Bank Of Montreal · TSX:BMO
Bank Of Montreal — BMO Financial Group — Investor Presentation (October 2023)
58 slides from Bank Of Montreal's investor presentation, October 2023
Slide 1: Investor Presentation October 2023
Investor Presentation October 2023
Slide 2: Caution Regarding Forward-Looking Statements
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 securities regulators or the U.S. Securities and Ex
Slide 3: About BMO
About BMO Established in 1817, BMO Financial Group is a highly diversified financial services provider based in North America 8th largest $1.25 trillion over 13 million bank in North America in total assets2 customers globally by assets1 Operating Groups Personal & Commercial Banking BMO Wealth Mana
Slide 4: Our Purpose
Our Purpose • Announced a strategic relationship with Immigrant Services Calgary to provide specialized guidance and Providing access to capital and resources to Canadian newcomers, with on-site support at the BMO branch located inside the Gateway valuable financial advice – Newcomer Centre investin
Slide 5: Reasons to invest in BMO
Reasons to invest in BMO • Diversified businesses that continue to deliver • Well-capitalized with an attractive dividend resilient and robust earnings growth and long-term yield value for shareholders • Ongoing commitment to positive operating • Strong foundation built for growth and differentiatin
Slide 6: Diversified business mix with strong, resilient revenue
Diversified business mix with strong, resilient revenue Diversified by business Diversified by geography % of Operating Groups Reported Net Revenue1,2 – Q3’23 % of Reported Net Revenue1 by Geography – Q3’23 Canada & Canadian BMO Capital Other P&C Markets 53% 34% 18% U.S. Canadian Personal & Business
Slide 7: Strong and stable balance sheet, capital and liquidity
Strong and stable balance sheet, capital and liquidity Balance Sheet (As At) Net Loans & Book Value Per Total Assets ($B) Deposits ($B) Acceptances ($B) Share ($) 1,249 884 640 93.79 90.88 1,068 729 535 80.00 971 681 Other Deposits 470 Customer Deposits 630 490 522 Q3'21 Q3'22 Q3'23 Q3'21 Q3'22 Q3'2
Slide 8: Strong financial performance
Strong financial performance Medium Term Financial Objectives1,2 Earnings Per Share ($) EPS Growth 7% to 10% per year Return on Equity 15% or more Operating Leverage 2% or more 12.96 19.99 13.23 11.58 7.55 7.71 Capital ratios that exceed regulatory Capital requirements 2020 2021 2022 Reported Adjust
Slide 9: Delivering strong shareholder returns
Delivering strong shareholder returns Dividends Declared ($ per share) $5.88 3 5.44 • BMO has the longest-running dividend 5% F2022 15-year CAGR2 payout record of any company in Canada, 4.06 4.24 4.24 at 194 years 3.78 3.40 3.56 1 3.08 3.24 • Dividend Yield1: 5.1% $2.80 2.80 2.80 2.80 2.82 2.94 Tota
Slide 10: BMO U.S. – scale, growth further enhanced by Bank of the West
BMO U.S. – scale, growth further enhanced by Bank of the West Benefiting from the strength of BMO’s trillion-dollar balance sheet Top 10 Footprint in Top 5 4 million U.S. Bank1 32 States Commercial Lender in customers North America2 BMO U.S. Bank BMO U.S. Segment BMO Financial Group US$2633 billion
Slide 11: Proven strength in Commercial Banking with advantaged market share
Proven strength in Commercial Banking with advantaged market share • A relationship-based commercial bank; top 5 commercial Commercial Banking Revenue as % of Operating Groups lender1 in North America Net Revenue3 – LTM Q3’234 — In Canada: Top tier commercial banking business, Canadian Commercial #2
Slide 12: Advancing our Digital First strategy
Advancing our Digital First strategy Continuing to deliver on our Driving digital engagement Recognized for industry leadership Digital First agenda Active Digital Users, Retail (000)1 • Enhanced the BMO Business Express • Named Overall Leader in the 2023 +7% (BBX) experience in Canada, Javelin Cana
Slide 13: Leading track record in risk management
Leading track record in risk management • Long track record of outperforming peers on credit, with over 30-year historical average loss rates well below peer banks • Prudent underwriting, consistent approach, unparalleled expertise and industry knowledge, effectiveness of work-out process. Deep expe
Slide 14: Q3’23 Highlights
Q3’23 Highlights
Slide 15: Q3 F2023 - Financial Highlights
Q3 F2023 - Financial Highlights Good PPPT1 growth driven by Canadian P&C and Bank of the West • Adjusted2 EPS $2.78, down 10% Y/Y (reported $1.97, up 1%) Reported Adjusted2 • Adjusted2 net income down 4% Y/Y (reported up 7%) ($MM) Q3 23 Q2 23 Q3 22 Q3 23 Q2 23 Q3 22 – Bank of the West (BOTW) added $
Slide 16: Strong Q3’23 CET1 Ratio of 12.3%
Strong Q3’23 CET1 Ratio1 of 12.3% Common Equity Tier 1 Ratio1 +5 bps -12 bps +10 bps -12 bps +20 bps -3 bps 12.3% 12.2% Q2’23 Internal capital DRIP Source currency AIR MILES Acquisition & Other Q3’23 generation RWA acquisition2 integration costs and tax-related charge3 • Q3’23 CET1 ratio1 of 12.3%,
Slide 17: Net Interest Margin and Interest Rate Sensitivity
Net Interest Margin1 and Interest Rate Sensitivity NII ($MM) and NIM ex. Trading (%) 1.86 1.88 1.90 1.85 1.79 • Term rates increased in Q3’23 and continue to be volatile, 1.83 reinvestment rates have reached the highest point in recent years 1.56 1.62 242 160 350 38 351 285 • Sustained higher long-t
Slide 18: Operating Groups
Operating Groups
Slide 19: Canadian Personal & Commercial Banking
Canadian Personal & Commercial Banking Strength and Value Drivers Q3’23 YTD Financial Highlights • High-performing team focused on providing a personalized banking Reported Adjusted2 experience that helps our customers make real financial progress Net Income $2,756MM $2,767MM • Top-tier commercial b
Slide 20: Canadian Personal & Commercial Banking Performance
Canadian Personal & Commercial Banking Performance Reported Revenue ($MM) Average Gross Loans & Acceptances ($B)2 2,547 2,629 2,546 2,785 2,529 312.7 316.2 779 295.2 750 777 738 763 129.3 131.6 121.4 6.4 6.4 6.0 57.6 58.7 58.7 1,852 2,006 1,766 1,797 1,808 10.8 11.6 9.7 100.5 107.5 107.9 Q3'22 Q4'22
Slide 21: U.S. Personal & Commercial Banking
U.S. Personal & Commercial Banking Strength and Value Drivers Q3’23 YTD Financial Highlights • High-performing team focused on providing a personalized banking US$ Reported Adjusted1 experience that helps our customers make real financial progress Net Income $1,532MM $1,648MM • Large-scale commercia
Slide 22: U.S. Personal & Commercial Banking Performance
U.S. Personal & Commercial Banking Performance Average Gross Loans & Acceptances (US$B) Reported Revenue (teb1, US$MM) 1,914 1,864 159.8 157.6 755 37.9 38.8 1,334 728 1,234 1,297 103.2 402 420 363 15.3 121.9 118.8 1,159 1,136 871 895 914 87.9 Q3'22 Q2'23 Q3'23 Q3'22 Q4'22 Q1'23 Q2'23 Q3'23 Commercia
Slide 23: BMO Wealth Management
BMO Wealth Management Strength and Value Drivers Q3’23 YTD Financial Highlights • Planning and advice-based approach that integrates investment, insurance, specialized wealth management and core banking solutions, offered by a team Reported Adjusted1 of highly skilled professionals Net Income $864MM
Slide 24: BMO Wealth Management Performance
BMO Wealth Management Performance Balances ($B) AUA, AUM ($B) 767 773 730 310 338 340 66 63 55 42 42 35 420 429 433 Q3'22 Q2'23 Q3'23 Q3'22 Q2'23 Q3'23 Avg Gross Loans and Acceptances Avg Deposits AUA AUM Reported Net Revenue1 by Business – Q3’23 Recognized as the Best Private Bank in Canada for 13
Slide 25: BMO Capital Markets
BMO Capital Markets Strength and Value Drivers Q3’23 YTD Financial Highlights • A valued financial partner to our clients; leveraging our people, innovative solutions and capital to help them overcome their Reported Adjusted1 challenges and achieve their goals Net Income $1,193MM $1,214MM • Unified
Slide 26: BMO Capital Markets Performance
BMO Capital Markets Performance Reported Revenue (teb1, $MM) Reported Revenue (teb1) by Geography2 – LTM Q3’23 1,718 1,586 1,478 1,405 1,264 618 651 554 608 451 Canada & Other 41% 1,100 813 851 935 870 59% U.S. Q3'22 Q4'22 Q1'23 Q2'23 Q3'23 Global Markets Investment and Corporate Banking Reported Re
Slide 27: Risk Overview
Risk Overview
Slide 28: Provision for Credit Losses (PCL)
Provision for Credit Losses (PCL) PCL By Operating Group Q3 23 Q2 23 Q3 22 PCL Ratio (bps) ($MM) $ bps $ bps $ bps Reported 65 Total Canadian P&C 209 26 173 23 104 14 Total U.S. P&C 119 23 66 12 22 7 30 BMO Wealth Management 1 1 1 2 2 2 Adjusted1 BMO Capital Markets 1 0 0 1 (22) (13) 16 15 20 10 Cor
Slide 29: Allowance and Provision on Performing Loans
Allowance and Provision on Performing Loans Allowance on Performing • The $159MM provision for credit losses on Q3 23 performing loans in the current quarter Loans (APL) and PCL on APL to Q2 23 Q3 23 Foreign Q3 23 primarily reflected portfolio credit migration Performing Loans (PCL) Performing APL1
Slide 30: Gross Impaired Loans and Formations
Gross Impaired Loans and Formations Formations Gross Impaired Loans • Gross Impaired Loans (GIL) ratio3 44 bps, up 3 bps Q/Q By Industry ($MM, as at Q3’23) CA & CA & U.S. Total U.S. Total 2,000 Other Other1 Formations ($MM) 1,800 1,600 1,400 Consumer 206 78 284 495 343 838 917 1,200 1,000 843 800 49
Slide 31: Loan Portfolio Overview
Loan Portfolio Overview Gross Loans & Acceptances (GL&A) • Portfolio is well diversified by geography and Canada & Total % of industry By Industry 3 U.S. Other1 BMO Total ($B, as at Q3’23) Canada & Other Countries Residential Mortgages 147.7 24.2 171.9 27% Consumer Instalment and Other Personal 70.4
Slide 32: Canadian Residential-Secured Lending
Canadian Residential-Secured Lending • Total Canadian residential-secured lending portfolio at $196.2B, Residential-Secured Lending by Region ($196.2B) representing 30% of total loans $94.1 ─ LTV1 on uninsured of 51% 26% $38.7 ─ 90-day delinquency rate for RESL remains good at 14 bps; $31.0 26% loss
Slide 33: Canadian RESL Portfolio: Renewal profile in the next 12 months
Canadian RESL Portfolio: Renewal profile in the next 12 months RESL renewal risk is reduced by borrower capacity, equity and quality • The impact of higher interest rates on payments is primarily realized upon renewal for both fixed and variable rate products • Variable rate products with fixed paym
Slide 34: Commercial Real Estate
Commercial Real Estate • Commercial Real Estate (CRE) portfolio at $66.7B represents CRE by Geography2 10% of total bank GL&A British Columbia 14% • Portfolio is well diversified across businesses, property types and geographies Quebec 7% Ontario 20% • Well managed with consistent and conservative C
Slide 35: Economic and Housing Market Overview
Economic and Housing Market Overview
Slide 36: Economic outlook and indicators
Economic outlook and indicators1 Canada United States Eurozone Economic Indicators (%)1, 2 2022 2023E2 2024E2 2022 2023E2 2024E2 2022 2023E2 2024E2 GDP Growth 3.4 1.1 0.6 1.9 2.2 1.1 3.4 0.5 0.5 Inflation 6.8 4.0 2.9 8.0 4.2 3.0 8.4 5.7 3.5 Interest Rate (3mth Tbills) 2.17 4.75 4.9 2.08 5.30 5.50 0.
Slide 37: Canada’s economy is diverse and well-positioned for growth
Canada’s economy is diverse and well-positioned for growth Canadian GDP by industry • The Canadian economy benefits from sound public finances, with net debt across all levels of government lower than most other leading economies as a share of GDP Other 15% Financial • Contiguous to the world’s larg
Slide 38: Canadian housing market recovery likely to stall for a while
Canadian housing market recovery likely to stall for a while • After a rebound in the first half of 2023, the Canadian housing market has hit another soft patch due to the Bank of Canada’s renewed rate increases this summer • A sustained recovery in the housing market is projected to unfold in the s
Slide 39: Structure of the Canadian residential mortgage market with comparisons to the United States
Structure of the Canadian residential mortgage market with comparisons to the United States • Conservative lending practices, strong underwriting and documentation discipline have led to low delinquency rates — Over the last 30 years, Canada’s 90-day residential mortgage delinquency rate has never e
Slide 40: Environmental, Social and Governance
Environmental, Social and Governance
Slide 41: Our commitment to sustainability
Our commitment to sustainability The United Nations Sustainable Affordable and Development Goals (SDGs) are a No poverty Gender equality clean energy universal call to end poverty, 1.4 5.1, 5.5, 5.a 7.2, 7.3, 7.a protect the planet and ensure We have products and services tailored We are a champion
Slide 42: BMO’s Bold Commitments for 2025
BMO’s Bold Commitments for 2025 Our Bold Commitments are measurable business-led goals to grow the good. They evolve as community needs, BMO priorities, and market realities change. Our Bold Commitments will continue to align with our commitment to progress for a thriving economy, a sustainable futu
Slide 43: Our history of climate action
Our history of climate action 2008 2010 2019 2021 Established Achieved carbon Established first sustainable Joined the Partnership for Carbon Accounting Financials (PCAF) and began to quantify operational neutrality in finance target and established financed emissions greenhouse gas operations Susta
Slide 44: BMO’s Climate Ambition
BMO’s Climate Ambition To be our clients’ lead partner in the transition to a net-zero world We are enhancing our climate-related capabilities and aim to build capabilities that enable ongoing, decision-useful analysis of progress against both risk management and opportunity capture. Commitment Capa
Slide 45: Consistently recognized for our industry leadership
Consistently recognized for our industry leadership 17 YEARS 6 YEARS 4 YEARS DOW JONES SUSTAINABILITY ETHISPHERE’S WORLD’S MOST CORPORATE KNIGHTS GLOBAL INDEX ETHICAL COMPANIES 100 MOST SUSTAINABLE CORPORATIONS IN THE WORLD Recognized for 17 years, in 2022 Recognized six years in a row, The most sus
Slide 46: Liquidity & Wholesale Funding Mix
Liquidity & Wholesale Funding Mix
Slide 47: BMO’s large and stable base of customer deposits is a source of strength
BMO’s large and stable base of customer deposits is a source of strength • A large and growing customer deposit base supports the maintenance of a sound liquidity position and reduces reliance on wholesale funding — Customer deposits grew with the closing of the Bank of the West acquisition on Febru
Slide 48: BMO maintains a sizeable portfolio of high-quality liquid assets
BMO maintains a sizeable portfolio of high-quality liquid assets and meets all regulatory liquidity metrics Liquid Asset Mix (%) • BMO has $357B in unencumbered high quality liquid Cash & Equivalents assets for the quarter ended July 31, 2023. BMO’s 13% liquid assets are primarily held in the Bank’s
Slide 49: Diversified wholesale term funding program
Diversified wholesale term funding program • 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 funded with longer-term wholesale funding • BMO has a well diversified whole
Slide 50: Diversified wholesale funding platform
Diversified wholesale funding platform • Programs provide BMO with diversification and cost-effective funding Canada1 U.S.1 Europe, Australia & Asia1 • Canadian MTN Shelf (C$10B) • SEC Registered U.S. Shelf (US$42B) • Note Issuance Programme (US$22B) • Fortified Trust (C$5B) • Global Registered Cove
Slide 51: Appendix
Appendix
Slide 52: Non-GAAP and Other Financial Measures
Non-GAAP and Other Financial Measures Results and measures in this document are presented on a GAAP basis. Unless otherwise indicated, all amounts are in Canadian dollars and have been derived from our audited annual consolidated financial statements prepared in accordance with International Financi
Slide 53: Non-GAAP and Other Financial Measures
Non-GAAP and Other Financial Measures8 (1) Reported net income included the impact of divestitures of our EMEA and U.S. Asset (Canadian $ in millions, except as noted) Q3 23 Q2 23 Q3 22 YTD 23 YTD 22 Management business. Q3-2022 included expenses of $6 million ($7 million pre-tax). Q2-2022 Reported
Slide 54: Summary of Reported and Adjusted Results by Operating Group
Summary of Reported and Adjusted Results by Operating Group (Canadian $ in millions unless otherwise stated) Q3 23 Q2 23 Q1 23 Q4 22 Q3 22 YTD 23 YTD 22 Canadian P&C Reported Net Income 915 861 980 917 965 2,756 2,909 Acquisition and integration costs 6 2 — — — 8 — Amortization of acquisition-relate
Slide 55: Net Revenue, Efficiency Ratio and Operating Leverage
Net Revenue, Efficiency Ratio and Operating Leverage Canadian $ in millions unless otherwise stated) Q3 23 Q2 23 Q1 23 Q4 22 Q3 22 YTD 23 YTD 22 Total Bank Total revenue 7,929 8,440 6,470 10,570 6,099 22,839 23,140 Reported Insurance claims, commissions and changes in policy benefit liabilities (CCP
Slide 56: Pre-Provision, Pre-Tax Earnings (PPPT) Reconciliation
Pre-Provision, Pre-Tax Earnings (PPPT) Reconciliation (Canadian $ in millions unless otherwise stated) Q3 23 Q2 23 Q1 23 Q4 22 Q3 22 YTD 23 YTD 22 Total Bank Reported Income before taxes 1,795 1,253 639 5,937 1,691 3,687 11,949 Total provision for (recovery of) credit losses 492 1,023 217 226 136 1,
Slide 57: Operating Groups
Operating Groups Canadian P&C Reported Adjusted1 U.S. P&C3 Reported Adjusted1 ($MM) Q3 23 Q2 23 Q3 22 Q3 23 Q2 23 Q3 22 (US$MM) Q3 23 Q2 23 Q3 22 Q3 23 Q2 23 Q3 22 Net Interest Income 2,129 1,983 1,938 2,129 1,983 1,938 Net Interest Income (teb) 1,550 1,589 1,001 1,550 1,589 1,001 Non-Interest Reven
Slide 58: Investor Relations
Investor Relations Contact Information http://www.bmo.com/investorrelations E-mail: investor.relations@bmo.com
BMO Financial Group — Investor Presentation (October 2023) on 6ix