At the lender’s investor day on Thursday, Piyush Agrawal pushed back on concerns that AI is creating immediate credit risk, arguing that “disruption risk and obsolescence” have long been part of underwriting—“well before AI.” (The Logic)

Talking point: Agrawal emphasized that BMO’s software portfolio is “less than one per cent,” consisting of established, “cash-flow positive” clients that bankers know well. He said any AI-driven obsolescence risk is “not an immediate impact” on provisions for bad loans. BMO now expects AI to generate more than $1 billion in additional operating profit by 2030. Meanwhile, CFO Rahul Nalgirkar said BMO is targeting a CET1 ratio—a measure of a lender’s ability to absorb losses—of 12.5 per cent to 13 per cent by the end of 2027—below the Big Six average of 13.6 per cent in the fourth quarter last year. He expects that will support its goal of reaching a 15 per cent return on equity by the end of 2027. Jefferies analyst John Aiken wrote in a note to clients that BMO “has been the most vocal of the group” about operating at lower capital levels.

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