bmo-20260731

Interim Consolidated Financial Statements

Consolidated Statement of Income


(Unaudited) (Canadian $ in millions, except as noted)	For the three months ended						For the nine months ended
	July 31,		April 30,		July 31,		July 31,		July 31,
	2026		2026		2025		2026		2025
Interest, Dividend and Fee Income
Loans	$	9,407	$	8,868	$	9,594	$	27,518	$	29,216
Securities (Note 2)	4,278		4,251		3,929		12,480		12,027
Securities borrowed or purchased under resale agreements	1,529		1,321		1,540		4,233		4,553
Deposits with banks	573		574		679		1,733		2,223
	15,787		15,014		15,742		45,964		48,019
Interest Expense
Deposits	6,211		5,938		7,008		18,397		22,400
Securities sold but not yet purchased and securities lent or sold under repurchase agreements	2,760		2,657		2,227		7,687		6,790
Subordinated debt	109		105		118		323		344
Other liabilities	1,140		1,046		893		3,079		2,494
	10,220		9,746		10,246		29,486		32,028
Net Interest Income	5,567		5,268		5,496		16,478		15,991
Non-Interest Revenue
Securities commissions and fees	325		323		286		964		849
Deposit and payment service charges	460		449		447		1,358		1,345
Trading revenues	850		883		406		2,599		2,027
Lending fees	358		327		327		1,025		1,013
Card fees	237		245		207		743		627
Investment management and custodial fees	741		676		589		2,095		1,719
Mutual fund revenues	463		420		376		1,304		1,092
Underwriting and advisory fees	500		504		453		1,430		1,248
Securities gains, other than trading (Note 2)	53		86		49		224		173
Foreign exchange gains, other than trading	81		86		65		243		203
Insurance service results (Note 5)	94		100		89		263		303
Insurance investment results (Notes 2 and 5)	66		51		29		193		85
Share of profit in associates and joint ventures	51		37		45		129		92
Other revenues	50		112		124		239		166
	4,329		4,299		3,492		12,809		10,942
Total Revenue	9,896		9,567		8,988		29,287		26,933
Provision for Credit Losses (Note 3)	722		739		797		2,207		2,862
Non-Interest Expense
Employee compensation	3,167		3,083		2,955		9,802		9,040
Premises and equipment	1,209		1,140		1,081		3,489		3,253
Amortization of intangible assets	302		296		278		892		862
Advertising and business development	269		194		198		643		582
Communications	86		85		82		252		263
Professional fees	176		152		172		496		459
Association, clearing and annual regulator fees	81		79		71		231		232
Other (Note 13)	1,388		301		268		1,956		860
	6,678		5,330		5,105		17,761		15,551
Income Before Provision for Income Taxes	2,496		3,498		3,086		9,319		8,520
Provision for income taxes (Note 11)	746		868		756		2,450		2,090
Net Income	$	1,750	$	2,630	$	2,330	$	6,869	$	6,430
Attributable to:
Bank shareholders	$	1,748	$	2,626	$	2,327	$	6,864	$	6,421
Non-controlling interest in subsidiaries	2		4		3		5		9
Net Income	$	1,750	$	2,630	$	2,330	$	6,869	$	6,430
Earnings Per Common Share (Canadian $) (Note 10)
Basic	$	2.38	$	3.54	$	3.14	$	9.33	$	8.48
Diluted	2.38		3.53		3.14		9.30		8.47
Dividends per common share	1.71		1.67		1.63		5.05		4.81

The accompanying notes are an integral part of these interim consolidated financial statements.

BMO Financial Group Third Quarter Report 2026 43

Interim Consolidated Financial Statements

Consolidated Statement of Comprehensive Income


(Unaudited) (Canadian $ in millions)	For the three months ended						For the nine months ended
	July 31,		April 30,		July 31,		July 31,		July 31,
	2026		2026		2025		2026		2025
Net Income	$	1,750	$	2,630	$	2,330	$	6,869	$	6,430
Other Comprehensive Income (Loss), net of taxes
Items that will subsequently be reclassified to net income
Net change in unrealized gains (losses) on fair value through OCI debt securities
Unrealized gains (losses) on fair value through OCI debt securities arising during the period (1)	28		(61)		178		170		161
Reclassification to earnings of (gains) during the period (2)	(10)		(22)		(11)		(43)		(32)
	18		(83)		167		127		129
Net change in unrealized gains (losses) on derivatives designated as cash flow hedges
Gains (losses) on derivatives designated as cash flow hedges arising during the period (3)	(392)		(798)		(1,051)		(1,759)		142
Reclassification to earnings of losses on derivatives designated as cash flow hedges
during the period (4)	196		189		272		558		797
	(196)		(609)		(779)		(1,201)		939
Net gains (losses) on translation of net foreign operations
Unrealized gains (losses) on translation of net foreign operations	2,053		(21)		282		101		(311)
Unrealized gains (losses) on hedges of net foreign operations (5)	(660)		8		(74)		(120)		132
	1,393		(13)		208		(19)		(179)
Items that will not be subsequently reclassified to net income
Net unrealized gains (losses) on fair value through OCI equity securities arising during the period (6)	(5)		39		–		31		(11)
Net gains on remeasurement of pension and other employee future benefit plans (7)	157		64		55		277		49
Net gains (losses) on remeasurement of own credit risk on financial liabilities
designated at fair value (8)	(44)		292		(313)		6		(255)
	108		395		(258)		314		(217)
Total Other Comprehensive Income (Loss), net of taxes	1,323		(310)		(662)		(779)		672
Total Comprehensive Income	$	3,073	$	2,320	$	1,668	$	6,090	$	7,102
Attributable to:
Bank shareholders	$	3,071	$	2,316	$	1,665	$	6,085	$	7,093
Non-controlling interest in subsidiaries	2		4		3		5		9
Total Comprehensive Income	$	3,073	$	2,320	$	1,668	$	6,090	$	7,102

(1)Net of income tax (provision) recovery of $(11) million, $22 million, $(66) million for the three months ended and $(62) million and $(61) million for the nine months ended, respectively.

(2)Net of income tax provision of $4 million, $8 million, $3 million for the three months ended and $15 million and $11 million for the nine months ended, respectively.

(3)Net of income tax (provision) recovery of $148 million, $302 million, $409 million for the three months ended and $671 million and $(41) million for the nine months ended, respectively.

(4)Net of income tax (recovery) of $(74) million, $(71) million, $(102) million for the three months ended and $(212) million and $(301) million for the nine months ended, respectively.

(5)Net of income tax (provision) recovery of $254 million, $(3) million, $28 million for the three months ended and $46 million and $(51) million for the nine months ended, respectively.

(6)Net of income tax (provision) recovery of $nil million, $(4) million, nil million for the three months ended and $(3) million and $4 million for the nine months ended, respectively.

(7)Net of income tax(provision) of $(60) million, $(25) million, $(22) million for the three months ended and $(106) million and $(19) million for the nine months ended, respectively.

(8)Net of income tax (provision) recovery of $16 million, $(112) million, $118 million for the three months ended and $(3) million and $96 million for the nine months ended, respectively.

The accompanying notes are an integral part of these interim consolidated financial statements.

44 BMO Financial Group Third Quarter Report 2026

Interim Consolidated Financial Statements

Consolidated Balance Sheet


(Unaudited) (Canadian $ in millions)	As at
	July 31,		October 31,
	2026		2025
Assets
Cash and Cash Equivalents	$	74,086	$	67,484
Interest Bearing Deposits with Banks	3,200		2,838
Securities (Note 2)
Trading	204,818		192,303
Fair value through profit or loss	23,760		21,354
Fair value through other comprehensive income	137,070		113,209
Debt securities at amortized cost	92,978		96,610
	458,626		423,476
Securities Borrowed or Purchased Under Resale Agreements	109,018		129,421
Loans (Note 3)
Residential mortgages	196,924		196,033
Consumer instalment and other personal	94,269		92,741
Credit cards	12,041		12,649
Business and government	398,508		380,788
	701,742		682,211
Allowance for credit losses (Note 3)	(5,247)		(5,050)
	696,495		677,161
Other Assets
Derivative instruments	67,997		57,151
Customers’ liability under acceptances	1,432		711
Premises and equipment	6,331		6,252
Goodwill	16,086		16,797
Intangible assets	5,158		4,758
Current tax assets	1,965		1,970
Deferred tax assets	3,162		2,732
Receivable from brokers, dealers and clients	45,928		43,167
Other	49,201		42,884
	197,260		176,422
Total Assets	$	1,538,685	$	1,476,802
Liabilities and Equity
Deposits (Note 4)	$	1,017,834	$	976,202
Other Liabilities
Derivative instruments	69,597		58,729
Acceptances	1,432		711
Securities sold but not yet purchased	51,098		54,876
Securities lent or sold under repurchase agreements	124,983		134,967
Securitization and structured entities’ liabilities	62,911		51,562
Insurance-related liabilities (Note 5)	21,300		20,436
Payable to brokers, dealers and clients	50,945		45,170
Other	44,517		37,549
	426,783		404,000
Subordinated Debt (Note 4)	7,495		8,500
Total Liabilities	1,452,112		1,388,702
Equity
Preferred shares and other equity instruments (Note 6)	7,706		8,956
Common shares (Note 6)	23,473		23,359
Contributed surplus	403		373
Retained earnings	47,734		47,377
Accumulated other comprehensive income	7,207		7,986
Total shareholders’ equity	86,523		88,051
Non-controlling interest in subsidiaries	50		49
Total Equity	86,573		88,100
Total Liabilities and Equity	$	1,538,685	$	1,476,802

The accompanying notes are an integral part of these interim consolidated financial statements.

BMO Financial Group Third Quarter Report 2026 45

Interim Consolidated Financial Statements

Consolidated Statement of Changes in Equity


(Unaudited) (Canadian $ in millions)	For the three months ended				For the nine months ended
	July 31,		July 31,		July 31,		July 31,
	2026		2025		2026		2025
Preferred Shares and Other Equity Instruments (Note 6)
Balance at beginning of period	$	7,706	$	7,787	$	8,956	$	8,087
Issued during the period	–		1,369		–		1,369
Redeemed during the period	–		–		(1,250)		(300)
Balance at end of period	7,706		9,156		7,706		9,156
Common Shares (Note 6)
Balance at beginning of period	23,537		23,730		23,359		23,921

Issued under the Stock Option Plan	64		30		161		101
Treasury shares (purchased)	–		(8)		–		(1)
Purchased for cancellation	(128)		(198)		(528)		(467)
Issued for acquisition (Note 13)	–		–		481		–
Balance at end of period	23,473		23,554		23,473		23,554
Contributed Surplus
Balance at beginning of period	390		367		373		354
Stock option expense, net of options exercised	9		5		30		10
Net premium (discount) on sale of treasury shares	4		(4)		–		4

Balance at end of period	403		368		403		368
Retained Earnings
Balance at beginning of period	48,053		47,158		47,377		46,469
Net income attributable to bank shareholders	1,748		2,327		6,864		6,421
Dividends on preferred shares and distributions payable on other equity instruments	(81)		(66)		(301)		(273)
Dividends on common shares	(1,192)		(1,165)		(3,541)		(3,475)
Equity issue expense	–		(4)		–		(4)

Common shares purchased for cancellation (Note 6)	(794)		(696)		(2,665)		(1,584)
Balance at end of period	47,734		47,554		47,734		47,554
Accumulated Other Comprehensive Income (Loss) on Fair Value through OCI Securities, net of taxes
Balance at beginning of period	56		(370)		(89)		(321)
Unrealized gains on fair value through OCI debt securities arising during the period	28		178		170		161
Unrealized gains (losses) on fair value through OCI equity securities arising during the period	(5)		–		31		(11)
Reclassification to earnings of (gains) during the period	(10)		(11)		(43)		(32)
Balance at end of period	69		(203)		69		(203)
Accumulated Other Comprehensive (Loss) on Cash Flow Hedges, net of taxes
Balance at beginning of period	(478)		199		527		(1,519)
Gains (losses) on derivatives designated as cash flow hedges arising during the period	(392)		(1,051)		(1,759)		142
Reclassification to earnings of losses on derivatives designated as cash flow hedges during the period	196		272		558		797
Balance at end of period	(674)		(580)		(674)		(580)
Accumulated Other Comprehensive Income on Translation of Net Foreign Operations, net of taxes
Balance at beginning of period	5,366		5,994		6,778		6,381
Unrealized gains (losses) on translation of net foreign operations	2,053		282		101		(311)
Unrealized gains (losses) on hedges of net foreign operations	(660)		(74)		(120)		132
Balance at end of period	6,759		6,202		6,759		6,202
Accumulated Other Comprehensive Income on Pension and Other Employee
Future Benefit Plans, net of taxes
Balance at beginning of period	1,131		868		1,011		874
Gains on remeasurement of pension and other employee future benefit plans	157		55		277		49
Balance at end of period	1,288		923		1,288		923
Accumulated Other Comprehensive (Loss) on Own Credit Risk on Financial Liabilities
Designated at Fair Value, net of taxes
Balance at beginning of period	(191)		62		(241)		4
Gains (losses) on remeasurement of own credit risk on financial liabilities designated at fair value	(44)		(313)		6		(255)
Balance at end of period	(235)		(251)		(235)		(251)
Total Accumulated Other Comprehensive Income	7,207		6,091		7,207		6,091
Total Shareholders’ Equity	86,523		86,723		86,523		86,723
Non-Controlling Interest in Subsidiaries
Balance at beginning of period	47		38		49		36

Net income attributable to non-controlling interest in subsidiaries	2		3		5		9
Dividends to non-controlling interest in subsidiaries	–		–		(3)		(3)
Other	1		1		(1)		–
Balance at end of period	50		42		50		42
Total Equity	$	86,573	$	86,765	$	86,573	$	86,765

The accompanying notes are an integral part of these interim consolidated financial statements.

46 BMO Financial Group Third Quarter Report 2026

Interim Consolidated Financial Statements

Consolidated Statement of Cash Flows


(Unaudited) (Canadian $ in millions)	For the three months ended				For the nine months ended
	July 31,		July 31,		July 31,		July 31,
	2026		2025		2026		2025
Cash Flows Provided by (Used in) Operating Activities
Net Income	$	1,750	$	2,330	$	6,869	$	6,430
Adjustments to determine net cash flows provided by operating activities:
Securities (gains), other than trading (Note 2)	(53)		(49)		(224)		(173)
Depreciation of premises and equipment	253		252		752		750
Depreciation of other assets	2		3		5		10
Amortization and impairment of intangible assets	303		279		905		864
Net loss on divestitures (Note 13)	1,087		–		1,104		–
Provision for credit losses (Note 3)	722		797		2,207		2,862
Deferred taxes	(322)		(77)		(437)		159
Share of (profit) in associates and joint ventures	(51)		(45)		(129)		(92)
Changes in operating assets and liabilities:
Trading securities	7,728		(503)		(12,332)		(5,873)
Derivative assets	(2,248)		5,813		(1,799)		5,031
Derivative liabilities	1,771		(6,464)		2,205		(8,651)
Current income taxes	183		(683)		290		(513)
Accrued interest receivable and payable	(474)		(498)		(580)		(913)
Insurance-related liabilities	179		(466)		864		102
Brokers, dealers and clients receivable and payable	(1,425)		3,748		3,024		1,532
Other items and accruals, net	269		3,513		(2,913)		814
Deposits	33,835		(5,457)		41,544		(26,862)
Loans	(8,990)		(929)		(21,242)		(2,930)
Securities sold but not yet purchased	(13,080)		(2,155)		(3,899)		16,480
Securities lent or sold under repurchase agreements	(3,846)		7,349		(9,918)		16,378
Securities borrowed or purchased under resale agreements	11,079		(8,416)		20,177		(17,687)
Securitization and structured entities’ liabilities	(1,932)		(2,548)		11,191		9,755
Net Cash Provided by (Used in) Operating Activities	26,740		(4,206)		37,664		(2,527)
Cash Flows (Used in) Financing Activities
Net increase (decrease) in liabilities of subsidiaries	(2,049)		(504)		4,768		(1,219)
Proceeds from issuance of subordinated debt (Note 4)	–		–		–		1,250
Repayment of subordinated debt (Note 4)	(1,000)		(1,250)		(1,025)		(1,250)

Proceeds from issuance of preferred shares, net of issuance costs (Note 6)	–		1,365		–		1,365
Redemption of preferred shares (Note 6)	–		–		(1,250)		(300)
Net proceeds from issuance of common shares (Note 6)	57		27		145		91
Net sale (purchase) of treasury shares	4		(12)		–		3
Common shares repurchased for cancellation (Note 6)	(905)		(877)		(3,133)		(2,013)
Cash dividends and distributions paid	(1,309)		(1,293)		(3,887)		(3,800)
Cash dividends paid to non-controlling interest	–		–		(3)		(3)
Repayment of lease liabilities	(96)		(98)		(275)		(236)
Net Cash (Used in) Financing Activities	(5,298)		(2,642)		(4,660)		(6,112)
Cash Flows Provided by (Used in) Investing Activities
Interest bearing deposits with banks	229		(978)		(357)		(546)
Purchases of securities, other than trading	(26,393)		(12,590)		(64,296)		(47,965)
Maturities of securities, other than trading	7,556		5,639		18,694		31,021
Proceeds from sales of securities, other than trading	6,453		8,221		21,430		21,332
Net purchases of premises and equipment and software	(572)		(405)		(1,432)		(1,230)
Acquisition (Note 13) (1)	–		–		(48)		–

Net Cash Provided by (Used in) Investing Activities	(12,727)		(113)		(26,009)		2,612
Effect of Exchange Rate Changes on Cash and Cash Equivalents	1,549		186		(393)		(484)
Net increase (decrease) in Cash and Cash Equivalents	10,264		(6,775)		6,602		(6,511)
Cash and Cash Equivalents at Beginning of Period	63,822		65,362		67,484		65,098
Cash and Cash Equivalents at End of Period (2)	$	74,086	$	58,587	$	74,086	$	58,587
Supplemental Disclosure of Cash Flow Information
Net cash provided by operating activities includes:
Interest paid in the period (3)	$	10,530	$	10,856	$	29,689	$	32,956
Income taxes paid in the period	553		1,086		1,912		2,392
Interest received in the period	15,298		15,396		44,110		46,316
Dividends received in the period	433		521		1,795		1,884

(1) This amount is net of $13 million cash and cash equivalents acquired as part of the acquisition of Burgundy Asset Management Ltd. (Burgundy) for the nine months ended July 31, 2026.

(2) We are required to maintain reserves or minimum balances with certain central banks, regulatory bodies and counterparties, totalling $61 million as at July 31, 2026 ($108 million as at October 31, 2025).

(3) Includes dividends paid on securities sold but not yet purchased.

The accompanying notes are an integral part of these interim consolidated financial statements.

Certain comparative figures have been reclassified to conform with the current period’s presentation.

BMO Financial Group Third Quarter Report 2026 47

Notes to Interim Consolidated Financial Statements

July 31, 2026 (Unaudited)

Note 1: Basis of Presentation

Bank of Montreal (the bank or BMO) is a chartered bank under the Bank Act (Canada) and is a public company incorporated in Canada. We are a highly diversified financial services company, providing a broad range of personal and commercial banking, wealth management and investment banking products and services. The bank’s head office is at 129 rue Saint Jacques, Montreal, Quebec. Our executive offices are at 100 King Street West, 1 First Canadian Place, Toronto, Ontario. Our common shares are listed on the Toronto Stock Exchange (TSX) and the New York Stock Exchange.

These condensed interim consolidated financial statements have been prepared in accordance with International Accounting Standard (IAS) 34, Interim Financial Reporting as issued by the International Accounting Standards Board (IASB) using the same accounting policies as disclosed in our annual consolidated financial statements for the year ended October 31, 2025, except as outlined below. These condensed interim consolidated financial statements should be read in conjunction with the notes to our annual consolidated financial statements for the year ended October 31, 2025. We also comply with interpretations of International Financial Reporting Standards (IFRS) by our regulator, the Office of the Superintendent of Financial Institutions (OSFI). These interim consolidated financial statements were authorized for issue by the Board of Directors on August 25, 2026.

Use of Estimates and Judgments

The preparation of the interim consolidated financial statements requires management to make estimates and judgments that affect the carrying amounts of certain assets and liabilities, certain amounts reported in net income and other related disclosures.

The most significant assets and liabilities for which we must make estimates and judgments include the allowance for credit losses (ACL); financial instruments measured at fair value; pension and other employee future benefits; impairment of securities and investments in associates and joint ventures; income taxes and deferred tax assets; goodwill and intangible assets; insurance contract liabilities; provisions including legal proceedings and severance charges; transfers of financial assets and consolidation of structured entities. We make judgments in assessing the business model for financial assets as well as whether substantially all risks and rewards have been transferred in respect of transfers of financial assets and whether we control structured entities. If actual results were to differ from the estimates, the impact would be recorded in future periods.

The economic outlook is subject to several risks that could impact the North American economy. The most immediate threat is a further escalation of the Iran war and a prolonged closure of the Strait of Hormuz, which would sharply increase energy and transportation costs. In addition, Canadian businesses face longer-term risks if the renegotiation of the United States-Mexico-Canada Agreement (USMCA) is unsuccessful, as significant tariffs could then apply to most goods exported to the U.S., potentially leading to a recession in Canada. Even under a successful renegotiation of the USMCA, some tariffs are likely to remain in place, though government measures to promote investment in energy and resource projects could provide some offsetting support to the economy. Additional risks include a potential escalation of the Russia-Ukraine war and the possibility of a destabilizing correction in equity markets amid elevated valuations. The impact on our business, results of operations, reputation, financial performance and condition, including the potential for credit, counterparty and mark-to-market losses, our credit ratings and regulatory capital and liquidity ratios, as well as the impacts to our customers and competitors, will depend on future developments, which remain uncertain. By their very nature, the estimates and judgments we make for the purposes of preparing our consolidated financial statements relate to matters that are inherently uncertain. However, we have detailed policies and internal controls in place that are intended to ensure the judgments made in estimating these amounts are well controlled and independently reviewed, and that our policies are consistently applied from period to period. We believe that our estimates of the value of our assets and liabilities are appropriate as at July 31, 2026.

Allowance for Credit Losses

As detailed further in Note 1 of our annual consolidated financial statements for the year ended October 31, 2025, ACL consists of allowances on impaired loans, which represent estimated losses related to impaired loans in the portfolio provided for but not yet written off, and allowances on performing loans, which is our best estimate of impairment in the existing portfolio for loans that have not yet been individually identified as impaired.

The expected credit losses (ECL) model requires the recognition of credit losses generally based on 12 months of expected losses for performing loans and the recognition of lifetime losses on performing loans that have experienced a significant increase in credit risk since origination.

The determination of a significant increase in credit risk takes into account many different factors and varies by product and risk segment. The bank’s methodology for determining a significant increase in credit risk is based on the change in probability of default between origination, and reporting date, assessed using probability-weighted scenarios as well as certain other criteria, such as 30 days past due and watchlist status. The assessment of a significant increase in credit risk requires experienced credit judgment.

In determining whether there has been a significant increase in credit risk and in calculating the amount of ECL, we must rely on estimates and exercise judgment, based on what we know at the end of the reporting period, regarding matters for which the ultimate outcome is unknown. These judgments include changes in circumstances that may cause future assessments of credit risk to be materially different from current assessments, which could require an increase or a decrease in the ACL. The calculation of ECL includes the explicit incorporation of forecasts of future economic conditions. We have developed models incorporating specific macroeconomic variables that are relevant to each portfolio. Key economic variables for our portfolios include our primary operating markets of Canada, the United States and regional markets, where considered significant. Forecasts are developed internally by our Economics group, considering external data and our view of future economic conditions. We exercise experienced credit judgment to incorporate multiple economic forecasts, which are probability-weighted, in the determination of the final ECL. The allowance is sensitive to changes in both economic forecasts and the probability weight assigned to each forecast scenario.

Additional information regarding the ACL is included in Note 3.

48 BMO Financial Group Third Quarter Report 2026

Note 2: Securities

Classification of Securities

The following table summarizes the carrying amounts of the bank’s securities by classification:


(Canadian $ in millions)	July 31, 2026		October 31, 2025
Trading securities (1)	$	204,818	$	192,303
Fair value through profit or loss securities (FVTPL)
FVTPL securities mandatorily measured at fair value	8,425		7,818
FVTPL investment securities held by Insurance subsidiaries designated at fair value	15,335		13,536
Total FVTPL securities	23,760		21,354
Fair value through other comprehensive income (FVOCI) securities (2)	137,070		113,209
Amortized cost securities (3)	92,978		96,610
Total	$	458,626	$	423,476

(1)Trading securities include interests of $44,346 million as at July 31, 2026 ($32,048 million as at October 31, 2025) in Collateralized Mortgage Obligations (CMO). We receive CMO in return for our sales of Mortgage Backed Securities (MBS) to certain structured vehicles that we do not consolidate. When we subsequently sell these CMO to third parties, but do not transfer substantially all risks and rewards of ownership to the third-party investor, or we maintain an interest in the sold instrument, we retain these CMO on our Consolidated Balance Sheet. Refer to Note 6 of our annual consolidated financial statements for the year ended October 31, 2025 for further discussion on these vehicles.

(2)As these securities are presented at fair value on the Balance Sheet, ACL of $6 million ($6 million as at October 31, 2025) is included in Accumulated Other Comprehensive Income.

(3)Amounts are net of ACL of $3 million ($4 million as at October 31, 2025).

Amortized Cost Securities

The following table summarizes the carrying value and fair value of amortized cost debt securities:


(Canadian $ in millions)	July 31, 2026				October 31, 2025
	Carrying value		Fair value		Carrying value		Fair value
Issued or guaranteed by:
Canadian federal government	$	450	$	451	$	949	$	943
Canadian provincial and municipal governments	7,042		7,116		6,182		6,220
U.S. federal government	42,142		39,739		43,468		40,432
U.S. states, municipalities and agencies	150		148		165		167
Other governments	463		463		525		523
NHA MBS, U.S. agency MBS and CMO (1)	36,157		32,679		37,770		34,838
Corporate debt	6,574		6,318		7,551		7,325
Total	$	92,978	$	86,914	$	96,610	$	90,448

(1)These amounts are either supported by insured mortgages or issued by U.S. agencies and government-sponsored enterprises. NHA refers to the National Housing Act.

The carrying value of securities that are part of fair value hedging relationships are adjusted for related gains (losses) on hedge contracts.

Unrealized Gains and Losses on FVOCI Securities

The following table summarizes the unrealized gains and losses on FVOCI securities:


(Canadian $ in millions)	July 31, 2026								October 31, 2025
	Cost or		Gross		Gross				Cost or		Gross		Gross
	amortized		unrealized		unrealized				amortized		unrealized		unrealized
	cost		gains		losses		Fair value		cost		gains		losses		Fair value
Issued or guaranteed by:
Canadian federal government	$	59,191	$	123	$	(121)	$	59,193	$	44,894	$	443	$	(2)	$	45,335
Canadian provincial and municipal governments	7,615		50		(53)		7,612		5,525		132		(13)		5,644
U.S. federal government	27,407		28		(378)		27,057		20,515		327		(33)		20,809
U.S. states, municipalities and agencies	5,009		21		(91)		4,939		5,622		77		(65)		5,634
Other governments	4,317		8		(31)		4,294		4,039		35		(9)		4,065
NHA MBS, U.S. agency MBS and CMO	29,325		75		(357)		29,043		26,946		291		(222)		27,015
Corporate debt	4,747		12		(20)		4,739		4,491		37		(13)		4,515
Corporate equity	167		26		–		193		165		27		–		192
Total	$	137,778	$	343	$	(1,051)	$	137,070	$	112,197	$	1,369	$	(357)	$	113,209

Unrealized gains (losses) may be offset by related (losses) gains on hedge contracts.

Interest Income on Debt Securities

The following table presents interest income calculated using the effective interest method:


(Canadian $ in millions)	For the three months ended				For the nine months ended
	July 31, 2026		July 31, 2025		July 31, 2026		July 31, 2025
FVOCI securities	$	1,144	$	1,128	$	3,243	$	3,304
Amortized cost securities	523		624		1,531		2,090
Total	$	1,667	$	1,752	$	4,774	$	5,394

BMO Financial Group Third Quarter Report 2026 49

Non-Interest Revenue

Net gains and losses from securities, excluding gains and losses on trading securities, have been included in our Consolidated Statement of Income as

follows:


(Canadian $ in millions)	For the three months ended				For the nine months ended
	July 31, 2026		July 31, 2025		July 31, 2026		July 31, 2025
FVTPL securities	$	35	$	36	$	163	$	132
FVOCI securities - net realized gains (1)	14		13		60		42
Impairment (loss) recovery on FVOCI and amortized cost securities	4		–		1		(1)
Securities gains, other than trading	$	53	$	49	$	224	$	173

(1)Gains are net of (losses) on hedge contracts.

Interest and dividend income and gains on securities held in our Insurance business are recorded as a component of non-interest revenue, insurance investment results, in our Consolidated Statement of Income as follows:


(Canadian $ in millions)	For the three months ended				For the nine months ended
	July 31, 2026		July 31, 2025		July 31, 2026		July 31, 2025
Interest and dividend income	$	153	$	137	$	449	$	406
Gains (losses) from securities designated at FVTPL (1)	(131)		29		(524)		6
Realized gains (losses) from FVOCI securities	–		–		(2)		2
Total interest and dividend income and gains held in our Insurance business	$	22	$	166	$	(77)	$	414

(1) Gains (losses) on these securities may be offset by certain (losses) gains from changes in insurance-related liabilities.

Note 3: Loans and Allowance for Credit Losses

Allowance for Credit Losses

The ACL recorded in our Consolidated Balance Sheet is maintained at a level we consider adequate to absorb credit-related losses on our loans and other credit instruments. The ACL amounted to $6,030 million as at July 31, 2026 ($5,739 million as at October 31, 2025) of which $5,247 million ($5,050 million as at October 31, 2025) was recorded in loans and $783 million ($689 million as at October 31, 2025) was recorded in other liabilities in our Consolidated Balance Sheet. Changes in gross balances, including originations, maturities, sales, write-offs and repayments in the normal course of operations, impact the ACL.

The following tables show the continuity in the loss allowance by product type for the three and nine months ended July 31, 2026 and July 31, 2025. Transfers represent the amount of ECL that moved between stages during the period, for example, moving from a 12-month (Stage 1) to lifetime (Stage 2) ECL measurement basis. Net remeasurements represent the ECL impact due to transfers between stages, as well as changes in economic forecasts and credit quality. Model changes include the ECL impact of new calculation models or methodologies which may impact the need for previously established experienced credit judgments.

50 BMO Financial Group Third Quarter Report 2026


(Canadian $ in millions)
For the three months ended	July 31, 2026								July 31, 2025
	Stage 1		Stage 2		Stage 3 (1)		Total		Stage 1		Stage 2		Stage 3 (1)		Total
Loans: Residential mortgages
Balance as at beginning of period	$	49	$	150	$	22	$	221	$	67	$	194	$	18	$	279
Transfer to Stage 1	8		(8)		–		–		36		(35)		(1)		–
Transfer to Stage 2	(2)		13		(11)		–		(2)		11		(9)		–
Transfer to Stage 3	–		(12)		12		–		–		(16)		16		–
Net remeasurement of loss allowance	(9)		7		33		31		(52)		(9)		8		(53)
Loan originations	5		–		–		5		8		–		–		8
Derecognitions and maturities	(3)		(4)		–		(7)		(2)		(5)		–		(7)
Model changes (2)	–		–		–		–		23		24		–		47
Total PCL (3)	(1)		(4)		34		29		11		(30)		14		(5)
Write-offs (4)	–		–		(4)		(4)		–		–		(2)		(2)
Recoveries of previous write-offs	–		–		1		1		–		–		2		2
Foreign exchange and other	–		1		(18)		(17)		1		1		(23)		(21)
Balance as at end of period	$	48	$	147	$	35	$	230	$	79	$	165	$	9	$	253
Loans: Consumer instalment and other personal
Balance as at beginning of period	$	204	$	601	$	162	$	967	$	183	$	545	$	179	$	907
Transfer to Stage 1	86		(82)		(4)		–		85		(79)		(6)		–
Transfer to Stage 2	(13)		23		(10)		–		(14)		28		(14)		–
Transfer to Stage 3	(2)		(50)		52		–		(1)		(45)		46		–
Net remeasurement of loss allowance	(78)		99		96		117		(90)		55		121		86
Loan originations	8		–		–		8		8		–		–		8
Derecognitions and maturities	(5)		(11)		–		(16)		(6)		(10)		–		(16)
Model changes (2)	–		–		–		–		13		47		–		60
Total PCL (3)	(4)		(21)		134		109		(5)		(4)		147		138
Write-offs (4)	–		–		(169)		(169)		–		–		(181)		(181)
Recoveries of previous write-offs	–		–		42		42		–		–		43		43
Foreign exchange and other	3		4		(13)		(6)		–		–		(23)		(23)
Balance as at end of period	$	203	$	584	$	156	$	943	$	178	$	541	$	165	$	884
Loans: Credit cards
Balance as at beginning of period	$	217	$	570	$	–	$	787	$	217	$	508	$	–	$	725
Transfer to Stage 1	68		(67)		(1)		–		61		(61)		–		–
Transfer to Stage 2	(16)		16		–		–		(22)		22		–		–
Transfer to Stage 3	(2)		(136)		138		–		(2)		(116)		118		–
Net remeasurement of loss allowance	(41)		215		36		210		(37)		203		81		247
Loan originations	12		–		–		12		11		–		–		11
Derecognitions and maturities	(3)		(10)		–		(13)		(4)		(20)		–		(24)
Model changes (2)	–		–		–		–		–		–		–		–
Total PCL (3)	18		18		173		209		7		28		199		234
Write-offs (4)	–		–		(203)		(203)		–		–		(234)		(234)
Recoveries of previous write-offs	–		–		49		49		–		–		55		55
Foreign exchange and other	1		1		(19)		(17)		(1)		–		(20)		(21)
Balance as at end of period	$	236	$	589	$	–	$	825	$	223	$	536	$	–	$	759
Loans: Business and government
Balance as at beginning of period	$	908	$	1,938	$	977	$	3,823	$	902	$	2,022	$	781	$	3,705
Transfer to Stage 1	111		(107)		(4)		–		154		(139)		(15)		–
Transfer to Stage 2	(35)		43		(8)		–		(37)		41		(4)		–
Transfer to Stage 3	(2)		(54)		56		–		(2)		(71)		73		–
Net remeasurement of loss allowance	(104)		197		323		416		(148)		283		359		494
Loan originations	107		–		–		107		73		–		–		73
Derecognitions and maturities	(34)		(110)		–		(144)		(39)		(96)		–		(135)
Model changes (2)	–		–		–		–		–		–		–		–
Total PCL (3)	43		(31)		367		379		1		18		413		432
Write-offs (4)	–		–		(307)		(307)		–		–		(259)		(259)
Recoveries of previous write-offs	–		–		81		81		–		–		80		80
Foreign exchange and other	36		61		(41)		56		(2)		20		(86)		(68)
Balance as at end of period	$	987	$	1,968	$	1,077	$	4,032	$	901	$	2,060	$	929	$	3,890
Total as at end of period	$	1,474	$	3,288	$	1,268	$	6,030	$	1,381	$	3,302	$	1,103	$	5,786
Comprising: Loans	$	1,139	$	2,898	$	1,210	$	5,247	$	1,130	$	2,980	$	1,055	$	5,165
Other credit instruments (5)	335		390		58		783		251		322		48		621

(1)Includes changes in the allowance for purchased credit impaired (PCI) loans.

(2)Represents the impact of IFRS 9 model enhancements, which reduced the need for previously established experienced credit judgement overlays.

(3)Excludes PCL on other assets of $(4) million for the three months ended July 31, 2026 ($(2) million for the three months ended July 31, 2025).

(4)Generally, we continue to seek recovery on amounts that were written off during the year, unless the loan is sold, we no longer have the right to collect or we have exhausted all reasonable efforts to collect.

(5)Other credit instruments, including off-balance sheet items, are recorded in other liabilities in our Consolidated Balance Sheet.

BMO Financial Group Third Quarter Report 2026 51


(Canadian $ in millions)
For the nine months ended	July 31, 2026								July 31, 2025
	Stage 1		Stage 2		Stage 3 (1)		Total		Stage 1		Stage 2		Stage 3 (1)		Total
Loans: Residential mortgages
Balance as at beginning of period	$	56	$	179	$	12	$	247	$	56	$	186	$	19	$	261
Transfer to Stage 1	92		(91)		(1)		–		118		(116)		(2)		–
Transfer to Stage 2	(9)		53		(44)		–		(7)		25		(18)		–
Transfer to Stage 3	–		(42)		42		–		–		(34)		34		–
Net remeasurement of loss allowance	(31)		52		80		101		(126)		92		26		(8)
Loan originations	11		–		–		11		18		–		–		18
Derecognitions and maturities	(6)		(15)		–		(21)		(3)		(12)		–		(15)
Model changes (2)	(64)		12		–		(52)		23		24		–		47
Total PCL (3)	(7)		(31)		77		39		23		(21)		40		42
Write-offs (4)	–		–		(10)		(10)		–		–		(7)		(7)
Recoveries of previous write-offs	–		–		6		6		–		–		6		6
Foreign exchange and other	(1)		(1)		(50)		(52)		–		–		(49)		(49)
Balance as at end of period	$	48	$	147	$	35	$	230	$	79	$	165	$	9	$	253
Loans: Consumer instalment and other personal
Balance as at beginning of period	$	200	$	555	$	160	$	915	$	197	$	471	$	175	$	843
Transfer to Stage 1	249		(238)		(11)		–		232		(216)		(16)		–
Transfer to Stage 2	(45)		76		(31)		–		(42)		81		(39)		–
Transfer to Stage 3	(6)		(144)		150		–		(5)		(130)		135		–
Net remeasurement of loss allowance	(196)		364		351		519		(225)		319		367		461
Loan originations	25		–		–		25		24		–		–		24
Derecognitions and maturities	(13)		(31)		–		(44)		(15)		(29)		–		(44)
Model changes (2)	(11)		2		–		(9)		13		47		–		60
Total PCL (3)	3		29		459		491		(18)		72		447		501
Write-offs (4)	–		–		(536)		(536)		–		–		(519)		(519)
Recoveries of previous write-offs	–		–		116		116		–		–		115		115
Foreign exchange and other	–		–		(43)		(43)		(1)		(2)		(53)		(56)
Balance as at end of period	$	203	$	584	$	156	$	943	$	178	$	541	$	165	$	884
Loans: Credit cards
Balance as at beginning of period	$	188	$	603	$	–	$	791	$	233	$	472	$	–	$	705
Transfer to Stage 1	271		(270)		(1)		–		185		(185)		–		–
Transfer to Stage 2	(51)		52		(1)		–		(68)		68		–		–
Transfer to Stage 3	(5)		(383)		388		–		(6)		(335)		341		–
Net remeasurement of loss allowance	(186)		620		169		603		(152)		567		241		656
Loan originations	31		–		–		31		44		–		–		44
Derecognitions and maturities	(9)		(33)		–		(42)		(10)		(39)		–		(49)
Model changes (2)	(4)		–		–		(4)		–		–		–		–
Total PCL (3)	47		(14)		555		588		(7)		76		582		651
Write-offs (4)	–		–		(630)		(630)		–		–		(687)		(687)
Recoveries of previous write-offs	–		–		135		135		–		–		164		164
Foreign exchange and other	1		–		(60)		(59)		(3)		(12)		(59)		(74)
Balance as at end of period	$	236	$	589	$	–	$	825	$	223	$	536	$	–	$	759
Loans: Business and government
Balance as at beginning of period	$	931	$	1,997	$	858	$	3,786	$	892	$	1,698	$	537	$	3,127
Transfer to Stage 1	435		(423)		(12)		–		406		(370)		(36)		–
Transfer to Stage 2	(193)		285		(92)		–		(207)		279		(72)		–
Transfer to Stage 3	(5)		(221)		226		–		(6)		(291)		297		–
Net remeasurement of loss allowance	(363)		186		968		791		(291)		989		1,139		1,837
Loan originations	264		–		–		264		219		–		–		219
Derecognitions and maturities	(101)		(343)		–		(444)		(107)		(280)		–		(387)
Model changes (2)	10		468		–		478		–		–		–		–
Total PCL (3)	47		(48)		1,090		1,089		14		327		1,328		1,669
Write-offs (4)	–		–		(887)		(887)		–		–		(883)		(883)
Recoveries of previous write-offs	–		–		192		192		–		–		234		234
Foreign exchange and other	9		19		(176)		(148)		(5)		35		(287)		(257)
Balance as at end of period	$	987	$	1,968	$	1,077	$	4,032	$	901	$	2,060	$	929	$	3,890
Total as at end of period	$	1,474	$	3,288	$	1,268	$	6,030	$	1,381	$	3,302	$	1,103	$	5,786
Comprising: Loans	$	1,139	$	2,898	$	1,210	$	5,247	$	1,130	$	2,980	$	1,055	$	5,165
Other credit instruments (5)	335		390		58		783		251		322		48		621

(1)Includes changes in the allowance for PCI loans.

(2)Represents the impact of IFRS 9 model enhancements, which reduced the need for previously established experienced credit judgement overlays.

(3)Excludes PCL on other assets of $nil million for the nine months ended July 31, 2026 ($(1) million for the nine months ended July 31, 2025).

(5)Other credit instruments, including off-balance sheet items, are recorded in other liabilities in our Consolidated Balance Sheet.

52 BMO Financial Group Third Quarter Report 2026

Credit Risk Exposure

The following table sets out our credit risk exposure for all loans carried at amortized cost, FVOCI or FVTPL as at July 31, 2026 and October 31, 2025. Stage 1 represents performing loans carried with up to a 12-month ECL, Stage 2 represents performing loans carried with a lifetime ECL, and Stage 3 represents loans with a lifetime ECL that are credit impaired.


(Canadian $ in millions)
For the three months ended	July 31, 2026								October 31, 2025
	Stage 1		Stage 2		Stage 3 (1)		Total		Stage 1		Stage 2		Stage 3 (1)		Total
Loans: Residential mortgages (2)
Exceptionally low	$	–	$	–	$	–	$	–	$	1	$	–	$	–	$	1
Very low	116,655		684		–		117,339		110,299		844		–		111,143
Low	44,788		5,769		–		50,557		50,148		3,051		–		53,199
Medium	6,377		5,020		–		11,397		7,048		6,713		–		13,761
High	287		3,392		–		3,679		240		3,032		–		3,272
Not rated (3)	12,272		545		–		12,817		12,802		952		–		13,754
Impaired	–		–		1,135		1,135		–		–		903		903
Gross residential mortgages	180,379		15,410		1,135		196,924		180,538		14,592		903		196,033
ACL	48		147		35		230		56		178		12		246
Carrying amount	180,331		15,263		1,100		196,694		180,482		14,414		891		195,787
Loans: Consumer instalment and other personal
Exceptionally low	10,523		16		–		10,539		9,984		1		–		9,985
Very low	40,307		1,049		–		41,356		21,962		35		–		21,997
Low	7,390		1,840		–		9,230		26,238		2,682		–		28,920
Medium	6,530		6,543		–		13,073		6,991		5,566		–		12,557
High	660		2,450		–		3,110		670		2,164		–		2,834
Not rated (3)	15,022		1,325		–		16,347		14,812		1,009		–		15,821
Impaired	–		–		614		614		–		–		627		627
Gross consumer instalment and other personal	80,432		13,223		614		94,269		80,657		11,457		627		92,741
ACL	183		552		156		891		182		532		160		874
Carrying amount	80,249		12,671		458		93,378		80,475		10,925		467		91,867
Loans: Credit cards (4)
Exceptionally low	1,683		–		–		1,683		1,643		–		–		1,643
Very low	2,091		15		–		2,106		2,129		4		–		2,133
Low	1,786		61		–		1,847		1,846		80		–		1,926
Medium	3,382		802		–		4,184		3,550		1,191		–		4,741
High	867		979		–		1,846		592		1,232		–		1,824
Not rated (3)	286		89		–		375		260		122		–		382
Impaired	–		–		–		–		–		–		–		–
Gross credit cards	10,095		1,946		–		12,041		10,020		2,629		–		12,649
ACL	158		524		–		682		125		527		–		652
Carrying amount	9,937		1,422		–		11,359		9,895		2,102		–		11,997
Loans: Business and government (2) (5)
Acceptable
Investment grade	209,777		5,315		–		215,092		188,707		3,873		–		192,580
Sub-investment grade	132,650		29,375		–		162,025		139,069		22,700		–		161,769
Watchlist	109		17,660		–		17,769		123		21,466		–		21,589
Impaired	–		–		5,054		5,054		–		–		5,561		5,561
Gross business and government	342,536		52,350		5,054		399,940		327,899		48,039		5,561		381,499
ACL	750		1,675		1,019		3,444		756		1,720		802		3,278
Carrying amount	341,786		50,675		4,035		396,496		327,143		46,319		4,759		378,221
Total gross loans and acceptances	613,442		82,929		6,803		703,174		599,114		76,717		7,091		682,922
Total net loans and acceptances	612,303		80,031		5,593		697,927		597,995		73,760		6,117		677,872
Commitments and financial guarantee contracts
Acceptable
Investment grade	220,375		6,380		–		226,755		202,913		1,544		–		204,457
Sub-investment grade	61,727		20,550		–		82,277		65,393		13,733		–		79,126
Watchlist	–		7,837		–		7,837		6		9,086		–		9,092
Impaired	–		–		1,704		1,704		–		–		1,660		1,660
Gross commitments and financial guarantee contracts	282,102		34,767		1,704		318,573		268,312		24,363		1,660		294,335
ACL	335		390		58		783		256		377		56		689
Carrying amount (6) (7)	$	281,767	$	34,377	$	1,646	$	317,790	$	268,056	$	23,986	$	1,604	$	293,646

(1)Includes PCI loans.

(2)Includes $67 million ($79 million as at October 31, 2025) of residential mortgages and $12,649 million ($13,231 million as at October 31, 2025) of business and government loans that are classified and measured at FVTPL, and not subject to ECL.

(3)Includes purchased portfolios and certain cases where an internal risk rating is not assigned. Alternative credit risk assessments, rating methodologies, policies and tools are used to manage credit risk for these portfolios.

(4)Credit card loans are immediately written off when principal or interest payments are 180 days past due, and as a result are not reported as impaired in Stage 3.

(5)Includes customers’ liability under acceptances.

(6)Represents the total contractual amounts of undrawn credit facilities and other off-balance sheet exposures, excluding personal lines of credit and credit cards, which are unconditionally cancellable at our discretion.

(7)Certain commercial borrower commitments are conditional and may include recourse to counterparties.

BMO Financial Group Third Quarter Report 2026 53

Loans Past Due Not Impaired

Loans that are past due but not classified as impaired are loans where our customers have failed to make payments when contractually due but for which we expect the full amount of principal and interest payments to be collected. The following table presents loans that are past due but not classified as impaired as at July 31, 2026 and October 31, 2025. Loans for which payment is less than 30 days past due are excluded as they are not generally representative of the borrower’s ability to meet their payment obligations.


(Canadian $ in millions)	July 31, 2026						October 31, 2025
	30 to 89 days		90 days or more (1)		Total		30 to 89 days		90 days or more (1)		Total
Residential mortgages	$	846	$	8	$	854	$	854	$	7	$	861
Credit cards, consumer instalment and other personal	712		156		868		661		171		832
Business and government	561		10		571		616		8		624
Total	$	2,119	$	174	$	2,293	$	2,131	$	186	$	2,317

(1) Fully secured loans with amounts over 90 days past due that we have not classified as impaired totalled $8 million as at July 31, 2026 ($7 million as at October 31, 2025).

ECL Sensitivity and Key Economic Variables

The ECL model requires the recognition of credit losses generally based on 12 months of expected losses for performing loans and the recognition of lifetime losses on performing loans that have experienced a significant increase in credit risk since origination.

The allowance for performing loans is sensitive to changes in both economic forecasts and the probability weight assigned to each forecast scenario. Many of the factors have a high degree of interdependency, although there is no single factor to which loan loss allowances as a whole are sensitive.

The upside scenario as at July 31, 2026 assumes a stronger economic environment than the base case forecast, with lower unemployment rates.

As at July 31, 2026, our base case scenario depicts a moderate economic expansion over the medium term as trade policy and geopolitical uncertainty diminishes. Our base case forecast as at October 31, 2025 broadly depicted a weaker economic environment.

If we assumed a 100% weight on the base case forecast and included the impact of loan migration by restaging, with other assumptions held constant, including the application of experienced credit judgment, the allowance on performing loans would be approximately $3,325 million as at July 31, 2026 ($3,125 million as at October 31, 2025), compared to the reported allowance for performing loans of $4,762 million ($4,709 million as at October 31, 2025).

As at July 31, 2026, our downside scenario involves a sharp contraction in the Canadian and U.S. economies in the near term, followed by a relatively slow recovery. Our severe downside scenario depicts an even deeper contraction in the Canadian and U.S. economies than in the downside scenario. The severe downside scenario as at October 31, 2025 broadly depicted a similar economic environment over the projection period. If we assumed a 100% weight on the severe downside forecast and included the impact of loan migration by restaging, with other assumptions held constant, including the application of experienced credit judgment, the allowance on performing loans would be approximately $8,350 million as at

July 31, 2026 ($7,975 million as at October 31, 2025), compared to the reported allowance for performing loans of $4,762 million ($4,709 million as at October 31, 2025).

Actual results will differ as our portfolio will change through time due to migration, growth, changes in geopolitical risks, risk mitigation actions and other factors. In addition, our allowance will reflect the four economic scenarios used in assessing the allowance, with often unequal weightings attached to each scenario, which can change through time.

The following tables show the key economic variables used to estimate the allowance for performing loans forecast over the next 12 months or lifetime measurement period. The variables as at July 31, 2026 include the impact of tariffs, trade policy uncertainty, and higher oil prices arising from the Iran conflict on the economic outlook. While the values disclosed below are national variables, we use regional variables in the underlying models and consider factors impacting particular industries where appropriate.


	As at July 31, 2026
	Scenarios
All figures are average annual values	Upside		Base		Downside		Severe downside
	First 12	Remaining	First 12	Remaining	First 12	Remaining	First 12	Remaining
	months	horizon (1)	months	horizon (1)	months	horizon (1)	months	horizon (1)
Real GDP growth rates (2)
Canada	4.2%	2.9%	1.4%	2.0%	(2.8)%	1.5%	(4.1)%	1.2%
United States	4.2%	2.4%	1.9%	1.9%	(2.4)%	1.4%	(3.6)%	1.3%
Corporate BBB 10-year spread
Canada	1.3%	1.8%	1.9%	2.0%	3.6%	3.0%	4.2%	3.5%
United States	1.0%	1.5%	1.7%	1.9%	3.7%	3.0%	4.6%	3.6%
Unemployment rates
Canada	5.4%	4.9%	6.5%	6.1%	9.2%	9.4%	9.9%	10.4%
United States	3.8%	3.4%	4.3%	4.2%	6.9%	7.5%	7.8%	8.7%
Housing Price Index (2)
Canada (3)	3.4%	6.0%	(1.7)%	3.5%	(10.8)%	(0.2)%	(20.0)%	(5.0)%
United States (4)	5.5%	4.0%	2.4%	2.5%	(2.2)%	(11.0)%	(4.8)%	(17.7)%

(1)The remaining forecast period is two years.

(2)Real gross domestic product (GDP) and housing price index are averages of quarterly year-over-year growth rates.

(3)In Canada, we use the Housing Price Index Benchmark Composite.

(4)In the United States, we use the National Case-Shiller House Price Index.

54 BMO Financial Group Third Quarter Report 2026


	As at October 31, 2025
	Scenarios
All figures are average annual values	Upside		Base		Downside		Severe downside
	First 12	Remaining	First 12	Remaining	First 12	Remaining	First 12	Remaining
	months	horizon (1)	months	horizon (1)	months	horizon (1)	months	horizon (1)
Real GDP growth rates (2)
Canada	3.6%	2.8%	1.1%	2.1%	(2.7)%	1.6%	(4.0)%	1.2%
United States	4.5%	2.4%	1.7%	1.8%	(2.3)%	1.4%	(3.5)%	1.3%
Corporate BBB 10-year spread
Canada	1.2%	1.8%	1.7%	2.0%	3.4%	3.0%	4.2%	3.5%
United States	0.8%	1.5%	1.5%	1.9%	3.5%	3.0%	4.6%	3.6%
Unemployment rates
Canada	6.0%	5.5%	7.1%	6.4%	9.4%	9.6%	9.9%	10.5%
United States	3.6%	3.1%	4.5%	4.4%	6.8%	7.5%	7.5%	8.4%
Housing Price Index (2)
Canada (3)	3.9%	5.8%	(0.4)%	3.4%	(10.5)%	(0.7)%	(19.4)%	(5.0)%
United States (4)	3.7%	3.9%	0.7%	2.4%	(11.6)%	(1.1)%	(20.0)%	(4.3)%

(1)The remaining forecast period is two years.

(2)Real gross domestic product (GDP) and housing price index are averages of quarterly year-over-year growth rates.

(3)In Canada, we use the Housing Price Index Benchmark Composite.

(4)In the United States, we use the National Case-Shiller House Price Index.

The ECL approach requires the recognition of credit losses generally based on 12 months of expected losses for performing loans (Stage 1) and the recognition of lifetime expected losses for performing loans that have experienced a significant increase in credit risk since origination (Stage 2). Under our current probability-weighted scenarios, if all of our performing loans were in Stage 1, our models would generate an allowance for performing loans of approximately $3,625 million ($3,375 million as at October 31, 2025), compared to the reported allowance for performing loans of

$4,762 million ($4,709 million as at October 31, 2025).

Note 4: Deposits and Subordinated Debt

Deposits


	Payable on demand
			Non-interest		Payable		Payable on a
(Canadian $ in millions)	Interest bearing		bearing		after notice (1)		fixed date (2) (3)		July 31, 2026		October 31, 2025
Amortized cost deposits by:
Banks (4)	$	4,313	$	1,924	$	1,316	$	27,309	$	34,862	$	27,621
Business and government (5)	82,965		44,683		229,298		265,379		622,325		585,497
Individuals (5)	4,073		39,414		156,479		96,002		295,968		306,922
Total amortized cost deposits	91,351		86,021		387,093		388,690		953,155		920,040
Deposits at FVTPL	–		–		–		64,679		64,679		56,162
Total (6)	$	91,351	$	86,021	$	387,093	$	453,369	$	1,017,834	$	976,202
Booked in:
Canada	$	75,730	$	73,850	$	176,883	$	315,587	$	642,050	$	620,858
United States	15,514		12,171		206,070		77,626		311,381		305,472
Other countries	107		–		4,140		60,156		64,403		49,872
Total	$	91,351	$	86,021	$	387,093	$	453,369	$	1,017,834	$	976,202

(1)Includes $45,438 million of non-interest bearing deposits as at July 31, 2026 ($43,766 million as at October 31, 2025).

(2)Includes $73,838 million of senior unsecured debt as at July 31, 2026 subject to the Bank Recapitalization (Bail-In) regime ($62,843 million as at October 31, 2025). The Bail-In regime provides certain statutory powers to the Canada Deposit Insurance Corporation, including the ability to convert specified eligible shares and liabilities into common shares if the bank becomes non-viable.

(3)Deposits totalling $26,570 million as at July 31, 2026 ($27,819 million as at October 31, 2025) can be redeemed early, either fully or partially, by customers without penalty. These are classified as payable on a fixed date, based on their remaining contractual maturities.

(4)Includes regulated and central banks.

(5)The carrying value of deposits that are part of fair value hedging relationships are adjusted for related gains (losses) on hedge contracts.

(6)Includes $535,463 million of deposits denominated in U.S. dollars as at July 31, 2026 ($508,058 million as at October 31, 2025), and $69,542 million of deposits denominated in other foreign currencies ($59,697 million as at October 31, 2025).

The following table presents deposits payable on a fixed date and greater than one hundred thousand dollars:


(Canadian $ in millions)	Canada		United States		Other		Total
As at July 31, 2026	$	273,963	$	70,995	$	60,156	$	405,114
As at October 31, 2025	259,670		69,206		47,386		376,262

The following table presents the maturity schedule for deposits payable on a fixed date greater than one hundred thousand dollars, which are booked in Canada:


(Canadian $ in millions)	Less than 3 months		3 to 6 months		6 to 12 months		Over 12 months		Total
As at July 31, 2026	$	51,867	$	37,203	$	53,520	$	131,373	$	273,963
As at October 31, 2025	51,591		32,105		56,129		119,845		259,670

BMO Financial Group Third Quarter Report 2026 55

Subordinated Debt

On July 22, 2026, we redeemed all of our $1,000 million 1.928% Series K Medium-Term Notes (NVCC) First Tranche, at a redemption price of 100% of the principal amount plus accrued and unpaid interest to, but excluding, the redemption date.

On December 15, 2025, $25 million of the $150 million Subordinated Debentures Series 20 matured. $25 million will mature on December 15 every three years starting 2025 with the final maturity in 2040.

Note 5: Insurance

Insurance Results

Insurance service results in our Consolidated Statement of Income are as follows:


(Canadian $ in millions)	For the three months ended				For the nine months ended
	July 31, 2026		July 31, 2025		July 31, 2026		July 31, 2025
Insurance revenue	$	422	$	486	$	1,230	$	1,430
Insurance service expense	(318)		(399)		(951)		(1,089)
Net income (expense) from reinsurance contracts	(10)		2		(16)		(38)
Insurance service results	$	94	$	89	$	263	$	303

Insurance investment results in our Consolidated Statement of Income are as follows:


(Canadian $ in millions)	For the three months ended				For the nine months ended
	July 31, 2026		July 31, 2025		July 31, 2026		July 31, 2025
Investment return	$	111	$	132	$	106	$	433
Insurance finance income (expense) from insurance and reinsurance contracts held	(40)		(120)		83		(332)
Movement in investment contract liabilities	(5)		17		4		(16)
Insurance investment results	$	66	$	29	$	193	$	85

Insurance Contract Liabilities

Insurance contract liabilities by remaining coverage and incurred claims comprise the following:


(Canadian $ in millions)	For the three months ended July 31, 2026						For the three months ended July 31, 2025
	Liabilities for		Liabilities for				Liabilities for		Liabilities for
	remaining coverage		incurred claims		Total		remaining coverage		incurred claims		Total
Insurance contract liabilities, beginning of period	$	19,388	$	165	$	19,553	$	17,629	$	187	$	17,816
Insurance service results	(325)		256		(69)		(632)		565		(67)
Net finance expense from insurance contracts	54		–		54		138		–		138
Total cash flows	413		(253)		160		807		(563)		244
Other changes in the net carrying amount of the insurance contract (1)	5		(5)		–		(785)		(12)		(797)
Insurance contract liabilities, end of period (2)	$	19,535	$	163	$	19,698	$	17,157	$	177	$	17,334


(Canadian $ in millions)	For the nine months ended July 31, 2026						For the nine months ended July 31, 2025
	Liabilities for		Liabilities for				Liabilities for		Liabilities for
	remaining coverage		incurred claims		Total		remaining coverage		incurred claims		Total
Insurance contract liabilities, beginning of period	$	18,667	$	199	$	18,866	$	17,047	$	201	$	17,248
Insurance service results	(1,626)		1,436		(190)		(1,818)		1,537		(281)
Net finance expense from insurance contracts	(53)		–		(53)		420		–		420
Total cash flows	2,534		(1,456)		1,078		2,293		(1,546)		747
Other changes in the net carrying amount of the insurance contract (1)	13		(16)		(3)		(785)		(15)		(800)
Insurance contract liabilities, end of period (2)	$	19,535	$	163	$	19,698	$	17,157	$	177	$	17,334

(1) Includes $(798) million relating to the sale of a non-strategic portfolio of insurance contracts for the three and nine months ended July 31, 2025.

(2) The liabilities for incurred claims relating to insurance contracts in our creditor and reinsurance business were $103 million as at July 31, 2026 and $105 million as at July 31, 2025.

Contractual service margin (CSM) from contracts issued was $32 million and $115 million for the three and nine months ended July 31, 2026, respectively ($18 million and $49 million for the three and nine months ended July 31, 2025, respectively). Total CSM for insurance contracts issued and reinsurance contract held was $1,687 million and $338 million, respectively, as at July 31, 2026 ($1,528 million and $312 million, respectively, as at October 31, 2025). Onerous contract losses for the three and nine months ended July 31, 2026 and 2025 were not material.

56 BMO Financial Group Third Quarter Report 2026

We use the following rates for discounting fulfilment cash flows for our insurance contract liabilities, which are based on a risk-free yield adjusted for an illiquidity premium that reflects the liquidity characteristics of the liabilities:


Portfolio duration:	July 31, 2026		October 31, 2025
1 year	3.74	%	3.24	%
3 years	4.22	%	3.54	%
5 years	4.55	%	3.89	%
10 years	5.21	%	4.67	%
20 years	5.77	%	5.25	%
30 years	5.69	%	4.99	%
Ultimate	4.95	%	5.00	%

Insurance Risk Management

The table below reflects the estimated immediate impact on, or sensitivity of, income before taxes to certain changes in interest rates, and includes the estimated impact of hedging arrangements and our exposure to equity price risk arising from our investment in equity securities.


(Canadian $ in millions)	July 31, 2026		October 31, 2025
Interest Rate Sensitivity (1) (2)
50 basis point increase	$	2	$	2
50 basis point decrease	(1)		(6)
Equity Market Sensitivity (3)
10% increase	$	7	$	6
10% decrease	(7)		(7)

(1)Estimated impact on, or sensitivity of, income before taxes to a 50 basis point increase or decrease in interest rates.

(2)Interest rate sensitivities assume a parallel shift in assumed interest rates across the entire yield curve as at the end of the period with no change in the ultimate risk-free rate.

(3)Estimated impact on, or sensitivity of, income before taxes to a 10% increase or decrease in our exposure to equity price risk arising from our investment in equity securities at the reporting date, assuming all other variables remain constant.

BMO Financial Group Third Quarter Report 2026 57

Note 6: Equity

Preferred and Common Shares Outstanding and Other Equity Instruments (1)


(Canadian $ in millions, except as noted)				July 31, 2026					October 31, 2025
	Number			Dividends declared		Number			Dividends declared
	of shares	Amount		per share (2)		of shares	Amount		per share (2)		Convertible into
Preferred Shares – Classified as Equity
Class B – Series 44	16,000,000	$	400	$	1.28	16,000,000	$	400	$	1.70	Class B - Series 45	(3) (4)
Class B – Series 50	500,000	500		36.87		500,000	500		73.73		Not convertible	(4)
Class B – Series 52	650,000	650		35.29		650,000	650		70.57		Not convertible	(4)
Preferred Shares – Classified as Equity		$	1,550				$	1,550
											Recourse to
Other Equity Instruments
4.800% Additional Tier 1 Capital Notes (AT1 Notes)		$	658				$	658			–	(4) (5) (6)
4.300% Limited Recourse Capital Notes, Series 1 (LRCNs, Series 1)		–					1,250		–			(6) (7)
5.625% Limited Recourse Capital Notes, Series 2 (LRCNs, Series 2)		750					750		Preferred Shares Series 49			(4) (6) (8)
7.325% Limited Recourse Capital Notes, Series 3 (LRCNs, Series 3)		1,000					1,000		Preferred Shares Series 51			(4) (6) (8)
7.700% Limited Recourse Capital Notes, Series 4 (LRCNs, Series 4)		1,356					1,356		Preferred Shares Series 53			(4) (6) (8)
7.300% Limited Recourse Capital Notes, Series 5 (LRCNs, Series 5)		1,023					1,023		Preferred Shares Series 54			(4) (6) (8)
6.875% Limited Recourse Capital Notes, Series 6 (LRCNs, Series 6)		1,369					1,369		Preferred Shares Series 55			(4) (6) (8)
Other Equity Instruments		6,156					7,406
Preferred Shares and Other Equity Instruments		7,706					8,956
Common Shares	697,146,398	$	23,473	$	5.05	708,905,679	$	23,359	$	6.44		(9) (10) (11) (12)

(1)For additional information refer to Notes 16 and 20 of our annual consolidated financial statements for the year ended October 31, 2025.

(2)Represents year-to-date dividends declared per share as at reporting date. Non-cumulative dividends on preferred shares are payable quarterly as and when declared by the Board of Directors, except for Class B – Series 50 and 52 preferred share dividends, which are payable semi-annually.

(3)If converted, the holders have the option to convert back to the original preferred shares on subsequent redemption dates, subject to certain conditions.

(4)The instruments issued include a NVCC provision, which is necessary for the preferred shares, AT1 Notes and by virtue of the recourse to the Preferred Shares Series 49, Preferred Shares Series 51, Preferred Shares Series 53, Preferred Shares Series 54 and Preferred Shares Series 55 (collectively, the LRCN Preferred Shares) for LRCNs, Series 2, Series 3, Series 4, Series 5 and Series 6 (collectively, the LRCNs), respectively, to qualify as regulatory capital under Basel III. As such, they are convertible into a variable number of our common shares if OSFI announces that the bank is, or is about to become, non-viable or if a federal or provincial government in Canada publicly announces that the bank has accepted or agreed to accept a capital injection, or equivalent support, to avoid non-viability. In such an event, each preferred share, including the LRCN Preferred Shares and AT1 Notes, is convertible into common shares pursuant to an automatic conversion formula and a conversion price based on the greater of: (i) a floor price of $5.00 and (ii) the current market price of our common shares based on the volume weighted average trading price of our common shares on the TSX. The number of common shares issued is determined by dividing the value of the preferred share or other equity instrument, including declared and unpaid dividends, by the conversion price and then applying the multiplier.

(5)The notes had an initial interest rate of 4.800% and reset on August 25, 2024 to 6.709%.

(6)The rates represent the annual interest rate percentage applicable to the notes issued as at the reporting date.

(7)On November 12, 2025, we redeemed the $1,250 million 4.300% Limited Recourse Capital Notes, Series 1 (NVCC) and the corresponding $1,250 million Preferred Shares Series 48 (NVCC).

(8)Non-deferrable interest is payable semi-annually on the LRCNs, Series 2 and Series 3, and quarterly on the LRCNs, Series 4, Series 5 and Series 6 at the bank’s discretion. Non-payment of interest will result in a recourse event, with the noteholders’ sole remedy being the holders’ proportionate share of trust assets, which comprises the LRCN Preferred Shares, each series of which is issued concurrently with the corresponding LRCNs and are eliminated on consolidation. In such an event, the delivery of the trust assets will represent the full and complete extinguishment of our obligations under the LRCNs. In circumstances where the LRCN Preferred Shares are converted into common shares of the bank under the NVCC provision, the LRCNs would be redeemed and the noteholders’ sole remedy would be their proportionate share of trust assets, which would then comprise common shares of the bank received by the trust on conversion.

(9)The stock options issued under the Stock Option Plan are convertible into 5,169,041 common shares as at July 31, 2026 (5,699,134 common shares as at October 31, 2025) of which 2,020,746 are exercisable as at July 31, 2026 (2,245,942 as at October 31, 2025).

(10) During the three and nine months ended July 31, 2026, we issued 507,279 and 1,294,493 common shares under the Stock Option Plan (289,748 and 975,467 common shares during the three and nine

months ended July 31, 2025).

(11) Common shares are net of nil treasury shares as at July 31, 2026 (nil treasury shares as at October 31, 2025).

(12) As part of the acquisition of Burgundy on November 1, 2025, we issued 2,723,726 common shares with an aggregate value of $481 million to shareholders of Burgundy. Refer to Note 13 for more

information.

Other Equity Instruments

The AT1 Notes and existing LRCNs are compound financial instruments that have both equity and liability features. On the date of issuance, we assigned an insignificant value to the liability components of both instruments and, as a result, the full amount of proceeds has been classified as equity and forms part of our additional Tier 1 Capital. Distributions on the AT1 Notes and LRCNs are recognized as a reduction in equity when payable. The AT1 Notes and LRCNs are subordinate to the claims of the depositors and certain other creditors in right of payment.

Common Shares

We have a normal course issuer bid (NCIB) to purchase up to 30 million of our common shares for cancellation which commenced on September 5, 2025 and ending no later than September 4, 2026. The timing and amount of purchases under the NCIB are determined by management, based on factors such as market conditions and capital levels. During the three months ended July 31, 2026, we purchased for cancellation 3.8 million common shares under the NCIB, at an average price of $239.37 per share for a total amount of $922 million, including tax. During the nine months ended July 31, 2026, we purchased for cancellation 15.8 million common shares under the NCIB, at an average price of $198.60 per share for a total amount of $3,193 million, including tax. The bank has purchased a total of 21.6 million common shares for cancellation under the NCIB as at July 31, 2026.

On August 25, 2026 we announced our intention to establish a new NCIB to purchase up to 25 million of our common shares for cancellation, subject to the approval of the Office of the Superintendent of Financial Institutions Canada (OSFI) and the Toronto Stock Exchange.

Shareholder Dividend Reinvestment and Share Purchase Plan

Until further notice, common shares under the Shareholder Dividend Reinvestment and Share Purchase Plan will be purchased on the open market without a discount.

58 BMO Financial Group Third Quarter Report 2026

Note 7: Fair Value Measurements

Fair Value of Financial Instruments Not Carried at Fair Value on the Balance Sheet

Set out in the following table are the amounts that would be reported if all financial instruments not currently carried at fair value were reported at their fair values. Refer to Note 17 of our annual consolidated financial statements for the year ended October 31, 2025 for further discussion on the determination of fair value.


(Canadian $ in millions)			July 31, 2026				October 31, 2025
	Carrying value		Fair value		Carrying value		Fair value
Securities (1)
Amortized cost	$	92,978	$	86,914	$	96,610	$	90,448

Loans (1) (2)
Residential mortgages	196,627		195,540		195,708		194,755
Consumer instalment and other personal	93,378		93,314		91,867		91,937
Credit cards	11,359		11,359		11,997		11,997
Business and government	381,968		382,200		364,265		364,866
	683,332		682,413		663,837		663,555

Deposits (3)	953,155		952,770		920,040		920,927
Securitization and structured entities' liabilities (4)	18,830		18,503		20,211		20,100
Other liabilities (5)	3,191		3,071		3,103		2,953
Subordinated debt	7,495		7,683		8,500		8,756

This table excludes financial instruments with a carrying value approximating fair value, such as cash and cash equivalents, interest bearing deposits with banks, securities borrowed or purchased under resale agreements, certain other assets, certain other liabilities and securities lent or sold under repurchase agreements.

(1)Carrying value is net of ACL.

(2)Excludes $67 million of residential mortgages classified as FVTPL, $12,649 million of business and government loans classified as FVTPL and $447 million of business and government loans classified as FVOCI

($79 million, $13,231 million and $14 million, respectively, as at October 31, 2025).

(3)Excludes $56,350 million of structured note liabilities, $83 million of money market deposits, $2,497 million of embedded options related to structured deposits carried at amortized cost and $5,749 million of metals deposits measured at fair value ($49,093 million, $1,129 million, $1,967 million and $3,973 million, respectively, as at October 31, 2025).

(4)Excludes $44,081 million of securitization and structured entities’ liabilities classified as FVTPL ($31,351 million as at October 31, 2025).

(5)Other liabilities include certain investment contract liabilities in our insurance business measured at amortized cost, as well as certain other liabilities of subsidiaries.

Fair Value Hierarchy

We use a fair value hierarchy to categorize assets and liabilities carried at fair value according to the inputs we use in valuation techniques to measure fair value.

Valuation Techniques and Significant Inputs

We determine the fair value of assets and liabilities using quoted prices in active markets (Level 1) when these are available. When quoted prices in active markets are not available, we determine the fair value of financial assets and liabilities using models such as discounted cash flows with observable market data for inputs, such as yields or broker quotes and other third-party vendor quotes (Level 2). Fair value may also be determined using models where significant market inputs are not observable due to inactive markets or minimal market activity (Level 3). We maximize the use of observable market inputs to the extent possible.

Our Level 2 trading securities are primarily valued using discounted cash flow models with observable spreads or broker quotes. The fair value of Level 2 FVOCI securities is determined using discounted cash flow models with observable spreads or third-party vendor quotes. Level 2 structured note liabilities are valued using models with observable market information. Level 2 derivative assets and liabilities are valued using industry standard models and observable market information.

BMO Financial Group Third Quarter Report 2026 59

The extent of our use of actively quoted market prices (Level 1), internal models using observable market information as inputs (Level 2) and models using one or more significant unobservable inputs (Level 3) in the valuation of securities, loans classified as FVTPL and FVOCI, other assets, fair value liabilities, derivative assets and derivative liabilities is presented in the following table:


(Canadian $ in millions)	July 31, 2026								October 31, 2025
	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
Trading Securities
Issued or guaranteed by:
Canadian federal government	$	455	$	8,955	$	–	$	9,410	$	757	$	11,554	$	–	$	12,311
Canadian provincial and municipal governments	–		9,219		–		9,219		–		9,035		–		9,035
U.S. federal government	1,865		25,670		–		27,535		3,308		27,594		–		30,902
U.S. states, municipalities and agencies	–		363		–		363		–		1,144		–		1,144
Other governments	241		4,620		–		4,861		199		3,927		–		4,126
NHA MBS, and U.S. agency MBS and CMO	–		74,426		–		74,426		–		56,450		–		56,450
Corporate debt	–		16,583		–		16,583		–		11,614		–		11,614
Trading loans	–		3,449		–		3,449		–		4,568		–		4,568
Corporate equity	57,583		1,389		–		58,972		61,495		658		–		62,153
	60,144		144,674		–		204,818		65,759		126,544		–		192,303
FVTPL Securities
Issued or guaranteed by:
Canadian federal government	–		1,329		–		1,329		56		1,563		–		1,619
Canadian provincial and municipal governments	–		2,393		–		2,393		–		1,578		–		1,578
U.S. federal government	–		1,721		–		1,721		–		1,495		–		1,495
Other governments	–		97		–		97		–		–		–		–
NHA MBS, and U.S. agency MBS and CMO	–		18		–		18		–		18		–		18
Corporate debt	–		9,961		12		9,973		–		8,908		–		8,908
Corporate equity	1,202		856		6,171		8,229		1,090		822		5,824		7,736
	1,202		16,375		6,183		23,760		1,146		14,384		5,824		21,354
FVOCI Securities
Issued or guaranteed by:
Canadian federal government	3,402		55,791		–		59,193		1,158		44,177		–		45,335
Canadian provincial and municipal governments	–		7,612		–		7,612		–		5,644		–		5,644
U.S. federal government	24		27,033		–		27,057		16		20,793		–		20,809
U.S. states, municipalities and agencies	–		4,939		–		4,939		–		5,634		–		5,634
Other governments	47		4,247		–		4,294		37		4,028		–		4,065
NHA MBS, and U.S. agency MBS and CMO	–		29,043		–		29,043		–		27,015		–		27,015
Corporate debt	–		4,739		–		4,739		–		4,515		–		4,515
Corporate equity	–		–		193		193		–		–		192		192
	3,473		133,404		193		137,070		1,211		111,806		192		113,209
Loans
Residential mortgages	–		67		–		67		–		79		–		79
Business and government loans	–		12,786		310		13,096		–		12,921		324		13,245
	–		12,853		310		13,163		–		13,000		324		13,324
Other Assets (1)	10,719		–		1,460		12,179		8,521		–		1,483		10,004
Fair Value Liabilities (2)
Deposits (3)	–		64,679		–		64,679		–		56,162		–		56,162
Securities sold but not yet purchased	13,284		37,814		–		51,098		14,998		39,878		–		54,876


Other liabilities (4)	2,443		44,773		198		47,414		2,142		32,096		–		34,238
	15,727		147,266		198		163,191		17,140		128,136		–		145,276
Derivative Assets
Interest rate contracts	114		13,182		–		13,296		15		8,666		–		8,681
Foreign exchange contracts	95		24,604		4		24,703		43		30,474		2		30,519
Commodity contracts	155		2,748		1		2,904		225		1,224		13		1,462
Equity contracts	182		26,877		2		27,061		275		16,203		10		16,488
Credit default swaps	–		33		–		33		–		1		–		1
	546		67,444		7		67,997		558		56,568		25		57,151
Derivative Liabilities
Interest rate contracts	81		12,937		–		13,018		18		10,081		–		10,099
Foreign exchange contracts	–		22,153		27		22,180		–		26,049		–		26,049
Commodity contracts	141		2,728		4		2,873		196		1,412		–		1,608
Equity contracts	763		30,736		1		31,500		175		20,793		5		20,973
Credit default swaps	–		25		1		26		–		–		–		–
	985		68,579		33		69,597		389		58,335		5		58,729

(1)Other assets include precious metals, segregated fund assets and investment properties in our insurance business, carbon credits, certain receivables and other items measured at fair value.

(2)Interest expense for liabilities carried at fair value is $1,253 million and $3,497 million for the three and nine months ended July 31, 2026, respectively ($832 million and $2,612 million for the three and nine months ended July 31, 2025). Interest expense for liabilities carried at amortized cost is $8,967 million and $25,989 million for the three and nine months ended July 31, 2026, respectively ($9,414 million and $29,416 million for the three and nine months ended July 31, 2025).

(3)Deposits include structured note liabilities, money market and metals deposits designated at FVTPL and certain embedded options related to structured deposits carried at amortized cost.

(4)Other liabilities include certain investment contract liabilities and segregated fund liabilities in our insurance business, certain securitization and structured entities’ liabilities measured at FVTPL, as well as the contingent consideration liability from the acquisition of Burgundy Asset Management Ltd. Refer to Note 13 for more information.

60 BMO Financial Group Third Quarter Report 2026

Quantitative Information about Level 3 Fair Value Measurements

The table below presents the fair values of our significant Level 3 financial instruments measured at fair value on a recurring basis, the valuation techniques used to determine their fair values and the value ranges of significant unobservable inputs used in the valuations. We have not applied any other reasonably possible alternative assumptions to the significant Level 3 categories of private equity investments, as the net asset values are provided by the investment or fund managers.

(Canadian $ in millions, except as noted)

July 31, 2026

Reporting line in fair

Significant

Range of input values (1)

value hierarchy table

Fair value

Valuation techniques

unobservable inputs

Low

High

Private equity

Corporate equity

6,364

Net asset value

EV/EBITDA

Multiple

Investment properties

Other assets

1,362

Income approach

Capitalization rate

Burgundy contingent consideration (2)

Other liabilities

198

Income approach

Discount rate

Forecasted assets under management

(1)The low and high input values represent the lowest and highest actual level of inputs used to value a group of financial instruments in a particular product category. These input ranges do not reflect the level of input uncertainty, but are affected by the specific underlying instruments within each product category. The input ranges will therefore vary from period to period based on the characteristics of the underlying instruments held at each balance sheet date.

(2)Range of inputs not applicable as the value is modeled using a Monte Carlo simulation.

na - not applicable

Significant Transfers

Our policy is to record transfers of assets and liabilities between fair value hierarchy levels at their fair values as at the end of each reporting period, consistent with the date of the determination of fair value. Transfers between Level 1 and Level 2 are dependent on the recency of issuance and availability of quoted market prices in the active market. There were no significant transfers between Level 1 and Level 2 during the three and nine months ended July 31, 2026 and 2025.

Changes in Level 3 Fair Value Measurements

The tables below present a reconciliation of all changes in Level 3 financial instruments for the three and nine months ended July 31, 2026 and

2025, including realized and unrealized gains (losses) included in earnings and other comprehensive income as well as transfers into and out of Level 3. Transfers from Level 2 into Level 3 were due to an increase in unobservable market inputs used in pricing the financial instruments. Transfers out of Level 3 into Level 2 were due to an increase in observable market inputs used in pricing the financial instruments.

BMO Financial Group Third Quarter Report 2026 61

Change in fair value

Movements

Transfers

Change in

unrealized gains

Included

(losses) recorded

Fair Value

in other

Transfers

Fair Value

in income

For the three months ended July 31, 2026

as at April 30,

Included in

comprehensive

Issuances/

Maturities/

into

out of

as at July 31,

for instruments

(Canadian $ in millions)

2026

earnings

income (1)

Purchases

Sales

Settlement

Level 3

2026

still held (2)

Trading Securities

NHA MBS and U.S. agency MBS and CMO

–

Corporate equity

–

Total trading securities

–

FVTPL Securities

Corporate debt

–

Corporate equity

5,818

389

(140)

–

(2)

6,171

Total FVTPL securities

5,821

389

(140)

–

(2)

6,183

FVOCI Securities

Corporate equity

189

–

193

Total FVOCI securities

189

–

193

Business and Government Loans

314

–

(15)

–

310

Other Assets

1,495

(21)

–

(24)

–

1,460

(21)

Derivative Assets

Foreign exchange contracts

(15)

–

(15)

Commodity contracts

–

Equity contracts

–

(5)

–

Credit default swaps

–

Total derivative assets

(14)

–

(5)

(14)

Other Liabilities

135

–

198

Derivative Liabilities

Foreign exchange contracts

–

Commodity contracts

(4)

–

(4)

Equity contracts

–

(5)

Credit default swaps

–

Total derivative liabilities

–

(5)

Change in fair value

Movements

Transfers

Change in

unrealized gains

Included

(losses) recorded

Fair Value

in other

Transfers

Fair Value

in income

For the nine months ended July 31, 2026

as at October 31,

Included in

comprehensive

Issuances/

Maturities/

into

out of

as at July 31,

for instruments

(Canadian $ in millions)

2025

earnings

income (1)

Purchases

Sales

Settlement

Level 3

2026

still held (2)

Trading Securities

NHA MBS and U.S. agency MBS and CMO

–

Corporate equity

–

Total trading securities

–

FVTPL Securities

Corporate debt

–

Corporate equity

5,824

(139)

920

(504)

–

(6)

6,171

Total FVTPL securities

5,824

(130)

923

(504)

–

(6)

6,183

FVOCI Securities

Corporate equity

192

–

193

Total FVOCI securities

192

–

193

Business and Government Loans

324

(26)

–

(15)

–

310

Other Assets

1,483

(18)

–

(10)

(49)

–

1,460

(18)

Derivative Assets

Foreign exchange contracts

–

Commodity contracts

(12)

–

(12)

Equity contracts

(1)

–

(11)

(1)

Credit default swaps

–

Total derivative assets

(11)

–

(11)

Other Liabilities

–

112

–

198

Derivative Liabilities

Foreign exchange contracts

–

Commodity contracts

–

Equity contracts

–

(10)

Credit default swaps

–

Total derivative liabilities

–

(10)

(1) Foreign exchange translation on assets and liabilities held by foreign operations is included in other comprehensive income, net foreign operations.

(2) Changes in unrealized gains (losses) on Trading and FVTPL securities still held on July 31, 2026 are included in earnings for the period.

Unrealized gains (losses) recognized on Level 3 financial instruments may be offset by (losses) gains on economic hedge contracts.

na – not applicable

62 BMO Financial Group Third Quarter Report 2026

Change in fair value

Movements

Transfers

Change in

unrealized gains

Included

(losses) recorded

Fair Value

in other

Transfers

Fair Value

in income

For the three months ended July 31, 2025

as at April 30,

Included in

comprehensive

Issuances/

Maturities/

into

out of

as at July 31,

for instruments

(Canadian $ in millions)

2025

earnings

income (1)

Purchases

Sales

Settlement

Level 3

2025

still held (2)

Trading Securities

NHA MBS and U.S. agency MBS and CMO

–

(5)

–

Corporate equity

–

Total trading securities

–

(5)

–

FVTPL Securities

Corporate debt

–

(36)

–

Corporate equity

5,257

(25)

288

(55)

–

(6)

5,469

Total FVTPL securities

5,293

(25)

288

(55)

–

(42)

5,469

FVOCI Securities

Corporate equity

189

–

190

Total FVOCI securities

189

–

190

Business and Government Loans

382

(17)

–

(46)

–

319

(17)

Other Assets

1,435

–

(15)

–

1,433

–

Derivative Assets

Foreign exchange contracts

–

Commodity contracts

(7)

–

(7)

Equity contracts

–

Credit default swaps

–

(1)

–

Total derivative assets

(5)

–

(1)

–

(5)

Other Liabilities

–

Derivative Liabilities

Foreign exchange contracts

–

Commodity contracts

–

Equity contracts

–

(1)

–

Credit default swaps

–

Total derivative liabilities

–

(1)

–

Change in fair value

Movements

Transfers

Change in

unrealized gains

Included

(losses) recorded

Fair Value

in other

Transfers

Fair Value

in income

For the nine months ended July 31, 2025

as at October 31,

Included in

comprehensive

Issuances/

Maturities/

into

out of

as at July 31,

for instruments

(Canadian $ in millions)

2024

earnings

income (1)

Purchases

Sales

Settlement

Level 3

2025

still held (2)

Trading Securities

NHA MBS and U.S. agency MBS and CMO

–

(5)

–

Corporate equity

–

(6)

–

Total trading securities

–

(5)

–

(6)

–

FVTPL Securities

Corporate debt

–

(38)

–

Corporate equity

4,899

(121)

(11)

902

(194)

–

(6)

5,469

Total FVTPL securities

4,934

(120)

(11)

904

(194)

–

(44)

5,469

FVOCI Securities

Corporate equity

177

–

(15)

–

190

Total FVOCI securities

177

–

(15)

–

190

Business and Government Loans

302

(15)

(1)

–

(52)

–

319

(15)

Other Assets

1,717

(56)

–

214

(7)

(435)

–

1,433

(52)

Derivative Assets

Foreign exchange contracts

–

(42)

–

Commodity contracts

–

Equity contracts

–

Credit default swaps

–

(1)

–

Total derivative assets

–

(43)

–

Other Liabilities

–

Derivative Liabilities

Foreign exchange contracts

–

Commodity contracts

(4)

–

(4)

Equity contracts

–

(3)

–

Credit default swaps

–

(1)

–

Total derivative liabilities

(4)

–

(1)

(3)

–

(4)

(1) Foreign exchange translation on assets and liabilities held by foreign operations is included in other comprehensive income, net foreign operations.

(2) Changes in unrealized gains (losses) on Trading and FVTPL securities still held on July 31, 2025 are included in earnings for the period.

Unrealized gains (losses) recognized on Level 3 financial instruments may be offset by (losses) gains on economic hedge contracts.

na – not applicable

BMO Financial Group Third Quarter Report 2026 63

Note 8: Capital Management

Our objective is to maintain a strong capital position in a cost-effective structure that is appropriate given our target regulatory capital ratios and our internal assessment of required economic capital; underpins our operating segments’ business strategies and considers the market environment; supports depositor, investor and regulator confidence, while building long-term shareholder value; and is consistent with our target credit ratings.

As at July 31, 2026, we met OSFI’s target capital ratio requirements, which include a 2.5% Capital Conservation Buffer, a 1.0% Common Equity Surcharge for Domestic Systemically Important Banks (D-SIBs), a Countercyclical Buffer and a 3.0% Domestic Stability Buffer (DSB) applicable to D-SIBs. On June 19, 2026, OSFI announced the reduction in the DSB level from 3.5% to 3.0%, effective immediately. In addition, OSFI lowered the DSB range from 0% to 4% to 0% to 3%. Our capital position as at July 31, 2026 is further detailed in the Capital Management section of our interim Management’s Discussion and Analysis.

Regulatory Capital and Total Loss Absorbing Capacity Measures, Risk-Weighted Assets and Leverage Exposures (1)


(Canadian $ in millions, except as noted)	July 31, 2026			October 31, 2025
CET1 Capital	$	59,273		$	58,286
Tier 1 Capital	66,864			65,890
Total Capital	75,467			75,562
TLAC	132,620			129,957
Risk-Weighted Assets	454,757			437,945
Leverage Exposures	1,586,178			1,521,813
CET1 Ratio	13.0		%	13.3		%
Tier 1 Capital Ratio	14.7		%	15.0		%
Total Capital Ratio	16.6		%	17.3		%
TLAC Ratio	29.2		%	29.7		%
Leverage Ratio	4.2		%	4.3		%
TLAC Leverage Ratio	8.4		%	8.5		%

(1)Calculated in accordance with OSFI’s Capital Adequacy Requirements Guideline, Leverage Requirements Guideline and Total Loss Absorbing Capacity (TLAC) Guideline.

Note 9: Employee Compensation

Stock Options

We did not grant any stock options during the three months ended July 31, 2026 or 2025. During the nine months ended July 31, 2026, we granted a total of 764,400 stock options (716,633 stock options during the nine months ended July 31, 2025) with a weighted-average fair value of $32.09 per option ($18.46 per option for the nine months ended July 31, 2025).

To determine the fair value of the stock option tranches (i.e. the portion that vests each year) on the grant date, the following ranges of values were used for each option pricing assumption:


For stock options granted during the nine months ended	July 31, 2026		July 31, 2025
Expected dividend yield	2.5% - 2.6%		3.6	%
Expected share price volatility	18.5% - 18.6%		16.7	%
Risk-free rate of return	3.0	%	2.8	%
Expected period until exercise (in years)	6.5 - 7.0		6.5 - 7.0
Exercise price ($)	181.30		141.00

Changes to the input assumptions can result in different fair value estimates.

Pension and Other Employee Future Benefit Expenses

Pension and other employee future benefit expenses are determined as follows:


(Canadian $ in millions)
	Pension plans				Other employee future benefit plans
For the three months ended	July 31, 2026		July 31, 2025		July 31, 2026		July 31, 2025
Current service cost	$	43	$	44	$	1	$	2
Net interest (income) expense (1)	(13)		(12)		10		9
Impact of plan amendments	–		–		–		–
Administrative expense	2		2		–		–

Benefits expense	32		34		11		11
Government pension plans expense (2)	101		96		–		–
Defined contribution expense	71		66		–		–
Total pension and other employee future benefit expenses
recognized in our Consolidated Statement of Income	$	204	$	196	$	11	$	11

(1) Net interest (income) expense is increased by $nil million for pension benefit plans and $1 million for other employee future benefit plans for the three months ended July 31, 2026 ($nil million for pension benefit plans and $1 million for other employee future benefit plans for the three months ended July 31, 2025) as a result of assets written down through other comprehensive income due to the asset ceiling.

(2) Includes Canada Pension Plan, Quebec Pension Plan and U.S. Federal Insurance Contribution Act.

64 BMO Financial Group Third Quarter Report 2026


(Canadian $ in millions)
	Pension benefit plans				Other employee future benefit plans
For the nine months ended	July 31, 2026		July 31, 2025		July 31, 2026		July 31, 2025
Current service cost	$	131	$	133	$	4	$	5
Net interest (income) expense (1)	(41)		(38)		27		28
Impact of plan amendments	–		(19)		–		–
Administrative expense	7		9		–		–

Benefits expense	97		85		31		33
Government pension plans expense (2)	326		310		–		–
Defined contribution expense	254		244		–		–
Total pension and other employee future benefit expenses
recognized in our Consolidated Statement of Income	$	677	$	639	$	31	$	33

(1) Net interest (income) expense is increased by $nil million for pension benefit plans and $3 million for other employee future benefit plans for the nine months ended July 31, 2026 ($nil million for pension benefit plans and $4 million for other employee future benefit plans for the nine months ended July 31, 2025) as a result of assets written down through other comprehensive income due to the asset ceiling.

(2) Includes Canada Pension Plan, Quebec Pension Plan and U.S. Federal Insurance Contribution Act.

Note 10: Earnings Per Share

Basic earnings per share is calculated by dividing net income attributable to bank shareholders, after deducting dividends payable on preferred shares and distributions payable on other equity instruments, by the daily average number of fully paid common shares outstanding throughout the period.

Diluted earnings per share is calculated in the same manner, with further adjustments made to reflect the dilutive impact of instruments convertible into our common shares.

The following tables present our basic and diluted earnings per share:

Basic Earnings Per Common Share


(Canadian $ in millions, except as noted)	For the three months ended				For the nine months ended
	July 31, 2026		July 31, 2025		July 31, 2026		July 31, 2025
Net income attributable to bank shareholders	$	1,748	$	2,327	$	6,864	$	6,421
Dividends on preferred shares and distributions on other equity instruments	(81)		(66)		(301)		(273)
Net income available to common shareholders	$	1,667	$	2,261	$	6,563	$	6,148
Weighted-average number of common shares outstanding (in thousands)	699,361		719,514		703,487		724,820
Basic earnings per common share (Canadian $)	$	2.38	$	3.14	$	9.33	$	8.48

Diluted Earnings Per Common Share


(Canadian $ in millions, except as noted)	For the three months ended				For the nine months ended
	July 31, 2026		July 31, 2025		July 31, 2026		July 31, 2025
Net income available to common shareholders	$	1,667	$	2,261	$	6,563	$	6,148
Weighted-average number of common shares outstanding (in thousands)	699,361		719,514		703,487		724,820
Dilutive impact of stock options (1)
Stock options potentially exercisable	5,252		5,597		5,423		5,912
Common shares potentially repurchased	(2,932)		(4,318)		(3,526)		(4,751)
Weighted-average number of diluted common shares outstanding (in thousands)	701,681		720,793		705,384		725,981
Diluted earnings per common share (Canadian $)	$	2.38	$	3.14	$	9.30	$	8.47

(1)The dilutive effect of stock options was calculated using the treasury stock method. In computing diluted earnings per share, we excluded average stock options outstanding of nil and 422,800 with a weighted-average exercise price of $nil and $199.52 for the three and nine months ended July 31, 2026, respectively (716,633 and 635,554 with a weighted-average exercise price of $149.35 and $150.96 for the three and nine months ended July 31, 2025, respectively), as the average share price for the periods did not exceed the exercise price.

Note 11: Income Taxes

Tax Assessments

Canadian tax authorities have reassessed us for additional income tax and interest in an amount of approximately $1,465 million in respect of certain 2011–2018 Canadian corporate dividends. These reassessments denied certain dividend deductions on the basis that the dividends were received as part of a “dividend rental arrangement”. In general, the tax rules raised by the Canadian tax authorities were prospectively addressed in the 2015 and 2018 Canadian federal budgets. We filed Notices of Appeal with the Tax Court of Canada and the matter is in litigation. We remain of the view that our tax filing positions were appropriate and intend to challenge all reassessments. However, if such challenges are unsuccessful, the additional expense would negatively impact our net income.

BMO Financial Group Third Quarter Report 2026 65

Note 12: Operating Segmentation

Operating Segments

We conduct our business through four operating segments, each of which has a distinct mandate. Our operating segments are Canadian Personal and Commercial Banking (Canadian P&C), U.S. Banking, Wealth Management and Capital Markets, along with a Corporate Services unit.

For additional information refer to Note 25 of our annual consolidated financial statements for the year ended October 31, 2025.

Our results and average assets, grouped by operating segment, are as follows:


(Canadian $ in millions)
	Canadian				Wealth		Capital		Corporate
For the three months ended July 31, 2026	P&C		U.S. Banking (1)		Management		Markets (1)		Services (1) (2)		Total
Net interest income	$	2,558	$	2,390	$	315	$	583	$	(279)	$	5,567
Non-interest revenue	699		644		1,264		1,544		178		4,329
Total Revenue	3,257		3,034		1,579		2,127		(101)		9,896
Provision for credit losses on impaired loans	447		223		2		30		6		708
Provision for (recovery of) credit losses on performing loans	60		(50)		(3)		11		(4)		14
Total provision for credit losses	507		173		(1)		41		2		722
Depreciation and amortization	182		228		68		79		–		557
Non-interest expense	1,217		1,522		966		1,150		1,266		6,121
Income (loss) before taxes and non-controlling interest in subsidiaries	1,351		1,111		546		857		(1,369)		2,496
Provision for (recovery of) income taxes	371		243		138		212		(218)		746
Reported net income (loss)	$	980	$	868	$	408	$	645	$	(1,151)	$	1,750
Non-controlling interest in subsidiaries	$	–	$	1	$	–	$	–	$	1	$	2
Net income (loss) attributable to bank shareholders	$	980	$	867	$	408	$	645	$	(1,152)	$	1,748
Average assets (3)	$	351,274	$	254,477	$	59,923	$	614,772	$	290,028	$	1,570,474

	Canadian				Wealth		Capital		Corporate
For the three months ended July 31, 2025	P&C		U.S. Banking (1)		Management		Markets (1)		Services (1) (2)		Total
Net interest income	$	2,459	$	2,221	$	257	$	729	$	(170)	$	5,496
Non-interest revenue	617		609		1,108		1,047		111		3,492
Total Revenue	3,076		2,830		1,365		1,776		(59)		8,988
Provision for credit losses on impaired loans	489		241		1		33		9		773
Provision for (recovery of) credit losses on performing loans	76		(70)		2		23		(7)		24
Total provision for (recovery of) credit losses	565		171		3		56		2		797
Depreciation and amortization	162		237		54		80		–		533
Non-interest expense	1,179		1,433		788		1,052		120		4,572
Income (loss) before taxes and non-controlling interest in subsidiaries	1,170		989		520		588		(181)		3,086
Provision for (recovery of) income taxes	321		222		128		146		(61)		756
Reported net income (loss)	$	849	$	767	$	392	$	442	$	(120)	$	2,330
Non-controlling interest in subsidiaries	$	–	$	2	$	–	$	–	$	1	$	3
Net income (loss) attributable to bank shareholders	$	849	$	765	$	392	$	442	$	(121)	$	2,327
Average assets (3)	$	345,353	$	251,683	$	53,484	$	514,825	$	268,397	$	1,433,742

(1) Operating segments report on a taxable equivalent basis (teb). Net interest income, revenue and the provision for income taxes are increased on tax-exempt securities to an equivalent before-tax basis to facilitate comparisons of income between taxable and tax-exempt sources. The offset to the groups’ teb adjustments is reflected in Corporate Services net interest income, revenue and provision for income taxes.

(2) Corporate Services includes Technology and Operations.

(3) Included within average assets are average earning assets, which comprise deposits with other banks, deposits at central banks, securities borrowed or purchased under resale agreements, loans and securities. Total average earning assets for the three months ended July 31, 2026 are $1,379,889 million, including $349,292 million for Canadian P&C, $235,937 million for U.S. Banking, and $794,660 million for all other operating segments including Corporate Services (for the three months ended July 31, 2025 - Total: $1,287,815 million, Canadian P&C: $343,805 million, U.S. Banking: $230,849 million and all other operating segments: $713,161 million).

Certain comparative figures have been reclassified to conform with the current period’s presentation.

66 BMO Financial Group Third Quarter Report 2026


(Canadian $ in millions)
	Canadian				Wealth		Capital		Corporate
For the nine months ended July 31, 2026	P&C		U.S. Banking (1)		Management		Markets (1)		Services (1) (2)		Total
Net interest income	$	7,506	$	6,874	$	906	$	1,793	$	(601)	$	16,478
Non-interest revenue	2,106		1,915		3,703		4,660		425		12,809
Total Revenue	9,612		8,789		4,609		6,453		(176)		29,287
Provision for credit losses on impaired loans	1,421		662		5		74		19		2,181
Provision for (recovery of) credit losses on performing loans	120		(86)		(1)		4		(11)		26
Total provision for credit losses	1,541		576		4		78		8		2,207
Depreciation and amortization	533		680		198		238		–		1,649
Non-interest expense	3,661		4,471		2,834		3,533		1,613		16,112
Income (loss) before taxes and non-controlling interest in subsidiaries	3,877		3,062		1,573		2,604		(1,797)		9,319
Provision for (recovery of) income taxes	1,065		662		385		664		(326)		2,450
Reported net income (loss)	$	2,812	$	2,400	$	1,188	$	1,940	$	(1,471)	$	6,869
Non-controlling interest in subsidiaries	$	–	$	3	$	–	$	–	$	2	$	5
Net income (loss) attributable to bank shareholders	$	2,812	$	2,397	$	1,188	$	1,940	$	(1,473)	$	6,864
Average assets (3)	$	348,396	$	247,690	$	57,861	$	601,878	$	279,965	$	1,535,790

	Canadian				Wealth		Capital		Corporate
For the nine months ended July 31, 2025	P&C		U.S. Banking (1)		Management		Markets (1)		Services (1) (2)		Total
Net interest income	$	7,203	$	6,783	$	746	$	1,902	$	(643)	$	15,991
Non-interest revenue	1,869		1,825		3,202		3,726		320		10,942
Total Revenue	9,072		8,608		3,948		5,628		(323)		26,933
Provision for credit losses on impaired loans	1,456		801		3		96		41		2,397
Provision for (recovery of) credit losses on performing loans	259		123		3		107		(27)		465
Total provision for credit losses	1,715		924		6		203		14		2,862
Depreciation and amortization	472		745		161		244		–		1,622
Non-interest expense	3,453		4,391		2,398		3,235		452		13,929
Income (loss) before taxes and non-controlling interest in subsidiaries	3,432		2,548		1,383		1,946		(789)		8,520
Provision for (recovery of) income taxes	942		545		343		481		(221)		2,090
Reported net income (loss)	$	2,490	$	2,003	$	1,040	$	1,465	$	(568)	$	6,430
Non-controlling interest in subsidiaries	$	–	$	7	$	–	$	–	$	2	$	9
Net income (loss) attributable to bank shareholders	$	2,490	$	1,996	$	1,040	$	1,465	$	(570)	$	6,421
Average assets (3)	$	343,543	$	259,617	$	53,038	$	552,478	$	277,446	$	1,486,122

(2) Corporate Services includes Technology and Operations.

(3) Included within average assets are average earning assets, which comprise deposits with other banks, deposits at central banks, securities borrowed or purchased under resale agreements, loans and securities. Total average earning assets for the nine months ended July 31, 2026 are $1,352,419 million, including $346,697 million for Canadian P&C, $228,772 million for U.S. Banking, and $776,950 million for all other operating segments including Corporate Services (for the nine months ended July 31, 2025 - Total: $1,305,339 million, Canadian P&C: $341,670 million, U.S. Banking: $238,149 million and all other operating segments: $725,520 million).

Certain comparative figures have been reclassified to conform with the current period’s presentation.

Note 13: Acquisitions and Divestitures

Acquisitions

Burgundy Asset Management Ltd.

On November 1, 2025, we completed the acquisition of Burgundy Asset Management Ltd., a leading independent wealth manager in Canada, providing discretionary investment management for private clients, foundations, endowments, pensions and family offices. Burgundy operates as a wholly-owned subsidiary of BMO. The purchase price of $654 million comprised $61 million in cash, $481 million in shares of a wholly-owned subsidiary of BMO that were exchanged into BMO common shares on close, and $112 million of contingent consideration payable in similarly exchangeable shares. The $112 million of contingent consideration represents the fair value of a holdback to be paid subject to Burgundy maintaining certain assets under management 18 months post-close and the fair value of a potential earn-out, payable in the future based on the achievement of certain growth targets. The acquisition was accounted for as a business combination, and the acquired business and corresponding goodwill are included in our Wealth Management reporting segment.

As part of this acquisition, we acquired customer relationship intangible assets valued at $375 million and goodwill of $319 million. Customer relationship intangible assets will be amortized over 12 years. Goodwill primarily reflects the expected future economic benefits from expanding our wealth advice and private investment counsel offering and is not deductible for tax purposes.

BMO Financial Group Third Quarter Report 2026 67

The fair values of the assets acquired and liabilities assumed at the date of acquisition are as follows:


(Canadian $ in millions)
	November 1, 2025
Customer relationship intangible assets	$	375
Other assets	89
Total assets	464
Deferred tax liabilities	99
Other liabilities	30
Total liabilities	129
Goodwill	319
Purchase price	$	654

The purchase price allocation for Burgundy is subject to refinement as we complete the valuation of the assets acquired and liabilities assumed.

Contingent consideration is remeasured at fair value each reporting period. The fair value of contingent consideration was remeasured to $198 million in the third quarter, and the resulting increases of $63 million and $86 million for the three and nine months ended July 31, 2026, respectively, were recorded as a reduction in non-interest revenue, other revenues. Changes in the fair value of the contingent consideration are not recognized for tax purposes.

Euroz Hartleys Group Capital Markets Business

On June 29, 2026, we entered into a definitive agreement to acquire the Australia-based metals and mining focused capital markets business of Euroz Hartleys Group Limited (Euroz Hartleys). This acquisition is expected to close in the fourth quarter of calendar 2026, subject to Euroz Hartleys shareholder approval, regulatory approvals and satisfaction of other customary closing conditions. Following closing, the acquired business will form part of the Capital Markets operating segment. The impact of this acquisition is not expected to be material to the bank.

Divestitures

Sale of Certain U.S. Branches

On October 16, 2025, we entered into a definitive agreement to sell 138 BMO branches in select U.S. markets that are part of our U.S. Banking operating segment to First-Citizens Bank & Trust Company (First Citizens Bank). Under the terms of this agreement, First Citizens Bank will assume approximately US$5.3 billion (CAD$7.4 billion) in deposits and purchase approximately US$0.7 billion (CAD$1.0 billion) in loans as at July 31, 2026, for a net deposit premium of approximately 5 percent paid on closing. This transaction is expected to close in the fourth quarter of fiscal 2026, subject to regulatory approvals and customary closing conditions. As this transaction met the accounting requirements for assets held for sale, we recognized a write-down of goodwill of US$73 million (CAD$102 million) before and after-tax in the fourth quarter of 2025. In the second quarter of 2026, we recognized an additional write-down of goodwill of US$13 million (CAD$17 million) before and after-tax based on updated assumptions. The write-down is included in non-interest expense, other, in our Consolidated Statement of Income, reported in Corporate Services. These amounts are subject to closing adjustments, including fair values and foreign exchange rates prevailing at the date of closing.

Sale of Transportation Finance and Vendor Finance Business

On May 11, 2026, we entered into a definitive agreement with Stonepeak for the sale of BMO’s Transportation Finance and Vendor Finance businesses, including related loan portfolios which are part of our U.S. Banking and Canadian P&C operating segments, representing approximately US$9.2 billion (CAD$12.9 billion) and CAD$1.7 billion respectively, as at July 31, 2026. Stonepeak will acquire the assets of these businesses for cash consideration and an earn-out contingent upon the business achieving specified future performance targets. BMO will use a portion of the consideration to invest an approximate 19.9% equity interest in the new entity.

As the transaction met the accounting requirements for assets held for sale, we recognized a charge of $1.1 billion pre-tax ($1.0 billion after-tax), primarily related to goodwill in the third quarter of 2026. The charge is included in non-interest expense, other, in our Consolidated Statement of Income and is reported in Corporate Services. The final amount is subject to closing adjustments and foreign exchange rates prevailing at the date of closing. This transaction is expected to close in the fourth quarter of fiscal 2026, subject to regulatory approvals and customary closing conditions.

Subsequent Event

Sale of Moneris Solutions Corporation

On August 10, 2026, we, together with Royal Bank of Canada, entered into a definitive agreement with Francisco Partners for the sale of jointly-owned Moneris Solutions Corporation for cash consideration of approximately $2.0 billion, of which BMO’s share is 50%. We expect to record a gain on closing of approximately $620 million pre-tax ($600 million after-tax), which will be recorded in non-interest revenue, in our Consolidated Statement of Income, reported in Corporate Services. The transaction is expected to close by the end of the first quarter of fiscal year 2027, subject to regulatory approvals and customary closing conditions.

68 BMO Financial Group Third Quarter Report 2026