Bank Of Montreal · TSX:BMO
Bank Of Montreal — BMO Financial Group — Q1 2020 Earnings Presentation
26 slides from Bank Of Montreal's earnings presentation, Feb 25, 2020
Slide 1: Investor Presentation Q1 20
BMO Financial Group Investor Presentation For the Quarter Ended January 31, 2020 February 25, 2020 Q1 20
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: Darryl White, Chief Executive Officer
Darryl White Chief Executive Officer Q1 20
Slide 4: Financial Highlights
Financial Highlights Q1’20 • Adjusted1 net income growth of 5% Y/Y Net Income1 $1,617MM • All businesses contributed; good progress on Reported $1,592MM strategic and financial objectives EPS1 • Strength of overall performance earned through $2.41 Reported elevated provisions $2.37 PPPT1,2 Growth •
Slide 5: Strong and Consistent Delivery Across Businesses
Strong and Consistent Delivery Across Businesses Canadian Personal & Commercial U.S. Personal & Commercial • Strong quarter; net income up 8% • Revenue up 3%, absorbing full impact of • Robust loan and deposit growth; revenue up 7% recent rate decreases • BMO Business Xpress on track to surpass $1B
Slide 6: Consistency of Strategy, Performance and Purpose
Consistency of Strategy, Performance and Purpose Our Purpose: Boldly Grow the Good in business and life • Launched inaugural sustainability bond in late 2019 • Led the first Canadian sustainability-linked corporate credit Sustainable Finance facility • Mobilizing $400 billion for sustainable finance
Slide 7: Financial Results
Financial Results For the Quarter Ended January 31, 2020 Tom Flynn Chief Financial Officer Q1 20
Slide 8: Q1 F2020 - Financial Highlights
Q1 F2020 - Financial Highlights Net income up 5% Y/Y; PPPT5 up 16% Y/Y; adjusted1 operating leverage2 4.6% with all Groups above 2.0% • Adjusted1 EPS $2.41, up 4% Y/Y, 5% CCY6 (reported Reported Adjusted1 $2.37, up 4%) ($MM) Q1 20 Q4 19 Q1 19 Q1 20 Q4 19 Q1 19 • Adjusted1 and reported net income up
Slide 9: Strong Capital Position
Strong Capital Position Capital position strong with CET1 Ratio at 11.4% Common Equity Tier 1 Ratio +27 bps -16 bps -12 bps +4 bps 11.4% 11.4% Q4 2019 Internal capital Regulatory changes Higher source Other Q1 2020 generation and IFRS 16 currency RWA Basis points may not add due to rounding. • CET1
Slide 10: Canadian Personal & Commercial Banking
Canadian Personal & Commercial Banking Strong performance and continued balance momentum • Adjusted1 and reported net income up 8% Y/Y Reported Adjusted1 • Adjusted1 and reported PPPT2 growth of 10% Y/Y ($MM) Q1 20 Q4 19 Q1 19 Q1 20 Q4 19 Q1 19 • Revenue up 7% Y/Y Revenue (teb) 2,082 2,078 1,950 2,0
Slide 11: U.S. Personal & Commercial Banking
U.S. Personal & Commercial Banking Continued PPPT3 growth and positive operating leverage Figures that follow are in U.S. dollars Reported Adjusted1 • Adjusted1 PPPT3 up 5% Y/Y (reported up 6%) (US$MM) Q1 20 Q4 19 Q1 19 Q1 20 Q4 19 Q1 19 1 Revenue (teb) 1,030 1,028 1,002 1,030 1,028 1,002 • Adjusted
Slide 12: BMO Capital Markets
BMO Capital Markets Strong performance across all businesses; adjusted1 net income up 38% Y/Y • Adjusted1 net income up 38% Y/Y (reported up 39%) Reported Adjusted1 • Adjusted1 PPPT2 up 50% Y/Y (reported up 52%) ($MM) Q1 20 Q4 19 Q1 19 Q1 20 Q4 19 Q1 19 Global Markets 823 686 631 823 686 631 • Reven
Slide 13: BMO Wealth Management
BMO Wealth Management Strong Y/Y adjusted1 net income growth of 21% • Adjusted1 net income up 21% Y/Y (reported up 22%) Reported Adjusted1 • Adjusted1 Traditional Wealth net income up 19% Y/Y ($MM) Q1 20 Q4 19 Q1 19 Q1 20 Q4 19 Q1 19 (reported up 21%) Net Revenue2 1,309 1,232 1,214 1,309 1,257 1,214
Slide 14: Corporate Services
Corporate Services • Adjusted1 and reported net loss of $106MM compared Reported2 Adjusted1,2 with a net loss of $76MM in the prior year, mainly due ($MM) Q1 20 Q4 19 Q1 19 Q1 20 Q4 19 Q1 19 to lower revenue excluding teb and higher expenses Revenue (7) (20) 19 (7) (20) 19 2 Group teb offset (78) (7
Slide 15: Risk Review
Risk Review For the Quarter Ended January 31, 2020 Patrick Cronin Chief Risk Officer Q1 20
Slide 16: Provision for Credit Losses (PCL)
Provision for Credit Losses (PCL) PCL By Operating Group • Q1’20 PCL ratio on Impaired Loans at 29 bps, Q1 20 Q4 19 Q1 19 up 8 bps Q/Q ($MM) Consumer – Canadian P&C 103 110 104 • Allowance for Credit Losses on Performing Loans increased PCL by $25 million Commercial – Canadian P&C 35 24 10 Total Can
Slide 17: Oil & Gas Portfolio Overview
Oil & Gas Portfolio Overview Q1’20 Outstanding by Sector ($12.9B total) • $12.9B in total outstandings, of which just over half are in the $4.5 U.S. Investment Grade $3.9 19% Non Investment Grade • Of the $8.4B in Exploration and Development (E&D) outstandings, approximately three-quarters is borrow
Slide 18: Gross Impaired Loans (GIL) and Formations
Gross Impaired Loans (GIL) and Formations By Industry Formations Gross Impaired Loans • GIL ratio 62 bps, up 4 bps Q/Q ($MM, as at Q1 20) Canada & Canada & U.S. Total U.S. Total Other Other1 Consumer 205 54 259 479 383 862 Formations ($MM) Service Industries 10 77 87 113 264 377 741 679 799 831 Oil
Slide 19: Loan Portfolio Overview
Loan Portfolio Overview Gross Loans & Acceptances Canada & • Loans are well diversified by By Industry U.S. Total % of Total Other1 geography and industry ($B, as at Q1 20) Residential Mortgages 113.4 11.0 124.4 27% Consumer Instalment and Other 56.4 12.2 68.6 15% Personal Cards 8.2 0.6 8.8 2% Total
Slide 20: Appendix
Appendix
Slide 21: Canadian Personal & Commercial Banking - Balances
Canadian Personal & Commercial Banking - Balances Average Gross Loans & Acceptances ($B) Average Deposits ($B) 243.4 247.4 191.5 230.4 184.0 168.2 102.0 103.1 100.1 115.2 118.7 104.2 47.6 48.2 46.0 9.2 9.4 8.8 84.6 86.7 64.0 68.8 72.8 75.5 Q1'19 Q4'19 Q1'20 Q1'19 Q4'19 Q1'20 Residential Mortgages Co
Slide 22: U.S. Personal & Commercial Banking – Balances
U.S. Personal & Commercial Banking – Balances Average Gross Loans & Acceptances (US$B) Average Deposits (US$B) 92.11 92.71 87.2 1 6.7 7.2 83.1 82.8 Personal 78.5 5.5 11.0 10.8 Loans 11.3 39.9 36.8 35.2 Commercial 74.4 74.7 Loans 66.0 43.3 46.3 47.3 Q1'19 Q4'19 Q1'20 Q1'19 Q4'19 Q1'20 Commercial Pers
Slide 23: Canadian Residential-Secured Lending
Canadian Residential-Secured Lending Residential-Secured Lending by Region ($147.5B) • Total Canadian residential-secured lending portfolio at $66.3 $147.5B, representing 32% of total loans HELOC ─ LTV1 on uninsured of 51% Uninsured Mortgages $28.8 24% ─ 90 day delinquency rate for RESL remains good
Slide 24: Trading-related Net Revenues and Value at Risk
Trading-related Net Revenues and Value at Risk November 1, 2019 to January 31, 20201 (pre-tax basis and in millions of Canadian dollars) 40 30 20 10 0 (10) (20) Daily Revenue Total Trading VaR 1 Presentation of Trading VaR updated subsequent to February 25, 2020 Risk Review February 25, 2020 24
Slide 25: Adjusting Items
Adjusting Items Adjusting items1 - Pre-tax ($MM) Q1 20 Q4 19 Q1 19 2 Acquisition integration costs (3) (2) (6) Amortization of acquisition-related intangible assets3 (29) (38) (31) 4 Restructuring costs - (484) - 5 Reinsurance adjustment - (25) - Adjusting items included in reported pre-tax income (
Slide 26: Investor Relations
BMO Financial Group Investor Relations Contact Information bmo.com/investorrelations E-mail: investor.relations@bmo.com JILL HOMENUK Head, Investor Relations 416.867.4770 jill.homenuk@bmo.com