Bank Of Montreal · TSX:BMO
Bank Of Montreal — Q4 2012 Earnings Presentation
34 slides from Bank Of Montreal's earnings presentation, Dec 12, 2012
Slide 1: Investor Presentation Q4 12
Investor Presentation December 12, 2012 Q4 12
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) Top ten North American bank1 Who we are Annual 2012 Results (C$ billions) Adjusted2 Reported Established in 1817, BMO Financial Group is a highly diversified financial Revenue 15.1 16.1 services provider based in North America. With total assets of $525 billion
Slide 4: BMO Financial Group – North American Footprint
BMO Financial Group – North American Footprint 9th largest bank in North America1; 2nd largest Canadian bank by retail branches in Canada and the U.S. Personal & Commercial (1,560 branches) 2 $204B Private Client Group Customer Deposits BMO Capital Markets 1 As measured by market capitalization as a
Slide 5: BMO – A Strong Foundation
BMO – A Strong Foundation We have the business platform, balance sheet and expertise to generate quality growth Diversified business mix with retail focus X Over 75% of F2012 operating group revenue and adjusted net income from retail businesses X Commercial banking is a strength in Canada (#2 in
Slide 6: Economic Outlook
Economic Outlook The Canadian economy continues to grow at a modest pace, held back by the strong Canada Canadian dollar, weak global demand, elevated household debt and fiscal consolidation, but supported by low interest rates and firm commodity prices Modest GDP growth of 1.8% is expected in 2
Slide 7: Economic Indicators
Economic Indicators North America should continue to grow modestly, while the eurozone economy will remain very weak Canada United States Eurozone Economic Indicators (%)1 2011 2012E 2013E 2011 2012E 2013E 2011 2012E 2013E GDP Growth 2.6 2.1 1.8 1.8 2.2 2.3 1.5 (0.4) 0.2 Inflation 2.9 1.6 1.8 3.1 2.
Slide 8: Operating Group Overview
Operating Group Overview Personal and Commercial Banking - Canada Over 7 million customers 930 branches and access to almost 2,600 automated banking machines #2 in commercial lending with ~20% market share and personal lending market share ~11% Personal and Commercial Banking – U.S. Over 2 m
Slide 9: F2012 - Financial Highlights
F2012 - Financial Highlights Strong Annual Performance with Adjusted Income of $4.1B, Increasing EPS by 18% from a Year Ago Specific Common Net Revenue EPS ROE Efficiency Equity Ratio Income PCL (Basel II) Reported $16,130MM $4,189MM $6.15 15.9% 63.5% $762MM 10.5% Results Adjusted $15,067MM $4,092MM
Slide 10: Diversified Business Mix with Retail Focus
Diversified Business Mix with Retail Focus 75% of F2012 operating group adjusted net income and adjusted revenue from retail businesses F2012 Adjusted Revenue by F2012 Adjusted Net Income by Operating Group (C$MM) - $15,353MM Operating Group1 (C$MM) - $3,870MM P&C PCG P&C (Wealth PCG (Personal & (Pe
Slide 11: Turning the page on M&I
Turning the page on M&I Looking back 24 months since announcement, we’ve achieved what we said we would Conversion of our core banking platform completed Completed on schedule in October and we’ve upgraded U.S. online, branch, core banking and mobile banking platforms at the same time Rebranding c
Slide 12: Q4 2012 - Financial Highlights
Q4 2012 - Financial Highlights Strong Performance with Adjusted Net Income of $1.1B, Increasing EPS by 38% from a Year Ago Common Net Specific Equity Revenue EPS ROE Efficiency Income PCL Ratio (Basel II) Reported $4,176MM $1,082MM $1.59 15.6% 64.7% $216MM 10.5% Results Adjusted $3,920MM $1,125MM $1
Slide 13: Revenue
Revenue Revenue growth driven by strong BMO CM and PCG results Total Bank Adjusted Revenue (C$MM) Net Interest Margin 13.4% 8.5% 14.9% 8.8% 6.8% Y/Y (bps) Growth 3,920 3,670 3,743 3,727 3,677 213 221 210 203 202 1,956 1,996 2,092 1,969 2,012 NII 201 205 189 188 183 Q4 Q1 Q2 Q3 Q4 1,674 1,758 1,964 1
Slide 14: Non-Interest Expense
Non-Interest Expense Focused on disciplined expense management Non-Interest Q4 11 Q3 12 Q4 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 2,342 2,436 Reported 2,432 2,484 2,701 (9)% (11)% Adjusted 2,341 2,342 2,436 (4)% (4)% 748 766 737 745 739
Slide 15: Capital & Risk Weighted Assets
Capital & Risk Weighted Assets Capital position strong Ratios remain strong Announced intention to seek approval to commence Normal Course Common Shareholders’ Equity Issuer Bid to repurchase up to 15 million common shares & Basel II Tier 1 Capital Basel II F2011 F2012 Common Equity Ratio (%)1 9
Slide 16: Personal & Commercial Banking Canada
Personal & Commercial Banking Canada Seeing stronger momentum in balance sheet growth F2012 net income flat Y/Y; on an actual loss basis up 3.4% Y/Y Revenue and Net Income* (C$MM) Expenses well managed 6,188 6,168 0.3% Personal 5,863 Good lending growth with balances up 7.8% Y/Y and 3.1% Q/Q
Slide 17: Personal & Commercial Banking U.S.
Personal & Commercial Banking U.S. Business performing well with disciplined expense management Revenue and Adjusted Net Income* F2012 adjusted net income up 48% primarily due to the acquired (US$MM) business 2,991 50% Revenue and net income higher due to the acquired business Continued good v
Slide 18: Personal & Commercial Banking U.S. – Commercial Balances
Personal & Commercial Banking U.S. – Commercial Balances All amounts in U.S. $B Core C&I ($B) - Average Core Commercial Real Estate ($B) - Average Strong C&I loan growth, with Q4’12 being the 4th straight sequential quarter of growth; growth of 15% since Q4’11 19.1 19.9 17.3 18.0 18.8 New client
Slide 19: Personal & Commercial Banking U.S. – Personal Balances
Personal & Commercial Banking U.S. – Personal Balances All amounts in U.S. $B Mortgages ($B) - Average Home Equity ($B) - Average Mortgages Serviced Mortgage Mortgage originations of $821MM up $33MM or 4.2% Q/Q and $271MM or 49% 3.9 3.9 4.0 4.1 4.2 Y/Y Mortgage portfolio declines as new originat
Slide 20: Private Client Group
Private Client Group Businesses performing well Revenue and Adjusted Net Income* F2012 adjusted net income up 12% (C$MM) 2,899 Ex-Insurance net income up 9% 2,585 12% 2,256 Insurance net income up 20% 546 486 U.S. segment net income of US$104MM up 96% from prior 437 year primarily due to acq
Slide 21: BMO Capital Markets
BMO Capital Markets Results reflect focus on execution and benefit of diversified revenue mix F2012 net income increased 5.1% Revenue and Net Income* (C$MM) Net income from US operations increased US$35MM or (1)% 3,278 3,299 3,265 61% to US$93MM Efficiency ratio of 59.8% 948 902 816 Strong a
Slide 22: Loan Portfolio Overview
Loan Portfolio Overview Canadian and US portfolios are well diversified by industry P&C business represents the majority of loans X Retail portfolios are predominantly secured – 88% in Canada and 97% in the US Canada & By Industry % of Other US Total (C$ B) total Countries1 Residential Mortgages 7
Slide 23: Provision for Credit Losses (PCL)
Provision for Credit Losses (PCL) Down 19% q/q and 47% y/y Fiscal 2012 adjusted specific provisions are $471MM (Fiscal 2011: $1,108MM) and include $509MM in recoveries related to the Purchased Credit Impaired Loans (Fiscal 2011: $ nil) During the quarter US Consumer provisions have increased pri
Slide 24: Canadian Residential Mortgages
Canadian Residential Mortgages Total Canadian portfolio $76.7B (Q3 '12: $73.9B) ~64% of the portfolio is insured (Q3 '12: ~65%) Average LTV1 of portfolio 62% (Q3 '12: 61%) X insured portfolio 64% (Q3 '12: 64%) X uninsured portfolio 58% (Q3 '12: 56%) Residential Mortgages by Province Insured Un
Slide 25: 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, ou
Slide 26: Issuance
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 27: Corporate Governance
Corporate Governance Comprehensive code of business conduct and ethics, FirstPrinciples, guides conduct and ethical decision-making by our directors, officers and employees Governance practices reflect emerging best practices and BMO meets or exceeds legal, regulatory, TSX and NYSE requirements
Slide 28: Sustainability at BMO
Sustainability at BMO Our Sustainability progress depends on how well we understand our impact on the world around us and are able to manage social, environmental, and governance concerns associated with our business. Sustainable growth comes from operating with integrity & respect for our stakehold
Slide 29: BMO’s Strategic Priorities
BMO’s Strategic Priorities Our Guiding Principle: Our Vision: We aim to deliver top-tier total shareholder return and To be the bank that defines great balance our commitments to financial performance, our customer experience customers, our employees, the environment and the communities where we liv
Slide 30: Reasons to invest in BMO
Reasons to invest in BMO Confident each of our businesses is positioned to deliver high quality sustained earnings growth Operating leverage from our expanded U.S. platform Focused on generating revenue growth by achieving industry-leading customer experience and loyalty Enhancing productivity
Slide 31: Appendix
Appendix Investor Presentation | Q4 2012 31
Slide 32: Systemic Differences Between Canadian & U.S. Banks
Systemic Differences Between Canadian & U.S. Banks Canada U.S. Mature oligopoly: 6 chartered banks with a single Fragmented market 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 33: Adjusting Items
Adjusting Items Adjusting1 items – Pre-tax Annual Annual Q4 11 Q3 12 Q4 12 ($MM) F2011 F2012 Credit-related items on the M&I purchased performing loan portfolio 173 76 57 173 407 Hedge costs related to foreign currency risk on purchase of M&I - - - (20) - M&I integration costs (53) (105) (153) (131)
Slide 34: 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 Senior Manager 416.867.7019 andrew.chin@bmo.com