Bank Of Montreal · TSX:BMO
Bank Of Montreal — BMO Financial Group — Q2 2021 Earnings Presentation
36 slides from Bank Of Montreal's earnings presentation, May 26, 2021
Slide 1: Investor Presentation Q2 21
BMO Financial Group Investor Presentation For the Quarter Ended April 30, 2021 May 26, 2021 Q2 21
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 secu
Slide 3: Darryl White, Chief Executive Officer
Darryl White Chief Executive Officer Q2 21
Slide 4: Our Strategy
Our Strategy About Us Helping customers since 8th largest 12+ million 1817 bank in North America by assets1 customers globally Our Purpose Our Strategic Priorities Medium Term Objectives2 Boldly Grow the Good World-class client loyalty and growth EPS growth 7% – 10% in business and life Winning cult
Slide 5: Financial Highlights
Financial Highlights Q2’21 YTD • Q2’21 adjusted1 EPS of $3.13 Net Income1 $2.1B $4.1B • Adjusted1 net income up 77% YTD; continued Reported $1.3B $3.3B momentum in all operating groups and strong credit performance PPPT1,2 Growth 39% 27% • Adjusted1 pre-provision, pre-tax earnings (PPPT)2 of $5.5B Y
Slide 6: Continuous path to building a strong, more competitive bank
Continuous path to building a strong, more competitive bank, enabling support of customers and communities Strengthening balance sheet, capital and ROE ROE1 (%) Adjusted1,2 efficiency (bps) CET1 ratio (%) • Specific actions 16.7 13.0 to improve 60.3 160bps 320bps 11.4 performance 13.5 370bps 56.6 an
Slide 7: Digital first strategy, meeting customer preferences, creating efficiencies
Digital first strategy, meeting customer preferences, creating efficiencies Canadian Personal Digital Adoption Rate1 (%) Active Mobile Users1 (000s) Self-Serve Transaction 2 (%) +210bps +7% +200bps 59.7% 60.8% 1,947 2,049 2,081 91.8% 91.5% 58.7% 89.5% Q2 F’20 Q1 F’21 Q2 F’21 Q2 F’20 Q1 F’21 Q2 F’21
Slide 8: Strong earnings across our diversified businesses
Strong earnings across our diversified businesses Canadian Personal & Commercial U.S. Personal & Commercial • PPPT1 growth of 11% and ROE2 of 26.8% YTD, • PPPT1,2 growth of 22% and ROE2 of 16.4% YTD, with revenue growth momentum and with good revenue growth and expense disciplined focus on expenses
Slide 9: U.S. segment continuing to deliver strong results
U.S. segment continuing to deliver strong results Figures that follow are on a U.S. dollar basis • U.S. segment adjusted1 PPPT1 up 46% YTD; contributed 40% of total adjusted1 earnings YTD • Adjusted1 efficiency of 55.0%, operating leverage of 16.1% YTD • #122 in U.S. commercial lending; top-tier mar
Slide 10: Supporting customers, communities for a sustainable and inclusive recovery
Supporting customers, communities for a sustainable and inclusive recovery Facilitating access to BMO support programs for Products and capabilities to government relief programs customers and communities help make real financial • In Canada, over $4B in loans • Granted over 250,000 payment progress
Slide 11: Financial Results
Financial Results For the Quarter Ended April 30, 2021 Tayfun Tuzun Chief Financial Officer Q2 21
Slide 12: Q2 F2021 - Financial Highlights
Q2 F2021 - Financial Highlights Continued momentum across businesses • Adjusted1 EPS $3.13 (reported $1.91) Reported Adjusted1 • Adjusted1 net income $2,095MM ($MM) Q2 21 Q1 21 Q2 20 Q2 21 Q1 21 Q2 20 Net interest income 3,455 3,578 3,518 3,455 3,578 3,518 – Reported net income $1,303MM includes $77
Slide 13: Balance Sheet
Balance Sheet Continued deposit growth and stable loans Average Net Loans and Acceptances ($B) • Average net loans and acceptances down $18.9B, 4% Y/Y, or down 1% excluding the impact of the weaker U.S. dollar due to: 478.0 458.3 459.1 – Business & government balances down 3% primarily driven by low
Slide 14: Strong Q2'21 CET1 ratio of 13.0%, up from Q1'21
Strong Q2’21 CET1 ratio of 13.0%, up from Q1’21 Common Equity Tier 1 Ratio +12 bps -1 bp 13.0% +39 bps 12.4% Q1 2021 Internal capital Lower source Other Q2 2021 generation1 currency RWA Basis points may not add due to rounding. • Q2’21 CET1 Ratio of 13.0%, up from Q1’21, well above our target range
Slide 15: Net Interest Margin
Net Interest Margin Net interest margins stable Q/Q • Excluding trading, net interest margin increased 1 basis point Q/Q, primarily due to higher loan spreads mostly offset by lower deposit spreads • Higher loan spreads in Canadian P&C primarily due to higher prepayment fees • Higher loan spreads in
Slide 16: Interest Rate Sensitivity
Interest Rate Sensitivity • Year 1 benefit to a +100 bps rate shock driven 2/3 by • Term rates increased in Q2, but remain below averages of short rates recent years • Higher Year 2 benefit to rising rates (+100 bps) of • If term rates remain low, NIM could continue to be approximately $675MM driven
Slide 17: Non-Interest Revenue
Non-Interest Revenue Non-Interest Revenue, net of CCPB2 Adjusted1 • Adjusted1 NIR net of CCPB up 3% Q/Q (reported up 4%) ($MM) Q2 21 Q1 21 Q2 20 – Excluding trading NIR, adjusted1 up 9% (reported up 11%), Securities Commissions and Fees 300 285 277 primarily driven by strong underwriting and advisor
Slide 18: Non-Interest Expense
Non-Interest Expense Expenses up Y/Y, in-line with better performance • Adjusted1 efficiency ratio2 56.6% (reported 69.3%) Non-Interest Expense Adjusted1 ($MM) Q2 21 Q1 21 Q2 20 • Adjusted1 operating leverage2 of 13.1% (reported (9.0)%), Salaries 959 999 1,033 very strong across all operating groups
Slide 19: Canadian Personal & Commercial Banking
Canadian Personal & Commercial Banking Strong results with PPPT2 up 19% Y/Y and strong operating leverage • Adjusted1 net income $765MM (reported $764MM), up Reported Adjusted1 $402MM Y/Y ($MM) Q2 21 Q1 21 Q2 20 Q2 21 Q1 21 Q2 20 • Adjusted1 PPPT2 $1,171MM, up 19% Y/Y (reported Net interest income 1
Slide 20: U.S. Personal & Commercial Banking
U.S. Personal & Commercial Banking Strong results with double digit PPPT3 growth and continued positive operating leverage Figures that follow are in U.S. dollars Reported Adjusted1 • Adjusted1 net income up 73% Y/Y (reported up 76%) (US$MM) Q2 21 Q1 21 Q2 20 Q2 21 Q1 21 Q2 20 Net interest income (t
Slide 21: BMO Wealth Management
BMO Wealth Management Strong net income and revenue growth across all businesses • Adjusted1 net income $353MM (reported $346MM) Reported Adjusted1 ($MM) Q2 21 Q1 21 Q2 20 Q2 21 Q1 21 Q2 20 • Adjusted1 Traditional Wealth net income up 79% Y/Y 2 (reported up 85%) Net Revenue 1,398 1,376 1,087 1,398 1
Slide 22: BMO Capital Markets
BMO Capital Markets Strong net income and revenue performance in both Global Markets and I&CB • Adjusted1 net income of $570MM (reported $563MM) Reported Adjusted1 • Adjusted1 PPPT2 of $710MM (reported $702MM) ($MM) Q2 21 Q1 21 Q2 20 Q2 21 Q1 21 Q2 20 Global Markets 919 1,031 564 919 1,031 564 • Con
Slide 23: Corporate Services
Corporate Services Reported2 Adjusted1,2 • Adjusted1 net loss of $140MM and reported net loss of ($MM) Q2 21 Q1 21 Q2 20 Q2 21 Q1 21 Q2 20 $912MM for the quarter, compared with an adjusted1 Revenue (3) (8) (3) (32) (8) (3) and reported net loss of $82MM in the prior year Group teb offset2 (83) (77)
Slide 24: Risk Review
Risk Review For the Quarter Ended April 30, 2021 Patrick Cronin Chief Risk Officer Q2 21
Slide 25: Provision for Credit Losses (PCL)
Provision for Credit Losses (PCL) PCL By Operating Group • Q2’21 PCL ratio on Impaired Loans is 13 bps, Q2 21 Q1 21 Q2 20 ($MM) down 6 bps Q/Q $ bps $ bps $ bps Consumer – Canadian P&C 100 24 91 22 121 30 PCL on Impaired Loans ($MM) Commercial – Canadian P&C 54 24 58 26 91 40 Total Canadian P&C 154
Slide 26: Allowance and Provision on Performing Loans
Allowance and Provision on Performing Loans Allowance on Performing Loans (APL) and PCL on Q2 21 APL to • The APL decreased $162MM to $2,829MM, driven Performing Loans (PCL) Q1 21 Q2 21 Q2 21 Performing by a reduction in PCL on performing loans and the Foreign By Operating Group APL1 PCL APL1 Loans
Slide 27: Gross Impaired Loans and Formations
Gross Impaired Loans and Formations • Gross Impaired Loans (GIL) ratio 65 bps, Formations Gross Impaired Loans down 9 bps Q/Q By Industry ($MM, as at Q2 21) Formations ($MM) Canada & Canada & U.S. Total U.S. Total Other Other1 Consumer 190 29 219 449 325 774 Service Industries 25 9 34 173 297 470 1,
Slide 28: Loan Portfolio Overview
Loan Portfolio Overview Gross Loans & Acceptances Canada & By Industry U.S. Total % of Total • Portfolio is well diversified by geography Other1 ($B, as at Q2 21) and industry Residential Mortgages 122.5 8.0 130.5 28% Consumer Instalment and Other • Business & Government loans down 4% 59.9 12.0 71.9
Slide 29: Sectors Impacted by COVID-19 Pandemic
Sectors Impacted by COVID-19 Pandemic Gross Loans & % of Total By Industry of Heightened Focus Acceptances GL&A • Sectors highly impacted by COVID make up less than ($B, as at Q2 21) 5% of the portfolio (GL&A) Hotels 4.3 0.9% • Portfolio is diversified and well-secured by real estate Restaurants 4.2
Slide 30: Trading-related Net Revenues and Value at Risk
Trading-related Net Revenues and Value at Risk February 1, 2021 to April 30, 2021 (pre-tax basis and in millions of Canadian dollars) 40 30 20 10 0 (10) (20) (30) (40) (50) (60) Daily Revenue Total Trading VaR Risk Review May 26, 2021 30
Slide 31: Appendix
Appendix
Slide 32: Canadian Personal & Commercial Banking - Balances
Canadian Personal & Commercial Banking - Balances Gross Loans & Acceptances ($B) Deposits ($B) 220.0 222.8 251.4 253.8 257.9 197.1 103.6 108.3 110.2 130.1 129.4 123.6 48.6 49.3 50.0 8.9 8.3 7.8 89.9 93.4 90.3 87.9 89.9 73.5 Q2'20 Q1'21 Q2'21 Q2'20 Q1'21 Q2'21 Avg. Avg. Avg. Avg. Avg. Avg. Residentia
Slide 33: U.S. Personal & Commercial Banking – Balances
U.S. Personal & Commercial Banking – Balances Figures on this slide are in U.S. dollars Gross Loans & Acceptances (US$B) Deposits (US$B) 96.41 108.1 110.0 93.41 95.41 7.5 8.5 93.5 8.0 10.5 8.9 8.6 47.9 48.2 47.9 78.4 76.5 78.3 60.2 61.8 45.6 Q2'20 Q1'21 Q2'21 Q2'20 Q1'21 Q2'21 Avg. Avg. Avg. Avg. Av
Slide 34: Canadian Residential-Secured Lending
Canadian Residential-Secured Lending Residential-Secured Lending by Region ($160.8B) $73.1 HELOC • Total Canadian residential-secured lending Uninsured Mortgages $31.9 portfolio at $160.8B, representing 35% of total Insured Mortgages 25% loans $25.2 ─ LTV1 on uninsured of 50% 25% ─ 90-day delinquenc
Slide 35: Adjusting Items
Adjusting Items Adjusting items1 - Pre-tax ($MM) Q2 21 Q1 21 Q2 20 YTD Q2 21 YTD Q2 20 2 Acquisition integration costs (2) (3) (3) (5) (6) 2 Amortization of acquisition-related intangible assets (24) (25) (30) (49) (59) Impact of divestitures3 (771) - - (771) - Adjusting items included in reported p
Slide 36: Investor Relations
BMO Financial Group Investor Relations Contact Information bmo.com/investorrelations E-mail: investor.relations@bmo.com BILL ANDERSON SUKHWINDER SINGH Director, Investor Relations Director, Investor Relations 416.867.7834 416.867.4734 bill2.anderson@bmo.com Sukhwinder.singh@bmo.com