Bank Of Montreal · TSX:BMO
Bank Of Montreal — Investor Day (October 2018)
112 slides from Bank Of Montreal's investor day presentation, Oct 24, 2018
Slide 1: Investor Day
Investor Day _-= pmo @ OCTOBER 24", 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 presentation, and may be included in other filings with Canadian
Slide 3: Darryl White, Chief Executive Officer
Darryl White Chief Executive Officer
Slide 4: Today's themes
Today’s themes 1 Strong Foundation 2 Differentiating Strengths 3 Accelerating Growth & Performance 4 One Bank, One Team, One Strategy 4
Slide 5: Executing on a consistent strategy
Strong Differentiating Accelerating One Bank Foundation Strengths Growth Executing on a consistent strategy Strategic Priorities Customer Digital Efficiency Growth across Risk Experience and Innovation North American Management Loyalty Platform 5
Slide 6: Strong foundation built for growth
Strong Differentiating Accelerating One Bank Foundation Strengths Growth Strong foundation built for growth 8th Largest Bank in North America Leading Share in Strategically Chosen Markets Respected Brand Diversified and Attractive Earnings Mix Strong Capital Position Consistent, Effective Risk Manag
Slide 7: Differentiating strengths driving competitive advantage
Strong Differentiating Accelerating One Bank Foundation Strengths Growth Differentiating strengths driving competitive advantage Integrated North American Platform Well- Core Strengths Unique Approach Creating Digital Investment established in Commercial to Cross-border Sustainable and Innovation U.
Slide 8: Leading employee engagement, award-winning culture
Strong Differentiating Accelerating One Bank Foundation Strengths Growth Leading employee engagement, award-winning culture BMO result1 Leading company 86 83 86 83 86 84 80 90 85 benchmark1 75 77 80 Median FI benchmark1 Employee Satisfaction Ethical Human values Collaboration 2 Time Catalyst Award w
Slide 9: Accelerating growth and performance
Strong Differentiating Accelerating One Bank Foundation Strengths Growth Accelerating growth and performance Delivered Outlook 2% adjusted1 net operating leverage2 Target remains 2% or better Operating Leverage F2016 & F2017 over time 340 bps adjusted1 efficiency ratio3 Expect to achieve 58% or bett
Slide 10: One Bank, One Team, One Strategy
Across geographies and businesses… One Bank, One Team, One Strategy … a seamless and consistent customer experience 10
Slide 11: Key takeaways
Key takeaways • Track record of financial performance 1 Strong Foundation • • Well-diversified and attractive earnings mix Strategic investments in technology, people and platforms • Consistent and effective risk management • Deep U.S. presence and integrated North American platform 2 Differentiatin
Slide 12: Driving Value From Digital and Technology
Driving Value From Digital and Technology Brett Pitts Chief Digital Officer Steve Tennyson Chief Technology & Operations Officer
Slide 13: Driving customer and business value through digital technology
Driving customer and business value through digital technology Great, digitally-enabled experiences for our customers and team Capitalizing on opportunities presented by open banking Unique assets for competitive advantage (e.g., brand, data, distribution) Growing investment in differentiated techno
Slide 14: Digital strategy: Accelerate growth, engagement, and self-service
Digital strategy: Accelerate growth, engagement, and self-service Drive leading customer Accelerate and build Self-service for growth and cross-sell digital engagement everyday transactions Digital sales penetration1 Digital adoption2 Assisted service transactions3 F2021 aspiration 50% 70% <10% F202
Slide 15: A modern technology foundation built for change
A modern technology foundation built for change World-Class Accelerated Advanced Data Secure Cloud Channels Architecture Automation & Analytics Shared computing Upgraded SmartCore enabling Speed-to-market AI platform enabling resources available customer and re-use and and quality business decisions
Slide 16: SmartCore: the heart of our technology architecture
SmartCore: the heart of our technology architecture Customer Identity Access Connector Grid Management • Open connectivity with enterprise API • Identity and credential services Integration management • Real time event processing • Single sign-on Master Data Management • 3600 enterprise customer vie
Slide 17: Investment yielding tangible business benefits
Investment yielding tangible business benefits… Speed Efficiency Quality 1,600 70,000 Up to 30-40% services designed technology changes improvement in software for re-use successfully executed release cycle-time1 annually 1 For select applications 17
Slide 18: Enabling a lift in transformational investment
… and enabling a lift in transformational investment Run the bank 67% Transform and protect 59% F2016 F2020 41% 33% Accelerating strategic spend towards customer growth and security while driving structural cost efficiencies 18
Slide 19: Market-leading sales in digital
Market-leading sales in digital… Drive accelerated digital account opening… …and new customer acquisition2 Canadian digital sales penetration1 50% 2x new customer growth aspiration 25% F2018 – F2021 13% 27% CAGR F2015 to to F2018 F2015 F2018 YTD F2021 F2015 YTD F2018 YTD F2021 aspiration aspiration
Slide 20: Supporting customer acquisition and deeper relationships
… supporting customer acquisition and deeper relationships Explore Apply Use Highly personalized offers Seamless application journeys Fulfillment and onboarding Pre-approved Market-first “in-line” credit mobile card offers on account open mobile 250K+ credit cards sales Current application Business
Slide 21: Accelerating growth in digital engagement
Accelerating growth in digital engagement… … to capture tangible customer growth, loyalty Drive growth in digital adoption1… and efficiency benefits CAGR 70% (users) 40% Lower annual attrition rate2 + 9% 54% + 18% 45% 55% 6% Higher revenue growth3 Digital 35% Mobile Reduction in assisted-serve 21% 3
Slide 22: Making digital part of every customer conversation
… and making digital part of every customer conversation Compelling experiences built with constant Digital part of every conversation, across all points of contact customer collaboration 73% of branch sales are BMO Quick Bill Pay coupled with a digital conversation1 Makes payments easier with an en
Slide 23: Platform for digital acceleration in U.S. Personal
Platform for digital acceleration is in place in U.S. Personal Transformed, low cost digital sales and service experiences enabling U.S. Personal growth strategy; built for North American scale New digital service platform New digital sales platform 23
Slide 24: Elevated mobile experience for Commercial
Elevated mobile experience for Commercial Redesigned Online Banking for Business Biometric Real-time International authentication account balances wire payments “Bio Authentication” allowing for confirmation of payments with voice, eyes and face 24
Slide 25: Extending our partnership strategy
Extending our partnership strategy Established partnership ecosystem Investing in partnerships to accelerate value BIGTECH FINTECHS • Open banking partnership • Enables mutual customers to more easily and securely exchange data CONSORTIA ACCELERATORS / RESEARCH • API portal to transfer information m
Slide 26: Key takeaways
Key takeaways 1 Delivering customer and business value 2 Technology foundation a source of competitive advantage 3 Digital core to BMO’s enterprise strategy to accelerate growth across businesses 4 Embracing open banking and meeting our customers where they are 26
Slide 27: Optimize and Innovate
Optimize and Innovate Luke Seabrook Global Head, Enterprise Initiatives, Infrastructure and Innovation
Slide 28: Continuous optimization of costs, process & resources
Continuous optimization of costs, process & resources Realization of Optimize Enterprise + Deliver Strategic + Enable Simplification & $1B+ in Infrastructure Initiatives Automation productivity benefits by F2021 Driving bottom-line improvement and creating capacity for investment in strategic revenu
Slide 29: Optimize enterprise infrastructure
Optimize enterprise infrastructure • Optimize supplier spend through effective sourcing and demand management strategies that leverage our size and scale, while managing third-party risk Procurement • Straight through automation of our supplier lifecycle $200-250 million expected run • Partner with
Slide 30: Deliver and enable
Deliver and enable • Optimize core internal operations, infrastructure and other resources • Seize opportunities to leverage our IT investments and emerging technologies in Deliver Strategic Strategic innovative ways Initiatives • Streamline end-to-end processes and resources across the organization
Slide 31: Data and AI strategies
Data and AI strategies • Leverage prior foundational investments in data architecture and infrastructure to enable strategic revenue growth • Accelerate deployment of capabilities to: o Streamline, integrate, simplify and accelerate work o Enhance customer and digital experience o Augment and enhanc
Slide 32: Talent strategies
Talent strategies • Launching employee-led Innovation Fund program • Align learning streams in Data Science, AI, Cybersecurity and Digi-tech with strategic talent initiatives for recruitment, onboarding, career and rotational programs • Reskill employees in targeted roles and move them into new, fut
Slide 33: BMO Innovation Fund program
BMO Innovation Fund program Recent Challenge: • 3,000+ North American employees • 2,000+ employee interactions over a one week submission period 33
Slide 34: Key takeaways: Optimize & innovate
Key takeaways: Optimize & innovate 1 Productivity benefits $1B+ productivity benefits by F2021 Investment in strategic revenue growth and 2 Creating capacity practical innovation Create a Bank that is more integrated, more 3 Future proofing BMO innovative, and adaptable to future trends 34
Slide 35: BMO U.S.: Strategic Growth Driver for BMO
BMO U.S.: Strategic Growth Driver for BMO Dave Casper CEO – BMO Financial Corp. Group Head – North American Commercial Banking Steve Taylor U.S. Chief Financial Officer Ernie Johannson Group Head - U.S. Personal & Business Banking
Slide 36: U.S. Segment: Strategically important for BMO
U.S. Segment: Strategically important for BMO Core U.S. footprint with an economy the size of Canada 2017 Nominal GDP1 (US$ Trillions) 19.5 1.7 2.3 U.S. Canada BMO mid-west footprint States BMO U.S. contribution significant to total Bank YTD Q3 F2018 U.S. footprint Adjusted Net Commercial Banking of
Slide 37: Strong growth over last several years
Strong growth over last several years BMO U.S. Transportation Finance Acquisitions have In US$ complemented organic growth Greene Holcomb Fisher F2010 F2014 F2017 YTD Q3 F2018 Strong momentum 1,009 957 Y/Y growth 835 Adjusted Net Income1 YTD Q3 ($MM) F2017 F2018 100 Revenue 6% 5% Net Income contribu
Slide 38: Diverse portfolio with strong linkages
Diverse portfolio with strong linkages YTD Q3 F2018 US$ MM Revenue Adjusted Net Income2 Strong core capability supported by our One Bank approach BMO U.S.1 4,215 957 Referrals 2,873 824 Partner and refer across businesses to deliver clients the U.S. P&C right value proposition Cross-sell Deepen rela
Slide 39: U.S. P&C: Strong performance year-to-date
U.S. P&C: Strong performance year-to-date U.S. regional peer U.S. P&C U.S. P&C US$ MM group average YTD Q3 F2018 Y/Y change1 Y/Y change1 Revenue 2,873 8% 5% Adjusted PPPT2,3 1,172 15% 10% Adjusted Net Income2,4 824 31% 28% Loans ($B) 75 9% 2% Deposits ($B) 69 5% 1% 1 Calendar YTD Q2 2018 f
Slide 40: U.S. P&C profitability metrics: progress and outlook
U.S. P&C profitability metrics: progress and outlook Adjusted financials1,2 F2015 YTD Q3 F2018 3-year target Efficiency ratio 64.8% 59.2% Mid 50s ROE 7.7% 11.0% 12% - 13% ROTE 11.5% 15.7% 16% - 17% 1 Adjusted measures are non-GAAP measures, see slide 2 for more information 2 Reported efficiency rati
Slide 41: U.S. P&BB: Serving over 2 million customers across 8 states
U.S. P&BB: Serving over 2 million customers across 8 states ~60% ~570 of U.S. P&C Branches deposits1 >40% #2 contribution to Reputation rank customer growth among U.S. Established markets in U.S. Wealth1 banks2 Light branch network markets Strong deposit contribution, large customer base, valuable b
Slide 42: Strong foundational capabilities built over time
Strong foundational capabilities built over time U.S. P&BB Leading share Continued momentum Attractive customer base Deposit market share1 % Deposit growth2 Y/Y % Average deposit balances per HH, $K WI +18% IL 41% 27% 10.9% 13% 10% 41 34 5.3% 2.7% BMO Large Banks Regional 20133 20183 Rank #2 #2 avg.
Slide 43: Targeting highest-value growth opportunities
Targeting highest-value growth opportunities Footprint outside IL and WI Digital Lending ~200 41% Target2 13% Target2 Digitally active >70% Credit card >20% Branches customers1 penetration4 U.S. P&BB 2/3 8% Target2 ~25% Target2 of our deposit Digital sales >30% of balances from >40% non-real estate
Slide 44: U.S. P&BB: Strategic pillars
U.S. P&BB: Strategic pillars In IL and WI, leverage footprint and accelerate digital enablement Deposits: On the offense In all other footprint markets, a “digital first - branch lite” deposit gathering model Business Banking: Digitization and simplification to accelerate growth A market leading fra
Slide 45: Key takeaways: U.S. P&BB 3 year outlook
Key takeaways: U.S. P&BB 3 year outlook 1 Revenue growth 6-8% CAGR 2 Deposit growth Top-tier deposit growth, with ~50% coming from markets outside IL and WI 3 Loan growth 3-4% CAGR, and shift in mix to non-real estate lending 4 Digital engagement Strong digital engagement of 50% (and 70% in 5 years)
Slide 46: U.S. Commercial: Strong performance, diversified presence
U.S. Commercial: Strong performance, diversified presence Profile Geographical footprint Specialty businesses • 10,000+ clients Financial Institutions Asset Based Lending • Leading presence in WI and Food, Consumer & Agriculture Chicagoland Dealer Finance • One of the largest Institutional Markets T
Slide 47: A leading commercial franchise in the U.S.
A leading commercial franchise in the U.S. Strong loan and deposit growth… …and deep relationships Average Loan balances, $B Average Deposit balances, $B Treasury & Payment Services (TPS) - revenues, $MM 27% 18% (10% excluding Acquisitions) 21% 55 380 314 31 24 22 132 8 6 F2010 F2014 YTD Q3 F2010 F2
Slide 48: U.S. Commercial: Strategic pillars
U.S. Commercial: Strategic pillars Leverage existing footprint to grow expansion markets (e.g., Minneapolis, Dallas) High growth geographies Selectively expand into new MSAs nationally Geographical expansion Core market presence Defend leading market position and deepen relationships in WI and IL Ac
Slide 49: Key takeaways: U.S. Commercial 3 year outlook
Key takeaways: U.S. Commercial 3 year outlook 1 Loan growth High single digit (8-10%) loan growth CAGR 2 Deposit growth Deposit growth to keep pace with loan growth 3 Customer Loyalty Maintain leading customer loyalty (NPS) and deepen customer relationships 49
Slide 50: North American Commercial Banking: A Differentiating Strength
North American Commercial Banking: A Differentiating Strength Sharon Haward-Laird Head, North American Treasury and Payment Solutions Ray Whitacre Co-Head, U.S. Commercial Banking Dan Marszalek Co-Head, U.S. Commercial Banking Christine Cooper Co-Head, Canadian Commercial Banking Nadim Hirji Co-Head
Slide 51: North American Commercial Banking capabilities
Capabilities Local Presence Specialty Sector Expertise Broad Product Suite (Lending, Payment & North Liquidity Services) Talent Customer Tenured Bankers Experience American Deep Industry Expertise Locally Connected Advice Driven Competitive Industry Leading Loyalty Customer Referrals Advantages Comm
Slide 52: BMO Capital Markets: Advantaged North American Platform
BMO Capital Markets: Advantaged North American Platform Pat Cronin Group Head, BMO CM* Dan Barclay Co-Head, Global I&CB* * Effective as of November 1, 2018, Pat Cronin will assume the role of CRO, BMO Financial Group and Dan Barclay will assume the role of Group Head, BMO CM
Slide 53: Capital Markets: Strong foundation built for growth
Capital Markets: Strong foundation built for growth Franchise Strength Unique Capabilities Accelerating U.S. growth Delivers steady net income growth 53
Slide 54: Steady net income contributor
Steady net income contributor Capital Markets Contribution to BMO1,5 Adjusted Net Income ($MM)1 1,277 Canadian P&C 1,236 U.S. P&C 1,075 22% BMO WM 986 5 Year CAGR 5.3%2 BMO CM 43% F2017 816 Net Income Volatility 17%1,3 17% Industry Average 24%4 F2010 F2012 F2014 F2016 F2017 18% 1 Adjusted measures a
Slide 55: Well diversified business
Well diversified business Sectors1 Client Type1 Product Type2 Corporate Oil, Gas & Diversified Investment Banking Energy Banking Investor Mining Merchant Global Equity Banking Products Tech FI Other Industrials Healthcare Gov't Corporate Global Structured Consumer Media & Global Fixed Products Comm
Slide 56: Strong Canadian franchise with unique capabilities
Strong Canadian franchise with unique capabilities #2 M&A (2012-2017) CB NPS 66 Best House in World’s Best Metals & Mining Investment #1 (2018) Canada 2018 Equity Research Bank (2010-2018) Franchise Canada (2018) 82% Employee Engagement #1 Equity & Fixed Income Futures #2 Clearing World’s Best Green
Slide 57: Established scalable U.S. platform
Established scalable U.S. platform 38% 31% U.S. Commitment % U.S. contribution to CM Revenue 1,318 U.S. Revenue ($USMM) 1,019 ~40% 976 1,080 of Clients1 ~40% of Capital2 U.S. FTE U.S. Loan 12 24 ~40% Authorizations (US$B) of FTE3 F2012 F2017 1 % of revenue generating entities domiciled in the U.S. (
Slide 58: Differentiating strengths driving competitive advantage
Differentiating strengths driving competitive advantage Strong Capital Position Full Product Capability High Performing Culture Lower Cost of Wholesale Funding High Quality Content Long Standing Client Strong Reputation Unique Cross-Border Capability Relationships Best in class control environment 5
Slide 59: Accelerating U.S. growth and performance
Accelerating U.S. growth and performance Increase Expand Broaden Need to Hire Strong One Bank Client Balance Product Lead Talent Alignment Footprint Sheet Capabilities Strategy Build & strengthen client relationships 59
Slide 60: Key takeaways: 5 year aspirations
Key takeaways: 5 year aspirations 1 U.S. Market Share Double 2 U.S. Revenue Contribution 45 – 50% 3 U.S. Revenue Growth ~10% CAGR 4 Total CM Efficiency <60% Goal: Top 10 North American Investment Bank 60
Slide 61: BMO Wealth Management: Accelerating Our Growth Trajectory
BMO Wealth Management: Accelerating Our Growth Trajectory Joanna Rotenberg Group Head, Wealth Management Gilles Ouellette Group Head, BMO Asset Management
Slide 62: BMO Wealth Management: Key takeaways
BMO Wealth Management: Key takeaways TODAY: TOMORROW: Strong Bold ambition foundation, to double strong earnings in momentum next five years 62
Slide 63: Wealth Management: Strong and stable growth engine
Wealth Management: Strong and stable growth engine Strong momentum… …and stable business BMO Wealth Management CAGR: net AUM/AUA, Adjusted1 Net Income 10% net loans & deposits >60% Fee-based revenues 14%/yr. 540 Improved efficiency1,2 $1.0B bps $544MM From 95% Client retention4 14 to17% BMO net inco
Slide 64: Well diversified and well positioned
Well diversified… …and well positioned Net AUM/A Net Revenue Strong market position by Region by Business (C$), F2017 (C$), F2017 • Private Banking1: Leading AUM, #2 in banking share 0.3% Asia • ETFs2: #2 share in Canadian market 10% 19% Insurance • BMO Nesbitt Burns3: Top 2 revenue, top 3 assets Eu
Slide 65: Culture of client-focused innovation
Culture of client-focused innovation First Canadian Bank Early adopter - unique digital Innovator in to launch ETFs advice platforms Responsible Investing BMO ETF Market Share1 adviceDirect Europe’s 1st ethically screened strategy Only Canadian platform of its kind ~31% SmartFolio Founder Signatory:
Slide 66: Bold ambition moving forward
Bold ambition moving forward Accelerating earnings growth Driving scale benefits Adjusted Net Income1 Adjusted Net Efficiency1,2 $2B+ 75.4% 70.0% $1B Low 60s $544 MM F2012 F2017 F2023 F2012 F2017 F2023 1 Adjusted measures are non-GAAP measures, see slide 2 for more information. F2012 reported net in
Slide 67: Personal Wealth: Clear 5 year strategic roadmap to win
Personal Wealth: Clear 5 year strategic roadmap to win 1 Differentiate with top 5 Grow responsibly by growth segments managing efficiency Value Proposition: and risk Make a meaningful difference in the lives Individual Business of our clients, by 2 Build ‘One Team’ to 4 Accelerate growth working tog
Slide 68: Differentiating with top growth segments
1 Differentiating with top growth segments Business owners Ultra HNW Women Cross-border Next Generation • Top 2 loan share in • Leading Canadian • Two time Catalyst • Strong North • Innovative digital Canadian Business Private Bank AUM3 award winner American platform investing platforms Banking1 • S
Slide 69: Strong track record of collaboration
2 Strong track record of collaboration Across Businesses Across Borders ~$19B ~40% 60% 50% 45% Closed referrals1 Wealth branches BMO Nesbitt Burns Increase in BMO Increase in cross- between Canadian co-located with branches with Canadian client border home lending2 Wealth and Canadian Business Banki
Slide 70: Building One Team to Win
2 Building One Team to Win Strong collaboration today…with great opportunity ahead Building a world-class partnership with Commercial Helping our HNW clients 400M+ <40M ~16,000 ~25,000 HNW Nesbitt households HNW U.S. Personal clients without a BMO banking without a BMO Wealth North American …that ar
Slide 71: Making it Easy through continued technology investment
3 Making it Easy through continued technology investment Simplified, digitized processes Digitally-enabled client experiences Using data to deepen relationships Client on-boarding WealthPath financial planning Customer 360 • Reduced number of forms by 90% • Dynamic, goals-based platform • 360 degree
Slide 72: Accelerating growth in U.S. Personal Wealth
4 Accelerating growth in U.S. Personal Wealth Well positioned for growth Clear strategic priorities 12% Adjusted1 Net Income CAGR • Expand market presence (F2015-F2017) • Deepen Commercial/Wealth partnership • Advance digital agenda 400+ bps • Accelerate banking growth Adjusted efficiency1,2 improve
Slide 73: BMO GAM: A globally significant asset manager
BMO GAM: A globally significant asset manager London Chicago Toronto Hong Kong Globally organized around product, 11 consultant-credible investment specializations distribution, operations, and technology Manufacturing concentrated in 4 global centres Distribution in 20+ offices 73
Slide 74: Well diversified across geographies, channels, and asset types
Well diversified across geographies, channels, and asset types BMO GAM AUM, YTD Q3 F2018 (% of total)1 Client location Channel segment Investment type Money-market Alternatives 4% Asia Retail 5% 6% Passive 14% 14% Canada Active 31% multi- Active Intermediary asset equity EMEA 23% 28% 22% 44% U.S. In
Slide 75: Award-winning global products for clients around the world
Award-winning global products for clients around the world Leading European Liability Globally recognized Environmental, First Canadian bank to launch Driven Investments Manager Social and Governance Offering Exchange Traded Funds • $160B liabilities managed 15 Professionals dedicated to • #2 in Can
Slide 76: Investments aligned to growth areas; consistently strong performance
Investments aligned to growth areas; consistently strong performance Investments Platform Excellent Performance BMO GAM performance1 Global investment platform (% of funds meeting or beating the 5 year benchmark) Fundamental Multi-asset & Quant & ETFs Investments Alternatives FIXED INCOME Absolute L
Slide 77: Utilize our strengths to continue to grow the business
Utilize our strengths to continue to grow the business Strengths Growth Trajectory BMO GAM AUM Distributing global products (C$B) to clients worldwide CAGR Investment excellence 325 +8% through F2023 113 Global platform F2012 F2017 Net new assets grew by 107% Y/Y ( July 2018) 77
Slide 78: BMO Wealth Management: Key takeaways
BMO Wealth Management: Key takeaways TODAY: TOMORROW: Strong Bold ambition foundation, to double strong earnings in momentum next five years 78
Slide 79: Canadian P&C: BMO's Flagship Business
Canadian P&C: BMO’s Flagship Business Cameron Fowler President, North American Personal & Business Banking Andrew Irvine Head, Customer Solutions, Canadian Personal & Business Banking
Slide 80: Canadian P&C: Flagship business for BMO
Canadian P&C: Flagship business for BMO Highly attractive Important driver of total bank performance F2017 Customers 8MM 35% of total operating group revenue1 Revenue $7.4B Net Income $2.5B 43% of total operating group net income2 ROE 29.9% Positive operating leverage in 10 of the past 11 quarters3
Slide 81: Bold aspirations for our business over five years
Bold aspirations for our business over five years Top-tier net income growth Market-leading efficiency ratio improvement 7-8% Net Income CAGR Efficiency ratio <45% Top-tier customer franchise growth in Personal Double-digit growth in Commercial 1 million net new customers 10% Net Income CAGR 81
Slide 82: Consistent formula to drive our strategy
Consistent formula to drive our strategy deployed against fueled by Market-leading …highest-value …distinctive capacity growth… opportunities… enablers 82
Slide 83: Personal: Strong foundation for growth
Personal: Strong foundation for growth • 7+ million customers and 900+ branches • Largest Mastercard® and AIR MILES® issuer in Canada • Top-tier premium travel rewards card • Top-tier digital sales performance • Official bank of the Canadian Defence Community TM • Official bank of Toronto FC and Mon
Slide 84: Well-positioned to lead in a more digital future
Well-positioned to lead in a more digital future Undergoing a customer-led shift from …and have built distinctive capabilities in the areas critical to win physical to digital… Digital and • Top-tier digital sales (25% of total) Partnerships • #1 rated mobile banking app in App Store1 86% BMO’s serv
Slide 85: Clear strategy in Personal to add 1MM customers over five years
Clear strategy in Personal to add 1MM customers over five years Market-leading Grow salesforce capacity by 50% capacity growth… • Aggressively hire specialist roles (~150 in F2019) • Drive productivity improvements via digital enablement deployed against Drive leading growth focused on primary relat
Slide 86: Growing Personal capacity by 50%
Growing Personal capacity by 50% Aggressively hiring specialist sales roles… …and driving individual productivity via digital enablement Onboarding platform Tailored customer conversations Financial Planners + Associates # FTE E-Signature Straight-through processing 1,000+ 710 710 775 F2015 F2018 F2
Slide 87: Accelerating top-tier digital sales, driving engagement
Accelerating top-tier digital sales, driving engagement Acquire Engage Digital sales penetration Digital adoption % of total units % of customers 50% 70% 54% 25% 45% 13% F2015 F2018 F2021 F2015 F2018 F2021 – + – Our most valuable Lower Higher Fewer assisted customers are digital 40% annual attrition
Slide 88: Developing leading offers and investing more in marketing
Developing leading offers and investing more in marketing Track record of innovative products and offers… …and growing marketing Marketing investment 50% 70+% digital F2017 F2018 F2021 Positive momentum +7 +19 +40% +10% bps bps Primary customer Higher per account Deposit market Cards spend acquisiti
Slide 89: Building leading data and analytics capabilities
Building leading data and analytics capabilities Key capabilities Leads Engine Using data to grow relationships with data-driven offers Mature Customer 360 Revenue from data-driven offers Single view of full customer relationship (products, preferences, characteristics, interactions, etc.) Offers pr
Slide 90: Personal: Top-tier customer franchise growth
Personal: Top-tier customer franchise growth • 7+ million customers 1 Strong foundational assets • #1 Mastercard® and AIR MILES® issuer in Canada • Top-tier digital sales 2 Strong momentum and • Share growth in deposits and payments market-leading capacity growth • Creating 50% more capacity • Digit
Slide 91: Commercial: Proven strength
Commercial: Proven strength • 400,000 commercial clients • #2 market share in business lending1 • #1 in upper mid-market2 • #1 in agriculture1 • Leader in indigenous banking • Strong cross-border business Best Commercial Bank in Canada 2015, 2016, 2017, 2018 1 Canadian Bankers Association; loan mark
Slide 92: Commercial: Opportunities to diversify for continued growth
Commercial: Opportunities to diversify for continued growth Strong momentum in loans and deposits… …clear opportunity areas going forward Loans Deposits Loan share #2 #3 (C$ billions) (C$ billions) by sector4 #4 +9%1 +7%1 Overall Health Services / Tech 63 68 52 55 60 Loan share 53 58 49 #2 #5 by mar
Slide 93: Clear strategy for double-digit Commercial growth over five years
Clear strategy for double-digit Commercial growth over five years Market-leading Grow Commercial capacity by 50% capacity growth… • Accelerate hiring (~125 RMs in F2019) • Drive individual productivity via digital enablement deployed against Maintain strengths while diversifying for growth …highest-
Slide 94: Growing Commercial capacity by 50%
Growing Commercial capacity by 50% Accelerating salesforce hiring… …and driving digital enablement Relationship Managers # FTE • Modernizing platforms to improve user experience, enable straight-through processing • Leveraging data and analytics to improve client risk monitoring, eliminating manual
Slide 95: Diversifying beyond core sectors
Diversifying beyond core sectors Good momentum Sector % Book Share1 Actions: Y/Y loan growth1 Y/Y Market share Δ1 • Adding bankers with sector expertise (e.g., added 20 sector specialists in Real Estate 22% #4 +5 Strengths past 4 quarters) Healthcare +14% bps Agriculture 17% #1 • Developing market-l
Slide 96: Growing in key markets
Growing in key markets Region Share1 Actions: Good progress BC #1 • Hiring aggressively to drive growth Alberta in key markets +83 Loan market share1 Prairies #2 bps • Developing dedicated coverage teams growth Y/Y Atlantic #2 to focus on most valuable opportunities in key urban centers (e.g., Tech
Slide 97: Profitably growing Small Business
Profitably growing Small Business Digital platform Partnerships Products and marketing Data and analytics Business Xpress Cloud Accounting Software Small Business Cards Automated loan monitoring 95% faster time to approval Integrating for Small Business clients Launched suite of market-leading cards
Slide 98: Commercial: Double-digit earnings growth
Commercial: Double-digit earnings growth • “Best Commercial Bank in Canada”1 1 Leading Commercial franchise • #2 loan share overall2 • #1 in Upper Mid-Market, Agriculture2 • Sectors (Healthcare, Services / Tech) 2 Clear opportunities to diversify growth • Markets (GTA, Alberta) • Segments (Small Bus
Slide 99: Bold aspirations for our business over five years
Bold aspirations for our business over five years Top-tier net income growth Market-leading efficiency ratio improvement 7-8% Net Income CAGR Efficiency ratio <45% Top-tier customer franchise growth in Personal Double-digit growth in Commercial 1 million net new customers 10% Net Income CAGR 99
Slide 100: Strong Financial Performance, Foundation for Growth
Strong Financial Performance, Foundation for Growth Tom Flynn Chief Financial Officer
Slide 101: Strong financial performance
Strong financial performance Adjusted1 Diluted EPS +8% 8.16 7.52 ($) 7.00 6.21 6.59 5.95 4.81 5.10 4.75 4.84 6.10 6.17 6.41 6.57 6.92 7.92 Reported EPS ($) F2010 F2011 F2012 F2013 F2014 F2015 F2016 F2017 Net Revenue2 Adjusted1 Diluted EPS Average Annual Total Shareholder Return3 ($B) ($) +7% 20.7 +8
Slide 102: Diversified and attractive mix by business and geography
Diversified and attractive mix by business and geography Adjusted1 Net Income – YTD Q3 F20182 • ~80% of earnings from retail businesses3 19% • U.S. Segment expected to represent ~1/3 Canada 64% of earnings (5 years) 18% 19% • Strong Commercial and Wealth 40% U.S. 19% 28% 62% 14% Other 5% 23% 8% 81%
Slide 103: Diversified revenue provides opportunity for growth, stability and resilience
Diversified revenue provides opportunity for growth, stability and resilience Net Revenue1,2 Net Revenue Growth Adjusted Net Income Volatility1,4 Growth Volatility3,4 Cdn Corporate Cards & Other 9% 28% 9% Canadian U.S. P&C P&C 17% 5% 15% 4% 11% 3% Cdn Personal Deposits 7% Cdn U.S. BMO BMO Total Cdn
Slide 104: Disciplined and integrated approach to risk management
Disciplined and integrated approach to risk management PCL on Impaired Loans as a % of Average Net Loans & Acceptances 1.8% • BMO’s PCL loss rates have been lower than peer average over time 1.6% 1.4% 1.2% 1.0% 0.8% 0.6% 0.53% 0.39% 0.4% 0.30% 0.2% 0.18% 0.0% '90 '91 '92 '93 '94 '95 '96 '97 '98 '99
Slide 105: Strong pre-provision, pre-tax earnings
Strong pre-provision, pre-tax earnings Current PPPT would cover PCL rate in excess of 220 bps, If PCL moved to ~40 bps, long term average and ~2x current higher than any time in at least 30 years, over five times level, impact to income ~10%1,3 average IF THEN +7% 7,687 Adjusted PCL rate ~10% PPPT1,
Slide 106: Ongoing commitment to improving efficiency
Ongoing commitment to improving efficiency Total Bank Adjusted Efficiency (%)1,2 Improved 340 bps • Investing in areas of opportunity (e.g. U.S., Wealth, 65.5 technology) • Efficiency improved 340 bps since F2015 (1.5) • Focused on innovation, simplification and digitization (1.2) 2% (0.4) 0.0 (0.3)
Slide 107: Strong capital position provides flexibility
Strong capital position provides flexibility Strong CET1 Capital Good Record of Capital Deployment 11.4% Ratio +270 Growth 1.9% 15% bps Total earnings of ~10.5% 9.5% Current OSFI expectation ~$15B over 3 1.5% Domestic Stability Buffer RWA Return of years, of which Growth 1.0% D-SIB Surcharge 18% Cap
Slide 108: Strong balance sheet, disciplined approach to liquidity and funding
Strong balance sheet, disciplined approach to liquidity and funding Customer Deposits and Capital to Cash and Securities to Total Assets Ratio (%) Customer Loans Ratio (%) 97.3 97.7 97.2 95.6 • Strong and sound liquidity and funding position 41 41 38 • Deep customer deposit base 35 along with capita
Slide 109: Committed to meeting medium-term financial objectives
Committed to meeting medium-term financial objectives Total Bank Medium-term Objective1 EPS growth 7 – 10% Net operating leverage 2% or more ROE 15% or more Capital Ratios exceed regulatory requirements 1 Medium-term financial objectives are on an adjusted basis. Adjusted measures are non-GAAP measu
Slide 110: Key takeaways
Key takeaways • Track record of financial performance 1 Strong Foundation • • Well-diversified and attractive earnings mix Strategic investments in technology, people and platforms • Consistent and effective risk management • Deep U.S. presence and integrated North American platform 2 Differentiatin
Slide 111: Appendix: Adjusting Items
Appendix: Adjusting Items Adjusting Items (Pre-tax) (Canadian $ in millions) YTD Q3 F2018 F2017 F2016 F2015 F2014 F2013 F2012 F2011 F2010 Amortization of acquisition-related intangible assets2 (85) (149) (160) (163) (140) (125) (134) (70) (36) Acquisition integration costs3 (16) (87) (104) (53) (20)
Slide 112: 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