Please be advised that this conference call is being recorded. Good morning and welcome to the BMO Financial Group’s Q3 2020 Earnings Release and Conference Call for August 25, 2020. Your host for today is Ms. Jill Homenuk, Head of Investor Relations. Ms. Homenuk, please go ahead.

Thank you. Good morning and thanks for joining us today. Our agenda for today’s investor presentation is as follows: We will begin the call with remarks from Darryl White, BMO’s CEO, followed by presentations from Tom Flynn, the bank’s Chief Financial Officer and Pat Cronin, our Chief Risk Officer. We have with us today Ernie Johannson from Canadian P&C and Dave Casper from U.S. P&C; Dan Barclay is here for BMO Capital Markets and Joanna Rotenberg is here for BMO Wealth Management. After their presentations, we will have a question-and-answer period where we will take questions from pre-qualified analysts. To give everyone an opportunity to participate, please keep it to one question. On behalf of those speaking today, I note that forward-looking statements maybe made during this call. Actual results could differ materially from forecasts, projections or conclusions in these statements. I would also remind listeners that the bank uses non-GAAP financial measures to arrive at adjusted results to assess and measure performance by business and the overall bank. Management assesses performance on a reported and adjusted basis and considers both to be useful in assessing underlying business performance. Darryl and Tom will be referring to adjusted results in their remarks unless otherwise noted as reported. Additional information on adjusting items, the bank’s reported results and factors and assumptions related to forward-looking information can be found in our 2019 Annual Report and our third quarter 2020 report to shareholders. With that, I will hand things over to Darryl.

Thank you, Jill and good morning everyone and thank you for joining us today. Today, we delivered adjusted earnings per share of $1.85 and strong pre-provision pre-tax earnings of $2.6 billion, up 12%, allowing us to absorb prudent loan loss provisioning and deliver sustained capital strength. Year-to-date, PPPT was $7 billion, up 7%. Our U.S. segment again demonstrated the value of its mature and scalable platform with PPPT in the quarter, up 31%. In this challenging environment, diversification matters more than ever. Our diversification across both businesses and jurisdictions was a key driver to the strength and resiliency of our financial performance. For the quarter, our total bank efficiency ratio was 56.8% and operating leverage was 5.3%. Year-to-date, we have delivered operating leverage of 2.9% despite the challenging environment. Expense management was strong in the quarter, with expenses down 2% year-over-year and also from Q2. We are maintaining disciplined expense management as we said we would, targeting overall expenses to be flat for the year and we intend to carry this year’s disciplined approach into 2021. We are as committed as ever to be a more agile, more efficient bank and we are applying lessons from the recent experience to accelerate our progress. Our CET1 ratio is strong at 11.6%. And today, we announced a quarterly dividend of $1.06 per common share. Together, we have all been facing one of the most challenging economic periods in history. And although uncertainty remains, there are signs of optimism. The resiliency of our customers, our employees and the economies we operate in has been admirable. Adding to the uncertainty of COVID, we have recently been reminded of how far our society still has to go to eliminate racial injustices. BMO will always stand up for a society that is more just where all…

Thank you, Darryl and good morning everyone. My comments will start on Slide 8 with the highlights of our results. Our diversified business has produced good results in Q3 despite the challenges we faced given the pandemic. Pre-provision pre-tax earnings growth was strong and we continue to be in a very good spot with our capital and liquidity positions. Q3 reported EPS was $1.81 and net income was $1.2 billion. Adjusted EPS was $1.85 and adjusted net income was $1.3 billion, down from last year due to higher credit provisions. Adjusting items are similar in character to past quarters and are shown on Slide 29. Turning now to revenue, third quarter net revenue was $6 billion, up 4% from last year with good revenue performance in Capital Markets and Wealth and P&C banking businesses affected by lower interest rates. Net interest income of $3.5 billion was up 10%. On an ex-trading basis, net interest income was down 1% reflecting lower interest rates and lower results in Corporate Services. Net non-interest revenue was $2.5 billion compared to $2.6 billion last year. We continue to focus on expense management. Expenses were down 2% and down 3% in constant currency and excluding a gain on an office building sale last year. The provision for credit losses was $1.1 billion and Pat will speak to this in his remarks. Moving now to Slide 9 for capital, our capital position continues to be strong and well above regulatory requirements. The common equity Tier 1 ratio was 11.6% up 60 basis points from Q2. As shown on the slide, the change in the ratio reflects growth in retained earnings, lower risk weighted assets, the adjustment for transitional arrangements for expected credit loss provisioning and other smaller net positive items. Lower risk weighted assets primarily reflect a…

Thank you, Tom and good morning everyone. The current COVID-19 pandemic continues to have an impact on our risk profile and the evolving nature of the crisis continues to inform our positioning and provisioning. We remain confident that our strong risk position going into the crisis and our long track record of successfully managing risk through challenging times will translate into manageable credit results as was the case this quarter. Starting on Slide 16, the provision for credit losses was $1.054 billion or 89 basis points, down from $1.118 billion or 94 basis points last quarter. PCL and impaired loans increased modestly from $413 million last quarter to $446 million this quarter or from 35 basis points to 38 basis points. The provision for performing loans was $608 million versus $705 million in the prior quarter. Looking at the PCL and impaired loan results by operating group, the quarter-over-quarter increase was driven by higher provisions in Canadian P&C and Capital Markets partially offset by lower provisions in U.S. P&C and Wealth Management. PCL on impaired loans in Canadian consumer increased slightly, while Canadian commercial provisions increased principally due to COVID-related losses. U.S. consumer PCL on impaired loans was flat compared to last quarter, while U.S. commercial losses decreased including in our transportation finance business, highlighting the resilient nature of the U.S. commercial portfolio and the strong underwriting practices across all of our lending businesses. Capital Markets impaired losses increased modestly as oil and gas provisions remained at an elevated level though within the range of our expectations for the quarter. We also saw impairment in COVID impacted sectors that contributed to capital markets, PCL on impaired loans as well this quarter. Turning to Slide 17, the $608 million provision for credit losses on performing loans in the current quarter reflects…

Thank you. [Operator Instructions] And the first question is from Ebrahim Poonawala from Bank of America Securities. Please go ahead.

Good morning. I guess, the question is for Pat, just following-up, I think Pat you mentioned that you expect in debt PCL to be in the 40 basis points range? Just talk to us around the visibility that you have when you think about deferrals probably 90% of them expiring in the fourth quarter around deformation for impaired loans both U.S. and Canada like when we talk to the U.S. banks shared has a still high degree of uncertainty around how things play out over the next quarter to once deferrals come to an end etcetera. So, give us a sense of how your confidence around what you are seeing credit and the migration patterns you expect both in the U.S. and Canada over the next quarter or two?

Okay, sure. Thanks for the question, Ebrahim. Let me start with formations. Obviously, they were elevated again this quarter and this is two quarters in a row. Really what you are seeing there is a couple of things as I noted in my speech, we did have one very lumpy addition to formations this quarter, it was about $300 million of that total formation number you saw there. And we don’t expect to take a loss we look at our collateral as more than covering our loan value. So I think you have to be a bit cautious when you look at high formations and even GIL balances when you think about the impact on losses, and of course, keep in mind that our current impaired loan provisions that we have taken in Q2, Q3, accurately, we think, reflect the impaired balances that we have today. So looking forward, obviously, we are going to see continued stress in the COVID impacted sectors. And that’s really what you are seeing this quarter, you are seeing provisions and formations showing up in oil and gas. As we highlighted last quarter, we expect to see that continue for the next two quarters. And that’s what’s partly informing our thinking about our impaired loss outlook that I just gave you. We have also done some very granular work around the consumer deferred balances. As you can imagine, we have very good information now about cash balances about credit card spending patterns. And that has allowed us to do some very deep segmentation of that portfolio. And in part that’s what’s informed the performing provision this quarter. And so we think we are adequately prepared there for what might be coming when consumer deferrals roll off. And then, lastly, another maybe guideposts for you if…

And barring a second or third wave, should we assume performing PCLs go back to closer to pre-COVID levels than what we have seen in the last two quarters?

Yes, we think we are adequately provisioned right now, that provision we took this quarter obviously reflects, the risk of that second and third wave now. So I would say barring any real major changes in the macro environment, I would expect to see the performing provision decline quite substantially over the course of the next quarter or two.

Alright. Thank you very much.

Thank you. The next question is from John Aiken from Barclays. Please go ahead.

Good morning. The – on deposit growth that you have experienced has been quite impressive. Obviously, as of the your prepared commentary talking about customers wanting to maintain liquidity at this stage in the game, do you have any sense in terms of how sticky these deposits may be? And if you don’t, when do you think you might have that sense? And then Tom, if you can add on and give us some sense in terms of what impact this heightened level of deposits has had on the NIM compression experienced in the quarter, please?

So, thank you for the question. On the deposits, we feel very, very good, I would say about our deposit growth. There is lots of liquidity as a general matter, in the system and out and about generally, as you know, but the positive growth has been above average and it does reflect a big focus that we have had on deposits in the bank over the last few years. And so we are happy to have the liquidity and feel good about the underlying business performance. We do think a portion of the excess deposit flow that we have seen over the last couple of quarters, declines gradually over the next year or so and a portion of it we think will stay and is permanent. And there is obviously a fair bit of uncertainty around exactly how that plays out. But in our management, we are assuming a portion of the extraordinary flows with the very, very high growth rates that you have seen does result in some gradual decline over the course of the next year. And then I am glad you asked the question about the impact on NIM, we are sitting on meaningful excess liquidity. We earned a lower rate of return on that liquidity. We are basically invested in shortish dated securities and we have got central bank deposits and so that does have a downward impact on NIM. And so if you look at the total bank, excluding trading margin change in the quarter, it was down 17 basis points. Excluding the impact of the higher level of excess liquidity, it would have been down about 10. And so meaningful impact from the excess liquidity and on the all bank margin, we were down about 11 bps and around half of that was due to the excess liquidity. And so as we look forward, if some of those deposits do get redeployed as customers do whatever they are going to do over time that will have a slight positive impact on NIM over the course of the next year.

Thanks for the color, Tom. I will re-queue.

Thank you. The next question is from Gabriel Dechaine from National Bank Financial. Please go ahead.

Good morning. Can you hear me?

Yes, we got you, Gabe.

Okay. Just want to ask about the forbearance numbers or the loan deferring payment and if you have visibility on or what you are modeling, I guess for how those balances evolve over the next few months or quarters and where you end up in terms of the percentage that go back to normal payment patterns versus those that don’t? And if you can go product by product obviously mortgages is the biggest chunk of that?

Sure, thanks. It’s Pat, Gabriel. Thanks for the question. So I guess I am not sure if you are asking in terms of balances, but that’s probably pretty straightforward. We would expect the bulk of the consumer deferrals to roll off in Q4. We wouldn’t anticipate giving out additional deferrals there. We think we will move much more just simply to a case by case with our consumer customers after that. And then similarly for wholesale, you have seen – you can see in the MD&A, a big chunk of the balances, have actually already rolled off. And as I indicated in my speech, we are seeing the vast majority of those not opt for a second extension. Typically, we granted about 3-month extensions there, most are not – did not want or need second extension. And of those – of that very large majority that expired we are seeing delinquency rates actually quite low, just in rough, rough order of magnitude kind of in the kind of 1% to 2% zone delinquency rates in terms of those that expired, so reasonably encouraging. You could make an argument that those that have gone for second extensions, which again is a pretty small percentage of the total might be lower credit quality. So, you might see that delinquency rate drift up a little bit, but that’s how we are thinking about what’s going to happen when deferrals roll off. We actually based on what we are seeing so far and you will keep in mind in consumer even though you don’t really see it in MD&A, we have had about $4 billion of consumer balances also come up for expiry. And you don’t see it because we have also given out early in the quarter, we offset that with some additional deferrals we granted, but if you look at just what consumer deferrals came up for expiry in the quarter, the experience was pretty similar. The vast majority of them don’t opt for a second extension and the delinquency levels that we are seeing in that segment are kind of in and around that same ballpark. And so as we look out that’s why and again, when you compare that to the performing provisions that we have now taken, which contemplate potential for our W shaped recovery or extension of the crisis, 57 basis points of coverage in Canadian consumer gives us some pretty good confidence that even if that does turn out to be maybe higher delinquencies than we think, there is some good performing provision coverage there as well. And the story is pretty much the same on wholesale.

And I was hoping maybe it’s just too tough to put a number out there, but is it bulk when you hit a bulk of loans or go back to normal at 70%, 80%, 90%, that anything you can provide there? Because it does kind of inform how we would calculate our impaired loan balances that should be peaking in 2021?

Yes, I guess it’s really hard for me to forecast, because it’s going to depend so much on the health path that we take over the fall, but all I can tell you is what we are seeing so far and particularly in wholesale, more than half of the deferrals have now expired. So, it’s a pretty good dataset and you could think of it as kind of 90% don’t need a second extension. And so we will see what the payment pattern looks like of that 90%, but I would expect it to be – to go back to normal and so kind of a 90:10 kind of a number is kind of where we are now and obviously in the fall, that’s going to be higher, because the extensions will mature. And so if I had to cop it, I’d probably put the delinquency rates kind of in the somewhere between kind of 1% to 5%ish of the different balances as they roll.

Got it. And then…

Gabe, sorry, we are just going to have to move on to the next question now.

Okay, thanks.

Thank you.

Thank you. The next question is from Paul Holden from CIBC. Please go ahead.

Thank you. Good morning. So, one question for you, in terms of the – your expectations around impairments and/or credit migration, what kind of impact would you expect that to have on CET1 over the next 12 to 18 months, any kind of guidance you can provide us there would be helpful?

Yes, it’s Tom. Thanks for the questions. The short answer would be we don’t think it will be a significant factor on the CET1 ratio. We have looked at how different scenarios playing out related to the deferred loans might impact the CET1 ratio and that works as the number shouldn’t be large. We don’t expect it to be a big thing that we would be talking about in Q4 or Q1. And then if you broaden the question out a bit and go to migration generally, we expect a little bit of pressure all else equal from the margin as a result of migration, which we have talked about before, but obviously feel good about where the ratio landed in the quarter and our ability to absorb that.

Got it. Okay, thank you.

Thank you. The next question is from Steve Theriault from Eight Capital. Please go ahead.

Thanks very much. Probably sticking with Tom, after the big swing in CET1, a couple of other sort of follow-ups from Paul in terms of asset quality, so can you talk about – and we think about going forward, have we seen most of the impact from the reversal of the draw-downs like I said most have run its course? Also wondering, Tom, if you can give us a little bit of some color around the model updates?

Yes, sure. So, on the first question related to whether we have seen the impact of the reversal of the loan draws, I would say that the answer to that is yes. So in Q2, we and the industry saw very significant loan growth, resulting from higher loan utilization that put some pressure on the ratio for us and for others. And this quarter those draws basically reversed. And it was a pretty amazing curve when you look at there was a sharp spike up in Q2 and then a steep glide path down in Q3. And we are now back to pretty much a normalized level. So, I wouldn’t expect any meaningful ongoing movement one way or another from that. I think it is important to note that although we had the movement in balances related to the line draw activity, business and government loans are actually up 3% from the end of Q1 to the end of Q3. So there is underlying growth in the portfolio through that period despite the big up and the big down. And then on the ratio generally, we are comfortable with it, we expect a little bit of migration going forward. Growth will be dependent to a degree on the outlook for the economy, but we expect the ratio to continue to be above 11% as we look forward over the next several quarters.

Is it too early, do you think about removing the DRIP discount or you let that run its course a little bit just given the continued uncertainty?

Yes, we have announced in the materials that we have eliminated the DRIP discount. So, yes, so we turned it on at a moment in the pandemic when there was very high uncertainty and we had the very significant line draw utilization that we talked about. And so we don’t have any regrets over having done it, but given where we sit now, it’s not needed and we have eliminated it.

That’s great. Thanks, Tom.

Thank you. The next question is from Meny Grauman from Scotiabank. Please go ahead. Mr. Grauman, your line is open. He has removed himself from the queue. The next question will be from Doug Young from Desjardins Capital Markets. Please go ahead.

Hi, good morning. Just maybe back to Pat, I just want to maybe get a better understanding of what drove the performing loan PCLs, because it doesn’t sound like it was changing your FLI, it doesn’t sound like it was changed in your scenario ratings, was this more a management overlay and just taking a look at migration? And then just kind of tangled into that, as you have indicated that you expect performing loan PCLs to move quite a bit lower and subsequent to this, is this just – is this after this quarter should we just be thinking about growth and a little bit from migration as being the two main drivers? Thanks.

Sure. So, I will start with your last question first. The answer is yes, we would expect going forward you are definitely going to still continue to see migration. As I said in my opening comments, migration has actually unfolded a bit, somewhat better than we would have expected so, but that will still be a feature in coming quarters and then we would expect a return to loan growth and so that balance increase will drive it. In terms of our thinking around the $608 million, it’s really a combination of a few things. You are right the macro changes didn’t really drive much this quarter and balance changes actually reduced the provision. We did see some migration in there. So that puts some upward pressure on it, but again somewhat less than we thought. So really it was a function. We did change our scenario weights this quarter, shifting reduced weighting on the benign scenario just given the heightened uncertainty in Q3 relative to Q2. We thought the possibility of the optimistic scenario had definitely declined. And then maybe more importantly, what’s driving the weighting of the adverse scenario is as I said in my comments, the belief that there is now kind of a fourth scenario out there, the W shape that has really the effect, that’s a nonlinear effect on credit losses, the longer we go, the more you start causing stress in companies outside of some of the more COVID impacted sectors. And so we tried to capture that with a heavier weighting on our adverse scenario. So that was the scenario weight change. And then we did apply some expert credit judgment this quarter for a couple of reasons. One, the very granular work that I referred to on the consumer deferred population. We now have a quarter worth of spending pattern and behavioral pattern data on those customers. So, we have a better sense where the high risk customers are. And so we topped up the estimate based on that additional work that we have done. We did put in some additional provisions for based on what we were seeing in some of the COVID impacted sectors, our view is that loss estimation models that look back at history can’t really factor in the very unique impact on things like hotels and restaurants and fitness facilities, where they are not just exposed to economic decline, but outright closure. And then lastly, we are seeing some slightly higher loss given default rates as we work out some of our distressed loans. In this environment, the workout options are just lower than they would be in a normal environment. And so as we roll forward, we would expect that to continue particularly for those COVID stress sectors. And so we wanted to factor that in as well. And the cumulative effect of all of that added up to the $608 million that you see this quarter.

So, I guess just like the, I guess it could be growth, it can be migration and then it’s duration changes relative to your expectations, that’s another thing to think about, is that?

Yes, that’s absolutely correct. But with that said, we think when we now look at our total coverage we actually are acknowledging some – of the risk of some extension and duration already. So, unless it gets quite a bit worse in terms of expected duration, we think we are covered. I would have to caveat all that with of course there is a huge amount of uncertainty out there, but we have started to factor in that risk of elongation of the recovery.

Okay, thank you.

Thank you. The next question is from Darko Mihelic from RBC Capital Markets. Please go ahead.

Hi, thank you. Good morning. Maybe stay with Pat, one of the things that might be helpful for us is to understand amongst your deferral portfolio, how many – on the consumer side, how many are receiving CERB payments? And of the $4 billion that was repaid, is the delinquency ratio so small, because they are actually receiving CERB payments still? And similarly, in the commercial side, how many of your commercial borrowers are tapping government programs? Maybe that would be a helpful statistic to know?

Hey, Darko, it’s Darryl. I am going to suggest we ask Ernie to come in on the first part of your question on how the consumers, is behaving around CERB and then Pat can cap you off on the outlook.

Good morning, Darko. Just a quick response on the CERB, what we typically find is that on the particularly in the lower end or the higher risk segments we will see a little bit more CERB. So, out of all the CERB customers we have in our franchise today, about 10% of them are in our hardship program that gives you a perspective of the size. So, it’s not a full driver, but it’s certainly present. Let me use that language. And so if you think about going forward, as we see customers coming out of the program, we are monitoring their behaviors as Pat has already said, they are making payments and just of particular note, right now, we currently have a large portion of those in hardship continuing to make payments as well.

And then with respect to wholesale, I think I am – I don’t have the number in front of me, but I can tell you that it’s a fairly modest proportion particularly when you think about the fact that there isn’t really a lot of direct to wholesale support coming from the government relief programs. But within – and the Canadian portfolio actually now has the disproportionate share of deferrals. We actually have seen a higher level of deferrals expire in the U.S. than in Canada just given the size of some of the accounts in Canada, they tend to be smaller and have slightly lower credit quality that are taking deferrals. So, the amount that are on government relief or have taken government relief loans in our wholesale portfolios is relatively small.

Thank you. Just to follow-up with Ernie’s answer, the 10% number is that 10% of the deferred that earn – what you call the hardship program or do you mean 10% of the total portfolio?

Of the total portfolio of CERB. So what we are finding is you have a number of customers who are in the deferral program that are not on CERB and are continuing to make payments as well as I said.

Okay, thank you.

Thank you. The next question is from Mario Mendonca from TD Securities. Please go ahead.

Good morning. If you could just sort of clean that one up, just so I understand a little better pattern in building up the provisions, are you compensating a period when the government support both for individuals and for corporates has expired, does that – are you trying to build that into your allowances?

Yes, but – and thanks for the question, Mario, I would say not explicitly, we – but certainly with when I talk about the potential for a W shaped recovery and the impact that that would have that the – you could see that the cause of that might be a reduction in government relief payments, but we certainly haven’t contemplated that specifically as we think about the numbers, no.

So, just if we look forward then, how should we think about this impacting your results, could we see some period in 2021 then where impaired loan losses moving very higher, but they are not necessarily offset by the release of the performing loan losses, is that something that could play out?

Yes, that’s really going to be a function of the trajectory of the pandemic. And certainly if we see a recovery much faster than the performing provision now contemplates, then the mathematical answer to that would be yes.

Okay. Just one real quick one, on the liquidities, one ratio that I keep track of and I am not suggesting that it’s something that the bank will be familiar with, but just capturing all your liquidities and comparing that to your loan balance. That number is obviously grown a lot in the last few quarters up to like 71% last year was probably in the mid-50s. When you – how do you look at that? And how do you look at liquidity is going forward should that normalize in the next few quarters back to the historical pattern of about sort of 55%, 56% liquidity for loans?

Yes, it’s Tom, Mario. So, you can look at different balancing metrics related to the amount of liquidity on the balance sheet and regardless of the metric you look at the conclusion would be that we currently have a lot of liquidity on the balance sheet. It reflects the liquidity in the system, I think, a degree of conservative behavior on the part of retail and commercial customers and we do expect the excess liquidity to decline gradually overtime. And so, that means, it likely sticks around through most of next year and potentially a bit into the following year. And the way we look at it as we manage the balance sheet in its components. And so at a point in time, we have an amount of what we consider to be just pure outright excess liquidity, and that’s over and above all the needs we would have on the balance sheet including the amount of normal what we call supplemental liquidity that we hold which is kind of our liquidity buffer. And all about liquidity, as we talked about earlier is putting some downward pressure on the net interest margin as the liquidity comes down over the course of the next year or so that would be a bit of a positive impact on the margin. And from our P&L perspective, it actually is not a big deal. Because, there is uncertainty about the timing of the reversal of the strong flows, we are investing that excess liquidity in a way that, gives us good underlying asset liquidity. And so the yields earning a relatively low and net when you look at what we pay to the customers it’s not a big item one way or the other from a P&L perspective.

Thank you.

Thank you. The next question is from Many Grauman from Scotiabank. Please go ahead.

Hi, good morning. I hope you can hear me now.

We can.

The question I wanted to ask was just a follow-up on capital we have gone through the mother of all stress tests now. So I am wondering is there any validity to the view that we went into this crisis with capital ratios that were too high and as you look to the other side, would you be comfortable running with lower capital ratios given? We are at 11, 6 now we had, again, the biggest crisis we could ever imagine. And it looks to be in great shape, you eliminate the discount. So I am just wondering your thoughts on that.

It’s Tom. I will take that. My mind actually goes to a slightly different place on the question. So we feel very good about the capital ratio. That was true last quarter. And it’s true this quarter, we think we have got lots of capital for the risk in the business and to convey, confidence to our stakeholders. And one of the outstanding questions that the market has kind of had, I would say around bank valuations as whether, overtime there would be some higher multiple attach to the sector given the reduced risk that results from higher capital levels and higher liquidity levels. And the industry is relevant to 10 years ago it was operating with much, much, much higher levels of capital and liquidity, multiples, I would say really haven’t re-rated to reflect that greater stability. And so we have some hope, when we get through this, people will look back and reflect on the multiple given the higher security that results from the capital position. Maybe there’s a little bit of room on the capital ratio itself. But the stronger thought I have is around the quality of the balance sheet, the quality of the income stream and the result in multiple.

Thanks for them.

Thank you. The next question is from Nigel D’Souza from Veritas Investment Research, please go ahead. Nigel D’Souza: Thank you. Good morning. So Pat you mentioned that you took a very close look at the deferral balances this quarter and you scrubbed it fairly well. And I was wondering if you could touch on the mix of Stage 2 loans in the deferral book and there was a meaningful increase in those stage two loans. And the reason I asked that is because when I look at your stage two bounces, the move marginally higher for mortgages and commercial, but they are actually down for credit cards and other consumers. So that impacts performing loans in the quarter from the deferrals was that driven by migration of stage two or did you take in more allowances in what you already had placed in stage two for deferral loans, or is it a bit of both?

Yes, it’s actually a little bit of both. I think that what you may have seen over the course of Q2 and Q3, the really the only thing that happened that was different, that caused impaired formations to be different over the two quarters was changes in collections practices. So we actually reduced our intensity of collections quite a bit in Q2, obviously, to be sensitive to our customers that were under stress. And then we resumed normal collections practices in Q3. And that caused some distortion in migration between stages over the quarter and a little bit of distortion in the build up the impaired loan balances between the two quarters. Nigel D’Souza: Okay, any touch or any comments on stage two relative to the deferrals itself? Have you meaningful increase the amount sitting in stage two currently or is that relatively safe?

It’s relatively the same. Nigel D’Souza: Okay, thank you. Appreciate it.

Thank you. There are no further questions at this time. I would like to turn the meeting back over to Mr. White

Thank you operator, I will wrap up with a recap of some of the key drivers that we think above from the perspective of our performance and our positioning for the future. There are four of them. Number one, we have strong operating performance and momentum. You have all had a lot of great questions for Tom and Pat through this call. And it’s been fun to watch them work. But we also want to acknowledge the great performance of our operating businesses that have come through in a really good way through the particularly challenging environment and we think we have further opportunities for targeted share gains and growth over time. Secondly, as you heard today, we are prudently provisioned we expect to continue to outperform the industry on credit, which has been a defining strength of BMO for decades. Thirdly, we are delivering on our expense commitments to you and we expect it to do more. And fourthly as you heard today we have got a strong capital position 11.6% CET1 and liquidity at 147% LCR which tells you that we have the capacity to absorb any additional uncertainty while at the same time maintaining the flexibility to invest and grow so putting it all together. I think what you are seeing in this quarter is the strength and resilience of our diversified business model tested and proven performing well. And we are confident in both our defensive positioning and our ability to outperform in the eventual economic recovery. So thank you all for your time today. We look forward to speaking to you again on September 30 at our investor event.

Thank you. The conference has now ended. Please disconnect your lines at this time and thank you for your participation.