Bank Of Montreal · TSX:BMO
Bank Of Montreal — BMO Financial Group — Q2 2020 Earnings Presentation
30 slides from Bank Of Montreal's earnings presentation, May 27, 2020
Slide 1: Investor Presentation Q2 20
BMO Financial Group Investor Presentation For the Quarter Ended April 30, 2020 May 27, 2020 Q2 20
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: Darryl White, Chief Executive Officer
Darryl White Chief Executive Officer Q2 20
Slide 4: Our Response to the COVID-19 Crisis
Our Response to the COVID-19 Crisis Protecting and supporting our employees and communities Our Employees • Enabled >90% of non-branch workforce to work remotely and optimized new collaboration tools • Implemented protective health and safety practices at all work locations • Providing flexible hour
Slide 5: Our Response to the COVID-19 Crisis
Our Response to the COVID-19 Crisis Supporting the financial well-being of our customers and the economy Our Customers • Assisted customers experiencing financial hardship with flexible relief options including payment deferrals for over 200,000 retail and commercial clients, fee waivers, increases
Slide 6: Financial Highlights
Financial Highlights Q2’20 YTD Net Income1 $715MM $2,332MM • Good revenue performance Reported in a challenging market $689MM $2,281MM environment EPS1 • YTD expenses flat year- $1.04 $3.45 over-year in constant Reported $1.00 $3.37 currency2 • Pre-provision, pre-tax PPPT1,3 $1,978MM $4,372MM earnin
Slide 7: Well-positioned to succeed in the new environment
Well-positioned to succeed in the new environment Our Purpose: Boldly Grow the Good in business and life • Diversified business mix Strong Foundation • Strong capital and liquidity positions • Well-defined and deliberate approach to risk management Business and • Stable and resilient earnings power
Slide 8: Financial Results
Financial Results For the Quarter Ended April 30, 2020 Tom Flynn Chief Financial Officer Q2 20
Slide 9: Q2 F2020 - Financial Highlights
Q2 F2020 - Financial Highlights Resilient PPPT4 earnings absorbed impact of higher PCLs • Adjusted1 EPS $1.04 (reported $1.00) Reported Adjusted1 • Adjusted1 net income $715MM (reported $689MM) ($MM) Q2 20 Q1 20 Q2 19 Q2 20 Q1 20 Q2 19 • Adjusted1 PPPT4 $1,978MM, down 5% Y/Y (reported Net Revenue2 5
Slide 10: Strong capital position
Strong capital position Capital position strong with CET1 Ratio at 11.0% Common Equity Tier 1 Ratio 11.4% -48 bps +7 bps 11.0% -7 bps +11 bps Q1 2020 Higher source Clearpool ECL provisioning Other Q2 2020 currency RWA Acquisition adjustment Basis points may not add due to rounding. • CET1 Ratio of 1
Slide 11: Canadian Personal & Commercial Banking
Canadian Personal & Commercial Banking Strong core profitability in challenging environment • Adjusted1 net income $362MM (reported $361MM) Reported Adjusted1 • Adjusted1 PPPT2 $985MM (reported $984MM), up 1% Y/Y ($MM) Q2 20 Q1 20 Q2 19 Q2 20 Q1 20 Q2 19 • Revenue up 2% Y/Y Revenue (teb) 1,960 2,082
Slide 12: U.S. Personal & Commercial Banking
U.S. Personal & Commercial Banking Adjusted1 PPPT3 up 11% Y/Y, with good revenue growth of 6% Figures that follow are in U.S. dollars Reported Adjusted1 • Adjusted1 net income $253MM (reported $246MM), (US$MM) Q2 20 Q1 20 Q2 19 Q2 20 Q1 20 Q2 19 impacted by higher credit provisions Revenue (teb) 1,0
Slide 13: BMO Capital Markets
BMO Capital Markets Results impacted by unprecedented market disruption from COVID-19 • Adjusted1 net loss $(68)MM vs $254MM in Q2’19 Reported Adjusted1 (reported $(74)MM vs $250MM in Q2’19). Higher PCL ($MM) Q2 20 Q1 20 Q2 19 Q2 20 Q1 20 Q2 19 reduced net income by $289MM after-tax Global Markets 5
Slide 14: BMO Wealth Management
BMO Wealth Management Results impacted by lower Insurance net income and a legal provision • Adjusted1 net income $153MM (reported $144MM) Reported Adjusted1 • Adjusted1 Traditional Wealth net income $169MM ($MM) Q2 20 Q1 20 Q2 19 Q2 20 Q1 20 Q2 19 (reported $160MM) Net Revenue2 1,087 1,309 1,281 1,
Slide 15: Corporate Services
Corporate Services • Adjusted1 and reported net loss of $81MM compared Reported2 Adjusted1,2 with net loss of $80MM in the prior year. Results ($MM) Q2 20 Q1 20 Q2 19 Q2 20 Q1 20 Q2 19 relatively unchanged with lower expenses and higher Revenue (3) (7) (16) (3) (7) (16) revenue excluding teb largely
Slide 16: Risk Review
Risk Review For the Quarter Ended April 30, 2020 Patrick Cronin Chief Risk Officer Q2 20
Slide 17: Provision for Credit Losses (PCL)
Provision for Credit Losses (PCL) PCL By Operating Group • Q2’20 PCL ratio on Impaired Loans at Q2 20 Q1 20 Q2 19 ($MM) 35 bps, up 6 bps Q/Q $ bps $ bps $ bps • Allowance for Credit Losses on Consumer – Canadian P&C 121 30 103 26 107 28 Performing Loans increased PCL by Commercial – Canadian P&C $70
Slide 18: Allowance and Provision on Performing Loans
Allowance and Provision on Performing Loans Allowance on Performing Loans (APL) and PCL on APL to Net • The allowance on performing loans Q2 20 Performing Loans (PCL) Q1 20 Q2 20 Foreign Q2 20 Loans & increased $758MM to $2,412MM, driven By Operating Group APL1 PCL 1 APL Allowances by a $705MM provi
Slide 19: Gross Impaired Loans (GIL) and Formations
Gross Impaired Loans (GIL) and Formations Formations Gross Impaired Loans • GIL ratio 74 bps, up 12 bps Q/Q By Industry ($MM, as at Q2 20) Formations ($MM) Canada & Canada & U.S. Total U.S. Total Other Other1 Consumer 203 42 245 463 383 846 1,396 Service Industries 61 115 176 127 372 499 799 831 741
Slide 20: Loan Portfolio Growth
Loan Portfolio Growth Business & Government Loan Growth Consumer Loan Growth Q1’20 vs Q2’20 ($B) Q1’20 vs Q2’20 ($B) 291.2 5.9 201.8 203.0 18.4 1.2 4.2 255.3 7.4 Business & Impact of New Existing Loans Under Business & Consumer QoQ Change Consumer 1 Government Foreign Borrower Borrower Government 2
Slide 21: Loan Portfolio by Industry
Loan Portfolio by Industry • Sectors of heightened focus shown in blue account for 13.6% of Total Gross Loans and Acceptances Gross Loans and Acceptances by Industry Canada & U.S. Total % of Total ($B, as at Q2 20) Other1 Residential Mortgages 114.5 11.0 125.5 25.4% Consumer Instalment and Other Per
Slide 22: Loan Portfolio by Industry – Sectors of Heightened Focus
Loan Portfolio by Industry – Sectors of Heightened Focus1 Hotels: Over 90% secured with real estate; further supported with specific recourse arrangements to ownership groups Restaurants: >60% of exposure is with Franchises backed by strong regional and national brands; in addition, 60% are Limited
Slide 23: Oil and Gas Industry Overview
Oil and Gas Industry Overview Industry by Sub-sector Industry by Risk Rating 3% 4% 8% 39% 26% $14,990 MM $14,990 MM 63% 57% Exploration and development Pipelines Services Manufacturing and refining Investment Grade Non Investment Grade Impaired • Of the $ 9.5B in Exploration and Development (E&D) gr
Slide 24: Trading-related Net Revenues and Value at Risk
Trading-related Net Revenues and Value at Risk • In March, markets experienced unprecedented asset price declines, record volatility, extreme liquidity challenges and dislocations, and significant widening of corporate bond spreads. Given certain trading activities and positions, we experienced nega
Slide 25: Appendix
Appendix
Slide 26: Canadian Personal & Commercial Banking - Balances
Canadian Personal & Commercial Banking - Balances Gross Loans & Acceptances ($B) Deposits ($B) 197.1 206.9 247.4 251.4 248.9 253.0 191.5 192.7 234.6 171.2 104.1 105.0 103.1 103.6 123.2 100.3 118.7 120.9 117.9 107.5 48.2 48.6 48.2 48.5 46.2 9.4 8.9 8.7 7.6 8.6 76.2 74.8 83.7 86.7 90.3 87.9 91.9 72.8
Slide 27: U.S. Personal & Commercial Banking – Balances
U.S. Personal & Commercial Banking – Balances Figures on this page are in U.S. dollars Gross Loans & Acceptances ($B) Deposits ($B) 100.41 103.6 96.41 92.71 93.01 93.5 7.8 87.2 87.0 85.91 7.5 7.2 7.4 10.3 5.5 10.5 79.1 10.8 10.7 49.9 11.2 47.9 47.3 47.6 45.1 78.4 82.3 69.2 74.7 74.9 53.7 39.9 45.6 3
Slide 28: Canadian Residential-Secured Lending
Canadian Residential-Secured Lending Residential-Secured Lending by Region ($149.2B) • Total Canadian residential-secured lending HELOC portfolio at $149.2B, representing 30% of Uninsured Mortgages $67.3 total loans Insured Mortgages $29.2 − LTV1 on uninsured of 51% 24% − 90 day delinquency rate for
Slide 29: Adjusting Items
Adjusting Items Adjusting items1 - Pre-tax ($MM) Q2 20 Q1 20 Q2 19 YTD Q2 20 YTD Q2 19 Acquisition integration costs2 (3) (3) (2) (6) (8) Amortization of acquisition-related intangible assets3 (30) (29) (30) (59) (61) Adjusting items included in reported pre-tax income (33) (32) (32) (65) (69) Adjus
Slide 30: Investor Relations
BMO Financial Group Investor Relations Contact Information bmo.com/investorrelations E-mail: investor.relations@bmo.com JILL HOMENUK BILL ANDERSON Head, Investor Relations Director, Investor Relations 416.867.4770 416.867.7834 jill.homenuk@bmo.com bill2.anderson@bmo.com