Bank Of Montreal · TSX:BMO
Bank Of Montreal — Q3 2014 Earnings Presentation
26 slides from Bank Of Montreal's earnings presentation, Aug 26, 2014
Slide 1: Investor Presentation Q3 14
Investor Presentation For the Quarter Ended – July 31, 2014 Q3 14 August 26 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 – July 31, 2014 Q3 14 August 26 2014 Bill Downe Chief Executive Officer
Slide 4: Q3 2014 Financial Highlights
Q3 2014 Financial Highlights Continued momentum across our businesses with year-to-date EPS up 8% Adjusted1 net income $1.2 billion or $1.73 per share Earnings up 4% from strong results a year ago Revenue up 10% to $4.2 billion ROE ~15% Good volume growth with loans up 9% and deposits up 1
Slide 5: Operating Group Performance
Operating Group Performance Results reflect benefit of diversification and attractive business mix Adjusted1 Net Income (C$MM) 528 489 Canadian P&C earnings up 8% Y/Y with good organic 306 269 revenue growth and operating leverage 224 212 157 158 U.S. P&C net income and pre-provision pre-tax ear
Slide 6: Clear and Consistent Strategy
Clear and Consistent Strategy 1 Achieve industry-leading customer loyalty by delivering on our brand promise. 2 Enhance productivity to drive performance and shareholder value. 3 Leverage our consolidated North American platform to deliver quality earnings growth. 4 Expand strategically in select gl
Slide 7: Financial Results
Financial Results For the Quarter Ended – July 31, 2014 Q3 14 August 26 2014 Tom Flynn Chief Financial Officer
Slide 8: Q3 2014 - Financial Highlights
Q3 2014 - Financial Highlights Adjusted Net Income of $1.2B with double digit underlying earnings growth1 Adjusted ($MM) 2,3 Q3 13 Q2 14 Q3 14 Growth reflects continued business momentum Revenue 3,842 4,041 4,215 Adjusted EPS up 4% Y/Y Expense 2,442 2,566 2,708 Double digit earnings growth, ex
Slide 9: Capital & Risk Weighted Assets
Capital & Risk Weighted Assets Common Equity Tier 1 Ratio (%) CET1 Ratio of 9.6% decreased approximately 10 bps from 9.6 9.9 9.7 9.6 Q2’14 primarily due to the F&C acquisition, largely offset by 9.3 lower RWA and retained earnings growth RWA of $226 billion at July 31, 2014, decreased by $9 bill
Slide 10: Canadian Personal & Commercial Banking
Canadian Personal & Commercial Banking Strong net income growth with continued good operating leverage As Reported ($MM) Q3 13 Q2 14 Q3 14 Adjusted net income up 8% Y/Y on good revenue growth and operating leverage. Up 9% Q/Q Revenue (teb) 1,564 1,560 1,660 including impact of three additional day
Slide 11: U.S. Personal & Commercial Banking
U.S. Personal & Commercial Banking Pre-provision, pre-tax earnings up with improved revenue trend Adjusted (US$MM)1 Q3 13 Q2 14 Q3 14 Adjusted net income up 1% Y/Y and 4% Q/Q Revenue (teb) 696 691 707 Revenue up 1% Y/Y and 2% Q/Q PCL 39 45 49 Y/Y higher commercial loan balances partially offse
Slide 12: BMO Capital Markets
BMO Capital Markets Strong results reflect the benefit of a diversified business mix As Reported ($MM) Q3 13 Q2 14 Q3 14 Adjusted net income up 14% Y/Y driven by higher Trading Products revenues, particularly in I&CB 563 599 596 Revenue Revenue up 15% Y/Y and 3% Q/Q I&CB Revenue 297 354 390 Y/
Slide 13: Wealth Management
Wealth Management Strong organic growth of 19% Y/Y excluding the impact of interest rates on insurance Adjusted net income up 7% Q/Q; Y/Y growth impacted by interest rates Adjusted1 ($MM) Q3 13 Q2 14 Q3 14 F&C contributed approximately 10% to revenue, expense and net Revenue (teb) 867 878 988 in
Slide 14: Corporate Services
Corporate Services Adjusted ($MM)1,2 Q3 13 Q2 14 Q3 14 Adjusted net loss of $55MM compared to net loss of $21MM a Revenue (teb)2,3 (172) (113) (183) year ago primarily due to lower credit recoveries PCL (recovery)3,4 (154) (19) (47) Q/Q adjusted net loss relatively flat Expenses 99 101 103 Net I
Slide 15: Risk Review
Risk Review For the quarter ended July 31, 2014 Q3 14 August 26 2014 Surjit Rajpal Chief Risk Officer
Slide 16: Loan Portfolio Overview
Loan Portfolio Overview Gross Loans & Acceptances By Industry Canada & US Total % of Total Loans are well diversified by Other1 (C$B) geography and industry Residential Mortgages 91.7 7.9 99.7 34% Personal Lending 49.3 15.0 64.3 22% Cards 7.5 0.5 8.0 3% Total Consumer 148.6 23.4 172.0 58% Financia
Slide 17: Provision for Credit Losses (PCL)
Provision for Credit Losses (PCL) Improved PCL Q/Q PCL By Operating Group (C$MM) Q3 13 Q2 14 Q3 14 PCL improved Q/Q primarily due to Consumer – Canadian P&C 100 110 110 increased recoveries in Corporate Commercial – Canadian P&C 25 23 24 Services Total Canadian P&C 125 133 134 Consumer – US P&C 40
Slide 18: Gross Impaired Loans (GIL) and Formations
Gross Impaired Loans (GIL) and Formations Continued GIL improvement Formations Gross Impaired Loans By Industry (C$MM) Canada Canada & Other US Total & Other2 US Total Formations and GIL down significantly Q/Q Consumer 149 143 292 359 626 985 Service Industries 1 23 24 44 212 256 Commercial Real E
Slide 19: Canadian Residential Mortgages
Canadian Residential Mortgages Total Canadian residential mortgage portfolio at $91.7B represents 43% of Canadian gross loans and acceptances – smallest of the big five banks 64% of the portfolio is insured Loan-to-value (LTV)1 on the uninsured portfolio is 58%2 68% of the portfolio has an e
Slide 20: Trading Revenue vs. VaR
Trading Revenue vs. VaR May 1, 2014 to July 31, 2014 (Presented on a Pre-Tax Basis) 50 30 10 01-May-14 07-May-14 13-May-14 20-May-14 26-May-14 30-May-14 05-Jun-14 11-Jun-14 17-Jun-14 23-Jun-14 27-Jun-14 03-Jul-14 09-Jul-14 15-Jul-14 21-Jul-14 25-Jul-14 31-Jul-14 (10) Daily Revenues Total Trading VaR
Slide 21: Appendix
APPENDIX Financial Results | August 26 • 2014 21
Slide 22: Canadian Personal & Commercial Banking – Balances
Canadian Personal & Commercial Banking – Balances Average Loans & Acceptances Y/Y Growth (C$B) 187.2 189.6 7% 177.3 Loans 85.2 86.5 79.1 Total loan growth of 7% Y/Y and 1% Q/Q Good personal lending growth¹, balances up 7% Y/Y and 43.5 44.2 44.1 1% Q/Q; mortgages up 9% Y/Y and 2% Q/Q 8.8 9.0 8.9
Slide 23: U.S. Personal & Commercial Banking – Commercial Balances
U.S. Personal & Commercial Banking – Commercial Balances All amounts in U.S. $B Average Commercial Loans 31.6 Loans 30.9 27.7 1.0 0.8 3.7 Strong core C&I loan growth, up 18% Y/Y and 3% Q/Q with 3.6 1.7 increases across all segments 3.0 Core Commercial Real Estate portfolio continues to grow, up
Slide 24: U.S. Personal & Commercial Banking – Personal Balances
U.S. Personal & Commercial Banking – Personal Balances All amounts in U.S. $B Average Personal Loans Loans 31.2* 31.1* 31.1* 4.6 4.9 4.9 Core Business Banking up 2% Y/Y and Q/Q; pipeline Serviced Mortgages remains strong Mortgages** Indirect Auto up 15% Y/Y and 6% Q/Q 12.2 11.8 11.5 Serviced m
Slide 25: Adjusting Items
Adjusting Items Adjusting1 items – Pre-tax ($MM) Q3 13 Q2 14 Q3 14 Credit-related items on the purchased performing loan portfolio 110 - - Acquisition integration costs (49) - (9) Amortization of acquisition-related intangible assets (32) (28) (39) Decrease/(increase) in the collective allowance for
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 Strategic Highlight