Bank Of Montreal · TSX:BMO
Bank Of Montreal — Q2 2000 Earnings Presentation
27 slides from Bank Of Montreal's earnings presentation, May 24, 2000
Slide 1: Q2 2000 Meeting with Investment Community
Q2 Q2 2000 2000 Meeting Meeting with with Investment Investment Community Community May May 24, 24, 2000 2000 Strategic Strategic Highlights Highlights -- Tony Tony Comper Comper Financial Financial Overview Overview -- Bob Bob Wells Wells Risk Risk Review Review -- Mike Mike Maila Maila SLIDE 1
Slide 2: Six Point Strategy
Six Point Strategy 1. 1. Continue Continue to to aggressively aggressively build build the the value value of of Harris Harris 2. 2. Rapidly Rapidly grow grow the the wealth wealth management management business business 3. 3. Capitalize Capitalize on on our our strong strong Canadian Canadian posit
Slide 3: Continue to aggressively build the value of Harris
Continue to aggressively build the value of Harris… Core earnings growth of 16% in Q2/00 vs. Q2/99... l l Corporate Corporate Trust Trust sale sale l l Cash Cash ROE ROE 18.9% 18.9% in in Q2/00 Q2/00 l l Strong Strong growth growth in in priority priority businesses businesses produced produced aver
Slide 4: Rapidly grow the wealth management business
Rapidly grow the wealth management business… Private Client Group net income increased 71.1% year over year driven by strong equity market conditions... l l Assets Assets under under management management andand l l BMO BMO InvestorLine InvestorLine volumes volumes grew grew administration administr
Slide 5: Capitalize on our strong Canadian position in personal and commercial banking
Capitalize on our strong Canadian position in personal and commercial banking… 17 branches 17 branches 14 branches 12 branches from TD Committed $20 million to branch expansion Agreement to open in-store branches in IGA Que. Sask. Man. Ont. Alta. SLIDE 5 SLIDE 5
Slide 6: Capitalize on our strong Canadian position in personal and commercial banking
Capitalize on our strong Canadian position in personal and commercial banking… P&C net income increased 23.9% (before one-time gains) over the prior year driven by volume growth and expense controls… l l New New mortgage mortgage products products l l Residential Residential mortgages mortgages of o
Slide 7: Build on our strong leadership position in investment banking
Build on our strong leadership position in investment banking... Net Income increased 27.4% year over year driven by strong equity market conditions... l l Hired Hired senior senior U.S. U.S. based based Media Media and and Telecommunications Telecommunications team team l l Committed Committed U.S.
Slide 8: Drive e-business opportunities
Drive e-business opportunities… l l EPOST EPOST expansion expansion … … 100,000 100,000 subscribers subscribers l l MERX MERX enhancements enhancements through through Meridex Meridex Network Network Corporation Corporation l l Competix.com Competix.com sold sold to to 41 41 U.S. U.S. banks banks ––
Slide 9: Intensely focus on cost, capital and risk management
Intensely focus on cost, capital and risk management… l l Initiated Initiated expense expense reductions reductions of of $64 $64 million million –– Total Total of of $114 $114 million million including including the the $50 $50 million million initiated initiated in in Q1 Q1 l l Announced Announced
Slide 10: 2nd Quarter 2000 Financial Overview
11 2nd Quarter 2000 Financial Overview Bob Wells
Slide 11: Earnings: 25% EPS Growth Excluding Gains From Business Dispositions
Earnings: 25% EPS Growth Excluding 22 Gains From Business Dispositions Q2 Growth Yr / Yr Growth Q2 / Q1 2000 Increase % Increase % Reported Net Net Income Income ($MM) ($MM) 497 497 133 133 37 37 23 23 55 Earnings Earnings Per Per Share Share -- FD FD ($) ($) 1.75 1.75 0.50 0.50 40 40 0.09 0.09 55 R
Slide 12: Financial Performance Highlights
Financial Financial Performance Performance 33 Highlights Highlights • Strong revenue growth across the bank • Continued Continued business business volume volume growth growth in in retail retail and and commercial commercial businesses businesses • Strong Strong equity equity markets markets drive
Slide 13: Organizational Realignment
44 Organizational Organizational Realignment Realignment • Harris Mid-Market Corporate Banking and Treasury from P&C to IBG • Combining the strengths of Harris client relationships with BMO Nesbitt Burns investment banking and capital markets capabilities in Chicago • Canadian term deposits and priv
Slide 14: Income Statement
55 Income Income Statement Statement Q2 Q1 Q2 Yr / Yr ($MM) 2000 2000 1999 Growth Net Net Interest Interest Income Income -- TEB TEB 1,084 1,084 1,081 1,081 1,112 1,112 (( 2.5 2.5%%)) Other Other Income Income 1,200 1,200 1,042 1,042 849 849 41.4 41.4 Total Total Revenues Revenues 2,284 2,284 2,123
Slide 15: Total Revenues: Growth Of 12% Ex. Gains (8% YTD)
6 6 Total Revenues: Growth Of 12% Ex. Gains (8% YTD) Total Revenues: Growth Of 12% Ex. Gains (8% YTD) Driven Driven By By Volume Volume Growth Growth And And Strong Strong Equity Equity Markets Markets Q2 00 Growth Q2 00 Growth Yr Yr // Yr Yr Growth Growth Q2 Q2 // Q1 Q1 Total Revenues % $MM $MM $MM
Slide 16: NII: Increase In P&C & PCG Driven By Volume Growth
NII: Increase In P&C & PCG Driven NII: Increase In P&C & PCG Driven ByBy 77 Volume Volume Growth Growth Offset Offset By By Narrower Narrower Spreads Spreads Growth Yr / Yr Growth Q2 / Q1 Net Interest NII NII Avg Avg Bal. Bal. Margin Margin NII NII Avg Avg Bal. Bal. Margin Margin Income % $B bps % $
Slide 17: Other Income: Volume Growth Driven Largely By Strong Equity Markets
Other Other Income: Income: Volume Volume Growth Growth Driven Driven 88 Largely Largely By By Strong Strong Equity Equity Markets Markets Q2 00 Growth Q2 00 Growth Yr Yr // Yr Yr Growth Growth Q2 Q2 // Q1 Q1 Other Income $MM $MM $MM$MM %% $MM $MM %% Excluding Excluding Gains Gains From From Busines
Slide 18: Expenses: Decreased By 2.4% (2.8% YTD) Excluding Revenue Driven Compensation
Expenses: Decreased By 2.4% (2.8%YTD) Expenses: Decreased By 2.4% (2.8%YTD) 99 Excluding Excluding Revenue Revenue Driven Driven Compensation Compensation Contribution To Growth Expenses Q2 Q2 00 00 Growth Growth Yr Yr // Yr Yr Growth Growth Q2 Q2 // Q1 Q1 $MM $MM $MM$MM % % $MM $MM % % Revenue Reve
Slide 19: Financial Measures
10 10 Financial Financial Measures Measures Q2 YTD Q2 YTD Total Yr Measures (%) 2000 1999 1999 Total Total Shareholder Shareholder Return Return (5 (5 year) year) 18.2 18.2 23.4 23.4 22.0 22.0 Performance EPS EPS Growth Growth (fully (fully diluted) diluted) 36.9 36.9 ((3.9 3.9 )) 1.3 1.3 Return Ret
Slide 20: 2nd Quarter 2000 Risk Review
11 2nd Quarter 2000 Risk Review Mike Maila
Slide 21: Highlights
22 Highlights Highlights • Asset quality remains sound: • Forecast provision remains at $400MM for F2000 • Gross Impaired Loans virtually flat at 0.81% of total loans at quarter end (underlying trend remains slightly adverse) • Market Risk exposure continues at moderate level
Slide 22: Highlights - Credit Risk
33 Highlights Highlights -- Credit Credit Risk Risk • Split of $400 MM Provision between Specifics and General to be established by fourth quarter in accordance with usual practice • Overall asset quality remains sound: • Increased allowance for Credit Losses now exceeds Gross Impaired Loans by $283
Slide 23: Highlights - Market Risk
44 Highlights Highlights -- Market Market Risk Risk • Aggregate Market Risk exposures (structural, money market and trading) remain moderate • Market Value Exposure of $397MM or approximately 3% of Total Capital • 12-month Earnings-at-Risk exposure of $108MM or approximately 8% of F1999 net income
Slide 24: Highlights - Market Risk (Cont'd)
55 Highlights Highlights -- Market Market Risk Risk (Cont'd) (Cont'd) • Structural and money market exposures are to rising interest rates: • Market Value Exposure down 15% since year end • Earnings exposure over the next 12 months reduced from $44 to $29 million since year end
Slide 25: Highlights - Market Risk (Cont'd)
66 Highlights Highlights -- Market Market Risk Risk (Cont'd) (Cont'd) • Trading exposures at low end of normal range • Commodities exposures now included in approved Trading Value-at-Risk Model
Slide 26: Forward-Looking Statements
77 Forward-Looking Forward-Looking Statements Statements • This This presentation presentation includes includes forward-looking forward-looking statements. statements. These These forward-looking forward-looking statements statements include include but but are are not not limited limited to to com
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