers in all of the places where they spend their digital time when they are thinking about their important financial decisions and being able to bring aspects of the relationship to them. Likewise, there are a whole host of very innovative partners across different spaces where we can incorporate new products and experiences and technologies to be able to augment the experiences that we have on bmo.com in all of its various forms. As Darryl mentioned, we have many unique assets, non-digital and non-technology related, the strength of our brand, the affinity that customers have for us, the loyalty, the full complement of distribution touch points that our customers continue to value. Digital can make each one of those assets stronger, and likewise, those assets make digital more effective. Steve will talk about the growing investment that we've been making in technology over the course of the past five years in particular, and what that looks like going forward. Again, to Darryl White's point, how we're also using that technology to generate and capture the value associated with efficiencies so that we can continue to invest in employee and customer-facing experiences at an inorganic rate and certainly far outpacing the overall expense growth of the company. From a digital perspective, what does that look like in terms of outputs? Three main dimensions. Revenue and sales growth, adoption and engagement of the channels, and self-service and the efficiencies associated with that. Today, BMO is already a leader in digital sales. We generate from a retail perspective, 25% of the retail sales that BMO makes, it closes through digital, which is best in class, not just from a Canadian perspective, but given my U.S. experience, where I operated in and among banks who had spent billions of dollars over the course of the past two decades, much of it oriented around generating sales and revenue through digital. Most of those banks are still in the 15%-20% range. So 25% would be aspirational for most in the U.S. two to three years from now. We're there today, and we have an intention to double that again over the course of the next three years. I'll talk about what that looks like. That's in Canada. From a U.S. perspective, the intention is to more than triple the contribution of digital sales over the course of the next five years. Over those same periods of time, we intend to drive best in class adoption and engagement from a digital perspective. By doing so, generating even more substantial efficiencies as more of our customers shift their everyday transactions from higher cost assisted channels into self-service, primarily digital. We'll talk more about what that looks like. To lay the foundation for this, we'll first start with technology, and for that, I'll turn it over to Steve. Thank you, Brett. I'm really happy to be here to talk about our technology architecture and where we've come over the last five years. I said to Brett when he joined the bank a year ago, I said, "You're joining a 200-year-old bank," which is fantastic, we're very proud of that, "but I think we have a 20-year-old architecture." It feels like a 20-year-old bank, but we have the wisdom and knowledge of a 200-year-old bank. What you'll find and what we built is a very modern platform. It is a world-class architecture, but I guess more than anything, it's an enterprise class architecture. You'll see at other banks where they have this architecture in different areas, but here it's across every business. Today you'll hear from all the business units, they're all riding the same architecture, which is exciting. It's built for speed. You will hear about Dale saying efficiencies and automation. We have done a lot of that from all the way from Agile through DevOps, through automating our IT Ops group. We are really into getting things to market faster. We built a state-of-the-art data and analytics platform, which provides all kinds of insights for our business units. We are looking at automating and changing a lot of our channels. We talked earlier outside about how it is easy to do plug and play now with this architecture. We can do open banking, we can build new platforms, and we can plug them in easily, which is exciting. At the heart of this, though, is what we call the SmartCore. We have branded it, but it is really the concept of three-tier service-oriented architecture for those of you that read a lot about technology. There are three components to it. There is the connector grid, which integrates our channel platforms with our product systems. It is simply that. It is really the glue that keeps it all together. The data and analytics platform that we built, we call IDP. We are leveraging that across all of our business units, and Lou is going to talk about that a little later. We are seeing roughly 3.5 million queries on that a day. We have a data lake that we have built, and it is not disparate anymore. We have one area where we have all the data. Then we have some enterprise platforms which are single sign-on identity and access management for our customers. We also get into digitization. We have a toolkit that allows you to do automation of business flow and workflow, which again, is going to help us get at all those efficiencies. We are excited about what we have built. Brett mentioned we have been at this for 5 years. I would say we more or less finished about 2 years ago, and we have been starting to see the benefits across many areas. We see it in the speed, again, 30%-40% on our speed. The efficiency is coming through the services we built. Back to being service oriented. We built 1,600 services. We feel like we need probably 2,000 for a bank our size. The other banks, I think, would probably say the same thing. With Brett, we are building those last 400 in the digital work that he is going to talk about. On quality, 4 or 5 years ago, we were doing 35,000 changes a year. We are now up to 70,000. I do not think we could have got here with this number of changes if we had not done the architecture the way we did it. That works out to about 1,500 changes a weekend. My teams are very busy over the weekend, but it is allowing us to do that with quality. More exciting than for probably my business partners is that we have changed the mix of spend, and we have moved almost 8 percentage points from run the bank to transform the bank and protect the bank. It does not mean the number is not going up, as Darryl said. We are expanding the amount we are spending, but as we do, we can move more to transform as opposed to running, which proves that the architecture itself is working. With that, as I give that money to Brett to spend, he is going to talk about what we are working on. Lots of ways to spend it. Yes. Again, to that point, in terms of how we're tasking this very modern architecture and all of the efficiencies now that we're starting to garner, first starting with sales and revenue generation. As I mentioned, BMO today is a leader in digital sales at one out of four retail products being sold and closed through digital. That represents a doubling of the rate when you look three years ago back to 2015. We have tremendous momentum for reasons that I'll talk about here in a moment and reasons why I think we are particularly good at this. And the plan and confidence that, again, we're going to be able to double that rate to 50% over the course of the next three years. Of course, we're going to continue to focus on making sure that we're effective from a product sales journey perspective and that we're very effective in deepening relationships with existing customers through digital and a lot of the applications and techniques. We will also have a particular focus on new customer acquisition and new primary customer acquisition in particular. You'll hear more about that from Cam a little bit later in the morning. But our intention is to also double the number of net new customers acquired through digital over that same period of time. In terms of what it is we do that makes us particularly good at this, there are a number of banks and financial institutions who I think are good at particular steps in the customer sales journey. They're good at the marketing upfront work. They're good from an application perspective. For years, BMO has been looking at the end-to-end. We are particularly effective during the customer shopping journey when they're doing researching, identification of needs, comparison, and making the decision to acquire a new financial product. We have very sophisticated tools and techniques even according to our partners that we apply to make sure that we're delivering the right information to the right prospect at the right time with the right offer. And then as we feed customers into the application journey, we have a very high level of fidelity between the customers starting the product application through digital and customers completing that application. We're north of 50% in terms of pull-through rates, which again, is best in class from an industry perspective, particularly when applied to prospects. From a use perspective, we've been going much deeper into the architecture, the operations, the way that the overall enterprise works to ensure that we have more real-time decisioning, more real-time product fulfillment, and more real-time onboarding to get customers up and running with their relationship much more quickly than they would've been able to in the past. Business Xpress, which again, you're going to hear about a little bit later, I think is a terrific example from the small business front where we have improved the time to loan by 95%. Essentially, we have taken a process that used to take days and distilled it down literally to just a handful of minutes, which of course adds tremendous value to customers being able to get to yes faster and certainly adds significant amounts of business value. Very excited about that as well. We're going to be applying these same techniques, tried and true, across a broader set of product portfolios and a broader set of businesses to be able to achieve the kinds of outcomes that I talked about earlier. From an adoption and engagement perspective, I'd say today we are with the rest of the pack in terms of adoption and engagement of digital in the mid-50s, which is pretty typical from a Canadian perspective. We intend to grow that over the course of the next three years to best-in-class rates of 70%. We're going to have a particular focus on mobile, where we have identified that we have a really good opportunity there. I think we have made tremendous progress with our mobile offering over the course of the past 18 months, and I'll talk about what that looks like. With that focus on mobile, we have confidence in being able to grow to that 70%. Why that's important in terms of both customer and business outcomes, digitally active and engaged customers on just about every possible dimension are happier with us, more loyal, less likely to attrit, are a disproportionate source of revenue, and are more efficient for us to serve because they have moved more of their everyday transactions from high-touch channels into self-service, which is also good for assisted channels being able to free up more capacity for more sophisticated conversations with customers, which is what they continue to value in assisted channels. In my experience, having driven engagement to 75%, 80% in the past, there are two important dimensions to being able to do that well. First and foremost, of course, you have to have a really competitive digital offering, and we do. That's what we've been focused on, again, over the past couple of years in particular. In the mobile space, we are at a high watermark in terms of customer satisfaction when we talk with them directly about our mobile offering. With publicly available sources of feedback like App Store ratings, we see tremendous progress over the course of the past year. We're also in the process of introducing a whole host of innovative first-to-market features, some of which you'll see during the tech demos at lunchtime. BMO QuickPay is one of the features that we are most excited about. This gives customers the ability, using their mobile device, to be able to take a picture of a bill or forward an email to a BMO email box, have us do a proprietary application of optical character recognition and AI, identify the different parts of the bill, the due date, the account number, the amount due, and automatically pay that on behalf of customers. As we put that in front of customers in prototype and pilot, they have absolutely rave reviews in terms of the utility and the ease of use of the feature. We have been issued patents associated with this, and in fact, we are going to announce in the next 24 or 48 hours that we just won a Gartner Eye on Innovation Award for the Americas region for this feature. This is just one of many features that you are going to be seeing from us over the next 6 to 12 months. The other important part of driving digital adoption and engagement is making sure that digital is part of every conversation that happens across the enterprise. Every product open, every onboarding conversation, every servicing interaction, every long-term loyalty conversation, ensuring that across the enterprise, we have the right expertise and advocacy to make sure that we are talking about digital with all of our customers to be able to drive that kind of engagement. A couple of other really quick examples, and again, you will see these in the tech demo for those of you who are here in the room. Over 2018, we have been completely redesigning and re-engineering our entire digital offering within the U.S. New digital sales platform, new digital servicing platform, very contemporary, responsive design, new look and feel across all of the different digital devices, new digital banking, all built on a brand-new infrastructure that will become the go-forward digital infrastructure, not just in the U.S., but we are also going to be using it in Canada to give ourselves true North American scale, efficiency, and responsiveness. I talked a lot about retail, but the progress that is being made is being made across the enterprise. Within wealth, within BMO Capital Markets, within commercial, you will see lots of good examples as the morning goes on. This is an example from our commercial business where we have a new online banking for business mobile application. For our more sophisticated commercial and treasury management customers, when they are on the go, traveling, sitting with their customers, the full suite of features enabling them to be able to manage their company's finances. A particular feature of this being biometric authentication, so enabling our customers to be able to divorce themselves from the keychain full of physical fobs that they have been carrying around for years, continue to carry around for a lot of our competitors. They now have a whole host of options, including fingerprint, voice print, facial recognition, and eye recognition in order to be able to authenticate and release high-consequence transactions. Early days in terms of the rollout, performing very well, and we are getting great feedback from customers. Last topic that I will touch on, partnerships. You hear a lot about partnerships within the financial services space right now. This is key to accelerating our digital strategy and progress as well. About three years ago, we started to establish a partnership ecosystem foundation on a number of different dimensions. We are working with big technology firms like Amazon, Google, Apple, Samsung, to ensure that we are putting BMO products in all of the places where customers expect to be able to interact with them. We have a growing inventory of FinTechs who we are working with so that we have access to new products, experiences, and technologies that we can incorporate into bmo.com without having to build everything ourselves. We participate in a number of cross-industry consortia, both in the U.S. and in Canada, around such consequential topics as blockchain, identity, and payments. We also participate and fund in a host of accelerators and incubators, both in the U.S. and Canada, to give us early looks at new technologies and early-stage companies at a time when we can partner with them on their product development and influence that in ways that we know are going to be beneficial to our customers and our business. We will continue to do all of those things, and I think that is pretty typical of what you hear from a number of competitors. But in 2019 and beyond, we are also starting to pivot into larger scale, more consequential types of partnerships. Today, you will see an announcement of a new partnership that we are forming with Intuit, which I think is a perfect example of this. An open banking partnership to better serve our mutual customers more easily and securely, enabling them to be able to take their banking data, put it into Intuit products like accounting software, and in the future, being able to take accounting information back into their banking relationship. I think this is a perfect example because it is a truly customer-centric model, very transparent in terms of the interaction with customers, puts them firmly in control of their information, and again, a very intuitive experience. We are very excited about this going forward, and it, again, is one of many new partnerships that you are going to be hearing about in the coming weeks and months. With that, we will wrap. I was going to say, we hope you feel as we do, which is we are really excited about the business and customer value we are generating. I am excited about the business value for Brett, and Brett is very excited about the customer value. But we are doing some really great things. On the technology side, I think if you walk away with feeling like it is a competitive advantage for us. I did not say it earlier, but we have four patents outstanding on the SmartCore. We do feel like how we built that is a competitive advantage for the bank, and it is for the entire bank, not just a part of the bank. Right. You have seen certainly through our talk today, lots of references to business strategies. You are going to hear about digital in just about every presentation for the rest of the morning. Digital is core and intrinsic to everybody's growth strategies over the course of the next three to five years. It is certainly a team sport from the BMO perspective. From a strategic standpoint, in addition to making sure that we are making the experiences the best they can be on bmo.com properties, we are also really embracing open banking and the power and leverage from the distribution and customer service perspective that that presents to us. The last thing that I will do before we wrap up is for those in the room, I am going to run a quick ad for the tech demo that we have during lunch. I would certainly encourage all of you to go out and spend some time. We have between 15 and 20 different prototypes, pilots, new features that we are in the process of launching as well as the business partners and technology partners out there who are very excited to be able to explain that to you, demo it for you, answer questions. For those of you on the webcast, I am also going to run a short promo here to just show you five to 16 things that you will see out there. Let us go ahead and run the video. At BMO, we are focused on meeting our customers where they are and reimagining the banking experience. Here is a preview of what our teams are working on. BMO, we are reimagining the banking experience with these and many more innovations to come. We would like to now invite Luke Seabrook to talk about EI3. Luke? Thank you very much, Darwin. I'm good. Just quickly 2 seconds on where I've come from and why I'm standing in front of you today. I previously was President and CEO of Capital Markets, and prior to that, was the head of Global Trading Products. I say that only so far as to make an opening statement that when I moved into this new role, I was pleasantly surprised, if not shocked, at the extent to which the work had been going on in the areas that exactly we needed to be doing them. I think you hear every organization say that efficiency is a focus, or at least you should be. That's certainly the case here at BMO. I think what I've learned is that at BMO, we go about it quietly, and we've accomplished a lot. What we intend to do here today is take you through some of the things that you may not really have been exposed to the full extent and the opportunities that associated with it. What if you could build the bank of the future? How big, how bold could you be? Innovation is a process for some, an action for most. For us, it's something deeper, a mindset enshrined in all of those who have worked here and in all that we've done. Our history speaks for itself. We brought customers the first drive-in bank in 1950. We were first to offer telephone banking and first to complete a trans-border electronic funds transfer. SmartFolio, SmartCore, smart branches, smart thinking. We've succeeded for over 2 centuries because our focus remains firmly on the horizon. We strive to be at the forefront of change. BMO's urban campus is being built upon these values, and in 2021, it will enable tremendous acceleration among our colleagues. Whether it's robotics and treasury and payment solutions, AI in risk and AML, or blockchain and Capital Markets, we're always on the cusp of the future. That's the drive behind BMO's innovation front, an employee-led innovation engine giving you a direct vehicle to change the bank. Part of the catalyst for accelerating efficiency at BMO is what we call EI3. The video gave you a brief overview, but EI3, what does it stand for? It is enterprise initiatives, infrastructure, and innovation. The key, though, is it is enterprise-wise. From our perspective, this is something that is relatively unique relative to our Canadian peers. We are here, we exist to leverage all of the good things that are going on across the entire organization, the different business units, the support areas, where we know that other parts of the organization could benefit by just even being made aware of what is going on and what they could benefit by implementing it. It provides resourcing. Where expertise or incremental help are needed in order to accelerate opportunities, we provide those. Mandated in February of this year, we anticipate that with EI3, we will be able to deliver over CAD 1 billion in savings and productivity improvement by 2021. This includes both permanent cost takeouts as well as revenue opportunities. That CAD 1 billion is not aspirational. As a matter of fact, as we are exiting 2018, we have locked in over a third of that CAD 1 billion already. Of that third, none of it has related to revenue. It has all been structural cost removal. Of that removal, less than half of it actually is people-related reductions. The balance coming from procurement and a number of areas that we will get into. With that as a backdrop, obviously, I am highly confident that hitting the CAD 1 billion is something that we will definitely achieve. We are also about improving efficiency for today, tomorrow, and beyond. We are looking to simplify the way we work across the enterprise, all the while keeping BMO's customers and equally importantly, our employees in mind. We have the ability to unlock our employees' potential by eliminating unnecessary complexity, overhead, and processes, again, across the entire enterprise. As well as having the mandate, we have the budget, the people, and very importantly, the support of the organization broadly. How do we get at this? By driving sustainable cost benefits, we have the ability to be reinvesting in strategic investments that can accelerate revenue opportunities, and this is across the organization. EI3 is agnostic. We do not have a P&L. We are here to purely support and facilitate the entire organization. As I mentioned earlier, our productivity efforts are focused into three areas. First, optimizing enterprise infrastructure. Secondly, delivering on targeted strategic initiatives. Finally, enabling simplification and automation. Let me start with enterprise infrastructure. I am going to call out procurement as an example because this is often an overlooked part of our industry generally. We have taken an outside lens as to how to approach it, and it started with specifically hiring from outside of the financial industry for our new global procurement head. This will allow us, with that expertise, to evaluate how are we using our technology? How are we leveraging our data and analytics? How do we move to a best-in-class procurement environment? With that, we are going to be transforming our supplier spend on everything that we use, including how we actually transact with the suppliers. We are launching our first e-auction in the next couple of weeks, which to our knowledge is the first of any Canadian bank. Studies will show you that on average, 10%-15% of incremental savings are realized in this approach versus the best bilaterally negotiated contract. To put this into context of just our commoditized items, from pens to toilet paper, we see significant potential savings. There is only so much you can do with demand management. We needed to find another way to get at these costs. These commoditized items for context, represent 25% of our annual spend. When you apply the potential savings by moving to e-auction, you can see that the size of the benefit there is significant. We also have a supplier innovation program. This is becoming official next month. This is something that we have been working on for a number of months with select suppliers. It gives us early access to innovative products and services that they have been developing. More importantly, an element of this is that we actually become part of their development process. We are able to influence the end product, having it come out in a form that is much easier and much more effective for us to implement into our organization. The opportunity to do all of this lends itself to our ability to reduce our real estate footprint. With that, we have a target of 10%-15% reduction in our real estate footprint over the next several years. With that comes the ability to accelerate agility, collaboration, and engagement as we implement new ways of interacting between the employees across multiple disciplines in the organization. Again, achieving this allows us to actually free up 10%-15% space. You saw in the video 290 Yonge Street renderings. This is really part of our broader Toronto GTA strategy. It is one that we are going to be launching as the BMO campus. We are going to be borrowing from the employee best in class seen in the likes of Google, Amazon, Apple, Microsoft. Had we not had a standstill negotiating that space, we would have been competing against two of those companies to secure it. We are looking to create a one-of-a-kind workplace. It will be a point of connection across all parts of the business where innovation and the decisions made around them are accelerated and simplified. More importantly, this will put BMO in a position to attract and retain the best talent. Next, targeted strategic investments. This is where we are going to be putting our investments in data and technology to work in innovative ways. For example, using robotics, we have been able to cut the amount of time that it takes to onboard a commercial payments client by 99%, reducing it from 72 hours to an hour, which gives us a better customer experience, obviously, with faster turnaround and employee experience, because what we were able to reduce was mostly manual work. That frees these employees up to do higher value add. Simplification and automation in EI3 is about automating, simplifying, or outright eliminating unnecessary work and overhead. We have the ability to look across the organization and look for it. From our vantage point with our mandate, we then have the ability to look to either automate or optimize or ask whether or not we should be even continuing to do it. Example of that would be employee onboarding. There are hundreds of people in this organization involved with onboarding new employees. Incredibly inefficient for us. EI3 will be providing an automated source to eliminate the need for a lot of the bodies that have been involved to date that will route, fill, and actually provide a cognitive interface at the desktop with a new employee, all the while reducing and freeing up the capacity for hundreds of employees. This next one is one that we just decided to do and see how hard we could push the organization when we sized what our productivity opportunity set was. In addition to everything that had been identified, we asked the top 60 leaders of the organization and challenged them to come up with eliminating one inefficiency within their organization, which hadn't been previously identified, for which they had 3 months to do it. The result, I think, surprised almost all of us in the sense that there was CAD 20 million in ongoing structural cost takeout. More importantly, 45,000 hours of employee time was freed up as a result of that, and that's one ask with one small group. Data and AI. This is the one when I mentioned we've been quiet about things, relatively quiet, is one that in my moving over, having come from an area where we were doing a lot of data and AI work on the trading businesses, really surprised me and thoroughly impressed me once we looked into it. Steve talked earlier about the significant investments that we've made in SmartCore. Those are foundational investments. They were not only money, but they were also time. We set out years ago to develop and commit to doing so with SmartCore. It was deliberately architected. It was developed, financially supported, and committed to. The time and financial investment now provide us with a single view of the customer and the organization. But we needed to be able to bring that data to life. We created an advanced analytics tool that sits on top of the SmartCore. This allows us to evaluate both the operating environment of the organization and the opportunity environment for the organization. And it needed to be more than just an analytical tool. It was developed to be both a teaching tool but also a learning tool. And this is where it gets really interesting. By teaching the users how you use the platform, the platform itself actually learns from the individual's interactions. As it learns over time, watching how people are using it, where are they going, what are they accessing, what are they doing after they may be accessing a particular spreadsheet, where do they go? It's able to proactively deliver insights to individuals before they may have even considered looking for them. We think that will make an improved decision-making process. It will support the actions that are taken as a result of that. It'll empower employee change by driving revenue growth so that we have a better understanding of where the opportunity set lies for our customers. All of this comes with an incremental cost savings through an improved understanding of our operating environment. This was actually so well done, and this is an absolutely factual statement, that we've been approached by one of the largest technology companies in the world to purchase it. Not for sale, but asked to purchase it. What do we need to do to bring all of this to life? Well, it's talent. As Darryl White said, talent is BMO's most valuable asset. We have a highly engaged workforce with an award-winning culture. It's a combination of these two things that make us truly differentiated from our competition. But we needed to find a way to fuse all of these elements together across the entire organization in a focused, coordinated way so that we could actually leverage it. We mentioned the BMO Innovation Fund on the video. This is something we've deliberately, thoughtfully, and thoroughly built out, have piloted, and will now be expanding. Other banks have chosen to go outside their organization to implement their innovation push. There was an article this morning on somebody who did that. We like to respect and leverage our employees, not overlook them. To suggest that they don't have valuable insights and ideas, I think that would be inconsistent with our culture. The BMO Innovation Fund is a funded vehicle with dedicated space where we will be going out to the entire workforce with focused questions and requests for ideas. The responses will be collected and presented in a transparent manner so that people can monitor where the ideas that are submitted are that have been selected to move forward in that process. This is all being done through a world-class ideation program. We piloted it last month. Response rate exceeded all of the expectations, and I think the more important data point was that of the ideation provider who has done this for a number of Fortune 100 companies and has actual empirical data to see. To me, that's another proof point of the kinetic energy we have built up in our employee base looking to engage. We know that technology will eliminate some of today's jobs, and it will also create new ones. Knowing that, we're launching programs that will enable us to continually invest in our employees. As new jobs are eliminated through technology, new jobs will open up through emerging technologies. The result for BMO, accelerated performance. Gives us the ability to retain and attract our existing employee base. We have a bold on talent program that we're launching. It gives us the opportunity for the employee to receive university credit for courses that they take on-site and online. They can ultimately earn advanced degrees, an example being a master's in data science from both a top Canadian university and a soon-to-be-announced Ivy League U.S. entity, and it's imminent to be announced. To us, EI3 is all about being the catalyst for accelerating organization and efficiency across the organization by working in partnership with all of the organization today, tomorrow, and beyond. Realizing productivity benefits in excess of $1 billion by 2021. Creating capacity for the investment, strategic growth, and practical innovation, all while making sure BMO is future-proofed. Thank you. I would now like to introduce Dave Casper and the team from BMO U.S., a strategic growth opportunity for us. Thanks, Luke. Joining me in this segment is my partner, Ernie Johannson. She is our Group Head of Personal and Business Banking, and Steve Taylor, our U.S. CFO. Steve is going to talk a few minutes about our overall U.S. business from a financial perspective. He will talk a little bit more on our P&C business. Ernie will then talk about her strategies in the personal and business banking, and I will close it out with some comments on our U.S. commercial. With that, over to Steve. Thanks, Dave, and good morning, everyone. We believe the U.S. business continues to represent a strong growth opportunity for BMO. Our core footprint is Midwest-centric, with our largest market shares in Wisconsin and the Chicagoland area. We have top 2 market shares in those regions, and we believe they continue to offer significant room for us to grow. We also have banking operations in several Midwest cities, including Indianapolis, Kansas City, St. Louis, Minneapolis, and Arizona, and to a lesser extent, Florida. In addition, we have offices in several large U.S. cities that support our national commercial lending businesses, as well as Capital Markets and Wealth. From a relative growth perspective, we think this footprint also offers upside. In terms of size of GDP, the Midwest is bigger than all of Canada, and the U.S. has outperformed Canada in that regard, and that is expected to continue. U.S. business has grown in scale significantly over the past several years, and this has been through a combination of organic growth as well as strategic investments. As of Q3 2018, as Darryl mentioned, the overall contribution of the U.S. to BMO's adjusted net income was 28%. That has been increasing over time and is up from 20% in 2014 and 24% in 2017. Overall, U.S. segment growth has also been strong, with NIAT growing 9% in 2017 and 30% in 2018. While tax reform is certainly a big part of that, the pre-provision pre-tax was also up 14%. The M&I transaction was a significant acquisition which has led to increased scale and efficiency in the U.S. But we have also executed other transactions, including Transportation Finance, Greene Holcomb Fisher, and the recently closed KGS-Alpha transaction. All of these represent strategic additions to our core U.S. businesses. The strength and advantage of our U.S. segment strategy is our ability to market as one bank, leveraging the value that all three of the businesses bring. Our commercial business is a strong referral source for Capital Markets and is also a strong referral source for Wealth, particularly the private client business. Our personal business provides a strong retail deposit gathering foundation for the U.S. overall. In addition, there is strong synergy between the personal business and the Wealth business in terms of partnering to grow the emerging wealth segment. Across the U.S., we feel there is room to continue to grow in all core markets and use the complementary power of our businesses to do that. You will hear more about the U.S. strategies for Capital Markets and Wealth in a bit. In U.S. dollars, the overall U.S. business delivered about $1 billion in profit through the third quarter of 2018, with U.S. P&C itself on track to deliver in excess of $1 billion for the year. Before I turn it over to Ernie and Dave, I would like to share some U.S. P&C financial metrics. The business has seen strong growth over the past year, with revenue up 10%, NIAT up 37%, or 8% and 31% when you exclude the loss on the sale of some indirect auto loans in 2017. Again, while some of that NIAT growth is tied to tax reform, pre-tax, pre-provision is up 15%, reflecting strong loan and deposit growth in the business, as well as the benefit of higher rates. On a go-forward basis, we are focused on growing deposits and loans at the same pace, and Ernie and Dave will talk a little bit more about our initiatives and strategies in that regard. The business' results have also tracked well against our regional peers, and we believe we can continue to perform well in that regard. And finally, before I turn it over to Ernie and Dave, some key profitability metrics for the U.S. business. An efficiency ratio of 59.2% on a year-to-date basis and an ROE of 11%, with a return on tangible equity of just under 16%. Those all represent significant improvements over the past several years. It had been a medium-term goal of ours to drive the efficiency ratio into the 50s and get the ROE above 10. So it's been good to see that happen, and we think we can improve on those numbers with an outlook to drive the efficiency ratio into the mid-50s and the ROE in the 12%-13% range over the next few years. And with that, I'd like to turn it over to Ernie. Great. Thanks, Steve, and good morning, everyone. I want to start off by saying the U.S. personal and business banking business is really poised for growth. There isn't a better time to be in this business than right now, and that's really because of three factors. One, we have a strong U.S. economy that's really fueling our business growth. Second of all, our consumer and our business banking segment is moving to a digitization space that we've already heard Brett speak to. That allows us to transform our business and take advantage of our North American scale. So we're going to be punching above our weight in the digital space because of our North American capabilities. And thirdly, we have a whole bunch of assets that are really built for more. Our people, our branch network, our products, our capabilities are going to allow us to do more with our current footprint and our current capabilities. Let's talk a little bit about the assets we have, what we're planning to do with them, how we're focusing on some opportunities and the strategies and their outcomes. In particular, we right now have about 2.2 million customers and growing, a really important fact. Our business banking segment services clients that have businesses of revenue size of greater than $5 million and lending of under $1 million. That allows us to leverage the integration of retail and the commercial banking capabilities together. Our retail franchise is composed of a very high SKU of mass affluent customers who, as Darryl White has already pointed out, really believe in our brand and trust in us as a strong, reputable bank. That allows us to have strong conversations and holistic relationships with them. We also have the capability of driving through that mass affluent base, significant referrals to our private client base, and also to drive deposit capabilities. We represent two-thirds of the deposits that are taken within P&C through this customer franchise. As I look to what our opportunities are moving forward, we cannot not pause and talk about our deposit capabilities. We have the second leading market share in our home market and an opportunity to leverage, as I speak further about the opportunity in our light branch footprint markets. We have been leading in this space for many years. We have capabilities and talents that go deep in deposits. You can see us being able to compete with the nationals as well as the regionals, and we're doing that by leveraging a great customer relationship to drive those very valuable deposits into our business. As we think about where we're going forward and what we need to really maximize the opportunities again, it's really around these three areas. The first one is our footprint. Six years ago, I probably would have said I was disappointed in our branch footprint. I'm now saying it's a competitive advantage. We have 200 branches in markets that represent two-thirds of the deposit opportunity for our business. Significant opportunity for us to leverage digital and our light branch footprint. Second of all, as Brett Pitts mentioned, we are very light in digital. Right now we're waiting for a launch that's coming in the next coming weeks that's going to transform our engagement with customers in a digital manner. That'll allow us to have more sales conversations because customers are self-serving, but we'll also be able to digitally acquire more customers in our lighter branch footprint. And you can see where we are now and where we target to be. The third area of opportunity for us is in our lending business. To drive consumer profitability through our lending business is key, and we're looking at shifting the mix of our lending book. Not changing our risk appetite, not moving from where we are, but cross-selling into our existing mass affluent base as we go forward. You can see where we are on credit card penetration and where we aspire to be in the very near future, really in line with where the industry is going. That is also part of our focus as we go forward. I am going to share with you the strategy that we have developed, and it is a four-pillar strategy that has a catalytic effect, if I can use that terminology, when each one of these components come together. The first is about going on the offense in deposit taking. We are future-proofing our deposit capability for not only our home markets where we have a high market share, but we are also doing it because we think there is an opportunity for us to acquire new customers in our lighter branch footprint. We just recently launched a new app, Apply, an apply section of our online platform in digital banking for deposit taking, and we are already seeing a 60% lift in pull-through on new customers coming through that app. We are going to streamline that process to make it all end-to-end for us to be able to acquire new customers in our light branch footprint markets, and then take the learning about price optimization, marketing, and bring it to defend our capabilities in Wisconsin and Illinois. In business banking, we think we have a phenomenal opportunity to take that strong commercial brand that we have, combine it with the simplicity of retail-type operations, automation, automated lending. You are going to see Andrew Irvine speak a little bit about a capability that we have in Canada that we are going to bring to the U.S. to make sure we are doing an automated approach to lending in the smaller end of this business. For us, combining the business relationship and the personal relationship through that combination of sales teams and our branch force is going to be powerful for us as we go forward to consolidate relationships. Third, I have spoken a little bit of the consumer lending book. We recently made a change in the mortgage business. We did that because the consumer in the U.S. has shifted. We have launched a new application, a digital application for consumers to apply themselves or to use the self-service capability in our branch. We are seeing an improvement in the speed to deliver a mortgage to our customers by 60% as a result of that application. We see an opportunity for us, as I mentioned to you, to cross-sell our customers and drive more profitability through a holistic lending relationship with them as well. Lastly, but certainly not least, is digitization and enhancing our guidance delivery. The more we are able to simplify our processes and digitize more in our branch network and in our back office, we are going to spend more time with our customers and have those great conversations. Our team is ready to engage in that as we speak, prepared and aligned to be able to have better conversations with our customers. As I think about how does this all come together and what are we looking to achieve over the next little while, it is really about achieving a revenue growth in the 6%-8% range. We believe we will be top tier in deposit growth, and 50% of that growth will come from our lighter branch footprint network. Our loan growth, because of that shift from mortgages into more unsecured and indirect auto lending, will now be growing at about 3%-4%. Of course, last but not least, the catalyst for efficiency, for better conversation and revenue generation is digital engagement, where we are moving from where we are to a 50% engagement score to a 70% engagement in the next five years. As I think about the strategy overall and its compounding effect, we really have something very special going on right now in the personal and business banking business in the U.S. We have confidence in the momentum that we have, that you have seen already articulated, and in the strategy that is already executing and starting to show performance. Our bankers are behind this, and they are confident that we are going to get there as well. We are looking forward to the next three years delivering against these objectives successfully. With that, I am going to turn it over to Dave. You can see why Ernie has just been named the number two woman to watch in American Banker. I do not know who number one is, but she better watch out. Good morning. I am here to talk about our largest business in the U.S., our commercial business. Our commercial business is one of our most successful businesses. It is one that we are most noted for. It was the business we were founded upon. It is the business that has a strategy that every day, a very steady, strong, long-term-focused management group, all sitting right over there in our North American Commercial Bank. By the way, I have never seen them sit this long without calling a customer. Relax. It is coming. You are going to hear from them in a minute. I am the message, the warm-up act. Let me talk a little bit about our U.S. commercial business. If you can see on the slide, the blue states are where we have retail footprint. Everywhere we have retail footprint, we have commercial bankers on the ground. Looks like there is a lot of white space. There is. But it is important to note that over the last eight years, we have filled out a lot of that white space with those blue dots. Those blue dots represent specialty groups that we have set up, where we have both specialty groups as well as commercial offices. An example of how we think about filling in this space would be Texas. For the longest time, our teams have wanted to be in Texas for good reason. Texas has a GDP the size of all of Canada. Texas has been a migration magnet for companies all over the United States and Canada. When we bought our Transportation Finance business, which is headquartered in Dallas, not only did we buy a very strong business, the leading financer of trucks and trailers in North America, we also acquired 400 employees in Texas, and that gave us the confidence to build a commercial banking team and a specialty business around that in Texas. We have done that. That is up and running, and it is going very well. But we are doing this over the long term. That is the most important thing we do. As we talk about talent, and we have all talked about talent, the one thing I would say is the most important part of our acquiring talent is getting teams that have culture similar to what we do, have a long-term view, and can express that to our clients because they expect a long-term view from a 200-year-old bank. A word on our specialties on the right-hand side. Six of those 13 specialties have significantly grown or have actually been started over the last number of years. A couple of examples of those would be our dealer finance business. Big business we have in Canada, auto dealer finance, floor planning. That was started from scratch in 2010 and is now a real national business for us. Another example would be our franchise finance business, a business that we did a lift-out and is headquartered in Irvine, California. All these businesses, and it is important to note, if you look on the right-hand side, it is a really diversified group. There is no business that has more than 10% of the overall personal and commercial loans. So it is very diversified. Lastly, I would say these businesses together, these specialty businesses, have contributed significantly to the growth in the U.S., but it has also augmented and really accelerated a business that started out as a Midwest business, but is much more of a national business as well today. This page tells the story graphically and with numbers of our U.S. commercial business over the last eight years. We picked eight years as a starting point because some of you will remember it was in 2010 that BMO signaled to the market that we thought the great recession was finally over. We also felt that it would be a commercially led recovery, and we thought that recovery would really start in the U.S. So we were poised pretty well. We had a very strong balance sheet. We had a weaker competitive set, and we had the heritage of being a commercial bank from our beginning. So we bought both M&I, and we bought Transportation Finance in that period, and that explains the 27% growth. But underlying that is 10% growth annually per annum just from building the business. That represents somewhere between 350 and 400 new commercial relationships each year. Those relationships beget more success, and that is really how we have grown over the period of time. One of my favorite businesses within the commercial business, and it is a cornerstone of our commercial business, is our treasury and payment solutions business. If done right, this is both a sticky business and an annuity business. It also is the business that when we do it right, and we do, and we invest in it breeds some of our most loyal customers. This is a real strategy for us. You will hear more about that later. I am quite sure Sharon will mention treasury and payment solutions a few times during her period. The strategy in the U.S. We get that. Okay, we got to that slide. It is really three-pronged. You will hear more of it. Let me just cover quickly. Geographic expansion. Ray and Dan will probably mention that, but let me talk about two areas where we have had strong growth without the expansion. Wisconsin, which we acquired when we acquired the M&I business. We were the number one commercial bank at that time. We have extended that, and we have grown it, and we have prospered off that. Chicago, where we have had no acquisitions. We started out as the fourth commercial bank there. We have gone to the third. We have gone to second. There is really only one place to go from there, and I think we have a very good chance over the long term of becoming the number one bank in Chicago, which is 10 times the size of Wisconsin. Second are specialty businesses. You will hear more about that in a minute, but let me cover two quick things. The asset-based lending business, a business which we have always been in, but in 2010, we were number 20 in the United States in terms of ranking. We should have been substantially stronger than that, and today we are number five. Another business that we have done quite well with is equipment finance. That was a business we acquired in 2012. At the time, it was about $400 million in assets. Today, it is over $2 billion. With the economy going as well as it is in the United States and the demand for equipment, that is a business that will continue to grow. Third, and again, you will hear more about this, but we continue to deepen the relationships. When you get 350 to 400 new relationships every year, you have not totally sold them. We have done quite well, but there are huge opportunities to continue to sell our treasury businesses, continue to sell our wealth and our capital markets, and make for a more wholesome relationship with these companies. Here are a couple things that you can expect over the next three years. Loan growth, which has been above industry over the last five years. We expect that to continue and to be above at the range of our top-tier competitors. Deposit growth will at least keep pace with our accelerated loan growth. Third, industry-leading scores in our customers. That is one of our strong points. I think that is our secret sauce. Both sides of the borders would have scores for NPS in the 70s. We know that is industry-leading, and I think that is the reason we get so many referrals from our existing customers. To pull it all together, Steve talked about our U.S. business and how important that is to the growth story for BMO. Ernie’s very compelling story on our personal and business banking and what we have talked about in the commercial bank. Tie that into the interconnectivity with our wealth and our capital markets business. I couldn't be more confident about the upside we have in the U.S., not just because of the growth we've had today, but frankly, more because of the talent we've put together, the way that we go to the market, and the long-term approach that we have in dealing with our customers. I think that is our success. That's how we've won, and now we'll talk about the real winners, the group that's really responsible for the North American Commercial Bank. As they come up, Sharon is going to lead the discussion. Sharon runs our treasury and payment systems. Ray and Dan run our U.S. commercial business, and Christine and Nadeem run our Canadian commercial business. As they come up, thank you, and this is the team. Great. Well, it's great to see so many familiar faces from my time in IR. It's nice not to have to organize the whole day, I must say. In any event, we're very excited to talk. As Darryl said, our commercial banking business is a differentiating strength for BMO, and what we're going to try to do in the next 20 minutes is really just explain what we believe are the elements that differentiate that business and why we think that's not something that can be replicated by our competitors. Because you can't do a presentation without a slide, we do have a slide, which really describes those competitive advantages, and as we have our conversation, we'll really bring out those points that have driven what we've seen above-market growth both in Canada and the U.S. over the last several years, and we'll start with that with a discussion about where that growth has come from. Ray, I thought maybe you could build on what Dave spoke about in terms of our geographic U.S. strategy. Yeah, sure. When we think about our geographic locations, we categorize them as flagship growth and high growth. When you think about the flagship, and we've talked a bit about those businesses are ones where we have high market share, and we have incredibly strong brand recognition. Illinois and Wisconsin are great examples of that. In those businesses, they have grown historically faster than the local GDP, and we expect that to continue going forward. When you think about our growth markets, those are ones that we are still building scale and where there's still lots of market potential. There, we actually look at growing those businesses from a revenue standpoint year over year on a high single-digit and low double-digit basis. Then the high growth markets are those where we've just started or just in the early stages of building a presence, and the growth there would be obviously exponential coming off of a smaller base. When we think about starting a business in a new city, we look at making sure that it will be breakeven in the first 18-24 months relative to our direct expenses. We look for those businesses to be well-balanced between loans and deposits, between fees and cross-selling of other non-lending products. We look at those businesses to be a mix of sole and lead bank opportunities. Strategically, we're looking to start new offices in new cities between one and two per year through the medium term. In addition to the geographies, our go-to-market strategy is also with national specialties. Dave Casper mentioned a number of the specialties in the U.S., but collectively across North American Commercial Bank, we have 17 specialty businesses. By specialties, I mean in terms of product specialties and industry specialties. Products are asset-based lending, equipment finance, our exchange settlement business, or mezzanine finance as an example. Specialties in terms of engineering construction or food and consumer or Transportation Finance, dealer finance businesses. What we do from a growth perspective is when we take the geographies that Ray laid out, and we're already national in terms of Canada, what is the extent in the U.S., we also layer on all the industry specialties and the product specialties. When we can combine all of those, what we do from a growth perspective is we have a higher win rate in terms of winning new customers. Customers really resonate when we can not only be near them and understand their needs, but when we can go really deep in an industry or really deep in a product, and we know them, it resonates. As a result, we have higher win rates. An example, Ray and I last month did a town hall for our U.S. team, and we polled the geographic teams that Ray is responsible for. In year-to-date for FY 2018, which is almost done now, 63% of the new transactions won in terms of new clients being added involved not only a geographic local presence, but also one of the industry or product specialty teams. It just shows that with the collaboration, we're able to get an exponential growth rate because we can do that in a manner that is better than our competitors. Actually, just following up on that but on the Canadian side. When we look at industry verticals for growth, we look at it in a very deliberate manner. We need to understand the industry deeply. We need to understand what is the market opportunity, what is the size of the pie, what are the risk return metrics that we can expect, and can we actually build scale and expertise to be meaningful and successful. Just to give an example on the Canadian side, if you go back to 2005, we took a look at aging demographics, regulatory support, the combination of which we believed would create significant market opportunity in the future for seniors housing. We built strong relationships with centers of influence in the industry and really became a partner to the industry and an advocate within it. Today, we are now one of the largest financiers of seniors housing in Canada. Similarly, if you think about agriculture, scale, expertise, and focus have led us to dominant market share in that industry segment across Canada. Today, we look at other verticals for growth, things like public sector, technology, and specialized lending. If you look at our specialty businesses like Dan talked about, real estate finance, auto finance, are mature businesses that we are very good at and we will continue to grow. But where we really have opportunity to accelerate the velocity of new revenue streams is in businesses at probably 15%-50%, is in businesses like equipment finance, asset-based lending, and media finance. Just to go to what Dave was talking about earlier in his presentation, cross-border collaboration between us is critical. Asset-based lending is a very established product segment in the U.S., still growing, but established, but much newer in Canada. We have been able to use the expertise and the platform of our U.S. colleagues up in Canada, not just to build a platform, but to actually win transactions and differentiate ourselves from the competitors. If you think about equipment finance, it did not even exist in Canada 2 and a half years ago. As Dave mentioned, we bought that capability when we bought M&I in 2012, and we have been leveraging that platform U.S. to Canada for 2 and a half years. We now have about CAD 1 billion in authorization, and I fully expect we will double that in the next 2 and a half years. The collaboration goes both ways. Auto finance, we have significant scale. It is a mature business for us in Canada, and we dominate the market, and we have helped create the platform in the U.S. about 8 years ago, and we have about $3 billion now in the U.S. outstanding and growing fast. We dominate in most of our core markets from a loan perspective. We have a number one or a number two perspective market share. In Canada, in the CAD 25 million to CAD 100 million space, we do have a number one market share, but still opportunities to grow. Where we don't have a number one market share is in deposits. That's an opportunity for us, and we are focused on that. We know we can grow in that and have introduced a number of things, including new deposit products and pricing strategies, adding deposit structuring capabilities, and really focusing on deposit-rich industries. Earlier, Nadeem mentioned public sector. As an example, we recognized that we did not have an appropriate share in this space within public sector, which is hospitals, universities, municipalities. We put a team earlier this year together focused specifically on that space. Since we've put that team together, we have increased our deposits by 37%. We're very confident based on this success that we can deliver over $1 billion in incremental deposits next year just from this team alone. Thanks for raising the subject of deposits. I don't want to disappoint Dave by not putting in a plug for treasury and payment solutions. This is actually an area where we have drastically increased our investment. As Brett mentioned, we've just launched our new mobile app which has bioauthentication capabilities. We're also rolling out some additional remote deposit products that really attract operational deposits which are the highest quality deposits you can get. For example, we've been kind of industry-leading in getting in Canada, 50% of all our commercial checks are now deposited through remote deposit capture with a product we call BMO DepositEdge. But we didn't have a strong solution for clients who had cash-rich industries and would have a lot of cash to deposit. Those clients would have to continue to go to the branch. We're just piloting for a full rollout in January, what we call a smart safe or BMO DepositEdge for cash, which will be on client's premises. They get same-day credit for the cash that they deposit in there. It reduces traffic in the branch and also allows us to better service clients who are not close to a branch. It's a win-win for the client because they get same-day credit for their cash and don't have to send their employees to the branch, and for us because it's efficient and it does attract those deposits as well. Sharon, if I could add just one more thing on deposits too, in terms of, Ray alluded to it in terms of our new markets. The goal of being the lead bank in a relationship is very important to us. Being the lead with that, if we can capture the lead, we can capture more of the deposits, we can capture more of the treasury and payment services business because those are just hugely correlated. We progressively each year get more and more of our new customers as the lead bank. One example for this year, in asset-based lending in the U.S., 14 of the last 17 deals we've been the lead. As a result, that team has seen a significant increase in terms of the treasury and payment service business, which drives a lot of revenue. With that role, we do a much better job in terms of winning deposits. I think we'll turn now. Dave spoke about the strong client satisfaction and NPS scores that we've seen. Nadeem, maybe you can talk about how we're turning that client satisfaction into revenue. Sure. Net promoter score is how we test client loyalty and the survey that goes out to clients asks a fair number of questions, but there's actually really one question that builds the score. That question is how likely the customer is to recommend us to a friend or colleague. In Canada, we've earned an industry-leading score of +77. Just so that you know, it goes from -100 to +100, and similarly high scores in the U.S. as well. Our clients are telling us that they are loyal to us, and what they're telling us is they're loyal to us because we understand their business, because we deliver on our commitments. What's as important through these surveys is they're telling us how we can be better. They tell us things like, "Speed up the onboarding process when we become a new customer. Increase your use of technology to simplify the customer experience." The loyalty is great to have. I think as we're going down the customer journey, I think, Sharon, where you were going is, how do we monetize this NPS? How do we monetize what the clients are telling us? What we're now focusing on is ensuring that our sales force are tooled and that they have the courage and confidence to go to these loyal customers and say, "We want more share of wallet. We would like a referral to a new customer." We're just starting to scratch the surface on this and going down this customer journey. But the formula, if you think about it, is not that difficult. It's quite simple. We have a highly engaged workforce that delivers a great customer experience, and that great customer experience leads to the great client loyalty that we enjoy. That client loyalty earns us the right, because the customers are telling us, to get more share of wallet and ask for referrals. If we do that, if we do it well and tool our sales force, that will lead to improved financial performance, which makes all shareholders pretty happy. The formula, I think, is actually pretty simple. What's difficult is flawless execution of this. It is extremely difficult, but I think that's where we can shine. Yeah. The two examples of that, Nadeem, the first one in Canada, as it relates to our Transportation Finance business. They have amazing net promoter score and have traditionally been financing a company's transportation assets, especially when they were part of GE. What we've seen, and just really over the last six months in this example, where we, from the commercial side, have actually won all of these two companies, all of their operating business as well as all of their operating lines. We actually won it from the incumbents that have been doing that business with these companies for over 20 years. It's a great example of leveraging that great net promoter that we had in the Transportation Finance business to leverage the entire bank. From a number standpoint, it's over CAD 100 million of new loan commitments just to those two companies here in Canada. Another example in the U.S. as it relates to net promoter, we have a client of ours who has referred us into four new companies that were not clients of the bank. Just over the last nine months. Now I am happy to report that all four of those referrals are now clients of the bank to the tune of an annualized revenue of over $2 million. To me, that is the power of a net promoter. That is the power of customer loyalty. Great. I think Nadeem, in his answer, talked about the talent playing an important role and our people playing an important role in customer loyalty. Christine, do you want to expand about talent? Sure, absolutely. Really, to me, it comes down to our people. We have this strong commercial presence because of the quality of the people that we have. The reputation that we have in the market really allows us to attract top talent and high-performing individuals who want to work on a winning team. It is more than just attracting those individuals, we really need to retain them. We look at lots of different ways that we will retain them, including aligning our incentives and compensation, investing in training and development, and providing multiple career paths for people. In many ways, our competition can do that as well. I really think what it comes down to is what Darryl was talking about earlier, and it is our culture and our unique culture that allows us to enjoy that really high employee engagement. It is not just our customers who tell us how happy they are to work here. I love when I hear it from our customers. I was having dinner a few weeks ago with one of our key customers in Vancouver who deals with all of the competition because of the size and the breadth of the operations that they have. When I was asking him how we were doing in servicing his business and looking after him, he said, "BMO has the best bankers on the street, and I deal with many of the competition, but it is really not just the individuals that I have on my account, but they deal with multiple businesses. They deal with our diversified industries, our real estate finance, our auto finance," and he says, "Consistently the best bankers on the street." While I know he can tell me that because I'm meeting with him, the proof is in the results because over the last three years, our business with this customer has grown over 50%, and that's taking share from the competition. I think, in our business, customer retention is critical, but that talent retention really drives customer retention and customer loyalty. Well, when we're in a high growth mode, we have to keep fueling the pipeline. Our two-prong approach on talent is one, we want to acquire talent from the outside when we need to, such as going into new geographies, when we want to get someone with a long-established local presence. We'll go out and seek out that talent. Or if we're going to go into a new industry, like we did years ago in terms of franchise finance or healthcare in our specialty businesses of hospitality and healthcare, we'll go out and acquire that deep expertise. But the other one is just we like to promote from within. We have a phenomenal program in terms of recruiting young professional bankers and developing them, giving them challenging opportunities, and growing them because that's the full way to take that talent and marry it with the outside to sustain the culture that we're looking to achieve. Maybe just a couple of words on efficiency and on the lending side, we're incredibly efficient. I think we do have more opportunity on the treasury side. Luke Seabrook spoke about some of the work that we're doing on robotics and onboarding, where we've really sped up the process of getting new clients onto our online banking platform. To me, more than the reducing the time by 90%, it's that with robotics, it's actually completely scalable. Tying to what Ernie Johannson talked about, if we have good opportunity there, we could onboard an exponentially higher number of clients. That's a throw down to Ernie Johannson there. Exponentially higher number of clients we could onboard onto our system without adding people in that part of the process. Another thing we are really focused on, especially after the M&I acquisition, we have quite often had separate systems running in Canada and the U.S., and we have been steadily integrating those systems. We have a couple of big ones that will be fully integrated by the end of the year. By rationalizing those platforms, you can invest more because you only have one platform and pick really the best of the two platforms that you have for moving forward. We see lots of great opportunity there. I think maybe another question we often get is what about risk management? Particularly in the U.S., with the strong growth that you have seen, how do you think about managing risk in that context of high growth? Yeah, the first of everyone's question probably is with this kind of growth, what are we doing to get that growth and what is it going to show up later on in terms of our portfolio stats? First of all, in terms of the growth, our portfolio stats are relatively stable. We are not stretching on credits in terms of trying to win new clients. What we want to do is we want to compete on the bases that we talked about already, which is our talent, our net promoter scores, our industry expertise, our product expertise. We do not like to do that in terms of competing on risk. We avoid competing on risk. We have shown that we can win new clients by delivering a high-value proposition. We show that we can retain clients by having that same value proposition. In our food and consumer business, in protein, for example, it is a cyclical business. There are commodity inputs, commodity outputs. We understand that business through and through. With that, clients who we talk to, they know that we know their business. They get the comfort that we know their business, and they know that we are going to stick with them through cycles. We also because of that deep industry expertise, we can figure out who we want to do business with in that industry as well. It is not only as much in terms of how we deal with our existing clients, but in terms of the portfolio selection, we try to over originate deals. We try to know everything about the industry, the suppliers, the customers, and competitors, and pick the right deals, pick the right customers such that we end up with a really high-quality portfolio. As I said, our portfolio stats are proving that out. We do have a very strong risk culture. In fact, our best relationship managers are probably our best risk people, too. I think it's that risk expertise, that deep risk expertise that allows us to grow without overall changing the material, the risk profile that we have as an organization. It's really in our DNA over many, many years. It's built over time. You can't just come in and do this well. You have to understand that risk. You need to manage it, and then you need to mitigate it. That allows us to grow in new areas and under-penetrated sectors without changing our risk profile. Another important component is the foundational strength that we have in our portfolio diversification. We've talked about it this morning. We're geographically diversified across Canada and in our specialty businesses across the U.S. and regionally, and we're diversified by industry and by product. It's that foundational strength that allows us to grow and continue to enjoy those low loss records. The clock is not our friend, but maybe we'll just close on one last point, which is really on the point of collaboration, both cross-border and across business segments. So, Nadeem, do you want to- Sure. Yeah. take that one? I already talked about leveraging platforms or expertise when we think about our auto finance business, equipment leasing, and other businesses. When you think about cross-border collaboration, like an example, without giving the client details, we look at real estate finance. A lot of Canadian large developers have gone into the U.S., and we've been able to use the U.S. real estate platform to seamlessly help them acquire assets in condo developments, hotel developments, regular commercial developments. We have auto finance dealers here in Canada, which is a significantly consolidating industry who've built strong franchises now looking down south to continue that strength and that build. Using the platform in the U.S., again, we're able to collaborate together and create seamless opportunities for debt financing for these clients. Even more importantly, we each have dedicated cross-border teams, and these teams are so focused is to simply look at the subsidiary companies, parent companies that deal with us north and south because we want to ensure that we have 100% of their share of wallet. It's not one at a time. It's not different types of groups. We all act together as one bank, and it's one bank all the time. The opportunity is significant. It's not tens of millions of dollars. It's hundreds of millions of dollars every year, going back north and south every year. The bank that gets this right is going to have a significant advantage for the future, and we are passionate about it. I want to be clear that although we have increased our focus on cross-border collaboration over the past few years, it's nothing new to us. We've been doing cross-border banking for 34 years and counting. We're already a leader in it, and we intend to keep it that way. Yeah, we're also working closely with our BMO Capital Markets colleagues and our wealth partners to deliver perspective and advice and unbiased solutions to our clients. If you think about a client when they're looking at or looking to make a strategic decision, they need an institution that's going to be able to provide market insight, be able to understand and provide insight into business valuation, and to provide a comprehensive solution. But taking all of that into consideration when thinking about the owner's personal wealth situation. I think that unbiased, comprehensive advice truly is what differentiates us and what we all provide every day to our clients. Two quick statistics. Closed referred revenue from commercial to our U.S. wealth partners is up 53% year over year, and our closed referred revenue to our BMO Capital Markets colleagues in the U.S. is up 23% year over year. That's great. To sum up, I think when we put all of those things together, the capabilities, the risk management strength, the sector expertise, the client loyalty, the customer talent, we think putting all of those things together is actually very hard to replicate and really is what has driven this to become one of the most differentiating segments. On that note, speaking of something that's hard to replicate is our Capital Markets business, and I'm really excited to turn it over to my colleagues, Pat and Dan. Well, thank you very much, Sharon. Capital Markets has established a strong foundation that is built for growth. What you see here on the screen today are the key attributes that are going to drive this business for years to come. We have real franchise strength. That strength is based on unique capabilities in all of the markets where we compete. From that foundation, we are accelerating our growth in the U.S. All of that translates into the one key message that we'd like to leave you with today about Capital Markets. Our business delivers steady net income growth for the bank on a consistent and meaningful basis. As you can see from this slide, Capital Markets has consistently generated a meaningful and steady contribution to the bank, at the same time with underlying net income growth and with low to moderate earnings volatility. Over the last five-year period, net income has grown at a compound annual growth rate of 5.3%. Over that same period, the volatility of quarterly net income in BMO Capital Markets has been 17%, versus an average of 24% for our Canadian peer set. Over that same five-year period, we have consistently generated a minimum of 20% of the bank's overall net income, and a maximum of 26% over the past decade. We expect to remain at or below 25% for the next five years as well. Now that attractive financial profile and strong foundation is, in large part, a function of the broad diversification that we have in this industry and in this business. I'd say this business is extremely well diversified when you look at it across every metric. Look at it by industry sector, with no one industry segment in our business driving more than 25% of our revenue last year. It's diversified by client type, with strong contributions coming from both investors and issuer clients, and even with strong diversification within those segments as well. It's highly diversified by product type, with deep capabilities in every single asset class. Lastly, it's diversified by geography. As you now know, a large percentage of our revenue now comes from outside of Canada. In fact, I'd go as far as to say that diversification is our greatest strength in the Capital Markets business. It is the principal reason why we've generated a stable earnings stream across various market cycles. Now, I'd like to spend a minute talking specifically about the Canadian segment of our franchise because Dan and I believe it's extremely important for several reasons, which I'll get to in a second. BMO Capital Markets is widely recognized as a leader in Canada, and we certainly have strong market share positions in every single one of the key fee and profit pools. A lot of firms say that, so we decided to put the facts on the screen to back that statement up. Even amongst all of these proof points, I'd like to highlight a couple that Dan and I feel are really representative of that statement. We have a top 2 league table ranking in Canada in M&A and equity capital markets versus our Canadian peers. We believe that those are the most important indicators of depth of client relationship with our banking clients. Similarly, when you look at our industrial businesses, we have strong market share across cash equities, fixed income, and foreign exchange. Again, great proxy for depth of client relationship in our trading businesses as well. Our structured products business, which has long been a big growth driver for our business in Capital Markets, has won best house in Canada according to Euromoney Magazine for 6 of the past 7 years. Lastly, I think we'd all agree that high-quality content is the foundation for great client relationships. Here again, our equity research team this year ranks number 1 according to Brendan Wood. Our Canadian business is based on deep client relationships developed over decades. I assure you, we will fiercely protect that position with market-leading client service and capabilities. As I said at the outset, this strong Canadian franchise is so important for several reasons. Certainly, it generates a meaningful financial contribution and an attractive return on equity. Equally important, it provides the foundation from which we can grow our business outside of Canada. It provides us with growth capital for expansion into new markets like the U.S. Our expertise and our Canadian capabilities are readily extendable into adjacent markets like the U.S. When you combine our Canadian and our U.S. expertise, we think that makes us, in the capital market space, one of the only true cross-border banks in the entire market. As Darryl and others have said from the outset, that is increasingly important to our clients, both north and south of the border. In fact, I'd go as far as to say the success and stability of that Canadian franchise has been the enabler of the development of our U.S. business, which as I said, is now not only a meaningful revenue contributor, but also an engine of attractive growth for our business. To give you a bit more of a comprehensive view of that platform and a bit of a financial picture of our aspirations going forward, I'd like to introduce Dan. Dan is currently the Co-Head of our Global Investment and Corporate Banking business. Only for one more week because next Wednesday, next Wednesday, he will assume the role of Group Head of BMO Capital Markets, and I couldn't be more pleased for Dan. I won't go through his bio. You can get it on the website, but suffice it to say that I've known Dan for a long time. He brings decades of client-focused experience to this role, and as one of the senior-most members of the Capital Markets executive team and absolutely a co-architect of our strategy, he is perfectly positioned to be taking on this role. With that, Dan, I'll turn it over to you. Well, as the new guy, I'm thrilled to be here today to talk to you. I think it's a great time for me to be taking over and guiding Capital Markets. I have the privilege of leading a dedicated and talented team with a unique client-driven partnership culture. Pat has left me an extraordinary legacy, Darryl before him, and I think I've got some big shoes to fill, and I'm looking forward to it. As we think about the U.S. since 2009, we've been investing heavily in the business, and we've now established what we believe is a scalable U.S. Capital Markets platform. It contributes now materially to our net income. Over the last five years, U.S. revenues have grown to US $1.3 billion, an increase of over 30%. Our U.S. employee base has grown modestly. As we built the business, we now have over 1,000 employees in the U.S. When we think about the U.S. loan book, it has doubled over the last period without sacrificing any credit quality. Today, the U.S. franchise delivers over 38% of our total revenues. It has approximately 40% of our clients, 40% of our capital, and 40% of our employees. With this investment, we believe we've now established a scalable U.S. platform that will both deliver organic growth as well as strong operating leverage. From a market share perspective, we continue to make progress. In investment banking, we've now broken into an overall top 15 in U.S. league tables. In equities trading, we've taken market share every quarter over the last three years. Our market share is now up 30%. We now have a research platform in the U.S. where we cover over 200 U.S. stocks. We're also making strides in fixed income. Our U.S. dollar SSA business is now a global top 10 business, with market share tripling over the last three years. We've also tripled our market share in investment-grade underwriting business over the last three years. And leveraged finance in the last year, we've increased our lead roles by 55%, being overtrade over 80 transactions in fixed price unique alone. We believe we've reached a point of relevance to our clients and to the marketplace. We've achieved a scalable Capital Markets platform, and we see an opportunity to accelerate our U.S. growth. What gives us the confidence that we can accelerate? Primarily how we see our competitive position in the U.S. We believe we have an offer equivalent to all the bulge brackets in the U.S. and superior to the boutiques. We also have a series of U.S. or European competitors who are distracted rebalancing their portfolios. There's significant opportunity for us to grab share. We think the strengths to drive this competitive advantage are fivefold. First, strong financial capabilities. We have a strong capital position, and we have a low cost of capital. Second, we have extensive product and service offerings. We have a full competitive suite in banking and in trading products. We have high impact, insightful content in all of our research platforms. Third, we have a well-established brand and reputation, both with our clients and with our regulators. Fourth, you've heard from many today, a unique cross-border capability. That cross-border capability benefits both our Canadian clients as well as our U.S. clients as we build the business. And fifth, we have a unique high-performance partnership culture that is driven to succeed. All of these capabilities are underpinned by our best-in-class control environment. Over the past several years, we've made conscious investment decisions to invest heavily in our control environment: AML, compliance, market risk, regulatory change management. This leading control environment is actually a key enabler that allows us to grow our business in a scalable way. This overall suite that you see on the screen of capabilities is what gives us the confidence that we can accelerate our growth in the U.S. today. How will we accelerate? Very simple. We're going to deepen our relationships and do more business with more clients. We'll increase our client footprint by adding the new clients, but also increasing our product penetration with those clients. We have a focused strategy. We're not trying to be all things to all people in the U.S. When we think of that marketplace, we focus on five key industry sectors for the U.S. in partnership with a real strong sector we've already had for a long time in Canada, like mining. We're focusing to achieve competitive scale in those sectors, as well as increasing client relevance. It's what we call our ecosystem. It's an alignment between our coverage teams, our product teams, our trading teams, and our distribution teams. When they all have a common agenda, you have higher impact and higher benefit to your client. The U.S. sectors that we're focused on: energy, healthcare, industrials, food consumer, and real estate. We have a secondary focus on FIG, technology and business services, important verticals to us, but the high growth are in the first five. And obviously, we have a deep coverage model in financial sponsors. We also need to expand the balance sheet as it's critical to driving high-quality relationships, both on the corporate side and on the institutional side. Lending is fundamental to allow us to achieve our objectives of increasing revenue growth, increasing market share, and improving efficiency. We'll also be broadening our product capabilities. We know we can go deeper and gain market share. We'll continue to focus on equities and prime finance. Last year, we successfully launched a U.S. ETF and index swap platform, as an example. In fixed income, we've increased our high-yield sales by 30%, and we've increased our commitment to investment-grade trading substantially over the last two years. There are also new product segments that we'll get into. A great example is the acquisition you heard earlier mentioned today, KGS-Alpha. It's an MBS, ABS underwriting platform, top 10 in the U.S. today. We are very excited about this acquisition. It was an area that we focused on that we see growth to come, and we were underweight. A perfect example of how we broaden and expand in the U.S. On board since September, KGS-Alpha is already materially contributing to our platform in the U.S. Over the last few years, our platform has matured, and our skills have deepened. We have transitioned to what we call our need to lead strategy. Less lead, more book run, up to your credit. A strategy where more of the fee wallet on every relationship and on every transaction accumulates to the lead. We will continue to hire strong talent. In a competitive marketplace, we believe we have a very attractive value proposition. We have both a growing competitive platform and a unique, attractive team-oriented culture. We are seeing everywhere that we can attract talent from all the banks in the U.S. You heard today as we think about one bank alignment, that it is an opportunity for all of us to drive revenues. Partnership between banking and trading products, partnership with commercial banking, partnership with wealth. All of these are openings for us to develop new client relationships, deepen them, and create opportunities for revenue for all of us. We think it is a differentiated strategy. Surprisingly, all of BMO actually likes to work together. All of these strategies, as you can imagine, are designed around one thing, which is our client. We want to strengthen and deepen relationships, make them sticky, and they are the foundation for all success that we bring. I take you to our takeaways. The one goal we want you to think for us today is we want to be a top 10 North American investment bank. We are on a clear path to accelerate growth in the U.S. while maintaining our strength in Canada. We will leverage our competitive position to take share from mid and small-sized players as well as the distracted Europeans. We are going to leverage our strong partnerships with wealth and with TMC. We will also capitalize on our position as one of the few truly North American competitive banks. With this strong foundation, we will generate and accelerate growth. We aspire over the next five years to double our U.S. market share, to have the U.S. business contribute between 45% and 50% of our overall revenues, have the U.S. revenue CAGR increase to 10%, all the while targeting to have the overall capital markets efficiency stay below 60, a 500 basis point improvement over where we are today. Hopefully, you see how BMO Capital Markets will capture the opportunities set in front of us and why we are confident that we will deliver. Thank you. I will hand it over to Jill now for the break. I think we're running in pretty good time. I'm going to ask everyone to come back at 10:20, and we'll get started again. The other thing to let everyone know is most of the team that you've seen this morning will be back up for the Q&A at the end, and we will obviously be taking questions on all of the presentations. Back at 10:20. Thank you. You're out to let that R&B ride. It's all about the desert wind. I can take it to the top. The shaky golden Cadillac. Eight men cruising down the strip. The hood of the Porsche Bentley. I'm the aviator queen. Y'all ain't going to like it. Funk in the trunk, funk in the trunk. Y'all ain't going to like it. Funk in the trunk, funk in the trunk. By order of the prophet. Burn that cool pizza. We decorate the faithful with a sexy daisy cast-off sound. Set it when they fall out, cat call. Cool as a shower in the desert wind. Baby, got the way. Y'all ain't going to like it. Funk in the trunk, funk in the trunk. Y'all ain't going to like it. Funk in the trunk, funk in the trunk. I pull up the tempo. Cool as a breeze in Bermuda. In the hot midsummer. Can't fake the game. But I go boom in silence. And if I shoot, I shoot to smile. The crowd going to will. It's like going to kill for the top. Y'all ain't going to like it. Funk in the trunk, funk in the trunk. Y'all ain't going to like it. Funk in the trunk, funk in the trunk. Kick off and jet fly the bird. It's the girl of your dreams. Ride your bumper 'til you accelerate. Down the catwalk way. Cool as a shower in the desert wind. Jet pilot zero to the perfect radio friend. Cool as a shower in the desert wind. Jet pilot way. Y'all ain't going to like it. Funk in the trunk, funk in the trunk. Y'all ain't going to like it. Funk in the trunk, funk in the trunk. Y'all ain't going to like it. Funk in the trunk, funk in the trunk. Find table space to stay, some sunglasses by your head. They're pioneers. You and I, we're pioneers. We make our own rules, our own room. Nobody's here. Let them stare, what they are staring. They're nobody here. Gather all the rebels now, we'll revel around and sing aloud. We don't care what they say. No way. No way. And we believe the empty chairs for those who say we can't sit ten. Fine all by ourselves. Hey, we brought our drums. This is how we dance. No mistaken. We make our breaks. You know, like our 808. Leave us alone 'cause we don't need your policies. We have no apologies for being. Find me where the wild things are. Wild things. All wild things. Young wild things. Find me where the wild things are. Wild things. Young wild things. Find me where the wild things are. I lose my balance on these eggshells you tell me to tread. I'd rather be a wild one instead. Don't want to hang around the in crowd. The cool kids aren't cool to me. They're not cool like we are. So hey, we brought our drums. This is how we dance. No mistaken. We make our breaks. You know, like our 808. Leave us alone 'cause we don't need your policies. We have no apologies for being. Find me where the wild things are. Wild things. All wild things. Young wild things. Find me where the wild things are. Wild things. Young wild things. We will carve our place into time and space. We will find our way or we'll make a way. Find your grace, don't you hide your face. Let it shine, shine, shine. So hey, we brought our drums. This is how we dance. No mistaken. We make our breaks. You know, like our 808s. Leave us alone because we don't need your policies. We have no apologies for being. Find me where the wild things are. Wild things. All wild things. Young wild things. Find me where the wild things are. Wild things. Young wild things. Find me where the wild things are. I keep my hands on my stuff. Pick those up and I'll put them back up on the shelf. And tell them, "Baby girl, it's me." Am I coming out or not? Ooh, on the run for just a kickstart. Got the feeling it's the fastest trick you taught me. Might be over now, but I feel it still. Ooh, on the run for just a kickstart. Love to kick it like it's nothing, then it hits me. Might be over now, but I feel it still. Got another mouth to feed. Leave it with a baby till the mama call the grave digger. Song of the fallen leaves. Am I coming out or not? Ooh, on the run for just a kickstart. Got the feeling it's the fastest trick you taught me. Might've had your fill, but I feel it still. Ooh, on the run for just a kickstart. Love to kick it like it's nothing, then it hits me. Might be over now, but I feel it still. Used to idle wild for speed. Give into that easy living, goodbye to my hopes and dreams. Got to listen for my enemies. They keep us waiting for the fall of man. I'ma give a little to the kids in the middle. Oh, singing in a foreign don't bother me. In the covers, in the covers. In the covers, in the covers. In the covers, in the covers. Ooh, on the run for just a kickstart. Your love is an abyss for my heart to eclipse in. Might be over now, but I feel it still. Ooh, on the run for just a kickstart. Got the feeling it's the fastest trick you taught me. Might be over now, but I feel it still. Ooh, on the run for just a kickstart. Love to kick it like it's nothing, then it hits me. Might be over now, but I feel it still. My house in Budapest, my hidden treasure chest. Golden grand piano, my beautiful Castillo. You, ooh you, ooh, I did it all. My acres of a land, five a cheese. It may be hard for you to stop and believe. But for you, ooh you, ooh, I did it all. Oh, for you, ooh you, ooh, I did it all. Give me one good reason why I should never make a change. Baby, if you want me then all of this will go away. My many architects, the list goes on. If you just say the words, I'll offer more. But for you, ooh you, ooh, I did it all. Oh, for you, ooh you, ooh, I did it all. Give me one good reason why I should never make a change. Baby, if you want me then all of this will go away. Give me one good reason why I should never make a change. Baby, if you want me then all of this will go away. My friends and family, they don't understand. They fear they'll lose so much if you take my hand. But for you, ooh you, ooh, I did it all. Oh, for you, ooh you, ooh, I did it all. Give me one good reason why I should never make a change. Baby, if you want me then all of this will go away. Give me one good reason why I should never make a change. Baby, if you want me then all of this will go away. My house in Budapest, my hidden treasure chest. Golden grand piano, my beautiful Castillo. You, ooh you, ooh, I did it all. Oh, for you, ooh you, ooh, I did it all. They say he's fast, a wild old man. They tell me, "Don't fence him in." He makes you laugh, then you cry. Then you let him in, just in time. Well, some things just can't be erased, but the heartache's been sealed in shame. You stand by me, through all the lonely nights. You stand by me, through the rain. Through the times when you were cruel. I remember them through it all. I see all my fears are tumbling down. Don't be hiding, girl, I've got you now. Alone I think of all the months that passed. There's only one more thing I can't face. You stand by me, through all the lonely nights. You stand by me, through the rain. You must be waiting, while he's running free. You make me lie when he talks to me. You stand by me, through all the lonely nights. Now I gotta go, but it don't pay. I'm leaving home, and I'm gonna stay. Without all of these things I can do. But you know that I'll get through. You don't understand my point of view. I suppose there's nothing I can do. You stand by me, through all the lonely nights. You stand by me, through the rain. You stand by me, through all the lonely nights. You stand by me, through the rain. You must be waiting, while he's running free. You make me lie when he talks to me. You stand by me. You stand by me, through all the lonely nights. You stand by me, through the rain. You stand by me Okay, everybody. Welcome back from break. I hope you got some great coffee as well as some great treats out there and good conversation as well. We are going to continue on here. What we're going to be covering now is wealth management, and Gilles and I will both cover in turn. We're going to specifically be talking about how we are accelerating our growth trajectory in wealth management. What we'll do is I'll kick it off talking about the overall total wealth business. Then I'll talk about our specific plans for personal wealth management. Then turn it over to Gilles, who will talk about global asset management in particular. Let's get started. There are two key takeaways that I hope you take from today. One is that wealth management, both as an industry as well as our particular business, is an attractive business. It's got strong fundamentals, we've got momentum, and we're growing. Two is that we're taking action now to continue that momentum as well as to double our earnings and wealth management, much of that already within sight. Before we go into the future too much, what I'd like to do is ground you in the present and tell you a little bit more about our starting point. If you look at the past five years, we've already had a strong earnings growth trajectory with double-digit earnings growth as well as improved efficiency to the tune of over 500 basis points over the past five years. We've also seen great fundamentals and strong figure, whether it's deposits, whether it's assets, or whether it's loans. So strong trajectory and good momentum. I'm pleased to say that this momentum has also been backed by strong fundamentals. If you look at the business in terms of its composition, we have over 60% of our business is fee-based. It's like an annuity to us. We have strong stickiness as well, backed by our loyalty from our customers. So it's a strong business, strong momentum, and strong fundamentals. Underpinning this momentum is our diversity of businesses and diversity of markets. We believe that this diversity, both in terms of the markets that we're leading in as well as the businesses that we're participating in, really helps us in two ways. One is it obviously minimizes our correlation risk, but it also lets us keep our anchor businesses and access global growth markets. We've got the anchors where we've already got momentum, and we're reaching for areas where we can continue to grow in keeping with global industry trends. Not only that, but we are leading in market positions where we're competing, and we're very proud of where we stand today. Just a couple of examples. Today in our private bank in Canada, we've got the leading AUM in the space. We're number 2 in terms of our ETF share, which we recognize obviously is a very important part of our space in asset management. We've also got strong full-service brokers revenues and asset participation. The good news about all of that is we are also building this business and getting this momentum by doing what's right with our clients. We're being recognized with that, both with our net promoter scores, which I'll talk about in a moment, but also externally recognized with a number of awards. One in particular I'd like to highlight that we're particularly proud of right now is we just received a few weeks ago, recognition that InvestorLine, our self-directed business, was awarded with the number 1 position by J.D. Power in terms of investor satisfaction. So we're number 1 there, and we're continuing with that momentum. Some of my colleagues earlier also mentioned that we are nothing without our people. In wealth management, we fundamentally believe that. We are a people-driven engine. We've got strong talent, and we've got high employee engagement. Our people feel engaged no matter whether they're in front of their clients or in more supportive functions. So we've got strong positions, strong client relationships and loyalty, and strong people underpinning all of that growth. A part of our culture that I want to touch on is also our client-focused innovation, and this is a key to our success and very much a part of our DNA. We've got a DNA that anticipates client needs and really sees around corners in terms of thinking about trends, thinking about how that will impact our clients, whether retail or institutional, and really being first to market with innovative solutions that will make a difference for our clients, their needs, and where they're going. A couple of examples here. One is in ETF, which Gilles will touch on as well. We recognize the growth potential in the market and the client needs, and we took an early leadership position then, many years ago now. We now have the dominant share in the space in Canada, and we have leading inflows five years straight. A great example of seeing around corners, making sure we're first to market, and continuing to participate in a growing trend. We're doing the same now with digital. We were early into the market there, recognizing the importance of the digital advice space. We built adviceDirect, which is very much a hybrid advice product to the market. We followed that up with SmartFolio, which recognized the opportunity and the client need to access digital advice wherever and whenever they wanted it, but do it in a way that gives them the benefits of professional money management as well. It really is the best of both worlds for our investing clients. We believe digital advice continues to be a growth space, and we are well-positioned in this growing space. That's a little bit about our starting point, which hopefully gives you a picture of our momentum. We've got strong foundation and strong momentum, but we're not stopping there. What I'd like to talk about now is how we're going to be doubling our earnings over the next five years. If you look at our track record, we've doubled our earnings over the last five years as well, and our ambition now is to double it again over the next five. We'll be doing this as well with profitable growth while continuing to manage down our efficiency ratio through a combination of initiatives that help us to drive revenue growth, make us effective capital allocators, as well as delivering on expense management platforms, many of which we've talked about before, as well as other participation choices. Now I'm going to shift gears and talk specifically about how we're going to be delivering this doubling of earnings just for Personal Wealth Management, and then Gilles will talk about BMO Global Asset Management. I want to start off by talking very much about our value proposition, because everything we do, whether it's product development, whether it's how our teams interface with clients, or whether it's our risk management, is really rooted in our value proposition. That is about making a meaningful difference in the lives of our clients by working together to help them grow, protect, and transition their wealth and do that with confidence. That is where we start. There are five priorities in particular that underpin our growth strategy, and I'll touch on each of them in turn through this presentation. They are differentiating with top growth segments, building one team to bring the best of BMO to our clients, making it easy for our clients and our teams, accelerating the growth of our U.S. wealth business, and growing responsibly by managing our efficiency and risk. Our first priority is to differentiate by focusing on our top priority client growth segments. There we will focus specifically on client segments where we have strong money in motion, because we know money in motion really drives our business growth, but also in areas where we have a natural competitive advantage. I will use two examples today. One example I believe you have heard throughout today's morning and presentation is on business owners, and hopefully you get the strength and underpinning of this growth segment. We have the leading North American Commercial franchise, so we are well-positioned. I would also comment about the fact that over 5 million business owner clients are going to be transitioning out of their business, likely through an exit. We are here to help there as well by using our leading Commercial franchise and together with them building a world-class partnership. I will get onto more of this in a minute. Ultra-high-net-worth is another area where we are growing. This is a growth area. It already represents a third of global assets in the marketplace. It is fast-growing when you look at its asset growth relative to other segments. It naturally has a high touch, and we do believe it is a more disruption-proof area, given the natural complexity of this client segment's needs. We have a leading private bank, and we have strength in brokerage as well as Capital Markets, as you heard before. Together, we will be building our platform, already a differentiated platform, to serve this important growth segment. Our second priority, and a thread you heard from today about one team, is building one team to win with clients. Here we already have a strong track record, working together both across businesses as well as across borders. A couple of examples there. Last year alone, we already referred $20 billion in referred and closed opportunities between our Wealth Management business and our Canadian Personal and Business Banking business, and you will hear from Cam in a moment. Almost two-thirds of our net referred branches already have dedicated bankers focused on those clients' needs. We see significant growth in our cross-border platform. As we look ahead, we are taking that collaboration strength that we already have and turning it into a deep competitive advantage. We have a priority to build out collaboration as a real source of differentiation for our clients and in the industry. For example, Commercial. You already heard again about a strength of our franchise. We have over 400,000 North American Commercial clients, yet only 10% of them or less today have a wealth relationship as well. So we see great opportunity here. We believe it is nearly $100 million in earnings opportunity to be able to serve these clients together in a world-class partnership. So picture integrated teams, many co-located, building out deep specialization for segments that need it, as we do today already with our Commercial segments, and working on relationship pricing as well to benefit the full client relationship. We also see a great opportunity to help our clients in many high-net-worth households that already have strong relationships in other parts of BMO. Let me touch on our third priority, Brett and others already referred to this, which is making it easy through continued technology investment to help both our clients as well as our professional teams win through digital. This is already a critical part of our agenda. I will give you a couple of examples of what is already underway and some more to come. Let me start with onboarding. Investment onboarding. It is our first impression. Many times, there is a competitive situation, and you have just won a client over. They have decided to come to BMO. A few years ago, that first impression, if they walked into one of our businesses, was a stack of paper that they had to sign. We have invested to make sure that experience feels completely different. Now today, our onboarding experience is digital, and it is modern, and it is easy for our clients. Our forms are down by 90% or more. Our accounts are now funded four days faster, and over 50% of clients are signing up through e-signature. So it is what we call win-win. It is a win on the client experience. It is a win in terms of lowering our cost to serve. It is a win because our clients are spending more time with our teams, our teams are spending more time with our clients and less time on administration. It is a win in terms of lowering our operating risk profile. So that gives you an example of what we already have today. Now I will talk about our next act, which we are very excited about. We are continuing to build out our differentiation using digital as a tool, either directly to clients or helping our advisory teams to win with clients. One example of that is our launch of WealthPath. WealthPath is a digital goal planning tool used on iPad, and we built it in partnership with Voyant, which is just an exceptional client technology startup based in the U.S. This is a goal-based planning tool that is collaborative, it is modern, it is dynamic, and it is going to make, most importantly, a meaningful difference in the lives of our clients as they make different decisions, and you can work in real time to help them shape those. So do not forget, for those of you here, to make sure you go see it demonstrated. You will see it out in the tech showcase in an hour. The fourth and final priority I will talk about today is how we are going to be accelerating our growth and our momentum in our U.S. wealth franchise. We already have a strong foundation in U.S. wealth today. We have built out an exceptional leadership team, have strong disciplines in each area that we participate in, strong talent backing that, and a deep bench across our markets. We have also chosen to exit non-core businesses and non-core markets where we did not believe we had a participation advantage. Through these choices and these changes, we have seen strong growth in earnings as well as efficiency, as well as great gains in client loyalty, where we are up in the high 50s now on net promoter score, which we believe is close or industry-leading. Our intent now is to more than double our earnings growth in the next five years. So we are going to do this in many ways, including market expansion, deepening our relationships with partners already, and you heard Dave and others refer to that before. Deepening our digital optionality and really building that optionality into our business model, as well as growing out our banking capability, which is already a source of growth for us. I am going to stop there and now turn it over to Gilles, who will talk specifically about our growth plans in global asset management. Okay, thanks, Joanna. Give you a little bit of background. We have had a great last five years in the asset management business. From 2012 to 2017, we tripled the size of this business to where we are currently around about $325 billion. We had the benefits of some acquisitions, but if you strip out the acquisitions and the divestitures, because we did divest ourselves of some non-core businesses, our organic growth was 20% a year. Again, our organic net income growth was 20% a year. During that period, we merged what was a number of boutiques into one global asset management business with one management team. We have had great success in the past five years, and I think that is what gives us confidence that we can reach our targets for this year, for the next five years, which is growing our business to $525 billion and double our net income. Let me just explain how this business operates. BMO GAM operates as one global business. We are structured globally across products, investments, distribution, and we are developing global operations and technology. Our manufacturing is concentrated in four hubs from which we distribute globally. In London is a center of excellence for equities and fixed income. In Toronto, we focus on ETFs. In Chicago, it is discipline equities, multi-asset, and alternatives. In Hong Kong, it is on Asian equities. Our distribution is through 20 offices around the world, and we have clients in 30 countries. We are continuing to grow this distribution to see the benefits of scale. You can see in the pie chart here that we have a well-diversified mix of clients across Canada, the U.S., various countries in EMEA, which includes the U.K., Germany, Netherlands, and a few others. Then we have a meaningful presence in Asia through our investment in Fullgoal. You see here that 19% of our assets are in the U.S., but the U.S. market represents 50% of the global $100 trillion asset pool. Clearly in the U.S., we are undersized. But we focused our business there, and we are now starting to see some strong results. We expect this to be driving significant growth as we go forward. In the middle, you can see that we have a healthy mix of assets across our bank-owned retail channels, intermediary advisors, and institutional. And then on the right, if you look at the diversification of our asset base, you can see that it kind of reflects the depth and scale of our money management. We have 14% of our assets in passives. We are able to serve all our clients, from low-cost passive to high-return alpha strategies. When we meet clients, we lead with an attractive global product offering. That is to say, we do not meet our clients and our Canadian clients and talk about Canadian equities. We introduce global products. Some of the examples of some of the award-winning products that we have is the liability-driven investments, ESG, we have been in this space since the mid-1980s, one of the first businesses to get this started, and now ETFs, as Joanna mentioned. But there are many more. We are involved with alpha-generating fundamental equities, quant-based capabilities, emerging market equities, core and specialty fixed income, multi-asset, real estate, private debt, and then just to name a few. Distributing our global products to clients worldwide is a differentiator. It is going to continue to enable us to go on this high-growth trajectory. Another key differentiator is our investment excellence. We bring global investment expertise to our clients through 11 consultant-credible specializations. Importantly, as you can see on the right, our investment performance is consistently outstanding. With 80% of our funds meeting or beating the five-year benchmark this year. Our global investment expertise and consistently strong performance is going to continue to be the cornerstone of our competitive position. Just to summarize, our business is growing through a combination of distributing leading global products to our clients around the world and delivering investment excellence with consultant-credible capabilities, and this is all enabled on a global structure and platform. This has enabled us to double our business from fiscal 2012 through 2017, and we are continuing to grow. In this past year, in 2018, we grew our net new assets year-over-year by 100%. It is the success of the strategy which gives us confidence that we can grow our assets to $525 billion in five years and to double our net income. In closing, there is a couple of messages that Joanna and I would like you to take away today, that at BMO, wealth is a high-growth business that has high ROE and it has great momentum. We have bold ambition to double our earnings over the next five years, and we see this as being very achievable, and we have a strong track record, a clear strategy that gives us confidence that we can deliver. Thank you. With that, I will pass to Cam and Andrew. Thank you, Gil and Joanna Rotenberg. A less confident leader might feel concerned about being the last group on the list. I made a gentle inquiry into our IR group, and they said, "Oh, no." Their job, by the way, is to work on messages, as you all know. The message back was, "No, you're not last. You're the anchor." I'm taking the best interpretation of that term anchor. I've been called worse in many years as well. I'm here with my co-anchor, Andrew, who leads our customer-Solutions group. I'm going to spend a minute on the business overall and I'll touch on the commercial business and Andrew will talk about commercial. Point of clarification, earlier you heard from the commercial panel up here, who did a terrific job. They're talking about the upper end of our commercial business. Andrew and I will focus on small business and on the mid-market. The anchor of the flagship business has a few things to deliver here. Just a couple of quick points on this one. This is a large group, and it is a profitable group and drives a significant component of our bank's performance, 43% of our net income, and it's a 30% ROE business. It's also a business that drives meaningful One Bank growth. 80% of our wealth customers were originated via Personal and Commercial Banking. A stat that we're very proud of. It's also a business that's been delivering strong financial performance. We've had positive operating leverage in 10 of the last 11 quarters. So lots to be excited about here. The focus for us now is acceleration. You've heard that theme throughout the day, and we're no different. We are focused on acceleration. We've built a platform in this business that prepares us to win, and that is our intention. We've invested heavily in the business in the last little while. We've taken out CAD 150 million in structural costs over the last three years, which has enabled us to both invest in this new platform at the same time as we improve our efficiency ratio. We have a few really specific ambitions for the business and they are as follows. Number one, we do expect to deliver top-tier earnings growth. Number two, market-leading efficiency gains. Number three, the one that I'm perhaps most excited about, is 1 million new customers in our personal business. Number four, continued double-digit NIAT growth in the commercial bank. We have a clear path to deliver on the strategy I've just laid out. I'll cover the personal ones, Andrew, the commercial ones. But they are consistent. There are three of them primarily. The first one starts with capacity growth. This is two parts, aggressive hiring in key roles, number one, and number two, pretty significant improvements in productivity through our digital agenda. The second is disciplined execution against our highest value opportunities by product and by market and by segment. Finally, you've heard throughout the day, and I do hope it sounds repetitive between Brett Pitts and myself and Ernie Johannson, we've made great gains on our digital and data agenda, and that is fuel for growth in the personal and commercial business. A couple of thoughts on the personal business off the top from me. We run our retail franchise on a North American basis. You will pick that up from themes from Ernie Johannson. We do this across brand and marketing. We do it in digital and technology. We do it in the way we think about our branches, our formats, our sales model, everything therein. When you put them together, we are a large retail franchise, 1,600 branches, north and south, over 20,000 employees, and more than CAD 750 million in technology investment to work with for the combined entity, so powerful. In Canada alone, more than 7 million customers. We are the number one issuer of Mastercard, the number one issuer of AIR MILES. We are the bank of the defense community. We are the sponsor of TFC and the Montreal Impact. So fantastic assets to work with, and we're very really proud of them all. I would just drill home the point around distinctive capabilities and specifically what it's going to take to win in the markets right now. We see the customer-led shift to digital to be a positive one for customers, and we see it to be a positive one for BMO. We know that digitally active customers are more valuable. They stay with us longer, they do more, and they are generally happier. For these reasons, we've invested at the enterprise and at the group level on some key capabilities. I want to just emphasize a couple of them. Digital and partnerships, it's core for the Canadian bank. It's core. We've spent a great deal of time working on it in the last few years. The architecture that Steve laid out has helped us get to a market-leading position in digital sales. It's helped us to get to number one app in the App Store with a rating of 4.7 as of this morning, which we're really pleased with. It's put us in a position to do meaningful value-based partnerships with partners across Big Tech, FinTech, Consortia, et cetera, which you've heard about earlier. I think the fuel of the whole thing is the data and analytics engine that we have, which with the machine learning capabilities built in, is really fueling our growth. Looking ahead, the personal ambition is clear, it's bold, we're confident. It is about getting 1 million new customers into the franchise. We're confident in the number for one reason primarily, and that is our primary customer growth over the last couple of years has been double digit. It's working. The formula we have we are pleased with. I would add just one point to that, which is when you have a customer focus, and in particular, a primary customer focus as we do, you make participation choices at the margin, and we've done that. You've seen it in our decision around third party, you've seen it in broker, you've seen it in auto. There are times where we choose not to participate as deeply. You mustn't confuse those decisions with our commitment to grow the personal franchise, both in terms of market share and customer base. We are here to grow this business. Key to the growth for us is capacity gains. We think about it in two ways. The first is really bold hiring in two roles in particular, our financial planners, number one, and number two, our mortgage specialists. We'd like to move these forces up significantly, 20%-30% gains in both of those over the next period of time. That's the hiring part. We get a great deal of capacity from our digital work, and Steve and others have laid down what we've done over the last few years, putting in place architecture that supports workflow, imaging, e-signature, et cetera. This enables us to create a great deal of capacity. In the Canadian business, we've removed more than 10 million pieces of paper, 3 million signatures, and 500,000 hours of work capacity just in the last few years. That, to us, is the equivalent of 250 customer-facing roles. We're starting to feel real gains from these capabilities. Beyond the hiring and the creating space, there is the digital capability that has been talked about that is customer-facing that drives our results. We are a leader, as has been pointed out in the Canadian industry, and we will be very soon in the U.S. with our capability. Getting from 8, 9, 10, 11, 12 to 25% of our total sales in digital has been what we've achieved over the last three years. To double that number again, as we expect to do over three, we'll shift our focus away from our strengths now, which are checking savings cards into lending, and that'll be the single biggest driver of the growth in the next period of time. Two bits that are important here that we're really pleased about, and you'll be able to see representations of them later today. Number one is the mortgage approval, preapproval capability using the architecture that the other groups talked about. We connect via API to external providers. That does two things, immediate preapproval because we're allowed to do credit, et cetera, and also a streamlining of the workflow. Our research says that preapproval is the single most important thing to accelerating buying decisions. Number one. Number two, unsecured lending. We're super excited about what we'll be rolling out in 2019. This will be minutes to approval, hours to funding for unsecured lending via the mobile app. We'll be first to market with it in Canada, and we're very excited about it. Moving on, just a couple of final points I'd like to make here. I do think that Brett raised the point about the Gartner recognition. That's really important to us because to me, that is the living manifestation of the caliber of the teams we have and the way in which we change work practices, and there's plenty more fuel to gain from that. Where are we pointing our energy from a customer perspective? We're positioned to serve all Canadian customers well. That's driving our customer growth now, but there's two that are newer for us that I'd like to amplify today. We are the bank of the military, as I pointed out before. Our Canadian forces are 1 million strong, including their families. We have strong penetration of the base already. You'll be hearing from us in 2019 for an acceleration of the agenda we have with the military. It is a wonderful, highly attractive captive group, and we have some terrific offers that will accelerate our customer growth through them. The second opportunity we're very focused on is Bank at Work. This is where we focus on providing banking services to corporate customers. With such a powerful commercial franchise as we have, we're in a natural position here. We are starting with some of our largest customers, and we have great strength in serving this segment in the U.S. We have emerging strength serving it here, and we think this will be a big driver for us. A final point on marketing. We have increased our marketing spend in the Canadian market significantly, and we will do so by doubling it over the next five years again. What I think is more interesting about the way we go about marketing is that we spend nearly 60% of our marketing dollars in digital. That is far higher than the industry average, and we are really very good at this. Our success in targeting our digital marketing has led to a decrease in CPA, cost per acquisition, of 35% in our core areas around checking and cards over the last two or three years. That just gives us more fuel to reinvest in the overall marketing and in specifically the digital aspects of that. Luke referenced the data. The data drives everything that we have talked about. This has been a long journey, and it is one that we are really proud of. Just want to amplify a couple of things here. We have moved from partial view of customer to full view of customer, plus the ability to bring in third party. We have moved from branch-only ability to provide leads to leads across all channels that are real-time, in the minute. That is a big step forward to us. We have moved from rather static offers five years ago to more dynamic real-time offers with the support of machine learning, which has been a real plus for us. Just these evolutions alone in the past year have led to 750,000 leads being presented to our teams and to our customer, and is a terrific driver of our revenue, and we expect that capability to double over the next three years. I will close before I turn it to Andrew with just a recap that says we are really very excited about the personal business. The strategy is clear. The ambition, over 1 million customers, is one that we have a great deal of confidence in. The foundational assets are in place, and they are terrific. What you should take from this more, though, is that we have momentum in the business, and the capabilities that will drive us most around data and digital are mature, and we are very proud of them. With that, I will pass it over to Andrew. Thank you, Cam. I must say co-anchor is quite possibly the nicest thing you have said to me all year. I cannot wait to share at the dinner table the conversation with my wife. Look, I am excited to talk to you today about the capabilities that we have built in our commercial business, building on the strategically advantaged foundation that we have. We have the second-largest market share in the zero to $25 million loan segment nationwide, with deep sector strength in areas like agriculture and Indigenous banking. We have also been recognized as the best commercial bank in Canada for four years in a row by World Finance Magazine, highlighting both our digital progress as well as the quality of our bankers. We have seen very strong growth in loans and deposits over time, with the best momentum of the Big Five in the last two quarters. I would highlight our focus on deposits, where we have taken 68 basis points of share so far this year. Yet, despite our strengths, we continue to have clear areas of opportunity for future growth, which I will talk to momentarily. As Cam said, our plan is to achieve double-digit growth in our commercial business over the next five years, and our areas of focus to achieve that goal are crystal clear. First, we will create significant sales force capacity through both aggressive hiring and enabling greater individual productivity through process improvement, through data and analytics, and through digital tools. Second, we will focus on opportunity areas in specific verticals, in geographic markets, and in client segments where we can take share through disciplined execution. Both of these levers will be fueled by distinctive enablers we will build to drive our digital transformation. Let me now dive deeper into our sales force expansion strategies. As is the case with our personal business, we are now shifting to invest significantly to increase our sales force capacity by 50%. About half of this increase will come from hiring. Specifically, we will be adding 125 relationship managers throughout FY 2019 and are focusing these RMs on our highest opportunity areas, right here in the Greater Toronto Area, in our verticals, where we are hiring industry specialists, as well as in our small banking segment. The other half of the increase will come from capacity creation through the transformation of our platform to allow our sales force to spend more time with our clients. Here we are modernizing our core systems to improve speed to market. We are automating routine work with robotics and AI. We are using data analytics to improve portfolio monitoring, allowing RMs to spend 50% less time on risk review, and importantly, therefore, to spend more time with our clients. We plan on and are seeing disciplined execution against our focus areas on diversification into high growth sectors such as healthcare, services, and technology. We are doing that by having teams specifically focused on an individual sector where they can foster deep relationships and understand the complexity of the specific vertical. We are developing tailored products focused on these key sectors, and we are improving our capabilities in credit structuring and in pricing so that we can be highly market relevant. We are seeing results. In healthcare, our share year-to-date is up five basis points. In services and in technology, our share is up 134 basis points. We are particularly excited by our technology and innovation group, where pipelines are the strongest we have ever seen. We are focused on geographic markets where we see growth potential and where our current share is below that we see nationally, namely Alberta and the Greater Toronto Area. In Alberta, we see high potential given strong projected GDP growth and a re-emergence of business confidence. We have remained committed to the market through the energy cycle, and we are already seeing this pay off with loan share up 83 basis points year-to-date. The GTA is also a major focus for us. Here in Toronto, we are aggressively adding to our sales force and are adding 50 relationship managers over the course of 2018 and 2019. We are doing that to bridge the gap from number five market share in this market to number two that we have nationally, and we are making great progress. Year-to-date, our deposit share in Toronto is up 87 basis points and above our natural share growth rate. Finally, we are excited about our prospects in small business, where I am very confident that the improvements we have made to our platform will allow us to lead in this segment. We have created dedicated leadership for this segment and are better aligning our RM portfolios to ensure we have more focused coverage on small business clients. We recently deployed a world-class digital lending platform called Business Xpress, where we can both write and approve a small business loan in under 20 minutes. We will be demoing this capability later this afternoon. As you heard from Brett this morning, we recently announced a partnership with Intuit Canada to allow BMO's Canadian small business clients who use Intuit QuickBooks Online to share the financial data between our two companies easily and securely. Finally, we have completely refreshed our small business card suite, which has led to 40% year-over-year client growth, and we have seen good momentum in our e-business deposit plan, which we only launched in 2017 and now has over half a billion CAD on deposit. Our commercial business prospects are bright. We are confident in our plan to achieve double-digit growth in our commercial business. To recap, we have a leading franchise with clear opportunities to diversify our growth and great traction in the sectors, in the geographic markets, and the client segments we are focused on. We have strong momentum in F 2018 with further potential to accelerate as we add 50% to our sales force capacity over the next three years. In closing, Cam and I would like to leave you with the following. Across both of our P&C businesses, we have a strong foundation that is built for purpose. We have a clear strategy, and we have great confidence that through disciplined execution, we will deliver on our bold goals. Top-tier net income growth in P&C, market-leading efficiency improvements, double-digit NIAT growth in commercial banking, and achieve one million net new customers in the personal bank. Thank you for your time. I would now like to turn it over to Tom. All right. Thank you very much, Andrew. If Cam and Andrew were the anchor presentation, I am not quite sure what that makes me, but I am happy to say that I will be the last presentation before we move to Q&A. My job really is to bring things together from a financial perspective and to reiterate some of the key themes that you have heard this morning. On the key themes, we do think the foundation of the bank is strong. We think we have got real differentiating strengths that will drive our performance. We are looking to accelerate as a company, and our posture is one of leaning in, and we are united as a team under a consistent strategy. I would like to start with a few quick historical financials. Since 2010, our EPS CAGR has been 8%. More recently, from 2015 to 2017, the EPS CAGR is also 8%, and our revenue CAGR is 7%. For the year-to-date, EPS is up 7%, and excluding a gain we had in Q1 of last year, EPS would be up 11%. Operating leverage is 0.7, and also excluding the gain, it would be up 1.6%. ROE is solid at 14.6%. When we look at that performance, we think it demonstrates good, consistent performance through time and nice growth. We are happy to say that performance has been recognized for our shareholders and the share price, which relative to our Canadian peers, is above average over the last one, three, five, and 10 years. I would like to talk now about the diversification in our business. You have heard a bit about this through time, but we do think it is a real source of strength for the company, and there are some critical benefits to it that we would like to spend a few minutes on, and it might be a somewhat underappreciated aspect of our story. From a mix perspective, Canadian Personal and Commercial Banking represents about 40% of the total, and then each of U.S. P&C, Wealth, and Capital Markets represent around 20%, with U.S. Personal and Commercial being the largest of the three. Geographically, Canada represents about 65% of the total, and the U.S., 28%. As we have talked about, we expect that 28% to grow to a third organically over five years. Within the U.S., U.S. Personal and Commercial Banking is the biggest group, but we do expect strong growth from both Wealth and Capital Markets, as you have heard about this morning. There are three key benefits to the diversification that I want to spend a minute on. Number one, our diversification provides us with a stable and resilient income stream over time. Number two, we think we have more options for growth by virtue of the diversification. We are in more markets, we deal with more customers, and with that, we have got more opportunity to grow our business. Thirdly, we think we have a particularly attractive mix for the opportunities that exist in the world today. We are overweight the U.S. and we expect better U.S. growth than Canadian growth. We are overweight Commercial Banking, and we think given consumer leverage in North America, Commercial Banking will have better growth. We have a strong and growing Wealth business that we expect to do well. The overall business is underpinned by our Canadian business, which has very strong core profitability. This slide takes a look at the diversification one level deeper. It shows our line of business revenue within each of our groups. It is meant to just graphically illustrate that the diversification runs deep. It does not exist just geographically or at the group level. It goes much deeper. The underlying drivers of our revenue within the businesses differ as well. In our deposit revenue business, we have a sensitivity, as you know, to interest rates. Some of the sensitivity comes through shorter rates and some through longer rates. We do see a real tailwind for our business from a revenue perspective with higher rates, which is what we expect going forward. The graph on the right shows our revenue growth and income growth volatility through time, and it just illustrates the benefit related to stability that flows from diversification. You can see that the volatility of the growth rate for the total bank on both revenue and income is lower than each of the parts, and we would expect that to continue given the diversification. Again, three key benefits, more stability, more resilience, more opportunities for growth because we are in more markets, and a specifically attractive mix given our lineup of businesses. Now, Darryl White, in his comments, mentioned that we have a strength in risk management. We do view this as one of the defining characteristics of the bank. This slide shows our long-term credit track record compared to the Canadian peers, and over the roughly 30 years on the slide that we show, you see that our losses have a lower rate than the Canadian peers. We average a loss rate of about 40 basis points. The Canadian peers are at about 53. That is a meaningful difference over time, and we think it reflects the strength of our ability to manage risk. This slide looks at how our business might play out under different scenarios. As you know, we are in a benign credit environment. Credit losses are running below the historical average. If credit losses were to roughly double from 20 basis points to 40 basis points, that would impact income by about 10%. So a significant increase in credit losses, a double, gives rise to, I will say, only a 10% change in income given the extent of the change. Secondly, we have very strong pre-tax, pre-provision income. In 2017, this was $7.7 billion. Year to date, $6.1 billion. At that level of pre-tax, pre-provision income, we could absorb credit losses above 220 basis points. That is higher than at any point over the last 30 years, and it is more than five times the average of that period of time. There is an expression in risk management that the best defense against loss is strong profitability, and we do think this slide shows that we have got lots of that. I would like to spend a minute on efficiency. We have talked about this through time. You have heard about it through the day today. We have improved the efficiency ratio. It is down by 340 basis points since 2015. That improvement reflects a lot of good operating discipline across the company. It reflects executing on initiatives. We do think it reflects also a stronger culture around efficiency that has resulted from a real focus on it over time. Then lastly, we have taken steps to manage the portfolio. Over the last three years, we have sold or downsized six or seven businesses because we did not see a clear enough path to improve performance with the business being a part of our group. We have improved efficiency, as we have talked about, while investing meaningfully in technology. The midterm target that we use to talk about efficiency is operating leverage. Our target is 2%, as you know. We have achieved that target over each of the last two years. We will not necessarily achieve it in every year. There are environmental factors that can impact that, but we are focused on achieving it looking forward. With 2% operating leverage over the next three years, we would expect the efficiency ratio to be 58% or better in three years' time. On the capital side, we are in a strong position. We have a CET1 ratio of 11.4%, with that close to $2 billion of excess capital, which makes us well-positioned to take advantage of strategic opportunities. Over the last three years, we've managed our capital carefully. We've grown the capital ratio. We've invested in the business, and we've returned over $8 billion to our shareholders, which is 56% of our earnings. That's come through dividends and through share buybacks. Looking forward, we would expect the dividend to grow over time as earnings grow and consistent with our 40%-50% dividend payout ratio. When the capital ratio is at the upper end of a band, you can expect us to be active with the share buyback, which we have been through time, and over the last year and a half, we bought back about 2% of our outstanding stock. Our balance sheet strength extends to liquidity and funding. We have a strong customer base that underpins our balance sheet on the deposit side. Our deposit growth has been good, averaging 6% per year over each of the last three years, and that provides funding for our loan portfolio, and it reduces our wholesale funding. Wholesale funding is well diversified across markets, structures, currencies, and instruments, and we don't expect any significant change in our approach to wholesale funding with the introduction of bail-in funding or bail-in debt, and we expect to meet the 23% TLAC ratio that will come into effect in November of 2021. This slide shows our midterm financial targets. We're not changing the targets for the next year. We're recommitting to working on achieving those targets going forward, and the fact that we're not changing them reflects the belief that the targets have served us well over the last couple of years and will do so looking forward as well. Just to conclude, I want to reiterate some of the key messages. We do think the foundation of the bank is very strong. It's strong in a number of ways. Some of them are shown on the slide. We believe we have real differentiating strengths that will drive our performance going forward. As a company, we're looking to accelerate for growth and performance. There's a lot of energy in the company, and we hope that you've seen some of that here today. We're united as one bank and one team around a common, consistent strategy. With that, I would like to thank everyone for your engagement through the presentation part of the agenda so far. I'll invite Darryl and some of our colleagues up to the front for the Q&A. For those of you who are listening on the webcast, I would invite you to submit questions if you'd like through the portal that's available. Thank you. Am I mic'd up? Good. Yep, we're good. All right. With this collection of dark suits sitting right in front here, we are ready to rock. We are on time almost to the second right now. We have about 40 minutes allocated for Q&A. We do run a tight ship around here on the clock, so we will end at noon sharp if we are still going with questions. But that leaves us lots of time for a dialogue here, and if you don't need all of that time, that's fine, too. So we're in your hands for the next 40 minutes or so in the room as well as on the webcast. So we have technology to take questions on the webcast. They'll pop up on the screen here and Tom Flynn will triage there. In the room, what we'll do is if you just put up your hand, we have people who have microphones around the corners of the room. They'll run a microphone to you. If you can contain yourself, try and wait for the microphone before you ask your question because people on the webcast won't be able to hear your question if you don't have a microphone in your hand. So those are the rules. First hand is up in the back. I think it's Gabriel's. He's tall, his arm's long. He has- Thank you for noticing that. And forgive my voice. I'm sick. Tom, you had an interesting slide there of doubling our PCL would hit year-end net income by 10%. I think many of us on the sell side here have done analysis on sensitivities to higher loan losses. What about the capital impact? Do you have an outcome there from that scenario? I don't have a calculated number that I can give you off the top. But we were trying to illustrate two things with the double. Number one, a doubling of credit losses is not insignificant. It's a meaningful change. And number two, it only goes, and again, I'll say only a 10% change in income. On the capital side, a move from the current loss rate to 40 basis points would bring us to the long-term average. That would have some impact on RWA from a migration perspective, but it wouldn't be that significant. So, we'd be going to a cycle neutral level. There'd be some movement, but I would say not significant. Okay. Then the trend in the ROE, which has been a pretty good one for BMO. It should be in the slides there, but along with EPS growth, the ROE has rebounded back up close to the 15% target level. Does that embolden you, I guess, having achieved that in your future capital allocation decisions, specifically with regards to M&A, where you would be willing to take a step back on ROE with the confidence that you are going to rebuild that? Then maybe I could take a first crack at that, Gabriel. By the way, did you just say we did not have enough slides and we should have given them? Because we did not think so. I guess I would say that in general, our improved ROE performance over the last year or so has emboldened us. I do not think it necessarily says that it emboldens you towards M&A, in particular. It is emboldened us because it is validating what we said we were going to do. If you remember about a year ago, we started talking pretty actively about getting on our efficiency agenda in an accelerated way and building on the growth head of steam that we had in the U.S. And I think you saw some of that come through today. Those two factors, among others, have really driven the ROE growth that you saw and that you have seen us post in the last couple of quarters. As we think about the world going forward, we look at, as I said, on many of the calls, we look at M&A opportunities, but the priority is organic growth. We do not feel compulsion on M&A. We feel like we are equipped, we are ready to go if the right thing comes along. But we do not feel a compulsion, and our priority is always on the organic growth and to continue to deliver that ROE that you saw from that perspective. Over here. Hi, Evan Yusko with 1832 Asset Management. A question for Tom. Tom, we have seen the first bail-in debt issuance. Could you give us your updated thoughts with regards to timing and other considerations as BMO prepares to issue their first bail-in debt? Sure. We have seen bail-in debt come to the Canadian market. The regulatory regime is in place. We have had one transaction. We would expect to be active with bail-in ourselves in the first quarter. Going forward, obviously our senior debt will take the form of bail-in debt. I would say from our perspective, the introduction of the new structure has gone very smoothly. There was a lot of consultation around the design of the debt. The market, I think, was ready for the product when it came in. We have had the one transaction, it went well. In the market now, bail-in debt is pricing 10 to maybe 15 basis points above where our senior debt would have traded before. Our hope is that we will tighten in a little bit through time as the market gets fully comfortable with the structure. I think not a big change all in all. A slight uptick in price, but very slight, and the market receptivity has been good for the product. Sorry, just to verify, is that 1 Q calendar or bank fiscal year? Bank fiscal. We will take one more in the room and then we will jump to one or two on the webcast, and we will come back to the room. That one over here. Sumit. Hi, mate. It's Sumit from Scotia. My questions are going to be for Ernie, so move over here so you can see me. Consumer or personal loan growth in the U.S., sorry, choked up a bit. It's been a slow growth proposition for BMO basically since the M&I deal, and you're certainly giving us a much more optimistic outlook for a couple of the components. Specifically in your view, what has changed in terms of your consumer platform? When you talk about non-resi real estate, what are the key drivers for that portfolio going forward? The second part of it, I think your revenue growth target is double what you've expected or what you've forecast for loans. It sounds like you think there's still more margin expansion to come. The market in the U.S. doesn't seem to be so sure of that for regional banks. Am I right on that it's basically margin that's going to make up that difference for you in terms of revenue? Yeah, great question. It's a mix shift that is accountable for the shift in the growth in revenue. As you think about the growth that we've had historically has been in the mortgage business, which has a lower spread overall for the business. As we think about growing credit cards at the current spreads, and we have a great opportunity in our franchise because we're under-penetrated versus what our regional competitors do, and so we see that as an opportunity. As we think about getting back into the indirect auto business, as you recall, we made a sale a few years ago. We are now in the market in a way that's optimizing what I would say price and risk/reward optimization. That's been fundamentally growing. We've been growing spreads in our indirect auto business over the past few quarters. As you think about a mix between credit card, you think about cross-selling our home equity into our portfolio and our indirect auto business as well as some unsecured, that's really going to accelerate our revenue trajectory going forward. The shift in mortgages is a really important one for us. We're in the mortgage business, and we're doing it in a more centralized, optimized manner as well. Okay, I'll take a question from the webcast. It's a question related to our commercial business. Dave, maybe you want to lead on this, and anyone else can join. The question is, what's our outlook for commercial real estate lending from both a growth and a credit perspective in Canada and in the U.S.? Okay, I'll start. I would say, let's take Canada first. We're less than at the market vis-à-vis some of our other banks in commercial real estate. We think it's a great business for us, and we've done extremely well, and we've been pretty conservative. Interesting that you and I had dinner last night with one of our clients, and this will weigh in. So there's a real estate side and half of this business is in Canada and half of this business is the U.S. We asked him where would he invest today if he had a dollar, and he was probably moving a little bit more to the U.S., maybe 60/40. Our business in the U.S. is, as you saw that page with all the white space, we've had a lower-than-scale real estate business over time. We've drastically changed it to deal with much larger institutions where we would have lower loan-to-value. That's been very positive. We have a lot of room to grow, and it's on both sides of the border. We feel very confident in the sponsors we're working with, the locations they're going after. The only area that we have very little exposure, particularly in the U.S., is in retail, and that's been a decided position for a number of years. So I feel good about it. I think there's room to grow, and I do not see any near-term downturn that would impact how we would run our business. That's my view. Comments from Riff, Cam, anybody else in the room? Do you want to take one more from the webcast and then we'll- Sure. We'll take one more. It's a multi-part question, and it's a little bit tricky, but the question relates to relationship pricing. You've heard us talking about how we want to deliver a one bank impact to our customers, and if we're doing business with someone in banking, we'd like to get their wealth business. So the question goes to what that means from a pricing perspective. The question relates to how we look at relationship pricing when we're looking at the total client relationship, and if we have a strong relationship on one side of the house, does that mean we would price below the market in another piece of business that we would do with that client? So that question goes to wealth, goes to banking, probably goes to Capital Markets as well. But go ahead, Joanna. I can kick it off, and others can chime in. I'd start off by saying when we think about pricing, before we get into relationship pricing, hopefully one of the themes you've taken from the conversation today is we are disciplined when it comes to pricing. So whether it's a credit we're looking at or an investment management relationship or otherwise, we really take into account a number of factors to make a very disciplined decision in the risk-based return that we'll achieve. As it relates to our clients overall, as you can appreciate, some of the comments that we've heard from our clients over time, many of which may be franchise clients of the bank or standalone prospects that we would like to be franchise clients. They want us to think about the total relationship value that they bring to us. In many cases, that can extend all the way from a, let's say, a multinational Capital Markets relationship to the personal wealth of that client. Increasingly, when we come to market together, whether it's with an existing relationship where we don't have one part of the relationship or if we're going to market together, we try to think about the total picture of the client. Again, reflecting on some of the other comments, we also try to use as much data as we can to back the decisions that we make. So increasingly, we do believe that relationship pricing is going to be a natural feature, something our clients naturally are expecting, and something you would expect of an industry leader. Again, I would say this would be obviously taking into expectation the full return-based expectation we would normally have, but giving our clients a full and consolidated chance to have a relationship. I do believe it would play out a little differently depending on the relationship and other factors, as well as within wealth management, we would be looking at the same. Anybody else want to comment on that? The only thing I would say is we're always in a better position when the clients are asking for more opportunities. Giving the relationship pricing almost always makes sense because we're just getting more of their wallet, and we work pretty closely across the businesses to make sure that if Glen gives it up sometime or I give it up or somebody can. It works out in the wash, and because we're trying to grow the overall business, this is the best thing you can have is when a client says, "Well, what if I bring some more business with? Cam? Yeah, when I think about it from a banking point of view, we've always had a relationship focus, and one of the things when you've had the technology tools activated, we actually see a full client relationship now. When we look at that relationship, we look at it over time as opposed to transactional. It's actually over a year, over three years, over five years. What you'll find is that by having a better relationship with the client, looking at our total cost of production, if you like, their cost of service, if we can add incremental revenue to it, ironically, we actually make more money. In the relationship pricing, you could say, okay, you've offered a discount if you look at it in a little box. But if you look at it on a big relationship with lots of relationship horsepower, we actually turn out to be our best relationships with the highest return. And it is really a multi-product solution set that we offer on the long term, and it has turned out very well for us. Back to the room. Meny? Sorry to make you wait for a mic. It is important. Thanks. It is Meny from Cormark. When I was looking at the map that you showed of the U.S., what struck me was specifically in the commercial and on the wealth side, that you are really breaking out of the Midwest and moving to, I think you called it the white spaces, the rest of the country in a more significant way. But the question is: when it comes to the branch network, and that is very much still Midwest constrained, what is your appetite for taking the branch network more across the U.S. and the retail business in general? Maybe I will start, Meny, on this, and Ernie might have something to say, and Dave might have something to say. I just want to make sure that we are level set. When we showed you the map on the U.S. We tried to animate it so that you could see how we think about the business. We talked first about what we call our core commercial markets, and those are the ones where I think you heard Dave say that the GDP of those markets where we are already well-represented, flag is flying, technology is in place, risk management is in place, salesforce is in place. Those markets represent about 14% of U.S. GDP, so bigger, way bigger than Canada right there. Then what you are referring to is we talk about our growth markets. We have got commercial operations, we have got Capital Markets operations, we have got wealth operations outside of those markets. Maybe not completely full service, but we're there, and those operations are following each other. Meaning you'll hear our wealth people, Joanna Rotenberg and the folks who work with Joanna in the United States will say, when our commercial bankers go to a market like Ohio or Georgia or Texas, our wealth people go with it. So that's the second ring, if you could think about it that way. Where you're going is, what about the retail branch footprint? Ernie Johannson talked about 200 branches that are outside of that first circle, and so we're in a lighter branch footprint there. When we think about the deposit gathering capability as we go out, let's talk about 3 years or 5 years here. I think we would say outside of those branch footprints, we're more likely to see increased commercial deposit gathering and more likely to see wealth deposit gathering and more likely to see digital deposit gathering as we ramp up our digital than we are to see more branches in more places outside of that footprint. I say all that, then I'll say never say never, because if we looked at something that was very attractive for a whole bunch of reasons and came with a really attractive branch footprint, then we might see ourselves target that as well, but we wouldn't do it for a branch sake. Would you guys have anything to add to that, Dave Casper, Ernie? The only comment I would make is that even as we're growing our digital deposit strategy and those lighter branch footprints, we're going to be attracting new customers into our franchise that allow us then at some point to potentially launch a smart branch in a neighborhood because we've attracted so many customers in that space to be able to enhance the cross-sell capability. Our first and foremost strategy would be to leverage what we have today, use the digital capabilities, and if necessary, add new customers coming to the franchise in those places. Any in the room? We have a couple, our left, your right. There are 2 hands up over here if we could run some mics over. We'll get the mic first, get you to speak first. Oh, great. I got the mic first here. Nigel D'Souza, Veritas Investment Research. The Bank of Canada just today announced that they will hike for the Bank of Canada rate and came out with a more hawkish tone than expected on monetary policy, stating that they expect to remove monetary stimulus from the economy. First reactions and does a tightening monetary policy, how does that impact your outlook for growth for credit risk across any of those business segments? Tom might have a perspective on the rate increase itself. Cam might as far as the housing. Could I get that, too? We've been pretty busy delivering these presentations. The Bank of Canada, when you say more hawkish, did they delete the reference to gradual, or how did it come out more hawkish? That's correct. There was a removal of the reference to gradual in the most recent commentary. Yeah. You've seen in the last bit, the rising rate environment has been good for our bank. It's been good for most banks. When we look at it, we consider the impact on our pricing, and you'll see that as the days roll forward. I think fundamentally what's important to think about when you look at the Bank of Canada is the underlying economy. If they've removed the reference to gradual because of the hawkishness, it's coming with some level of confidence in the underlying Canadian economy, and we're feeling that. We're feeling that in our small business banking and our commercial banking and our Capital Markets banking. Overall, the real economy, the underlying economy that's driving these rate decisions is what's driving the profitability of the bank and our strategy. That's the most important factor when we talk about rates in particular. Yeah, I'll add a little bit on rates. I would say we're happy with that increase. Number one, we think it makes sense given what we see in the economy. Economy's doing well. Rates are relatively low. It's good to take away the stimulus and to have more powder for when that might be needed. The approach makes sense to us. Secondly, we do benefit from higher interest rates. We benefit on the short end, and we benefit from higher five-year rates. I'd say we've been pleased with the moves that have occurred in the U.S., and we welcome the move today in Canada, and we're happy to see the market rates move up around the five-year area over the last little while. Just to put a few numbers on that, people kind of naturally because it gets the press focused on the move in the administered rates from the Fed and Bank of Canada. The sensitivity there is real. You've seen it flowing through in the U.S. business. But the sensitivity that comes through time from higher five-year rates is very significant. What happens is we effectively have like a five or six-year bond ladder that rolls in and reprices. As our assets in that bond ladder mature, we reprice at higher rates. Over time, that can be very significant and will provide, we think, a real tailwind to our revenue. When you look at the deposits and the capital that we reprice in that kind of way, it's about CAD 135 billion. That's a big number to put higher rates on, and we think will benefit us. There's lots of natural debate about whether higher rates will cause pressure on credit with a good underlying economic performance, as Darryl talked about, low unemployment. We don't think that's something that's of immediate concern. The economy feels good, higher rates make sense, and we see it flow through in a positive way in the financials. I still would just add that given the overall health that Tom laid out, I don't think there's a near-term particular concern. We also know that from our book, probably least exposed to whatever that might be in the near and medium term, and the strategy that I laid out earlier is quite well aligned to some moderation in the performance of that business from a growth perspective. I think very limited risk in the near term and good opportunities for growth from the otherwise healthy bits of the economy. There were other hands up in this corner here. Thanks. Steve Carroll from Eight Capital. Some pretty positive messages on the deposit franchise in the U.S., but there was lots of hand-wringing through U.S. bank reporting season around the rotation out of non-interest-bearing deposits. Maybe you can just talk a little bit about what you're seeing in the context of your businesses, and is this clawing back some of your outlook or expectations for margin expansion? Sure. I can take that one. A couple of things. We think of our deposit capabilities as a portfolio. There's a couple of things that we are very focused on. Obviously, originating new customers to our franchise and we're growing. We're supporting our core checking account and savings. We've been seeing stability in our savings business, which is important, and in our checking business. We are starting to see some movement from some of our products from a money market into a CD right now is what we're seeing in terms of a migration within the portfolio. We're seeing more pricing competition, no question about that. We're looking at how do we diversify the play in the portfolio and take advantage of opportunities in certain markets where we think we can price differently into different customer segments. Generally, macro statement, you'd say that there is more of a shift in terms of giving back to the customer, more of an increase. But it's managing that portfolio, and that's what our plans are and have been, and we've been doing that quite effectively. Just to add on the commercial side, as you recall, we're underweight commercial deposits in the U.S. versus retail, and we're overweight the loans commercial. But on the commercial deposits, we're up overall. There absolutely has been a shift, and we would expect new commercial clients, they watch the sophisticated treasurers. They're going to expect from their bank, and we would do that we would pay up and there would be a change over time. What we've seen, though, and what we've been successful at is gathering. We always have the deposits of our commercial clients where they are running all their cash through us. We're their cash management bank. That's good business for us. Also, we don't always have, but we have been more aggressive in getting the excess cash from those clients and from prospects. So that would also help those. That'll build our deposits, but it would make a little bit more into spend. It's what you would expect in a rising rate environment. It's not a big surprise for us, and we want to always stay competitive but have the full relationship with those clients as well. Does that help? We had another hand up a moment ago over here. I don't see it currently. Coming back around. Gabriel, then Rob. A couple follow-ups here on the businesses. In the commercial bank in the U.S., the loan growth we've seen has been really, really strong, and thankfully doesn't look to be a one trick pony driven by commercial real estate. But to play devil's advocate, I see pretty much all the U.S. banks generating sub 5% commercial growth. They're talking about intensification of competition from non-banks and what have you. So why shouldn't I be worried about seeing growth like the kind you're delivering in the commercial loan book, and why should I be comfortable with it? I mean, it's just to play devil's advocate. No, that's a great question and one that I think we address every day. We're not worried, but we're always watching to see that. We've got a couple of things. Very diversified. Our real estate business is less than 10%, and a lot of the banks are a lot larger, so they're pushing back. What we've done though, and what we've tried to show is in these specialty businesses, and when we talk about them, asset-based lending is a good example. Our floor plan business is another good example. As we've grown, we've gotten to scale. We kind of caught up with other banks. These are businesses too that have underlying assets behind them. So when there is a downturn, you still have the asset. You have a truck. You have receivables and inventory. So these are businesses that have very low losses given default. Where we haven't grown specifically in any major ways in the riskiest businesses we have. We have them, but they're a small part. So I feel real good about it. I feel that when I do see and I watch all the U.S. reporting, and I see lots of things that people talk about. We have paydowns every quarter. We compete with all the non-banks. But I think we found a way, and I will point back to this group over here, of not competing on risk, presenting a good long-term value, and growing over the long term. That's the message we have. We started this in 2010 to say this is going to be a good business in the U.S. and we should double down to grow it. So I feel very good about it. And we had low losses. They'll go up at some point, but I do not feel that we are creating a big problem. Gabriel, I would just add before we go to Rob, unless you have I have a follow-up on that. I am going to follow up on the follow-up. I would just add in a way that perhaps Dave won't, that we are really, really good at this business. When we look at our commercial franchise and the DNA that has been built up effectively over the course of 35 years. This business, we think, by the way, there is a little bit of sketchy data on this, but when you look at the commercial definition of the traditional definition of the commercial market, BMO is the seventh largest commercial lender in the U.S., and I think we are the second largest commercial lender in Canada. When you put it together in North America, we are inside of seven. We do not take a backseat to anybody in terms of our relationship capability. Yet, the reason I think it is a sweet spot is that while we are the seventh largest commercial lender in the U.S., we still have low aggregate market share. We have got really leading capabilities and ability to beat anybody in a street fight or in a boardroom to get the business, but we have a low market share. So we are taking share, and we are taking it from folks who are pretty good competitors, and Dave's team is doing a really good job with it. Okay. It is actually not a lot more complicated than that, but it is hard to get there. All right. Thanks for that. Next one, I guess, for Dan on the capital market side, also U.S.-related. The extension of the balance sheet has been a big part of that story, corporate lending. Just wondering, that's the backdrop, I guess. How do you see or what are the main drivers to get you from your 70%-plus efficiency ratio, your base to 60% or below your five-year target? Are you happy with the ancillary revenue generation that you've achieved with the top balance sheet that you put out there, or are you progressing ahead as normal, or are you reviewing the relationships? What's the progress like now? Well, I think you've answered my question, which is nice. The driver for us is going to be scale in a bunch of this, and the lending book is a really interesting one. If you remember sitting up here a few years ago, we would have told you we're a mid-market strategy. Mid-market really for us when we think about it, corporate versus commercial, was clients in the $100 million, $250 million, $500 million range. Then we stretched it to $2 billion, then to 5, and now we tell you we're stretching it to 10. What we're doing is we're increasing scale. One of the benefits of that is we're actually moving more into the investment grade than we were before. We had the crossover triple B as kind of a core strength, and now we're really stretching that quite a bit broader. We're doing bigger loans, we're doing it with better clients, higher credit quality clients. That's an underpinning. That business runs for us very similar to commercial, kind of in the mid-30s in terms of efficiency. Investment banking runs higher, trade runs higher. We get to a blend of businesses of what's going to bring us down. The second is when you think about us moving forward on terms of revenue growth, I made lots of references to scale. We put a lot of investment into the business. Regulatory is a great example where you have to have a core capability on AML to survive. That's a basic service offering. As you think about doubling your revenues from where we are, I don't need to double our regulatory scale anymore. I don't need to double the number of people we have in trading clients. I don't need to double the number of people we have in banking to double our share. I'm going to add share in lots of places, which really flows down into net income. If you think about it in the classic operating model, we're going to increase revenues faster than expenses. That's what we're going to do. In all places, we're going to be increasing our expenses, but just revenue will be faster. Rob, you were trying to get in. Thank you. It's Rob Sedran from CIBC. Cam, for you on the mortgage business, tangibly, I'm not concerned about risk in the answer, so feel free to go there if you like. It's more about growth. We know that the market has clearly slowed, and I think I saw the words aggressive on your slide in terms of adding sales staff. So a little bit more color on what you're hoping to achieve in what feels like late cycle in the housing market, at least from a growth perspective. Around the same issue, we've historically thought, and maybe we've overused the word anchor, but we've historically thought of the anchor product as the mortgage product. If that's not the anchor product anymore, what's the anchor product of tomorrow that's going to get you the million net new customers you're looking for? Perfect. Thank you. The first thing that I would say on the mortgage side, we made the participation choice seven, eight, nine years ago to not be part of the broker market. Everything we do, we originate by ourselves, and we are very limited participants in the third party presently as well. We start from that position that says we have a strong capability in this regard. We have a strong branch footprint. As you saw from the page, in terms of the number of mortgage specialists on the street we have right now, we've got a number that is in the 500 range. Obviously, you have FFNs and other folks in the branch who do this as well. That's a number that's meaningfully lower than our peer group. You put with that the fact that we have a wonderfully healthy book that we're super proud of and confident in, but it is smaller relative to the peers. To us, I think the fundamental point is that the opportunity is bigger. I would say that market's down 15-ish and in the 20s in GTA and GVA. But settling the rest of Canada market outside of those two things is relatively healthy and relatively well-balanced. We see there to be opportunities outside of the two big markets where we're strong but not performing as well as we could in this product. You're right to say that there can be other anchor products in terms of growth. When we think about our net million, we're pretty focused on primary, and for us, primary is checking, and specifically the checking where the relationship involves the deposit of the paycheck. A lot of our energy will go to ensuring that we can acquire checking accounts via digital In as high a quality way as we do via the branch channel. That specifically means doing more than one product when you do so to secure the relationship. But if you were to say, is there a co-anchor idea like the ones you met earlier on stage today? Mortgage and checking, I think, are reasonable ways to think about it. It is fair to assume, though, that the mortgage product is still part of that 1 million net new is taking share in the mortgage product. Yeah, I expect that we would take a little bit. Winning in that alone is not the ambition. We will be at or ahead of market, and I think you will see that in the next couple of quarters as we probably already are. But we are not looking to That is what we are looking to do. Probably have time for one more, maybe two, depending on the complexity of Sumit's question. Okay. I'll give it a shot. My question's actually for someone not on stage. That's Pat. Pat's over here. Is that right? Okay. Pat, first off, Surjit's doing a really good job as Chief Risk Officer. Surjit's over here. He is leaving when things are perfect, so he is- I could not agree more. Handing the baton over to you. As incoming Chief Risk Officer, you hear your commercial colleagues talking about double-digit growth. In U.S. personal, we are talking about increased growth in credit cards and auto, which historically have been higher loss rate products in the U.S. You are a markets guy. Equity market does not seem to be as sanguine about credit as most of the banks I talk to or hear from do. When you put all these things together, what are some of the factors as a Chief Risk Officer that you would look at, either qualitatively or quantitatively, to make you go to your colleagues and say, "We got to rethink some of these growth objectives that we put out to the market today. I will say for Surjit Rajpal, now you have me really worried about Chief Risk Officer. I would say, first of all, it is probably a little bit too early for me to answer the question. I can tell you a little bit of my philosophy going in, though. I think even though I am a markets guy by background, probably one of the things I am most proud of in my career is, amongst other people in the business, really building up a strong risk management capability in BMO Capital Markets. We have spent the better part of 5 to 10 years investing heavily in the risk infrastructure and the risk culture. That is the philosophy that I am bringing into the role, that that really is the foundation for all of the strategies that my colleagues are talking about. If we don't continue to invest heavily, continue to focus really deeply on a lot of the same risk metrics you're talking about, we're going to undermine the strategies of all of my colleagues. You can expect the same level of risk discipline. Secondly, I would simply point to my second strategy, which is a continuation, really, of what's been going on in the risk group so far. I think several of my colleagues have pointed to our track record over the past five years or so across all kinds of risk metrics, whether you look at PCLs, whether you look at our VaR stress exposure in the risk groups, our operational risk track record, our track record on regulatory reviews and audits. My primary goal in the first six to 12 months is going to be to maintain the stability of that group and continue the great risk management tradition that we've got right now. Over the course of time, I'll start to develop views along with the risk team about some of the key metrics that I want to look at to help underneath those strategies. I think it's too early for me to say which ones are going to be the drivers of my thought process. We've got a lot of great risk professionals on our bench before that happens. One thing I can tell you, and it might be a good place to end it, is that I've worked with Patrick for a very long time, and if there's anybody who has a great way of coming in either the front door or the back door and saying, "You probably shouldn't do that," it's Pat. He will do an excellent job in this role, and he'll follow a superb job that Surjit has done in making sure with his team, with a great team, that we're all taking care of the risks at the same time as we take care of the customers. We've got that at center ice as well. I don't see any other hands, so I'm going to do an attempt at wrapping up. We're going to get you out of this room before noon sharp, and I'd like to just leave you with a couple of thoughts. I was sitting listening to the presentations today thinking to myself, if I were in your shoes and you were to take away what's new, you'll formulate your own point of view on this. I was looking at the various commentary that we heard today. Some of the financial goals were new. We've been specific with respect to the achievement of the 58% in three years through the 2% of operating leverage. We've been specific with respect to the one-third from the U.S. We've been specific with respect to our spend on the technology agenda. On the technology agenda, the digital leadership that we talked to you about today, I said at the beginning, I thought might come as a bit of a surprise to some. You will see a few more surprises if you have got some time to join us. When you leave the room, we are going to serve lunch, and then keep going to your left. We have got quite a display of technology innovations that we have got going on in the digital side, including some robots that are wandering around that you can talk to and do some fun things with. I think there is a lot of exciting things from my perspective that are new on the digital agenda. When Luke was talking about the EI3 agenda, this is brand new. We got going on this only eight months ago, so we are really only ramping up speed towards the efficiencies that Luke was talking about, and that will be really productive for all of our employees, our customers, and our shareholders. The other thing that was particularly inspiring to me is as I watched the different groups perform what I like to think about as the One Bank, One Team, One Strategy, it was remarkable for me to hear Ray, a U.S. commercial banker, talking about trucking clients in the United States and our businesses in commercial talking about 53% increase in referral rates to wealth and 23% referral increases to Capital Markets. The list goes on and on as whether we are talking cross-border, cross-function, or cross-business, this is for real, and this is what is happening here. I would not say to you that that is brand new. We have been at this for quite a while, but I can say to you that I think we are at an inflection point where everybody is in it together and everybody has got a hand on the oar, and I am very proud of the work that we have done in that capacity. Before we wrap up, one shout-out. This has been a great session today. Thank you for all of your attention. As we think about our relationships with the investment community, analysts, shareholders, rating agencies, there is one person in the room that I did not give a shout-out to earlier, and that is Frank Techar. Frank is sitting in the front row. Frank, probably, if there were an award for somebody who has spent more time being an ambassador for this bank, probably went through 40 or 50 or 60 quarterly analyst calls where you heard his voice. You did not have the pleasure always of seeing a smiling face through the whole way. I just want to give a shout-out to Frank because Frank will be moving on to his retirement in 2019, and he has been the best partner to all of us that are up here, and he has been the best partner to the investment community as well. It just occurs to me that this may be the last time that he is here with all of you in person at the same time, so I would like to give Frank a hand. Afterwards, Frank is going to be sure to take us aside and tell us everything that we should have done better. That is good, too. My responsibility is to get you out of the room. For those of you who are here in the room, join us, as I said, for lunch and the tech showcase. You just keep following around to your left. For those of you on the webcast, thank you for joining us today. We are out of time. We look forward to talking to you all again soon. Take care.

Data Source: Quartr Last updated: Oct 24, 2018

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