Bank Of Montreal · TSX:BMO
Bank Of Montreal — Investor Presentation (May 2024)
61 slides from Bank Of Montreal's investor presentation, May 2024
Slide 1: Investor Presentation
Investor Presentation May 2024
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: About BMO
About BMO Established in 1817, BMO Financial Group is a highly diversified financial services provider based in North America 8th largest $1.4 trillion 13 million bank in North America in total assets2 customers globally by assets1 Operating Groups Personal & Commercial Banking BMO Wealth Management
Slide 4: Our Purpose
Our Purpose For a Thriving Economy • Announced the continuation of BMO Celebrating Women Grant Program, an initiative dedicated to Providing access to capital and supporting women-owned businesses that demonstrate they are addressing at least two of the United valuable financial advice – investing i
Slide 5: Reasons to invest in BMO
Reasons to invest in BMO • Premium commercial banking franchise with a top 4 market position in North America1 Diversified businesses • Flagship personal banking business with a strong deposit base and growing market share that deliver resilient and robust earnings • Diversified, high‐return wealth
Slide 6: Diversified business mix with strong, resilient revenue
Diversified business mix with strong, resilient revenue Diversified by business Diversified by geography % of Operating Groups Reported Revenue2 – LTM Q2’24 % of Reported and Adjusted1 Net Income by Geography – LTM Q2’24 Canadian BMO Capital P&C Markets Reported Adjusted1 34% 19% Canadian Personal &
Slide 7: Solid financial performance
Solid financial performance Medium Term Financial Objectives1,2 Earnings Per Share ($) EPS Growth 7% to 10% per year Return on Equity 15% or more 19.99 12.96 13.23 Return on Tangible 11.58 11.81 18% or more Common Equity 5.76 Operating Leverage 2% or more 2021 2022 2023 Reported Adjusted2 Capital ra
Slide 8: Delivering strong long-term shareholder returns
Delivering strong long-term shareholder returns Dividends Declared ($ per share) $6.20 4 5.80 5.44 • BMO has the longest-running dividend 5% F2023 15-year CAGR2 payout record of any company in Canada, 4.06 4.24 4.24 at 195 years 3.56 3.78 1 3.08 3.24 3.40 • Declared quarterly dividend of $1.55 per $
Slide 9: BMO U.S. well-positioned for growth
BMO U.S. well-positioned for growth Benefiting from the strength of BMO’s trillion-dollar balance sheet Top 10 Physical footprint in Digital platforms 4 million U.S. Bank1 32 states across all 50 states customers BMO U.S. Bank BMO U.S. Segment BMO Financial Group US$2672 billion in assets US$4412 bi
Slide 10: Proven strength in Commercial Banking with advantaged market share
Proven strength in Commercial Banking with advantaged market share • A relationship-based commercial bank; #4 commercial lender1 Commercial Banking Revenue as % of Operating Groups in North America Revenue3 – LTM Q2’24 — In Canada: Top tier commercial banking business, Canadian #2 market share for b
Slide 11: Flagship North American Personal and Business Banking franchise
Flagship North American Personal and Business Banking franchise ▪ Well established and growing business for BMO, serving P&BB Banking Revenue as % of Operating Group ~12MM customers and contributing 36% of BMO’s revenue Revenue3 – LTM Q2’24 — Canada: Leading revenue growth and top tier share gains C
Slide 12: Advancing our Digital First strategy
Advancing our Digital First strategy Delivering on our Digital First agenda, Driving tangible customer Being recognized as an industry leader powered by AI, data and tech modernization and business value and innovator • Driving tangible customer and business Active Digital Users, Retail1 (000) • Ran
Slide 13: Strong and stable balance sheet, capital and liquidity
Strong and stable balance sheet, capital and liquidity Balance Sheet (As At) Gross Loans & Book Value Per Total Assets ($B) Deposits ($B) Acceptances ($B) Share ($) 1,374 938 665 97.67 650 95.36 1,318 876 89.17 519 1,072 714 367 379 289 Other Deposits Business and Government 676 628 Customer Consume
Slide 14: Leading track record in risk management
Leading track record in risk management • Long track record of outperforming peers on credit, with over 30-year historical average loss rates well below peer banks • Prudent underwriting, consistent approach, unparalleled expertise and industry knowledge, effectiveness of work-out process. Deep expe
Slide 15: Q2'24 Highlights
Q2°24 Highlights BMO
Slide 16: Q2 F2024 - Financial Highlights
Q2 F2024 - Financial Highlights Strong PPPT1 growth and positive operating leverage offset by higher PCL • Adjusted2 EPS $2.59, down $0.30 Y/Y Reported Adjusted2 (reported $2.36, up $1.10) ($MM) Q2 24 Y/Y Q/Q Q2 24 Y/Y Q/Q • Adjusted2 net income down 7% Y/Y (reported Revenue 7,974 2% 4% 7,988 2% 2%
Slide 17: Strong Q2'24 CET1 Ratio of 13.1%
Strong Q2’24 CET1 Ratio1 of 13.1% Common Equity Tier 1 Ratio1 +10 bps +1 bp -5 bps +1 bp 13.1% +11 bps +15 bps 12.8% Source Currency RWA:+5 bps Q1’24 Internal capital DRIP Market Risk Op Risk Credit Risk Other Q2’24 generation RWA RWA RWA • Q2’24 CET1 ratio1 of 13.1%, up from Q1’24 – Internal capita
Slide 18: Net Interest Margin and Interest Rate Sensitivity
Net Interest Margin1 and Interest Rate Sensitivity NII ($MM) and NIM ex. trading and Insurance (%)1 • Term rates decreased in Q2’24 and continue to be volatile, but are 6,900 1.90 1.92 1.90 1.84 1.82 2 still higher than historical rates 1.90 1.92 1.89 1.83 1.81 • Sustained higher long-term investmen
Slide 19: Operating Groups
Operating Groups BMO
Slide 20: Canadian Personal & Commercial Banking
Canadian Personal & Commercial Banking Strength and Value Drivers YTD’24 Financial Highlights • High-performing team focused on providing a personalized banking Reported Adjusted2 experience that helps our customers make real financial progress Net Income $1,793MM $1,802MM • Top-tier commercial bank
Slide 21: Canadian Personal & Commercial Banking Performance
Canadian Personal & Commercial Banking Performance Reported Revenue ($MM) Average Gross Loans & Acceptances ($B)2 2,796 2,778 2,819 317.3 319.9 2,716 304.7 2,490 768 757 761 803 129.3 136.5 137.3 732 6.4 6.8 6.7 50.7 51.9 52.0 1,948 2,039 2,017 2,016 10.8 12.8 13.0 1,758 107.5 109.4 110.8 Q2'23 Q3'2
Slide 22: U.S. Personal & Commercial Banking
U.S. Personal & Commercial Banking Strength and Value Drivers YTD’24 Financial Highlights • High-performing team focused on providing a personalized banking US$ Reported Adjusted1 experience that helps our customers make real financial progress Net Income $817MM $924MM • Large-scale commercial banki
Slide 23: U.S. Personal & Commercial Banking Performance
U.S. Personal & Commercial Banking Performance Reported Revenue (teb1, US$MM) Average Gross Loans & Acceptances3 (US$B) 1,875 154.6 152.1 149.0 1,811 1,822 1,833 1,753 33.3 33.8 31.1 758 732 721 717 675 121.3 118.2 117.9 1,117 1,079 1,101 1,116 1,078 Q2'23 Q3'23 Q4'23 Q1'24 Q2'24 Q2'23 Q1'24 Q2'24 C
Slide 24: BMO Wealth Management
BMO Wealth Management Strength and Value Drivers YTD’24 Financial Highlights • Planning and advice-based approach that integrates investment, insurance, specialized wealth management and core banking solutions, offered by a Reported Adjusted1 team of highly skilled professionals Net Income $560MM $5
Slide 25: BMO Wealth Management Performance
BMO Wealth Management Performance Balances ($B) Reported Revenue ($MM) 1,525 1,465 1,328 1,393 1,293 50 265 218 81 102 66 61 60 42 42 42 1,243 1,260 1,247 1,247 1,291 Q2'23 Q1'24 Q2'24 Q2'23 Q3'23 Q4'23 Q1'24 Q2'24 Avg Gross Loans and Acceptances Avg Deposits Wealth and Asset Management Insurance Re
Slide 26: BMO Capital Markets
BMO Capital Markets Strength and Value Drivers YTD’24 Financial Highlights • A valued financial partner to our clients; leveraging our people, innovative solutions and capital supporting the growth aspirations of Reported Adjusted1 our clients Net Income $852MM $874MM • Unified coverage and integrat
Slide 27: BMO Capital Markets Performance
BMO Capital Markets Performance Reported Revenue (teb1, $MM) Reported Revenue (teb1) by Geography2 – LTM Q2’24 1,579 1,651 1,589 1,661 1,463 647 706 637 653 Canada & Other 600 48% 52% 932 863 945 952 1,008 U.S. Q2'23 Q3'23 Q4'23 Q1'24 Q2'24 Global Markets Investment and Corporate Banking Reported Re
Slide 28: Risk Overview
Risk Overview BMO
Slide 29: Provision for Credit Losses (PCL)
Provision for Credit Losses (PCL) PCL By Operating Group • Q2’24 PCL ratio on impaired loans4 of 41 bps; Q2 23 Q3 23 Q4 23 Q1 24 Q2 24 ($MM) YTD 35 bps Personal & Business Banking 150 162 190 204 247 • Higher provisions across businesses, reflecting impact of the higher interest rate environment Com
Slide 30: Allowance and Provision on Performing Loans
Allowance and Provision on Performing Loans • The $47MM provision for credit losses on Allowance on Performing performing loans was primarily driven by portfolio Q2 24 Loans (APL) and PCL on APL to credit migration and uncertainty in credit Q1 24 Q2 24 Foreign Q2 24 Performing Loans (PCL) Performing
Slide 31: Gross Impaired Loans and Formations
Gross Impaired Loans and Formations • Gross impaired loans (GIL) ratio3 of 79 bps, up 14 bps Q/Q, Formations Gross Impaired Loans with the largest increases in the services industries, By Industry commercial real estate and wholesale trade ($MM, as at Q2 24) CA & CA & U.S. Total U.S. Total Other Oth
Slide 32: Loan Portfolio Overview
Loan Portfolio Overview Gross Loans & Acceptances • Portfolio is well-diversified by geography and Canada & Total % of segment By Industry U.S. Other1 BMO Total ($B, as at Q2 24) • Gross Loans & Acceptances up 2% Q/Q or 1% excluding the impact of the stronger Residential Mortgages 151.8 28.7 180.5 2
Slide 33: Business & Government Portfolio Overview
Business & Government Portfolio Overview Gross Loans & Acceptances B&G Portfolio Industry Diversification Canada & Total % of By Industry U.S. Other1 BMO Total Financing Products 2% ($B, as at Q2 24) Construction 2% Oil & Gas 1% 1 Others 3% Total Consumer 232.8 53.0 285.8 43% Utilities 3% Commercial
Slide 34: Commercial Real Estate
Commercial Real Estate • Commercial Real Estate (CRE) portfolio at $72.8B represents 11% of CRE by Geography1 Total bank Gross Loans & Acceptances (GL&A) British Columbia 13% • Portfolio is well-diversified across businesses, property types and Quebec 6% geographies Ontario 22% • Well-managed with c
Slide 35: Canadian Residential Secured Lending Portfolio Overview
Canadian Residential Secured Lending Portfolio Overview • Total Canadian residential-secured lending portfolio at $200.7B, representing 30% of total loans Residential-Secured Lending by Region ($200.7B) – LTV1 on uninsured of 52% $97.8 Amortizing HELOC – 90-day delinquency rate for RESL remains good
Slide 36: Canadian Mortgage Portfolio Profile
Canadian Mortgage Portfolio 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 through an extension of amortization until renewal. At renewal, the product r
Slide 37: Economic and Housing Market Overview
Economic and Housing Market Overview
Slide 38: Economic outlook and indicators
Economic outlook and indicators1 Canada United States Eurozone Economic Indicators (%)1, 2 20232 2024E2 2025E2 20232 2024E2 2025E2 20232 2024E2 2025E2 GDP Growth 1.0 0.5 2.0 2.4 1.7 1.7 0.5 0.4 1.2 Inflation 3.9 2.8 2.2 4.1 2.8 2.3 5.4 2.4 2.0 Interest Rate (3mth Tbills) 4.74 4.65 3.40 5.28 5.25 3.9
Slide 39: Canada's economy is diverse and well-positioned for growth
Canada’s economy is diverse and well-positioned for growth • The Canadian economy benefits from sound public finances, with net Canadian GDP by industry debt across all levels of government lower than most other leading economies as a share of GDP Other — Contiguous to the world’s largest consumer m
Slide 40: Canadian housing market
Canadian housing market • After a challenging couple of years, the Canadian housing market is stabilizing and is expected to strengthen gradually in 2024 in response to easier monetary policy and strong population growth • Mortgage arrears remain close to record lows and are expected to rise only mo
Slide 41: 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 42: Environmental, Social and Governance
Environmental, Social and Governance
Slide 43: Our commitment to sustainability
Our commitment to sustainability The United Nations Sustainable Affordable and Development Goals (SDGs) are a No poverty Gender equality clean energy universal call to end poverty, 1.4 5.1, 5.5, 5.a 7.2, 7.3, 7.a protect the planet and ensure We have products and services tailored We are a champion
Slide 44: BMO's Bold Commitments for 2025
BMO’s Bold Commitments for 2025 Our commitments for a thriving economy, a sustainable future and an inclusive society are measurable business-led goals to grow the good and support BMO’s long-term success. They evolve as community needs, BMO priorities and market realities change. This dashboard sho
Slide 45: Our history of climate action
Our history of climate action 2007 2009 2018 2020 2022 First purchase Became lead investor Began reporting in Achieved 100% renewable Rolled out enterprise-wide “Climate Change Essentials” of renewable in the Greening line with TCFD electricity across global training for energy Canada Fund for Deliv
Slide 46: BMO's Climate Ambition
BMO’s Climate Ambition To be our clients’ lead partner in the transition to a net-zero world We are enhancing our climate-related capabilities and aim to build capabilities that enable ongoing, decision-useful analysis of progress against both risk management and opportunity capture. Commitment Capa
Slide 47: Consistently recognized for our industry leadership
Consistently recognized for our industry leadership 19 YEARS 7 YEARS 22 YEARS DOW JONES SUSTAINABILITY ETHISPHERE’S WORLD’S MOST CORPORATE KNIGHTS’ RANKING INDEX ETHICAL COMPANIES OF CANADA’S BEST 50 CORPORATE CITIZENS Recognized for 19 years, in 2023 Recognized six years in a row, Ranked among the
Slide 48: Liquidity & Wholesale Funding Mix
Liquidity & Wholesale Funding Mix
Slide 49: Large and stable base of customer deposits is a source of strength
Large and stable base of customer deposits is a source of strength • A large and growing customer deposit base supports the maintenance of a sound liquidity position and reduces reliance on wholesale funding • Customer deposits had a compounded annual growth rate of 11.7% between 2016 and Q2’24 ― De
Slide 50: BMO maintains a sizeable portfolio of high-quality liquid assets
BMO maintains a sizeable portfolio of high-quality liquid assets and meets all regulatory liquidity metrics Liquid Asset Mix (%) Cash & Equivalents • BMO has $384B in unencumbered high quality liquid Corporate equity 21% assets for the quarter ended April 30, 2024. BMO’s 14% liquid assets are primar
Slide 51: 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 52: Diversified wholesale funding platform
Diversified wholesale funding platform • Senior unsecured, secured and capital programs provide BMO with diversification and cost-effective funding Canada1 U.S.1 Europe, Australia & Asia1 • Canadian MTN Shelf • SEC Registered U.S. Shelf (US$42B) • Note Issuance Programme (US$22B) • Fortified Trust (
Slide 53: Canadian Legislative Covered Bond Programme
Canadian Legislative Covered Bond Programme • Canadian Registered Covered Bond Programs Legal Framework • Canadian National Housing Act (NHA) Issuance Framework • Canadian Registered Covered Bond Programs Guide Issued by Canada Mortgage and Housing Corporation (CMHC) ECBC Covered Bond Label • Joined
Slide 54: BMO Covered Pool
BMO Covered Pool Pool Summary as of April 30, 20241 Current Collateral Pool • Canadian uninsured residential mortgages Asset Percentage Requirement • 93.50% Current Balance (CAD$) • 40,154,817,160 CAD$ Equivalent of Outstanding Covered Bonds • 25,464,837,900 Number of Loans • 126,526 Average Balance
Slide 55: Appendix
Appendix BMO
Slide 56: 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 57: Non-GAAP and Other Financial Measures
Non-GAAP and Other Financial Measures9 (Canadian $ in millions, except as noted) Q2 24 Q1 24 Q2 23 YTD 24 YTD 23 (1) Reported net income in Q1-2023 included losses of $1,461 million Reported Net interest income 4,515 4,721 4,814 9,236 8,835 ($2,011 million pre-tax) related to the acquisition of Bank
Slide 58: Summary of Reported and Adjusted Results by Operating Group
Summary of Reported and Adjusted Results by Operating Group (Canadian $ in millions unless otherwise stated) Q2 24 Q1 24 Q4 23 Q3 23 Q2 23 YTD 24 YTD 23 Total Bank Reported Net Income 1,866 1,292 1,710 1,565 1,029 3,158 1,162 Management of Fair Value Changes on the Purchase of Bank of the West — — —
Slide 59: Pre-Provision, Pre-Tax Earnings (PPPT) Reconciliation
Pre-Provision, Pre-Tax Earnings (PPPT) Reconciliation (Canadian $ in millions unless otherwise stated) Q2 24 Q1 24 Q4 23 Q3 23 Q2 23 YTD 24 YTD 23 Total Bank Reported Income before taxes 2,425 1,656 2,194 1,988 1,265 4,081 1,765 Total provision for (recovery of) credit losses 705 627 446 492 1,023 1
Slide 60: 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) YTD 24 YTD 23 YTD 24 YTD 23 (Canadian $ in millions unless otherwise stated) YTD 24 YTD 23 YTD 24 YTD 23 Total Bank Revenue 15,646 12,888 15,838 14,912 BMO
Slide 61: Investor Relations
Investor Relations http://www.bmo.com/investorrelations E-mail: investor.relations@bmo.com
Bank of Montreal (BMO Financial Group) — Investor Presentation (May 2024) on 6ix