Bank Of Montreal · TSX:BMO
Bank Of Montreal — Q2 2014 Earnings Presentation
26 slides from Bank Of Montreal's earnings presentation, May 28, 2014
Slide 1: Investor Presentation Q2 14
Investor Presentation For the Quarter Ended – April 30, 2014 Q2 14 May 28 2014
Slide 2: Forward Looking Statements & Non-GAAP Measures
Forward Looking Statements & Non-GAAP Measures Caution Regarding Forward-Looking Statements Bank of Montreal’s public communications often include written or oral forward-looking statements. Statements of this type are included in this document, and may be included in other filings with Canadian sec
Slide 3: Strategic Highlights
Strategic Highlights For the Quarter Ended – April 30, 2014 Q2 14 May 28 2014 Bill Downe Chief Executive Officer
Slide 4: Q2 2014 Financial Highlights
Q2 2014 Financial Highlights Results demonstrate continued momentum and strong performance across our operating groups $1.1 billion in both reported and adjusted1 earnings Adjusted pre-provision pre-tax earnings $1.5 billion, up 11% Adjusted EPS up 13% to $1.63 Revenue up 9% to $4.0 billion
Slide 5: Operating Group Performance
Operating Group Performance Strong results benefiting from diversification and attractive business mix Adjusted1 Net Income (C$MM) 482 422 Canadian P&C net income up 14% Y/Y from 306 262 strong balance sheet growth and operating 200 leverage 159 151 147 Canadian P&C U.S. P&C* Wealth Management BMO
Slide 6: Clear and Consistent Strategy
Clear and Consistent Strategy Four areas of operating focus are going to be dominant in the execution of our strategy AREAS OF OPERATING FOCUS STRATEGIC PRIORITIES 1 Achieve industry-leading customer loyalty Continuing to build a strong, by delivering on our brand promise. differentiated brand 2 Enh
Slide 7: Financial Results
Financial Results For the Quarter Ended – April 30, 2014 Q2 14 May 28 2014 Tom Flynn Chief Financial Officer
Slide 8: Q2 2014 - Financial Highlights
Q2 2014 - Financial Highlights Adjusted Net Income of $1.1B with EPS growth of 13% Adjusted ($MM) 1,2 Q2 13 Q1 14 Q2 14 Adjusted EPS up 13% Y/Y reflecting strong operating group performance Revenue 3,708 4,122 4,041 Revenue growth of 9% Y/Y reflecting good growth in Expense 2,384 2,653 2,566 Wea
Slide 9: Capital & Risk Weighted Assets
Capital & Risk Weighted Assets Common Equity Tier 1 Ratio (%) CET1 Ratio of 9.7% increased approximately 40 bps from Q1’14 9.7 9.6 9.9 9.7 due to lower RWA and benefit from increased retained earnings 9.3 RWA of $235B decreased $5B from Q1’14 due to reduced market risk exposures and lower credit
Slide 10: Canadian Personal & Commercial Banking
Canadian Personal & Commercial Banking Continued momentum with strong net income growth and operating leverage As Reported ($MM) Q2 13 Q1 14 Q2 14 Revenue (teb) 1,473 1,602 1,560 Adjusted net income up 14% Y/Y on good revenue growth and operating leverage. Down 1% Q/Q due to impact of 3 PCL 153 14
Slide 11: U.S. Personal & Commercial Banking
U.S. Personal & Commercial Banking Good loan growth and stable revenue Q/Q As Reported (Amounts in US$MM) Q2 13 Q1 14 Q2 14 (US$MM) Revenue (teb) 711 693 691 Adjusted net income down 6% Y/Y and 8% Q/Q PCL 53 18 45 Pre-provision, pre-tax earnings2 up 4% Q/Q Expenses 453 464 451 Revenue stable Q
Slide 12: BMO Capital Markets
BMO Capital Markets Strong results reflect the benefit of a diversified business mix As Reported ($MM) Q2 13 Q1 14 Q2 14 Trading Products Revenue 544 590 599 Adjusted net income up 17% Y/Y and 10% Q/Q with good contribution from the U.S. business and a more I&CB Revenue 296 384 354 favourable tax
Slide 13: Wealth Management
Wealth Management Continued strong performance with adjusted net income up 36% Y/Y As Reported ($MM) Q2 13 Q1 14 Q2 14 Revenue (teb) 763 867 878 Adjusted net income up 36% Y/Y and 10% Q/Q PCL 1 (1) 2 Continued strong performance in traditional wealth with Expenses 587 644 630 adjusted net income
Slide 14: Corporate Services
Corporate Services Adjusted ($MM)1,2 Q2 13 Q1 14 Q2 14 Adjusted net loss of $58MM compared to net loss of $11MM a Revenue (teb)2,3 (92) (69) (113) year ago primarily due to lower credit recoveries PCL (recovery)3,4 (94) (59) (19) Q/Q adjusted net loss $17MM higher due to lower credit Expenses 92
Slide 15: Risk Review
Risk Review For the quarter ended April 30, 2014 Q2 14 May 28 2014 Surjit Rajpal Chief Risk Officer
Slide 16: Loan Portfolio Overview
Loan Portfolio Overview Canadian and US portfolios well diversified by industry Gross Loans & Acceptances Canada & % of By Industry US Total Other1 Total (C$B) Residential Mortgages 89.8 7.8 97.6 33% 2% loan growth Q/Q driven primarily Personal Lending 49.6 15.0 64.6 22% by Canadian commercial loa
Slide 17: Provision for Credit Losses (PCL)
Provision for Credit Losses (PCL) Good credit performance continues PCL By Operating Group (C$MM) Q2 13 Q1 14 Q2 14 Specific PCL improved with a Q/Q Consumer – Canadian P&C 117 91 110 $9MM reduction excluding Commercial – Canadian P&C 36 50 23 Purchased Credit Impaired portfolio Total Canadian P&C
Slide 18: Gross Impaired Loans (GIL) and Formations
Gross Impaired Loans (GIL) and Formations Continued reduction in Gross Impaired Loans Formations Gross Impaired Loans By Industry (C$MM) Canada Canada & US Total US Total & Other Other2 Formations down Q/Q both in Consumer 147 106 253 381 719 1,100 Canada and the US Service Industries 3 70 73 55 3
Slide 19: Canadian Residential Mortgages
Canadian Residential Mortgages Total Canadian residential mortgage portfolio at $89.8B represents 43% of Canadian gross loans and acceptances – smallest of the big five banks 60% of the portfolio is insured Loan-to-value (LTV)1 on the uninsured portfolio is 59%2 67% of the portfolio has an e
Slide 20: Trading Revenue vs. VaR
Trading Revenue vs. VaR February 1, 2014 to April 30, 2014 (Presented on a Pre-Tax Basis) 50 30 10 01-Apr-14 07-Apr-14 11-Apr-14 17-Apr-14 24-Apr-14 30-Apr-14 03-Feb-14 07-Feb-14 13-Feb-14 20-Feb-14 26-Feb-14 04-Mar-14 10-Mar-14 14-Mar-14 20-Mar-14 26-Mar-14 (10) Daily Revenues Total Trading VaR Tot
Slide 21: Appendix
APPENDIX Financial Results | May 28 • 2014 21
Slide 22: Canadian Personal & Commercial Banking – Balances
Canadian Personal & Commercial Banking – Balances Average Loans & Acceptances Y/Y Growth (C$B) 185.6 187.2 9% Loans 171.8 Total loan growth of 9% Y/Y and 1% Q/Q 85.1 85.2 75.7 Good personal lending growth¹ with balances up 9% Y/Y and flat Q/Q 43.1 44.1 44.2 Strong commercial lending with growt
Slide 23: U.S. Personal & Commercial Banking – Commercial Balances
U.S. Personal & Commercial Banking – Commercial Balances All amounts in US $B Average Commercial Loans Loans 30.9 27.1 28.6 1.0 Strong core C&I loan growth, up 19% Y/Y 1.1 3.6 2.1 3.2 2.9 Growth in core C&I reflects balance increases across all segments Good growth in Commercial Real Estate po
Slide 24: U.S. Personal & Commercial Banking – Personal Balances
U.S. Personal & Commercial Banking – Personal Balances All amounts in US $B Average Personal Loans 31.1* 31.2* 31.1* 4.5 4.8 4.9 Serviced Mortgages Loans Business Banking up 1% Q/Q; pipeline remains strong Mortgages** 12.4 12.0 11.8 Serviced mortgage portfolio up 9% Y/Y and 1% Q/Q Other Loans***
Slide 25: Adjusting Items
Adjusting Items Adjusting1 items – Pre-tax ($MM) Q2 13 Q1 14 Q2 14 Credit-related items on the purchased performing loan portfolio 119 - - Acquisition integration costs (50) - - Amortization of acquisition-related intangible assets (31) (31) (28) Decrease/(increase) in the collective allowance for c
Slide 26: Investor Relations Contact Information
Investor Relations Contact Information www.bmo.com/investorrelations E-mail: investor.relations@bmo.com Fax: 416.867.3367 SHARON HAWARD-LAIRD Head, Investor Relations 416.867.6656 sharon.hawardlaird@bmo.com ANDREW CHIN Director, Investor Relations 416.867.7019 andrew.chin@bmo.com Financial Results |