Bank Of Montreal · TSX:BMO
Bank Of Montreal — Q1 2012 Earnings Presentation
31 slides from Bank Of Montreal's earnings presentation, Mar 12, 2012
Slide 1: Investor Presentation Q1 12
Investor Presentation Q1 12 March 12 y 2012
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: Bank of Montreal (BMO Financial Group)
Bank of Montreal (BMO Financial Group) 4th largest bank1 in Canada measured by total assets Top-ten North American Bank as measured by assets1 (8th) and market capitalization1 (9th) 100% ownership of Chicago-based BMO Harris Bank Q1 F2012 Results2 Listings Adjusted3 Revenue / Revenue NYSE, TSX
Slide 4: BMO Financial Group – North American Footprint
BMO Financial Group – North American Footprint P&C Canada (922 branches) P&C US (665 branches) Private Client Group BMO Capital Markets Investor Presentation • Q1 2012 3
Slide 5: Reasons to Invest in BMO
Reasons to Invest in BMO Clear and attractive investor proposition Clear growth strategy X Consistent and focused North American growth strategy X Growing global presence to support our customers X Commitment to our medium-term financial objectives Well-positioned businesses in the current envir
Slide 6: Economic Outlook
Economic Outlook Canada The Canadian economy continues to grow at a modest pace, held back by the strong Canadian dollar, elevated household debt and fiscal consolidation, but supported by low interest rates and firm commodity prices Modest GDP growth of 2.0% is expected in 2012, led by business
Slide 7: Economic Indicators
Economic Indicators North America forecast to grow modestly in 2012, with the U.S. outpacing Canada for first time in 7 years Canada United States Eurozone Economic Indicators (%)1 2010 2011E 2012E 2010 2011E 2012E 2010 2011E 2012E GDP Growth 3.2 2.3 2.0 3.0 1.7 2.4 1.8 1.5 (1.0) Inflation 1.8 2.9 2
Slide 8: Systemic Differences Between Canadian & U.S. Banks
Systemic Differences Between Canadian & U.S. Banks Canada U.S. Mature oligopoly: 6 chartered banks with a Fragmented market single regulator (OSFI) Multiple regulators Almost no subprime in this market Governed by the Bank Act Choice of State vs. National Charter allows Foreign ownersh
Slide 9: Operating Group - Overview
Operating Group - Overview Personal and Commercial Banking - Canada Q1 F2012 Adjusted1 Revenue by Over 7 million customers Operating Group (C$MM) Over 900 branches Access to over 2,100 automated banking machines PCG, $695 18% P&C Personal and Commercial Banking – U.S. Canada, BMO CM, $1,556
Slide 10: Q1 2012 - Financial Highlights
Q1 2012 - Financial Highlights BMO Reports Very Strong First Quarter Net Income Specific Common Net Revenue EPS ROE Productivity Equity Ratio Income PCL (Basel II) Reported $4,117MM $1,109MM $1.63 17.2% 62.0% $122MM 9.6% Results Adjusted $3,743MM $972MM $1.42 15.0% 63.5% $91MM 9.6% Results Adjuste
Slide 11: Adjusting Items
Adjusting Items Adjusting items – Pre-tax Q1 11 Q4 11 Q1 12 ($MM) Credit-related items on the acquired M&I performing loan portfolio - 173 184 Run-off structured credit activities 20 (119) 136 M&I integration costs - (53) (70) M&I acquisition-related costs - (4) - Amortization of acquisition-related
Slide 12: Diversified Business Mix
Diversified Business Mix Over 75% of adjusted revenue and adjusted net income from retail businesses Q1 12 Adjusted Revenue by Q1 12 Adjusted Net Income by Operating Group (C$MM) - $3,804MM* Operating Group1 (C$MM) - $910MM* P&C PCG P&C PCG (Personal & (Wealth (Personal & (Wealth Commercial) Managem
Slide 13: Revenue
Revenue Y/Y revenue growth driven by M&I acquired business Total Bank Adjusted Revenue (C$MM) Net Interest Margin 13.7% 6.1% 16.0% 13.4% 8.5% Y/Y (bps) Growth 3,670 3,743 3,448 3,378 228 3,245 223 221 217 213 1,726 1,996 2,092 201 NII 1,708 1,819 182 205 178 176 1,722 1,537 1,559 1,674 1,651 NIR Q1
Slide 14: Non-Interest Expense
Non-Interest Expense Y/Y growth largely reflects acquisitions; Q/Q growth modest Non-Interest Q1 11 Q4 11 Q1 12 Q/Q Y/Y Total Bank Adjusted Non-Interest Expense Expense ($MM) B/(W) B/(W) (C$MM) Reported 2,058 2,432 2,554 (5%) (24%) 2,341 2,378 Adjusted 2,049 2,341 2,378 (2%) (16%) 2,070 2,049 1,994
Slide 15: Update on the Acquired M&I Business
Update on the Acquired M&I Business Strong contribution from M&I with Q1’12 adjusted net income of $215MM (Q4’11 $149MM) Operating Groups of $100MM (Q4’11 $124MM), including Credit-Related Adjusting Items on the Acquired M&I Q4 11 Q1 12 Performing Loan Portfolio (CDE $MM) P&C US $90MM (Q4’11 $
Slide 16: Capital & Risk Weighted Assets
Capital & Risk Weighted Assets Capital position strong Basel II Q1 11 Q4 11 Q1 12 Tier 1 Capital & Common Equity Ratio (%)1 10.2 9.6 9.6 Common Shareholders’ Equity Tier 1 Capital Ratio (%) 13.0 12.0 11.7 Total Capital Ratio (%) 15.2 14.9 14.6 23.6 24.3 24.5 25.1 24.7 24.4 RWA ($B) 165 209 209 21.5
Slide 17: Personal & Commercial Banking Canada
Personal & Commercial Banking Canada Continue to innovate in execution of our customer focused strategy Q1’12 net income up 1.4% Q/Q; net income on an actual loss Revenue and Net basis up 5.4% Income* (C$MM) Continue to innovate in the execution of our strategy, achieving 1,580 1,542 1,558 1,556
Slide 18: Personal & Commercial Banking Canada – Product Balances & Market Share
Personal & Commercial Banking Canada – Product Balances & Market Share Personal Y/Y total personal lending balances up 4.8% and personal deposit balances up 4.0% Commercial Market Share (%) 1 Q1 11 Q2 11 Q3 11 Q4 11 Q1 12 Commercial deposit balances increasing over the past 11 quarters, up $2.6B
Slide 19: Personal & Commercial Banking U.S.
Personal & Commercial Banking U.S. Y/Y growth reflects benefit of acquisition and solid organic revenue growth Revenue and Adjusted Net Income* Q1’12 revenue and net income more than doubled Y/Y (US$MM) 781 771 Focused on sales productivity, effectively managing costs and optimizing expanded dis
Slide 20: Personal & Commercial Banking U.S. – Product Balances
Personal & Commercial Banking U.S. – Product Balances All amounts in U.S. $B Mortgages ($B) - As At Home Equity ($B) - As At Personal Y/Y product balances up significantly driven by M&I acquired business 9.7 9.7 9.4 Q/Q personal loans down given 8.0 7.7 7.5 environment and selling of mortgage 4.
Slide 21: Private Client Group
Private Client Group Solid growth in traditional wealth businesses offset by unfavourable impact of long-term interest rates on Insurance Net income down 28% Y/Y and 24% Q/Q largely driven Revenue and Net Income* by the negative impact of unfavourable movements in (C$MM) long-term interest rates o
Slide 22: BMO Capital Markets
BMO Capital Markets Q1 results reflect improved market environment; investment banking pipeline remains healthy Q/Q net income up 39% driven by higher revenues, Revenue and Net Income* mainly trading, as market conditions showed signs of (C$MM) improvement 959 825 822 772 Q1’12 net income down Y
Slide 23: Loan Portfolio – Well Diversified by Segment and Business
Loan Portfolio – Well Diversified by Segment and Business Canadian and US portfolios well diversified. The M&I loan portfolio contributes ~12% of total loans P&C business represents the majority of loans X Retail portfolios are predominantly secured – 87% in Canada and 97% in the US By Segment C
Slide 24: Provision for Credit Losses
Provision for Credit Losses Q1'12 Adjusted specific provisions at $91MM are Business Segment down from last quarter (Q4'11: $281MM) (By Business Line Segment) Q1’11 Q4’11 Q1’12 X Main driver of the decrease is a $142MM (C$ MM) recovery related to the Purchased Credit Impaired Loans (PCIs) Consumer
Slide 25: Liquidity and Funding Strategy
Liquidity and Funding Strategy BMO’s large base of customer deposits, along with our strong capital base, reduces reliance on wholesale funding. Our wholesale funding principles seek to match the term of assets with the term of funding (e.g. to fund loans with longer term funds). In addition, ou
Slide 26: Issuance
Diversified Wholesale Term Funding Mix 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 provided by longer-term wholesale funding BMO has a well diversified wholesale
Slide 27: Corporate Governance
Corporate Governance Comprehensive code of business conduct and ethics, FirstPrinciples, guides conduct and ethical decision-making by our directors, officers and employees Governance practices reflect emerging best practices and BMO meets or exceeds legal, regulatory, TSX and NYSE requirements
Slide 28: Sustainability at BMO
Sustainability at BMO Companies are judged by how well they manage the sustainability impacts that can affect performance. For a Financial Institution, these include: • Corporate Governance • Ethical Conduct • Human Capital Development • Access to Financial Services / Financial Literacy • Environmen
Slide 29: Differentiated Customer-Focused Strategy
Differentiated Customer-Focused Strategy Strategic Priorities Drive quality earnings growth across all North Relentless Customer Focus 1 American personal and commercial banking businesses by focusing on industry-leading Remain focused on our strategy and our customer experience and enhancing oper
Slide 30: Looking Ahead…
Looking Ahead… We have the business platform, balance sheet and expertise to generate quality growth We’re confident in our ability to perform strongly against peers through a number of differentiated growth levers: Continued successful integration of M&I; Strength in commercial banking; Expected
Slide 31: Investor Relations Contact Information
Investor Relations Contact Information www.bmo.com/investorrelations E-mail: investor.relations@bmo.com Fax: 416.867.3367 VIKI LAZARIS MICHAEL CHASE ANDREW CHIN Senior Vice President Director Senior Manager 416.867.6656 416.867.5452 416.867.7019 viki.lazaris@bmo.com michael.chase@bmo.com andrew.chin