Bank Of Montreal · TSX:BMO
Bank Of Montreal — Q3 2024 Earnings Presentation
44 slides from Bank Of Montreal's earnings presentation, Aug 27, 2024
Slide 1: Investor Presentation Q3 24
BMO Financial Group Investor Presentation For the Quarter Ended July 31, 2024 August 27, 2024 Q3 24
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 Ex
Slide 3: Darryl White, Chief Executive Officer
Darryl White Chief Executive Officer Q3 24
Slide 4: Sustained strength in operating performance
Sustained strength in operating performance Momentum across our diversified businesses Q3 2024 Net Income EPS PPPT2 Y/Y Growth Total Assets Adjusted1 $2.0B Adjusted1 $2.64 Adjusted1 8% $1.4T Reported $1.9B Reported $2.48 Reported 35% Efficiency Ratio ROE ROTCE3 CET14 Adjusted1 57.3% Adjusted1 10.6%
Slide 5: Highly diversified businesses delivering resilient performance
Highly diversified businesses delivering resilient performance Canadian Personal & Commercial Banking U.S. Personal & Commercial Banking Reported Revenue ($MM) Reported Revenue (teb1, US$MM) 2,778 2,819 2,908 2,716 2,796 1,811 1,822 1,833 1,753 1,789 827 768 757 761 803 Commercial Commercial 1,079 1
Slide 6: BMO U.S. well-positioned for growth
BMO U.S. well-positioned for growth 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$2692 billion in assets US$4572 billion in assets C$1.4 trillion in assets • Broad capabilities: Perso
Slide 7: BMO U.S. Performance Highlights
BMO U.S. Performance Highlights Diversified business mix and consistent PPPT1 performance BMO U.S. Segment BMO U.S. Segment BMO U.S. Segment Pre-Provision Pre-tax Earnings (PPPT)1 (US$MM) Business Mix by Operating Group (%) Efficiency Ratio (%) Q3’24 Last Twelve Months (LTM) Reported Revenue -30 bps
Slide 8: Our Purpose
Our Purpose For a Thriving Economy Providing access to capital and • In the first year, delivered $10B of our more than $40B BMO EMpower 2.0 five-year commitment to valuable financial advice – investing break down barriers faced by underserved communities, businesses, and families in the United Stat
Slide 9: Financial Results, Tayfun Tuzun, CFO
Financial Results For the Quarter Ended July 31, 2024 Tayfun Tuzun Chief Financial Officer Q3 24
Slide 10: Q3 F2024 - Financial Highlights
Q3 F2024 - Financial Highlights Good PPPT1 growth and operating leverage offset by higher PCL • Adjusted2 EPS $2.64, down $0.30 Y/Y Reported Adjusted2 (reported $2.48, up $0.36) ($MM) Q3 24 Y/Y Q/Q Q3 24 Y/Y Q/Q • Adjusted2 net income down 8% Y/Y Revenue 8,192 2% 3% 8,206 -% 3% (reported up 19%) Exp
Slide 11: Balance Sheet
Balance Sheet Diversified loan and deposit portfolio • Average gross loans and acceptances up 4% Y/Y, or 6% Average Gross Loans and Acceptances ($B) excluding the impact of Indirect Retail Auto wind-down and RV loan portfolio sale2, due to: 644.7 657.1 669.3 – 6% growth in Business & Government loan
Slide 12: Net Interest Margin
Net Interest Margin1 • Reported net interest income (NII) down 2% Y/Y NII ($MM) and NIM ex. trading and Insurance (%)2 and up 6% Q/Q 1.92 1.90 • Adjusted NII ex. trading relatively unchanged Y/Y 1.84 1.82 1.83 7,200 6,700 1. 9 with volume growth offset by lower NII in Corporate 6,200 1.92 5,700 1.89
Slide 13: Interest Rate Sensitivity
Interest Rate Sensitivity • Year 1 benefit / exposure to an incremental +/- 100bps rate • Term rates decreased significantly in Q3’24, but are still shock reflects a relatively neutral positioning higher than historical rates • Year 2 benefit to rising rates (+100bps) of approximately • Long-term in
Slide 14: Q3 F2024 Non-Interest Expense
Q3 F2024 Non-Interest Expense Delivering against expense commitments, driving positive operating leverage • Adjusted1 expenses down 5% Y/Y Non-Interest Expense Trend (reported down 13%) (5%) Adjusted1 – Primarily driven by Bank of the West cost (13%) Reported synergies and efficiency savings – Prior
Slide 15: Strong Q3'24 CET1 Ratio of 13.0%
Strong Q3’24 CET1 Ratio1 of 13.0% Common Equity Tier 1 Ratio1 • Q3’24 CET1 ratio1 of 13.0%, down from Q2’24 +16 bps -32 bps – Internal capital generation 13.1% – More than offset by higher source currency RWA +3 bps 13.0% Q2’24 Internal capital Source Other Q3’24 generation currency RWA RWA ($B) • R
Slide 16: Canadian Personal & Commercial Banking
Canadian Personal & Commercial Banking Continued strong PPPT2 performance driven by balance growth and higher margins Reported Adjusted1 • Adjusted1 net income up 3% Y/Y (reported up 4%) • Adjusted1 and reported PPPT2 up 12% Y/Y ($MM) Q3 24 Y/Y Q/Q Q3 24 Y/Y Q/Q Net interest income 2,253 9% 5% 2,253
Slide 17: U.S. Personal & Commercial Banking
U.S. Personal & Commercial Banking Good PPPT2 growth with stable revenue and lower expenses, offset by higher PCL Amounts that follow are in U.S. dollars: Reported Adjusted1 1 (US$MM) Q3 24 Y/Y Q/Q Q3 24 Y/Y Q/Q • Adjusted and reported net income down 9% Y/Y 3 Net interest income (teb) 1,500 0% 3% 1
Slide 18: BMO Wealth Management
BMO Wealth Management Good growth in client assets and market appreciation offset by lower Insurance revenue • Adjusted1 net income down 8% Y/Y Reported Adjusted1 (reported down 9%) ($MM) Q3 24 Y/Y Q/Q Q3 24 Y/Y Q/Q • Revenue down 6% Y/Y Wealth & Asset Management 1,342 7% 4% 1,342 7% 4% Insurance 97
Slide 19: BMO Capital Markets
BMO Capital Markets Strong revenue performance in Global Markets, M&A and corporate banking-related activities • Adjusted1 net income up 31% Y/Y Reported Adjusted1 (reported up 32%) ($MM) Q3 24 Y/Y Q/Q Q3 24 Y/Y Q/Q • Adjusted1 PPPT3 $625MM (reported $619MM) Global Markets 1,000 16% (1)% 1,000 16% (
Slide 20: Corporate Services
Corporate Services • Adjusted2 net loss of $236MM and reported net Reported Adjusted2 loss of $270MM for the quarter, compared with ($MM)1 Q3 24 Y/Y Q/Q Q3 24 Y/Y Q/Q an adjusted2 net loss of $18MM and reported Revenue (266) (289) 11 (252) (416) 11 net loss of $509MM in the prior year 3 Group teb of
Slide 21: Risk Review, Piyush Agrawal, CRO
Risk Review For the Quarter Ended July 31, 2024 Piyush Agrawal Chief Risk Officer Q3 24
Slide 22: Provision for Credit Losses (PCL)
Provision for Credit Losses (PCL) • Q3’24 PCL ratio on impaired loans2 of 50 bps; PCL By Operating Group YTD’24 40 bps Q3 23 Q4 23 Q1 24 Q2 24 Q3 24 ($MM) • Higher provisions across businesses, reflecting Personal & Business Banking 162 190 204 247 274 sustained higher interest rates and tighter cre
Slide 23: Business & Government Portfolio Overview
Business & Government Portfolio Overview Gross Loans & Acceptances B&G Portfolio Industry Diversification Canada & Total % of Financing Products, 2% By Industry U.S. Other BMO Total Construction, 2% Oil & Gas, 1% ($B, as at Q3 24) Utilities, 3% Commercial Real Total Consumer 237.5 55.0 292.5 43% Oth
Slide 24: Allowance and Provision on Performing Loans
Allowance and Provision on Performing Loans • The $78 million provision for credit losses on Allowance on Performing performing loans in the current quarter was Q3 24 primarily driven by portfolio credit migration Loans (APL) and PCL on APL to Q2 24 Q3 24 Foreign Q3 24 Performing Loans (PCL) Perform
Slide 25: Gross Impaired Loans and Formations
Gross Impaired Loans and Formations • Gross impaired loans (GIL) ratio3 89 bps, up 10 bps Q/Q, Formations Gross Impaired Loans with the largest increases in commercial real estate, By Industry manufacturing and transportation ($MM, as at Q3 24) CA & CA & U.S. Total U.S. Total Other Other1 Formations
Slide 26: Appendix
Appendix
Slide 27: Loan Portfolio Overview
Loan Portfolio Overview Well diversified by geography and industry Gross Loans & Acceptances Impaired PCL ($B) ($MM) Gross Loans & Acceptances By Industry Canada & Total Canada & Total Canada & Other Countries U.S. U.S. (As at Q3 24) Other1 BMO Other1 BMO Residential Mortgages 155.8 30.7 186.5 11 3
Slide 28: Commercial Real Estate
Commercial Real Estate • Commercial Real Estate (CRE) portfolio at $74.9B represents 11% CRE by Geography1 of Total bank Gross Loans & Acceptances (GL&A ) British Columbia 13% • Portfolio is well-diversified across businesses, property types and Ontario 24% geographies Quebec 7% • Well-managed with
Slide 29: Canadian Consumer Portfolio Overview
Canadian Consumer Portfolio Overview Canadian Consumer Portfolio • Total Canadian Consumer lending portfolio balances of $237.5B in Q3’24, represent 35% of total loans – 89% of the portfolio is secured Residential Mortgages – 90+ day delinquency rate for the portfolio at 34 bps $155.8B Credit Cards
Slide 30: Canadian Residential Secured Lending Portfolio Overview
Canadian Residential Secured Lending Portfolio Overview • Total Canadian residential-secured lending (RESL) portfolio Residential-Secured Lending by Region ($205.3B) at $205.3B, representing 30% of total loans $101.0 – LTV1 on uninsured of 51% Amortizing HELOC 18% $39.6 – 90+ day delinquency rate fo
Slide 31: Canadian Mortgage Portfolio Profile
Canadian Mortgage Portfolio Profile • The impact of higher interest rates on payments is primarily realized upon renewal for both fixed and variable rate mortgages • Variable rate mortgages with fixed payments are impacted through an extension of amortization until renewal. At renewal, the product r
Slide 32: Trading-Related Net Revenue and Value-at-Risk
Trading-Related Net Revenue and Value-at-Risk May 1, 2024 to July 31, 2024 (pre-tax basis and in millions of Canadian dollars) 40 30 20 10 0 (10) (20) (30) (40) (50) Daily Revenue Total Trading VaR Risk Review • August 27, 2024 32
Slide 33: Advancing our Digital First strategy
Advancing our Digital First strategy Delivering on our Digital First agenda, Driving tangible customer Being recognized as an industry leader powered by AI, data and tech modernization and business value and innovator Active Digital Users, Retail1 (000) • Ranked #1 in the EMARKETER Canada • Driving
Slide 34: Canadian Personal & Commercial Banking – Balances
Canadian Personal & Commercial Banking – Balances Average Gross Loans & Acceptances ($B) Average Deposits ($B) 319.9 326.0 306.4 308.8 297.3 276.6 140.2 131.6 137.3 203.3 208.6 6.8 191.1 6.4 6.7 51.3 52.0 52.5 11.6 13.0 13.6 107.9 110.8 112.8 94.0 97.8 85.5 Q3'23 Q2'24 Q3'24 Q3'23 Q2'24 Q3'24 1 Comm
Slide 35: U.S. Personal & Commercial Banking – Balances
U.S. Personal & Commercial Banking – Balances Amounts on this slide are in U.S. dollars1 Average Gross Loans & Acceptances (US$B) Average Deposits (US$B) 152.7 151.3 162.4 163.9 149.0 157.6 34.6 31.1 32.4 75.7 82.5 83.4 118.1 117.9 118.9 81.9 79.9 80.5 Q3'23 Q2'24 Q3'24 Q3'23 Q2'24 Q3'24 Commercial
Slide 36: Canadian and U.S. deposit trends
Canadian and U.S. deposit trends Canadian P&C and BMO Wealth Management deposits CDE$B, average balances 342 353 318 321 6% 7% • Total Canadian deposits grew 10% Y/Y due to 290 266 6% 6% new customer acquisition, a comprehensive 3% 21% 20% 238 2% 20% 20% onboarding program and increased customer 4%
Slide 37: Asset Yields and Liabilities Costs
Asset Yields1 and Liabilities Costs2 Average Earning Assets ($B) and Yield1 (%) Average Liabilities ($B) and Costs2 (%) 5.40% 5.40% 3.56% 3.72% 3.75% 5.26% 5.27% 3.18% 3.34% 5.06% Yield on Total Cost on Total Average Liabilities Earning Assets 1,218 1,260 1,236 1,265 1,246 1,272 1,306 1,162 1,177 1,
Slide 38: 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 39: Non-GAAP and Other Financial Measures
Non-GAAP and Other Financial Measures9 (1) Reported net income in Q1-2023 included losses of $1,461 million (Canadian $ in millions, except as noted) Q3 24 Q2 24 Q3 23 YTD 24 YTD 23 ($2,011 million pre-tax) related to the acquisition of Bank of the West, comprising Reported Net interest income 4,794
Slide 40: Summary of Reported and Adjusted Results by Operating Group
Summary of Reported and Adjusted Results by Operating Group (Canadian $ in millions unless otherwise stated) Q3 24 Q2 24 Q1 24 Q4 23 Q3 23 YTD 24 YTD 23 Total Bank Reported Net Income 1,865 1,866 1,292 1,710 1,565 5,023 2,727 Management of Fair Value Changes on the Purchase of Bank of the West — — —
Slide 41: Pre-Provision, Pre-Tax Earnings (PPPT) Reconciliation
Pre-Provision, Pre-Tax Earnings (PPPT) Reconciliation (Canadian $ in millions unless otherwise stated) Q3 24 Q2 24 Q1 24 Q4 23 Q3 23 YTD 24 YTD 23 Total Bank Reported Income before taxes 2,447 2,425 1,656 2,194 1,988 6,528 3,753 Total provision for (recovery of) credit losses 906 705 627 446 492 2,2
Slide 42: Revenue, Non-Interest Expense and Efficiency Ratio Reconciliation
Revenue, Non-Interest Expense and Efficiency Ratio Reconciliation (Canadian $ in millions unless otherwise stated) Q3 24 Q2 24 Q1 24 Q4 23 Q3 23 YTD 24 YTD 23 F2023 F2022 Total Bank Reported Revenue 8,192 7,974 7,672 8,319 8,052 23,838 20,940 29,259 33,710 Insurance claims, commissions and changes i
Slide 43: Summary of Reported and Adjusted Results by Operating Group
Summary of Reported and Adjusted Results by Operating Group Reported Adjusted Reported Adjusted (Canadian $ in millions unless otherwise stated) (Canadian $ in millions unless otherwise stated) Q3 24 Q2 24 Q3 23 Q3 24 Q2 24 Q3 23 Q3 24 Q2 24 Q3 23 Q3 24 Q2 24 Q3 23 Total Bank Revenue 8,192 7,974 8,0
Slide 44: Investor Relations
BMO Financial Group Investor Relations Contact Information bmo.com/investorrelations E-mail: investor.relations@bmo.com BILL ANDERSON PERRY CHEN-SEE Director, Investor Relations Director, Investor Relations 416.867.7834 416.359.8074 bill2.anderson@bmo.com perry.chensee@bmo.com