Bank Of Montreal · TSX:BMO
Bank Of Montreal — Debt Investor Presentation (December 2018)
34 slides from Bank Of Montreal's debt investor presentation, December 2018
Slide 1: Fixed Income Investor Presentation
Fixed Income Investor Presentation December 2018
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: BMO Financial Group
BMO Financial Group 8th largest bank in North America1 with an attractive and diversified business mix Who we are F2018 Results * Adjusted2 Reported Net Revenue ($B)3 21.7 21.7 • Established in 1817, Canada’s first bank Net Income ($B) 6.0 5.5 • In Canada: a full service, universal bank across EPS (
Slide 4: Reasons to Invest
Reasons to Invest • Diversified businesses that continue to deliver • Well-capitalized with an attractive dividend yield robust earnings growth and long-term value for shareholders • Creating sustainable efficiency and reinvestment capacity through resource optimization, • Strong foundation built fo
Slide 5: BMO’s Strategic Footprint
BMO’s Strategic Footprint BMO’s strategic footprint spans strong regional economies. Our three operating groups (Personal and Commercial Banking, BMO Capital Markets and BMO Wealth Management) serve individuals, businesses, governments and corporate customers across Canada and the United States with
Slide 6: F2018 - Financial Highlights
F2018 - Financial Highlights Good full year performance with strong growth in the P&C businesses • Adjusted1 EPS $8.99, up 10% Y/Y (reported up 3%) Reported Adjusted1 ($MM) F2018 F2017 F2018 F2017 • Adjusted1 net income up 9% (reported up 2%) 2 Net Revenue 21,685 20,722 21,685 20,722 – U.S. Segment
Slide 7: Q4 2018 - Financial Highlights
Q4 2018 - Financial Highlights Adjusted1 net income up 17% Y/Y, with strong growth in P&C businesses Reported Adjusted1 • Adjusted1 EPS $2.32, up 19% Y/Y (reported up 42%) ($MM) Q4 18 Q3 18 Q4 17 Q4 18 Q3 18 Q4 17 • Adjusted1 net income up 17% (reported up 38%) Net Revenue 2 5,532 5,551 5,082 5,532
Slide 8: Strong Capital Position
Strong Capital Position Capital position strong with CET1 Ratio at 11.3% Common Equity Tier 1 Ratio +37 bps -23 bps -22 bps 11.4% -4 bps +1 bp 11.3% Q3 2018 Internal capital Higher source Acquisition Share Other Q4 2018 generation currency RWA repurchases Basis points may not add due to rounding. •
Slide 9: Economic & Housing Overview
Economic & Housing Overview
Slide 10: Economic Outlook and Indicators
Economic Outlook and Indicators1 Canada United States Eurozone Economic Indicators (%)1, 2 2017 2018E2 2019E2 2020E2 2017 2018E2 2019E2 2020E2 2017 2018E2 2019E2 2020E2 GDP Growth 3.0 2.1 1.8 1.7 2.2 2.9 2.5 1.7 2.4 1.9 1.6 1.7 Inflation 1.6 2.2 1.8 2.1 2.1 2.4 2.1 2.0 1.5 1.7 1.9 2.0 Interest Rate
Slide 11: Canadian Residential-Secured Lending
Canadian Residential-Secured Lending Residential-Secured Lending by Region ($139.7B) • Underweight exposure to uninsured real-estate secured loans $61.6 representing a modest 23% of total loans, below peer average of 31%, with strong credit quality 23% • Canadian P&C consumer lending contributes <15
Slide 12: Canada’s housing market is stable
Canada’s housing market is stable • Rising interest rates, tougher mortgage rules and provincial policy measures have slowed the housing market • The high-priced detached property markets in Toronto and Vancouver have taken the brunt of the impact, though the condo market remains healthy due to stea
Slide 13: Structure of the Canadian residential mortgage market with comparisons to the United States
Structure of the Canadian residential mortgage market with comparisons to the United States • Conservative lending practices, strong underwriting and documentation discipline have led to low delinquency rates — Over the last 30 years, Canada’s 90-day residential mortgage delinquency rate has never e
Slide 14: Loan Portfolio Overview
Loan Portfolio Overview
Slide 15: Our loans are well-diversified by geography and industry
Our loans are well-diversified by geography and industry Gross Loans & Acceptances Loans by Geography3 Canada & By Industry U.S. Total % of Total Other1 ($B, as at Q4 18) Residential Mortgages 108.0 11.6 119.6 29% 33% Canada Consumer Instalment and Other 53.2 10.0 63.2 16% 65% U.S. Personal Cards 7.
Slide 16: Gross Impaired Loans (GIL) and Formations
Gross Impaired Loans (GIL) and Formations By Industry Formations Gross Impaired Loans • GIL ratio 48 bps, down 5 bps Q/Q ($MM, as at Q4 18) Canada & Canada & U.S. Total U.S. Total Other Other1 Consumer 203 75 278 426 470 896 Service Industries 5 18 23 57 180 237 Agriculture 7 22 29 55 154 209 Transp
Slide 17: Provision for Credit Losses (PCL)
Provision for Credit Losses (PCL) PCL By Operating Group Q4 18 Q3 18 Q4 171 • Q4’18 PCL ratio on Impaired Loans at 18 bps, ($MM) flat Q/Q Consumer – Canadian P&C 99 96 98 • Allowance for Credit Losses on Performing Commercial – Canadian P&C 19 24 32 Loans decreased PCL by $2 million Total Canadian P
Slide 18: Provision for Credit Losses (PCL) on Impaired Loans
Provision for Credit Losses (PCL) on Impaired Loans Strong credit performance reflective of our consistent approach to effective risk management PCL on Impaired Loans as a % of Average Net Loans & Acceptances 1.80% 1.60% 1.40% 1.20% 1.00% 0.80% 0.60% 0.53% 0.40% 0.38% 0.31% 0.20% 0.18% 0.00% '90 '91
Slide 19: Liquidity & Wholesale Funding Mix
Liquidity & Wholesale Funding Mix
Slide 20: Liquidity and Funding Strategy
Liquidity and Funding Strategy Cash and Securities to Total Assets Ratio (%) • BMO's Cash and Securities to Total Assets 28.5 29.0 28.1 28.2 29.9 Ratio reflects a strong and stable liquidity position Q4'17 Q1'18 Q2'18 Q3'18 Q4'18 Customer Deposits1 ($B) 303.1 302.7 310.0 317.8 329.2 • BMO’s large ba
Slide 21: Canadian Bail-in Regime
Canadian Bail-in Regime • Canadian bail-in regime is effective from September 23, 2018 (implementation date) Canadian Approach • Bail-in eligible senior unsecured debt that is issued after the implementation date will be subject to conversion in a resolution scenario Statutory / Contractual Subordin
Slide 22: Manageable TLAC Requirements and no incremental funding
Manageable TLAC Requirements and no incremental funding • Canadian D-SIBs will be required to meet a Supervisory Target Funding Profile as at October 31, 2018 ratio by November 1, 2021 40.0% 36.6% — Risk-based TLAC ratio of 23% (Minimum 21.5% of RWA 37.5% TLAC ratio plus a Domestic Stability Buffer
Slide 23: Strong Ratings Profile
Strong Ratings Profile Rating for BMO Legacy Senior Debt and Senior Debt 1 1,2 Rating for BMO Legacy Senior Debt Rating for BMO Senior Debt Moody’s Standard & Poor’s Fitch DBRS Aa1 AA+ AA+ AA (high) Aa2 AA AA AA Aa3 AA- AA- AA (low) A1 A+ A+ A (high) A2 A A A A3 A- A- A (low) Baa1 BBB+ BBB+ BBB (hig
Slide 24: 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 25: 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$8B) • SEC Registered U.S. Shelf (US$25B) • Note Issuance Programme (US$20B) • Fortified Trust (C$5B) • Global Registered Cover
Slide 26: APPENDIX
APPENDIX
Slide 27: Diversified by businesses, customer segments and geographies
Diversified by businesses, customer segments and geographies Adjusted Net Income by Canadian P&C Operating Group – F20181 • Full range of financial products and services to eight million customers • Helping customers make the right financial decisions as they bank across a network of 900 branches, c
Slide 28: Canadian Personal & Commercial Banking
Canadian Personal & Commercial Banking Net income up 8% Y/Y with continued momentum in commercial business • Adjusted1 and reported net income up 8% Y/Y Reported Adjusted1 • Revenue up 4% Y/Y ($MM) Q4 18 Q3 18 Q4 17 Q4 18 Q3 18 Q4 17 – Average loans up 4% Y/Y. Commercial2 up 12%; Revenue (teb) 1,968
Slide 29: U.S. Personal & Commercial Banking
U.S. Personal & Commercial Banking Continued strong performance Figures that follow are in U.S. dollars Reported Adjusted1 • Adjusted1 net income up 31% Y/Y (reported up 33% Y/Y) (US$MM) Q4 18 Q3 18 Q4 17 Q4 18 Q3 18 Q4 17 • Revenue up 8% Y/Y Revenue (teb) 996 985 924 996 985 924 Total PCL 60 31 52
Slide 30: BMO Wealth Management
BMO Wealth Management Good underlying net income growth Y/Y in Traditional Wealth • Adjusted1 net income up 21% Y/Y (reported up 25%) Reported Adjusted1 – Traditional Wealth down 2% Y/Y (reported flat); legal ($MM) Q4 18 Q3 18 Q4 17 Q4 18 Q3 18 Q4 17 provision, net of favourable U.S. tax item, had 8
Slide 31: BMO Capital Markets
BMO Capital Markets Solid performance, primarily driven by I&CB • Adjusted1 and reported net income lower than prior year Reported Adjusted1 reflecting current market conditions impacting Trading ($MM) Q4 18 Q3 18 Q4 17 Q4 18 Q3 18 Q4 17 Products as well as higher expenses Trading Products 629 638 6
Slide 32: Strategic Priorities
Strategic Priorities • Well-diversified, double-digit commercial loan Drive leading growth in priority growth and good deposit growth areas by earning customer loyalty • Improved loyalty scores across businesses • Established EI3 Group to drive enterprise-wide, Simplify, speed up, and improve sustai
Slide 33: Corporate Governance
Corporate Governance • Code of Conduct based on BMO’s values, provides ethical guidance and expectations of behaviour for all directors, officers and employees • Governance practices reflect emerging best practices and BMO meets or exceeds legal, regulatory, TSX, NYSE and Nasdaq requirements • Direc
Slide 34: Investor Relations
Investor Relations Contact Information bmo.com/investorrelations E-mail: investor.relations@bmo.com JILL HOMENUK CHRISTINE VIAU Head, Investor Relations Director, Investor Relations 416.867.4770 416.867.6956 jill.homenuk@bmo.com christine.viau@bmo.com
Bank of Montreal — Debt Investor Presentation (December 2018) on 6ix