Bank Of Montreal · TSX:BMO
Bank Of Montreal — BMO Financial Group — Q2 2012 Earnings Presentation
29 slides from Bank Of Montreal's earnings presentation, May 23, 2012
Slide 1: Investor Presentation Q2 12
Investor Presentation Q2 12 May 23 y 2012 Risk Review • May 23 • 2012 1
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 Q2 12
Strategic Highlights Q2 12 Bill Downe President & Chief Executive Officer BMO Financial Group May Risk Review • May 2012y 2012 3 23 •23
Slide 4: Financial Results
Financial Results Another quarter of strong results; $2 billion of net income in first half of year C$ millions unless otherwise indicated Q2 11 Q1 12 Q2 12 Revenue 3,333 4,117 3,959 PCL 297 141 195 Adjusted1 net income up 28% and Adjusted1 EPS up 15% Expense 2,030 2,554 2,499 Net Income 813 1,109
Slide 5: Over 75% of adjusted net income from retail businesses
Over 75% of adjusted3 net income from retail businesses1 C$ millions unless otherwise indicated Operating Group Net Income P & C Banking P & C Banking Private Client BMO Canada U.S. Group Capital Markets (US$) 8.5% +100% 62% (1)% 2 2 2 2 Y/Y Growth 449 417 446 414 229 226 229 225 137 150 93 145 59 1
Slide 6: Financial Results Q2 12
Financial Results Q2 12 Tom Flynn Executive Vice President & Chief Financial Officer BMO Financial Group May Risk Review • May 2012y 2012 6 23 •23
Slide 7: Q2 2012 - Financial Highlights
Q2 2012 - Financial Highlights Another Strong Quarter, Second Quarter Results of $1.03B, up 27% Y/Y Common Net Specific Equity Revenue EPS ROE Productivity Income PCL Ratio (Basel II) Reported $3,959MM $1,028MM $1.51 16.2% 63.1% $195MM 9.9% Results Adjusted $3,727MM $982MM $1.44 15.4% 63.2% $151MM 9
Slide 8: Revenue
Revenue Y/Y revenue growth in all retail businesses Total Bank Adjusted Revenue (C$MM) Net Interest Margin Y/Y (bps) 6.1% 16.0% 13.4% 8.5% 14.9% Growth 3,670 3,743 3,727 3,244 3,378 228 221 217 213 210 1,996 2,092 1,969 NII 1,708 1,819 182 176 205 201 189 1,536 1,559 1,674 1,651 1,758 Q2 Q3 Q4 Q1 Q2
Slide 9: Non-Interest Expense
Non-Interest Expense Expenses being managed closely and focused on longer term productivity improvements Non-Interest Q2 11 Q1 12 Q2 12 Q/Q Y/Y Total Bank Adjusted Non-Interest Expense Expense ($MM) B/(W) B/(W) (C$MM) 2,341 2,378 2,357 Reported 2,030 2,554 2,499 2% (23)% Adjusted 1,994 2,378 2,357 1
Slide 10: Capital & Risk Weighted Assets
Capital & Risk Weighted Assets Capital position strong Basel II Q2 11 Q1 12 Q2 12 Common Shareholders’ Equity Common Equity Ratio (%)1 10.7 9.6 9.9 & Basel II Tier 1 Capital Tier 1 Capital Ratio (%) 13.8 11.7 12.0 Total Capital Ratio (%) 17.0 14.6 14.9 24.3 25.1 24.2 24.4 24.5 24.8 RWA ($B) 159 209
Slide 11: Adjusting Items
Adjusting Items1 Adjusting items – Pre-tax Q2 11 Q1 12 Q2 12 ($MM) Credit-related items on the acquired M&I performing loan portfolio - 184 90 Run-off structured credit activities 100 136 76 Hedge costs related to foreign currency risk on purchase of M&I (11) - - M&I integration costs (25) (70) (74)
Slide 12: Operating Groups – Q2'12 Quick Facts
Operating Groups – Q2’12 Quick Facts Over 75% of adjusted revenue and net income from retail businesses1 P&C Canada P&C U.S. Revenue up 2% Y/Y Revenue up US$383MM Y/Y, reflecting benefit of the Net income up 9% Y/Y on an actual loss basis, 8% using acquisition expected losses Adjusted net in
Slide 13: Personal & Commercial Banking - Canada
Personal & Commercial Banking - Canada Good net income performance, up 8% Y/Y As Reported Q/Q Y/Y Highlights Q2 11 Q1 12 Q2 12 ($MM) B/(W) B/(W) Personal Revenue 929 963 961 0% 4% Net income up 8% Y/Y Commercial Revenue 559 593 562 (5)% 1% Y/Y revenue growth reflected higher volumes across most
Slide 14: Personal & Commercial Banking - U.S.
Personal & Commercial Banking - U.S. Y/Y growth reflects benefit of acquisition (Amounts in US$MM) As Reported Q/Q Y/Y Q2 11 Q1 12 Q2 12 (US$MM) B/(W) B/(W) Highlights Revenue 355 771 738 (4)% +100% Strong growth Y/Y due to acquisition PCL 36 85 84 1% (+100)% Y/Y revenue and income up by over 10
Slide 15: Private Client Group
Private Client Group Good growth in underlying PCG ex insurance business As Reported Q/Q Y/Y Q2 11 Q1 12 Q2 12 ($MM) B/(W) B/(W) Highlights Revenue 588 695 743 7% 27% Strong adjusted net income growth Y/Y and Q/Q Expenses 455 557 553 1% (21%) Ex. insurance revenue up 18% Y/Y from Net Income 91 1
Slide 16: BMO Capital Markets
BMO Capital Markets Q/Q good results reflect focus on execution and benefit of diversified business mix As Reported Q/Q Y/Y Highlights Q2 11 Q1 12 Q2 12 ($MM) B/(W) B/(W) Y/Y net income consistent with prior year Trading Products 481 513 473 (8)% (2)% Y/Y revenue driven by lower investment Reven
Slide 17: Corporate Services
Corporate Services Adjusted net income up Y/Y and down Q/Q Adjusted As Reported Q2 11 Q1 12 Q2 12 Q2 11 Q1 12 Q2 12 ($MM) ($MM) Revenue (teb) 2 (60) (60) Revenue (teb) 90 313 172 PCL – Specific 62 (161) (100) PCL – Specific 62 (130) (56) – Collective -- -- -- – Collective 33 19 -- Expenses 83 66 121
Slide 18: Group Net Income
Group Net Income Net Income, Adjusted B/(W) Q2 11 Q1 12 Q2 12 ($MM) Q/Q Y/Y P&C Canada 417 448 449 0% 8% P&C U.S. 57 154 136 (11)% +100% Total P&C 474 602 585 (3)% 24% PCG 93 110 150 37% 62% BMO Capital Markets 229 198 226 14% (1)% Corporate Services (26) 62 21 (68)% +100% Total Bank 770 972 982 1%
Slide 19: P&C Canada – Product Balances & Market Share
Personal & Commercial Banking Canada – Product Balances & Market Share Personal Y/Y total personal lending balances up 4.8% and personal deposit balances up 3.8% Commercial Market Share (%) 1 Q2 11 Q3 11 Q4 11 Q1 12 Q2 12 Y/Y total commercial loan and acceptance balances up $1.2B or 3.2% Total P
Slide 20: P&C U.S. – Commercial Balances
Personal & Commercial Banking U.S. – Commercial Balances All amounts in U.S. $B Second straight quarter of C&I loan growth C&I ($B) - As At Core Commercial Real Estate ($B) - post-acquisition. Growth of $0.8B Q/Q or As At 4.1% Continued strong growth, representing a 16% annualized rate, in Corpo
Slide 21: P&C U.S. – Personal Balances
Personal & Commercial Banking U.S. – Personal Balances All amounts in U.S. $B Mortgages ($B) - As At Home Equity ($B) - As At Y/Y product balances up significantly driven by the acquired business Mortgage portfolio continues to reflect practice of selling originations in the secondary market and
Slide 22: Risk Review Q2 12
Risk Review Q2 12 Surjit Rajpal Executive Vice President & Chief Risk Officer BMO Financial Group May Risk Review • May 2012y 201222 23 •23
Slide 23: Loan Portfolio Overview
Loan Portfolio Overview Canadian and US portfolios are well diversified P&C business represents the majority of loans X Retail portfolios are predominantly secured – 88% in Canada and 97% in the US By Segment Canada & % of Other US2 Total (C$B) total Countries1 Residential Mortgages 70.5 8.0 78.
Slide 24: Provision for Credit Losses
Provision for Credit Losses Q2 '12 Adjusted specific provisions are $151MM Business Segment (Q1 '12: $91MM) (By Business Line Segment) Q2 ‘11 Q1 ‘12 Q2 ‘12 X Lower recovery related to the Purchased (C$ MM) Credit Impaired Loans at $(117)MM vs. Consumer – P&C Canada 138 125 129 $(142)MM Commercial
Slide 25: Specific Provision Segmentation – Legacy Portfolio
Specific Provision Segmentation – Legacy Portfolio Canadian provisions are $177MM (Q1 '12: $153MM) US legacy provisions are $91MM (Q1 ’12 $80MM) Consumer portfolio accounts for ~70% of legacy provisions in both the US and Canada (C$MM) Canada US (Legacy) Total Cards 85 2 87 Personal Lending 41
Slide 26: Impaired Loans and Formations
Impaired Loans and Formations Legacy portfolio formations (excluding M&I purchased performing portfolio) are higher for the quarter at $455MM (Q1 '12: $392MM) M&I purchased performing loan formations are $444MM (Q1 ’12: $232MM). The potential for impairment and losses in this portfolio was adequ
Slide 27: Trading & Underwriting Net Revenues vs. Market Value Exposure
Trading & Underwriting Net Revenues vs. Market Value Exposure February 1, 2012 to April 30, 2012 (Presented on a Pre-Tax Basis) 50 February 29 $43.7 MM 30 February 17 March 14 $23.3 MM $25.2 MM March 19 $20.6 MM 10 01-Feb-12 07-Feb-12 13-Feb-12 17-Feb-12 24-Feb-12 01-Mar-12 07-Mar-12 13-Mar-12 19-Ma
Slide 28: Canadian Residential Mortgages
Canadian Residential Mortgages Residential Mortgages by Insured Uninsured Total % of Total Province (C$B) Atlantic 3.2 1.0 4.2 6% Residential Mortgages1: Quebec 7.4 2.9 10.3 15% Total portfolio $70.5 billion Ontario 20.8 7.8 28.6 40% ~70% of the portfolio is insured Average LTV: Alberta 8.3 2.
Slide 29: 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 MICHAEL CHASE ANDREW CHIN Head, Investor Relations Director Senior Manager 416.867.6656 416.867.5452 416.867.7019 sharon.hawardlaird@bmo.com michael.chase@bmo