Bank Of Montreal · TSX:BMO
Bank Of Montreal — Q1 2024 Earnings Presentation
43 slides from Bank Of Montreal's earnings presentation, Feb 27, 2024
Slide 1: Investor Presentation Q1 24
BMO Financial Group Investor Presentation For the Quarter Ended January 31, 2024 February 27, 2024 Q1 24
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 E
Slide 3: Darryl White, Chief Executive Officer
Darryl White Chief Executive Officer Q1 24
Slide 4: Resilient performance in a challenging environment
Resilient performance in a challenging environment Strong foundation, disciplined expense control, positioned for growth Q1 2024 Net Income EPS PPPT2 Growth Total Assets Adjusted1 $1.9B Adjusted1 $2.56 Adjusted1 3% $1.3T Reported $1.3B Reported $1.73 Reported +100% Efficiency Ratio ROE ROTCE3 CET14
Slide 5: Highly diversified businesses delivering resilient performance
Highly diversified businesses delivering resilient performance Canadian Personal & Commercial Banking U.S. Personal & Commercial Banking Reported Revenue ($MM) Reported Revenue (teb1, US$MM) 2,716 2,796 2,778 1,875 1,811 1,822 1,833 2,557 2,490 768 757 761 765 732 Commercial 1,292 Commercial 1,117 1
Slide 6: Our Purpose
Our Purpose For a Thriving Economy Providing access to capital and • Committed US$2 million to expand BMO’s Welcome Home Grant program, helping households in valuable financial advice – investing underserved California communities make progress for homeownership in businesses, supporting home owners
Slide 7: Financial Results
Financial Results For the Quarter Ended January 31, 2024 Tayfun Tuzun Chief Financial Officer Q1 24
Slide 8: Q1 F2024 - Financial Highlights
Q1 F2024 - Financial Highlights Efficiency savings and the benefit of acquisitions offset by slower environment • Adjusted2 EPS $2.56, down $0.50 Y/Y (reported $1.73, Reported Adjusted2 up $1.59) ($MM) Q1 24 Y/Y Q/Q Q1 24 Y/Y Q/Q • Adjusted2 net income down 12% Y/Y (reported up +100%); Revenue 7,672
Slide 9: Q1 F2024 Revenue
Q1 F2024 Revenue Idiosyncratic items impacting the quarter Insurance Revenue ($MM) • Contributed 2% Y/Y and (2)% Q/Q to total bank revenue growth • Y/Y increase and Q/Q decrease both driven by market-related 218 impacts reflecting the transition to IFRS 17 81 • Fiscal 2023 quarterly results are not
Slide 10: Balance Sheet
Balance Sheet Diversified loan and deposit portfolio • Average gross loans and acceptances up 16% Y/Y due to: Average Gross Loans and Acceptances ($B) – 15% growth in Business & Government loans driven by Bank of the West and good growth in Canadian P&C, BMO 657.0 655.0 Capital Markets and BMO Wealt
Slide 11: Net Interest Margin
Net Interest Margin1 • Reported NII up 17% Y/Y and down 4% Q/Q NII ($MM) and NIM ex. trading and Insurance (%)2 • Adjusted2 NII ex trading up 12% Y/Y due to volume 1.90 1.92 1.90 1.84 growth; down 3% Q/Q due to lower NII in Corporate 7,200 1.81 2 Services 6,700 6,200 1.90 1.92 1.89 1.83 5,700 1. 5 •
Slide 12: Q1 F2024 Non-Interest Expense
Q1 F2024 Non-Interest Expense Executing expense efficiency initiatives • Adjusted1 expenses up 16% Y/Y (reported Reported Adjusted1 up 23%) ($MM) Q1 24 Y/Y Q/Q Q1 24 Y/Y Q/Q – Driven by acquisitions partially offset by Salaries 1,471 21% (13)% 1,437 23% (3)% operational efficiencies as well as $84MM
Slide 13: Strong Q1'24 CET1 Ratio of 12.8%
Strong Q1’24 CET1 Ratio1 of 12.8% Common Equity Tier 1 Ratio1 +14 bps -9 bps -8 bps +7 bps 12.8% +10 bps +14 bps 12.5% Q4’23 Internal capital DRIP Sale of Source FDIC special Other Q1’24 generation RV loans currency RWA assessment • Q1’24 CET1 ratio1 of 12.8%, up from Q4’23 – Internal capital genera
Slide 14: Canadian Personal & Commercial Banking
Canadian Personal & Commercial Banking Strong PPPT2 performance with continuing loan and deposit growth and higher margins • Adjusted1 and reported net income down 3% Y/Y Reported Adjusted1 • Adjusted1 PPPT2 and reported PPPT2 up 8% Y/Y ($MM) Q1 24 Y/Y Q/Q Q1 24 Y/Y Q/Q • Revenue up 9% Y/Y Net inter
Slide 15: U.S. Personal & Commercial Banking
U.S. Personal & Commercial Banking PPPT2 up Q/Q as lower expenses offset environmental pressure on revenues Amounts that follow are in U.S. dollars: Reported Adjusted1 1 • Adjusted net income down 4% Y/Y (reported 16%) (US$MM) Q1 24 Y/Y Q/Q Q1 24 Y/Y Q/Q 3 Net interest income (teb) 1,537 44% 1% 1,53
Slide 16: BMO Wealth Management
BMO Wealth Management Good growth in client assets offset by lower net interest income • Adjusted1 net income up 51% Y/Y (reported Reported Adjusted1 up 52%) ($MM) Q1 24 Y/Y Q/Q Q1 24 Y/Y Q/Q • Wealth and Asset Management adjusted1 and Wealth & Asset Management 1,247 6% (0)% 1,247 6% (0)% reported n
Slide 17: BMO Capital Markets
BMO Capital Markets Client activity gaining momentum after muted start to quarter • Adjusted1 net income down 17% Y/Y (reported Reported Adjusted1 down 19%) ($MM) Q1 24 Y/Y Q/Q Q1 24 Y/Y Q/Q • Adjusted1 PPPT3 down 20% Y/Y (reported Global Markets 952 (13)% 1% 952 (13)% 1% down 22%) I&CB 637 5% (10)%
Slide 18: Corporate Services
Corporate Services • Adjusted2 net loss of $316MM and reported net Reported Adjusted2 loss of $822MM for the quarter, compared with an ($MM)1 Q1 24 Y/Y Q/Q Q1 24 Y/Y Q/Q adjusted2 net loss of $114MM and reported net Revenue (449) 1,492 (463) (271) (347) (299) loss of $2,130MM in the prior year 4 Gro
Slide 19: Risk Review
Risk Review For the Quarter Ended January 31, 2024 Piyush Agrawal Chief Risk Officer Q1 24
Slide 20: Provision for Credit Losses (PCL)
Provision for Credit Losses (PCL) PCL By Operating Group Q1 23 Q2 23 Q3 23 Q4 23 Q1 24 • Q1’24 PCL ratio on impaired loans4 of 29 bps, ($MM) up 4 bps Q/Q with increases in consumer loans and Personal & Business Banking 116 150 162 190 204 business & government loans, offset by benefits from risk tra
Slide 21: Allowance and Provision on Performing Loans
Allowance and Provision on Performing Loans • The $154 million provision for credit losses on Allowance on Performing performing loans in the current quarter was Q1 24 primarily driven by portfolio credit migration and Loans (APL) and PCL on APL to Q4 23 Q1 24 Foreign Q1 24 Performing Loans (PCL) Pe
Slide 22: Gross Impaired Loans and Formations
Gross Impaired Loans and Formations • Gross impaired loans (GIL) ratio3 65 bps, up 6 bps Formations Gross Impaired Loans Q/Q, with the largest increases in the services and By Industry manufacturing industries ($MM, as at Q1 24) CA & CA & U.S. Total U.S. Total Formations ($MM) Other Other1 1,766 Tot
Slide 23: Business & Government Portfolio Overview
Business & Government Portfolio Overview Gross Loans & Acceptances B&G Portfolio Industry Diversification Canada & Total % of By Industry U.S. Other1 BMO Total ($B, as at Q1 24) Financing Construction, 2% Products, 2% Total Consumer 230.7 50.4 281.0 43% Utilities, 3% Oil & Gas, 1% Total Business and
Slide 24: Canadian Mortgage Portfolio Renewal Profile
Canadian Mortgage Portfolio Renewal Profile • The impact of higher interest rates on payments is primarily realized upon renewal for both fixed and variable rate mortgages • Variable rate mortgages with fixed payments are impacted by interest rate changes via the amortization period, until renewal •
Slide 25: Appendix
Appendix
Slide 26: Loan Portfolio Overview
Loan Portfolio Overview Gross Loans & Acceptances • Portfolio is well diversified by geography and Canada & Total % of industry By Industry U.S. Other1 BMO Total ($B, as at Q1 24) • Total Gross Loans & Acceptances down 2% Q/Q or up 1% excluding impact of the stronger U.S. dollar Residential Mortgage
Slide 27: Commercial Real Estate
Commercial Real Estate • Commercial Real Estate (CRE) portfolio at $71.7B represents CRE by Geography1 11% of total Gross Loans & Acceptances (GL&A ) British Columbia 13% • Portfolio is well-diversified across businesses, property types Quebec 6% Ontario 22% and geographies • Well-managed with consi
Slide 28: Canadian Residential Secured Lending Portfolio Overview
Canadian Residential Secured Lending Portfolio Overview • Total Canadian residential-secured lending portfolio at $198.7B, representing 30% of total loans Residential-Secured Lending by Region ($198.7B) $96.2 – LTV1 on uninsured of 51% Amortizing HELOC $38.9 – 90-day delinquency rate for RESL remain
Slide 29: Trading-Related Net Revenue and Value-at-Risk
Trading-Related Net Revenue and Value-at-Risk November 1, 2023 to January 31, 2024 (pre-tax basis and in millions of Canadian dollars) 50 40 30 20 10 0 (10) (20) (30) (40) (50) (60) Daily Revenue Total Trading VaR Risk Review • February 27, 2024 29
Slide 30: Advancing our Digital First strategy
Advancing our Digital First strategy Continuing to deliver on our Driving digital engagement Recognized for industry leadership Digital First agenda • Canadian mobile app offers a simplified Active Digital Users, Retail1 (000) • Ranked first in customer satisfaction and enhanced user experience and
Slide 31: Canadian Personal & Commercial Banking – Balances
Canadian Personal & Commercial Banking – Balances Average Gross Loans & Acceptances ($B) Average Deposits ($B) 314.2 317.3 288.8 301.4 283.9 261.3 128.1 134.8 136.5 194.8 199.6 181.3 6.1 6.5 6.8 50.7 51.8 51.9 10.6 12.1 12.8 105.9 109.0 109.4 80.0 89.1 89.2 Q1'23 Q4'23 Q1'24 Q1'23 Q4'23 Q1'24 1 Comm
Slide 32: U.S. Personal & Commercial Banking – Balances
U.S. Personal & Commercial Banking – Balances Amounts on this slide are in U.S. dollars1 Average Gross Loans & Acceptances (US$B) Average Deposits (US$B) 152.7 152.1 160.7 158.0 36.3 33.9 102.4 110.6 77.3 80.0 9.7 47.6 116.4 118.2 92.7 80.7 80.7 63.0 Q1'23 Q4'23 Q1'24 Q1'23 Q4'23 Q1'24 Commercial Pe
Slide 33: Canadian and U.S. deposit trends
Canadian and U.S. deposit trends Canadian P&C and BMO Wealth Management deposits CDE$B, average balances 318 328 328 • Total Canadian deposits grew 8% Y/Y due to new 309 290 7% 7% customer acquisition, a comprehensive onboarding 266 6% 5% 238 3% program and increased customer primacy 2% 20% 21% 20%
Slide 34: Asset Yields and Liabilities Costs
Asset Yields1 and Liabilities Costs2 Average Earning Assets ($B) and Yield1 (%) Average Liabilities ($B) and Costs2 (%) 5.06% 5.26% 5.27% Yield on Total 2.55% 2.92% 3.18% 3.34% 3.56% Cost on Total 4.17% 4.86% Average Liabilities Earning Assets 1,261 1,236 1,265 1,246 1,083 1,162 1,162 1,177 1,196 1,
Slide 35: Interest Rate Sensitivity
Interest Rate Sensitivity • Year 1 benefit / exposure to an incremental +/- 100bps rate • Term rates decreased in Q1’24 and continue to be volatile, shock reflects a relatively neutral positioning but are still higher than historical rates • Year 2 benefit to rising rates (+100bps) of approximately
Slide 36: Adoption of IFRS 17 Insurance Contracts
Adoption of IFRS 17 Insurance Contracts Overview of accounting change and impacts • Effective November 1, 2023, we adopted IFRS 17 Insurance Contracts (IFRS 17) which replaced existing IFRS 4 Insurance Contracts (IFRS 4) • We applied the full retrospective approach to our creditor business and the f
Slide 37: 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 and our unaudited interim consolidated financial
Slide 38: Non-GAAP and Other Financial Measures
Non-GAAP and Other Financial Measures8 (Canadian $ in millions, except as noted) Q1 24 Q4 23 Q1 23 (1) Reported net income in Q1-2023 included losses of $1,461 million Net interest income 4,721 4,941 4,021 ($2,011 million pre-tax) related to the acquisition of Bank of the West, Non-interest revenue
Slide 39: Adjusted Net Income Reconciliation by Operating Group
Adjusted Net Income Reconciliation by Operating Group (Canadian $ in millions unless otherwise stated) Q1 24 Q4 23 Q3 23 Q2 23 Q1 23 Canadian P&C Reported Net Income 921 922 881 819 951 Acquisition and integration costs 1 1 6 2 — Amortization of acquisition-related intangible assets 3 3 2 1 — Adjust
Slide 40: Pre-Provision, Pre-Tax Earnings (PPPT) Reconciliation
Pre-Provision, Pre-Tax Earnings (PPPT) Reconciliation (Canadian $ in millions unless otherwise stated) Q1 24 Q4 23 Q3 23 Q2 23 Q1 23 Total Bank Reported Income before taxes 1,655 2,194 1,988 1,265 500 Total provision for (recovery of) credit losses 627 446 492 1,023 217 Reported Pre-Provision, Pre-T
Slide 41: Adjusted Non-Interest Expense Reconciliation
Adjusted Non-Interest Expense Reconciliation (Canadian $ in millions unless otherwise stated) Q1 24 Q4 23 Q3 23 Q2 23 Q1 23 Reported Salaries 1,471 1,683 1,872 1,783 1,219 Acquisition and integration costs (34) (203) (197) (357) (52) Impact of divestitures 1,437 1,480 1,675 1,426 1,167 Reported Perf
Slide 42: Summary of Reported and Adjusted Result by Operating Group
Summary of Reported and Adjusted Result by Operating Group Reported Adjusted Reported Adjusted (Canadian $ in millions unless otherwise stated) (Canadian $ in millions unless otherwise stated) Q1 24 Q4 23 Q1 23 Q1 24 Q4 23 Q1 23 Q1 24 Q4 23 Q1 23 Q1 24 Q4 23 Q1 23 Revenue 7,671 8,319 5,099 7,849 8,3
Slide 43: Investor Relations
BMO Financial Group Investor Relations Contact Information bmo.com/investorrelations E-mail: investor.relations@bmo.com BILL ANDERSON PERRY CHEN-SEE Director, Investor Relations Director, Investor Relations 416.867.7834 416.359.8074 bill2.anderson@bmo.com perry.chensee@bmo.com