Bank Of Montreal · TSX:BMO
Bank Of Montreal — Q3 2011 Earnings Presentation
29 slides from Bank Of Montreal's earnings presentation, Sep 21, 2011
Slide 1: Investor Presentation Q3 11
Investor Presentation Q3 11 September 21 y 2011
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: Bank of Montreal (BMO Financial Group)
Bank of Montreal (BMO Financial Group) 4th largest bank1 in Canada measured by total assets 9th largest bank1 in North America measured by market capitalization 100% ownership of Chicago-based BMO Harris Bank Acquisition of Marshall & Ilsley closed July 5, 2011 YTD Q3 F2011 Results2 Listings
Slide 4: BMO Financial Group – North American Footprint
BMO Financial Group – North American Footprint Greater Edmonton 37 Greater Vancouver 74 Halifax / Greater Saint John Calgary 22 43 Greater Greater Montreal Winnipeg 95 27 Greater Greater Toronto Phoenix 205 48 Greater Greater Chicago 221 Minneapolis 30 Florida 39 Greater Milwaukee 78 Branches in Can
Slide 5: Transforming BMO's U.S. Operations
Transforming BMO’s U.S. Operations M&I acquisition closed July 5, 2011 – an excellent strategic, financial, and cultural fit with BMO Consistent with BMO’s strategy of expanding our U.S. business Strategically Transforms and strengthens BMO’s U.S. operations by increasing scale and Compelling co
Slide 6: M&I Acquisition
M&I Acquisition Closed on July 5, 2011 for consideration of approximately $4B in the form of ~67MM common shares Reported Q3 results include impact of M&I: Adjusted net income of $32MM; reported net loss of $10MM Revenue of $117MM Integration costs of $53MM and amortization of intangibles
Slide 7: Reasons to Invest in BMO
Reasons to Invest in BMO Uniquely clear investor proposition Clear growth strategy X Consistent and focused North American growth strategy X Good momentum supported by operating group performance X Growing global presence to support our customers X Commitment to our medium-term financial objective
Slide 8: Capital Overview
Capital Overview Strong capital position Basel II Q3 10 Q4 10 Q1 11 Q2 11 Q3 11 Annual Dividends Declared Per Share (C$) Common Equity Ratio (%)(1) 10.27 10.26 10.15 10.67 9.11 Tier 1 Capital Ratio (%) 13.55 13.45 13.02 13.82 11.48 Compound Annual Growth Rate 10.1% 8.6% Total Capital Ratio (%) 16.10
Slide 9: Economic Outlook
Economic Outlook Canada The Canadian economy has slowed sharply due to weak U.S. demand, the strong Canadian dollar and moderation in consumer spending Modest growth expected in the year ahead due to strong currency and less-supportive fiscal policy, though firm commodity prices should support b
Slide 10: Economic Indicators
Economic Indicators North America forecast to grow modestly Canada United States Eurozone Economic Indicators (%)1 2010 2011E 2012E 2010 2011E 2012E 2010 2011E 2012E GDP Growth 3.2 2.2 2.2 3.0 1.6 2.5 1.7 1.7 1.5 Inflation 1.8 2.8 2.0 1.6 3.1 2.5 1.6 2.5 1.9 Interest Rate (3mth Tbills) 0.6 0.9 1.2 0
Slide 11: Systemic Differences Between Canadian & U.S. Banks
Systemic Differences Between Canadian & U.S. Banks Canada U.S. Mature oligopoly: 6 chartered banks with a Fragmented market single regulator (OSFI) Multiple regulators Almost no subprime in this market Governed by the Bank Act Choice of State vs. National Charter allows Foreign ownersh
Slide 12: Operating Group - Overview
Operating Group - Overview Personal & Commercial Banking - Canada Q3 YTD Revenue by Operating Group Over 7 million customers (C$MM) Over 900 branches Access to over 2,100 automated banking machines PCG, $1,860, 18% P&C Canada, Personal and Commercial Banking – U.S. BMO CM, Total $4,530, Over
Slide 13: Year-to-Date Financial Performance
Year-to-Date Financial Performance Momentum evident across all our businesses C$ billions unless otherwise indicated YTD YTD F2010 F20111 Revenue 8.9 9.8 Net income growth of 14%; adjusted net income growth of 16% Provision for Credit Losses 0.8 0.6 Expense 5.6 6.2 Revenue growth of 9.5% Net Inc
Slide 14: Financial Highlights
Financial Highlights Good third quarter results, contributing to very good year-to-date performance Total Common Net Operating Revenue EPS ROE Productivity Equity Ratio Income Leverage PCL (Basel II) Q3 11 $3,274MM $793MM $1.27 14.7% 64.5% 1.5% $174MM 9.11% (reported) Q3 11 $3,283MM $843MM $1.36 15.
Slide 15: Diversity of Business Mix
Diversity of Business Mix Over 75% of revenue and net income from retail businesses in Canada and the US (P&C and PCG), pro forma1 Q3 11 Revenue by Operating Q3 11 Adjusted2 Net Income by Group (C$MM) - $3,471MM* PCG Operating Group (C$MM) - $935MM* P&C P&C (Wealth PCG (Personal & (Personal & Manage
Slide 16: Personal & Commercial Banking Canada
Personal & Commercial Banking Canada Track record of strong performance Revenue and Net Income* Strong performance over the past two years, holding top (C$MM) 5,831 tier positions in both revenue and net income growth 5,288 4,794 5% 4,310 4,530 Building capacity by expanding specialized sales fo
Slide 17: Personal & Commercial Banking Canada – Product Balances
Personal & Commercial Banking Canada – Product Balances Personal Total Personal lending balances increased Y/Y and Q/Q, driven by growth in branch-originated mortgages and Homeowner ReadiLine products Commercial Market Share (%) 1 Q3 10 Q4 10 Q1 11 Q2 11 Q3 11 Continue to rank second in commerci
Slide 18: Personal & Commercial Banking U.S.
Personal & Commercial Banking U.S. Competitive scale, focused on organic expansion within attractive markets Revenue and Net Income* Focused on sales productivity, effectively managing (US$MM) costs and optimizing expanded distribution network and 1,365 1,371 capabilities 1,301 1,230 22% 1,008 M
Slide 19: Personal & Commercial Banking U.S. – Product Balances
Personal & Commercial Banking U.S. – Product Balances1 All amounts in U.S. $B Personal Decline in mortgage balances (ex Mortgages ($B) Other Personal Loans & Personal M&I) primarily driven by Deposits($B) 22.0 amortization/run off of 15.9 16.0 15.6 15.9 outstandings and new originations 6.1 being
Slide 20: Private Client Group
Private Client Group Leveraging personal and commercial client base to drive growth in Canada and the U.S. Revenue and Net Income* Building collaboratively through effective partnering across (C$MM) segments to maximize cross-sell opportunities 2,245 2,146 2,012 1,860 13% Selectively investing f
Slide 21: BMO Capital Markets
BMO Capital Markets Established track record of success Revenue and Net Income* Aligning capital and capabilities with client opportunity (C$MM) 3,278 3,085 Focus on strategic sectors and further extending 2,636 8% 2,442 2,178 capital markets offering 870 816 771 Building out distribution plat
Slide 22: Credit Performance Measure
Credit Performance Measure Canadian BMO Competitors Specific PCL as a % of Average Net Loans and F2011 YTD 0.47 0.41 Acceptances (excluding Reverse Repos) F2010 0.61 0.53 1.8 Historical avg.* 0.44 0.61 1.6 * Historical avg.: 1991 to 2010 1.4 1.2 Percent 1.0 0.8 0.61% 0.6 0.47% 0.4 0.41% 0.44% 0.2 0.
Slide 23: Diversified Loan Portfolio
Diversified Loan Portfolio Gross Loans and Acceptances by Product Total Gross Loans and Acceptances* As at July 31, 2011 and Industry ($B)* As at July 31, 2011 ($B) Canada U.S.* Other Total Consumer Residential 45 8 - 53 25% Mortgage Consumer 45 13 - 58 28% Loans Cards 2 - - 2 1% Total Consumer 92 2
Slide 24: Liquidity and Funding Strategy
Liquidity and Funding Strategy BMO’s large base of customer deposits, along with our strong capital base, reduces reliance on wholesale funding Our wholesale funding principles seek to match the term of assets with the term of funding (e.g. to fund loans with longer term funds). In addition, our
Slide 25: Diversified Wholesale Term Funding Mix
Diversified Wholesale Term Funding Mix BMO's wholesale funding principles seek to match the term of assets with the term of funding. Loans for example are funded with customer deposits and capital, with any difference provided by longer-term wholesale funding BMO has a well diversified wholesale
Slide 26: Corporate Governance
Corporate Governance Comprehensive code of business conduct and ethics provides a framework for directors, officers and employees on the conduct and ethical decision-making integral to their work Governance practices are consistent with, and in many cases exceed, requirements of the TSX and NYSE
Slide 27: Sustainability at BMO
Sustainability at BMO We acknowledge the sustainability emphasis that stakeholders are placing on the social aspects of our business and recognize that judgements are made as to how well we respond to the issues. Common areas of focus include: • Environmental impact • Diversity, Talent Management •
Slide 28: BMO – Moving With Our Customers
BMO – Moving With Our Customers Strategic Priorities Maximize earnings growth across all North Relentless Customer Focus 1 American personal and commercial banking businesses, focusing on industry-leading customer experience and sales force productivity. Remain focused on our strategy and our cust
Slide 29: Investor Relations Contact Information
Investor Relations Contact Information www.bmo.com/investorrelations E-mail: investor.relations@bmo.com Fax: 416.867.3367 VIKI LAZARIS MICHAEL CHASE ANDREW CHIN Senior Vice President Director Senior Manager 416.867.6656 416.867.5452 416.867.7019 viki.lazaris@bmo.com michael.chase@bmo.com andrew.chin