Bank Of Montreal · TSX:BMO
Bank Of Montreal — Q4 2015 Earnings Presentation
28 slides from Bank Of Montreal's earnings presentation, Dec 1, 2015
Slide 1: Investor Presentation Q4 15
Investor Presentation For the Quarter Ended – October 31, 2015 December 1, 2015 Q4 15 December 1, 2015 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
Strategic Highlights For the Quarter Ended – October 31, 2015 December 1, 2015 Bill Downe Chief Executive Officer Q4 15 December 1, 2015 3
Slide 4: 2015 Financial Highlights
2015 Financial Highlights Strong finish to the year with adjusted net income of ~$4.7B • Record adjusted1 EPS of $7.00, up 6% • Canadian P&C, U.S. P&C and Wealth Management represent ~80% of adjusted net income • Personal & Commercial and Wealth Management businesses in the U.S. contributed $1B to a
Slide 5: Operating Group Performance
Operating Group Performance Good growth in Canadian P&C, U.S. P&C and Wealth Management • Canadian P&C had good performance in F2015 Adjusted1 Net Income (C$MM) the second half of the year with record annual earnings of $2.1B, up 4% 4% • U.S. P&C had a good year with record 2,108 2,020 net income, u
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 – October 31, 2015 December 1, 2015 Tom Flynn Chief Financial Officer Q4 15 Financial Results Month xx, 2015 7
Slide 8: F2015 - Financial Highlights
F2015 - Financial Highlights Record adjusted net income of $4.7B, reflecting stronger performance in the second half of the year Adjusted ($B)1 F2014 F2015 • Adjusted EPS up 6%; adjusted net income up 5% Revenue 18.2 19.4 • Net revenue up 8% (4% ex USD impact), demonstrating the benefit CCPB2 1.5 1.
Slide 9: Q4 2015 - Financial Highlights
Q4 2015 - Financial Highlights Adjusted net income of $1.3B, EPS up 17% Y/Y with growth across groups Adjusted ($MM) 1 Q4 14 Q3 15 Q4 15 • Adjusted EPS up 17% Y/Y; adjusted net income up 14% Y/Y Revenue 4,640 4,826 4,984 • Net revenue up 9% Y/Y (3% ex USD impact) with growth across all CCPB2 300 218
Slide 10: Capital & Risk Weighted Assets
Capital & Risk Weighted Assets CET1 Ratio strong at 10.7% Common Equity Tier 1 Ratio (%) • Common Equity Tier 1 Ratio of 10.7%, ~30 bps higher than Q3’15 - ~25 bps increase due to CET1 capital mainly from retained earnings 10.4 10.7 growth 10.1 10.1 10.2 - ~5 bps increase due to lower RWA of ~$1B pr
Slide 11: Canadian Personal & Commercial Banking
Canadian Personal & Commercial Banking Good net income growth in quarter of 7% Y/Y Adjusted ($MM)1 Q4 14 Q3 15 Q4 15 Annual Highlights Revenue (teb) 1,651 1,698 1,709 • Good performance in the second half of the year; annual earnings of $2.1B, up 4% PCL 129 109 112 Expenses 818 844 845 Q4 Highlights
Slide 12: U.S. Personal & Commercial Banking
U.S. Personal & Commercial Banking Good annual adjusted net income growth of 25% (9% in USD) Annual Highlights Adjusted (US$MM)1 Q4 14 Q3 15 Q4 15 • Adjusted net income up 25% (9% in USD) with strong C&I loan Revenue (teb) 724 727 723 growth, well-controlled expenses (up less than 1%) and good credi
Slide 13: BMO Capital Markets
BMO Capital Markets Solid results given market conditions; Q4 adjusted net income up 27% Y/Y Adjusted ($MM)1 Q4 14 Q3 15 Q4 15 Annual Highlights Trading Products • Solid results given market conditions, with revenue up 4%; 470 619 564 net income over $1B, down 4% from last year; ROE of 14.9% Revenue
Slide 14: Wealth Management
Wealth Management Good annual net income growth, up 13% from prior year Adjusted1 ($MM) Q4 14 Q3 15 Q4 15 Annual Highlights • Good organic growth and the addition of F&C drove adjusted net income1 growth of 13%. Revenue 1,400 1,336 1,457 Wealth now comprises 20% of BMO’s adjusted net income CCPB2 30
Slide 15: Corporate Services
Corporate Services Annual Highlights Adjusted ($MM)1,2 Q4 14 Q3 15 Q4 15 • Adjusted net loss5 of $296MM compared to a net loss of Revenue 72 (15) 47 $194MM a year ago primarily due to lower credit recoveries Group teb offset2 (99) (114) (120) and lower purchased loan portfolio revenues Total Revenue
Slide 16: Risk Review
Risk Review For the Quarter Ended – October 31, 2015 December 1, 2015 Surjit Rajpal Chief Risk Officer Q4 15 Financial Results Month xx, 2015 16
Slide 17: Provision for Credit Losses (PCL)
Provision for Credit Losses (PCL) PCL By Operating Group Q4 141 Q3 15 Q4 15 (C$MM) • Credit performance for the year remains Consumer – Canadian P&C 111 86 95 strong (F2015: 19 bps) Commercial – Canadian P&C 18 23 17 Total Canadian P&C 129 109 112 • PCL improved in the quarter (Q4: 15 bps) Consumer
Slide 18: Gross Impaired Loans (GIL) and Formations
Gross Impaired Loans (GIL) and Formations Formations Gross Impaired Loans By Industry • GIL decreased by 8 bps to 58 bps (C$MM) Canada & Canada & U.S. Total U.S. Total Other Other1 • In constant U.S. dollars, GIL down Consumer 159 126 285 359 557 916 13% year-over-year Manufacturing 2 1 3 19 121 140
Slide 19: Oil and Gas and Alberta Consumer Portfolios
Oil and Gas and Alberta Consumer Portfolios Oil and Gas Balances – By Sector (C$B) Oil and Gas – Corporate/Commercial $0.1 $0.9 2% • Oil and Gas Loans of $6.7B; 2% of total bank loans 14% with >50% investment grade • $7.8B in undrawn exposure; ~60% investment grade $1.2 18% $4.5 Consumer Exposure in
Slide 20: Loan Portfolio Overview
Loan Portfolio Overview Gross Loans & Acceptances Canada & By Industry U.S. Total % of Total Other1 • Loans are well diversified by (C$B) Residential Mortgages 97.0 8.9 105.9 32% geography and industry Personal Lending 49.5 16.1 65.6 19% Cards 7.4 0.6 8.0 2% Total Consumer 153.9 25.6 179.5 53% Finan
Slide 21: Canadian Residential Mortgages
Canadian Residential Mortgages • Total Canadian residential mortgage portfolio at $97.0B represents 43% of Canadian gross loans and acceptances ─ 58% of the portfolio is insured ─ Loan-to-value (LTV)1 on the uninsured portfolio is 57%2 ─ 71% of the portfolio has an effective remaining amortization o
Slide 22: Trading Revenue vs. VaR
Trading Revenue vs. VaR August 3, 2015 to October 30, 2015 (in MM's and on a Pre-Tax Basis) 35 15 Aug 04 Aug 11 Aug 18 Aug 25 Sep 01 Sep 09 Sep 16 Sep 23 Sep 30 Oct 07 Oct 15 Oct 22 Oct 29 (5) Daily Revenues Total Trading VaR (25) Risk Review December 1, 2015 22
Slide 23: APPENDIX
APPENDIX Financial Results December 1, 2015 23
Slide 24: Canadian Personal & Commercial Banking – Balances
Canadian Personal & Commercial Banking – Balances Average Loans & Acceptances Y/Y Growth (C$B) 195.3 197.2 190.4 4% 88.1 90.1 92.0 Loans • Loan growth of 4% Y/Y 43.7 43.3 43.6 - Mortgages up 4% Y/Y 8.5 8.5 8.5 - Consumer loan balances relatively stable 50.1 53.4 53.1 - Commercial loan balances1 up 6
Slide 25: U.S. Personal & Commercial Banking – Commercial Balances
U.S. Personal & Commercial Banking – Commercial Balances All amounts in US$B Average Commercial Loans 35.6 36.5 32.9 4.4 4.6 4.9 Loans • C&I loan growth up 11% Y/Y • Good growth in the Commercial Real Estate portfolio, 28.5 31.0 31.6 up 21% Y/Y Q4'14 Q3'15 Q4'15 C&I CRE* Average Commercial Deposits
Slide 26: U.S. Personal & Commercial Banking – Personal Balances
U.S. Personal & Commercial Banking – Personal Balances All amounts in US$B Average Personal Loans 31.3* 30.6* 30.2* Loans 5.0 5.2 5.3 Serviced Mortgages • Business Banking up 2% Y/Y • Serviced mortgage portfolio up 8% Y/Y Mortgages** 11.3 10.8 10.6 • Mortgage portfolio down 7% Y/Y Other Loans*** • I
Slide 27: Adjusting Items
Adjusting Items Adjusting1,2 items – Pre-tax ($MM) Q4 14 Q3 15 Q4 15 F2014 F2015 Amortization of acquisition-related intangible assets (42) (40) (43) (140) (163) Acquisition integration costs (11) (9) (20) (20) (53) Restructuring costs - - - - (149) Adjusting items included in reported pre-tax incom
Slide 28: Investor Relations Contact Information
Investor Relations Contact Information www.bmo.com/investorrelations E-mail: investor.relations@bmo.com Fax: 416.867.3367 LISA HOFSTATTER CHRISTINE VIAU Managing Director, Investor Relations Director, Investor Relations 416.867.7019 416.867.6956 lisa.hofstatter@bmo.com christine.viau@bmo.com Financi