Bank Of Montreal · TSX:BMO
Bank Of Montreal — BMO Financial Group — Q4 2013 Earnings Presentation
38 slides from Bank Of Montreal's earnings presentation, Dec 11, 2013
Slide 1: Investor Presentation Q4 13
Investor Presentation December 11, 2013 Q4 13
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: BMO Financial Group
BMO Financial Group 8th largest bank in North America1; 2nd largest Canadian bank by retail branches in Canada and the U.S. Who we are F2013 Results Adjusted2 Reported Revenue (C$ billions) 15.6 16.3 Established in 1817, Canada’s first bank Net Income (C$ billions) 4.3 4.2 In Canada: a strong, f
Slide 4: Strategic Priorities
Strategic Priorities A clear vision: To be the bank that defines great customer experience Strategic priorities Leverage our Ensure our Achieve industry- Enhance Expand strength in risk 3 4 consolidated 1 2 5 leading customer productivity to strategically in North American management loyalty by driv
Slide 5: BMO – A Strong Foundation to Generate Sustainable Growth
BMO – A Strong Foundation to Generate Sustainable Growth We have an advantaged business mix, strong capital position and a proactive approach to risk management Diversified Business Mix with Strong Capital Position Retail Focus ~80% operating group revenue from Basel III Common Equity Tier 1 Rat
Slide 6: Operating Group Overview
Operating Group Overview Canadian Personal & Commercial Banking US Personal & Commercial Banking • Over 7 million customers • Over 2 million customers • Over 900 branches; 2,900 ABMs • Over 600 branches and access to 1,325 ABMs • #2 market share in commercial lending • Footprint spans across six US
Slide 7: Reasons to Invest in BMO
Reasons to Invest in BMO Clear opportunities for growth across a diversified North American footprint 9 Large North American commercial banking business with advantaged market share 9 Good momentum in our well-established Canadian Personal and Commercial Banking business 9 Award-winning wealth fra
Slide 8: Proven Strength in Commercial Banking
Proven Strength in Commercial Banking Our large North American platform is a key differentiator and positions us well Canadian P&C US P&C Commercial loan1 balances up 11% from F2012 Strong core C&I loan growth, up 19% Y/Y Strong competitive position in commercial banking, Core Commercial Rea
Slide 9: Good momentum in our Canadian P&C Banking Business
Good momentum in our Canadian P&C Banking Business Record net income with good momentum in the second half of the year Record earnings with robust volume growth contributing to stronger revenue and income in the second half of F2013. Positive operating leverage of 2.7% in Q4 Strong competitive p
Slide 10: Wealth Management
Wealth Management Strong wealth franchise, with good growth prospects, contributing over 20% F2013 revenues Record results with earnings up 59% and increased market share Assets under management and administration up 14% F2013 Revenue Contribution** Good momentum heading into 2014 Expanded p
Slide 11: Strategic Footprint Anchored in North America with Select International Presence
Strategic Footprint Anchored in North America with Select International Presence Combined population and GDP of BMO’s US Midwest States is greater than Canada 1,5631 Branches 2 $220B Customer Deposits 1 Branches in Canada and the U.S., excluding Other, 1,559 2 Q4’13 customer deposits: core deposits
Slide 12: Strong Capital Position Provides Strength and Flexibility
Strong Capital Position Provides Strength and Flexibility Basel III CET1 Ratio strong at 9.9% Basel III F2013 ~10.7 million common shares repurchased in 2013 Common Equity Tier 1 Ratio (CET1) (%) 9.9 Dividend payout range 40-50% Tier 1 Capital Ratio (%) 11.4 Balanced and disciplined approach
Slide 13: Advantaged Business Mix
Advantaged Business Mix Diversified by both customer segment and geography F2013 Adjusted Net Income by F2013 Adjusted Net Income1 by Operating Group (C$MM) - $4,467MM Geography (C$MM) - $4,276MM Wealth Management (including Insurance) 19% United States 25% WM Canadian 861 1,072 Personal & Canadian
Slide 14: F2013 - Financial Highlights
F2013 - Financial Highlights Record Net Income and Adjusted EPS, both up 5% Y/Y Adjusted1 Record earnings and EPS in 2013 (C$B) F2011 F2012 F2013 Good operating group performance Revenue 13.7 15.1 15.6 ¾ Record earnings in Canadian P&C with robust PCL 1.1 0.5 0.4 volume growth and good momentum
Slide 15: Canadian Personal & Commercial Banking
Canadian Personal & Commercial Banking Record annual earnings with robust volume growth; good momentum heading into 2014 F2013 Financial Highlights Revenue and Adjusted Net Income1 ($B) 6.2 6.2 6.3 Record net income of $1.9B, up 4% Delivered robust volume growth contributing to notably stronger
Slide 16: US Personal & Commercial Banking
US Personal & Commercial Banking Commercial business performing very well and focused on adding new customers in personal banking [USD] Revenue and Adjusted Net Income1 (US$MM) F2013 Financial Highlights 3,015 2,871 Adjusted net income of $633MM, relatively flat Y/Y Strong C&I loan growth with l
Slide 17: Wealth Management
Wealth Management Record earnings up significantly supported by strong asset growth and customer loyalty F2013 Financial Highlights Revenue and Adjusted Net Income1 3,454 ($MM) Adjusted net income of $861MM, up 58%; Wealth up 55%; 2,905 Insurance up 65% 2,592 261 Revenue in wealth businesses up
Slide 18: BMO Capital Markets
BMO Capital Markets Good year with earnings up 7% and strong ROE of 19%; improved contribution from the US F2013 Financial Highlights Revenue and Adjusted Net Income1 ($MM) Good year with net income of $1.1B, up 7% 3,315 3,276 3,428 Strong ROE 19% 1,096 1,022 Good contribution from US with net
Slide 19: APPENDIX
APPENDIX Investor Presentation | Q4 2013 19
Slide 20: Q4 2013 - Financial Highlights
Q4 2013 - Financial Highlights Good income reflecting benefits of diversified business model Adjusted1 Q4 12 Q3 13 Q4 13 Adjusted EPS down 1 cent Y/Y Net Income (C$MM) 1,125 1,136 1,102 ¾ Continued good momentum in Wealth Management and Canadian P&C. Higher securities gains in Q4’13 EPS ($) 1.65 1
Slide 21: Revenue
Revenue Good growth in Canadian P&C and high Wealth Management revenue Y/Y adjusted revenue up 4% Total Bank Adjusted1 Revenue (C$MM) ¾ NII up 1% with strong volume growth in Canadian 3,920 4,060 P&C, continued loan growth in US P&C and lower NIM 3,892 ¾ NIR up 6% Strong Wealth Management reflec
Slide 22: Non-Interest Expense
Non-Interest Expense Select investment with disciplined expense management Total Bank Adjusted Non-Interest Expense (C$MM) 2,458 2,502 Y/Y adjusted expenses up 3% and just 1% adjusting for 2,436 stronger U.S. dollar 821 ¾ Higher employee-related costs, including pension and Salaries 748 825 higher
Slide 23: Canadian Personal & Commercial Banking – Loan Balances
Canadian Personal & Commercial Banking – Loan Balances Average Loans & Acceptances (C$B) Y/Y Growth 11% Personal 177.3 182.5 Strong lending growth¹ with balances up 11% Y/Y and 4% Q/Q 165.1 Mortgage balances up 16% Y/Y and 5% Q/Q 84.1 Total personal lending¹ market share² up 22 bps Q/Q 79.8 72
Slide 24: Canadian Personal & Commercial Banking – Deposit Balances
Canadian Personal & Commercial Banking – Deposit Balances Average Deposits (C$B) Y/Y Growth Personal 9% Deposit balances up 6% Y/Y and 2% Q/Q 114.9 117.9 108.2 ¾ Strong growth in retail operating deposits of 7% Y/Y and 1% Q/Q Personal deposit market share down 4 bps Q/Q 72.5 74.4 70.2 Commercial
Slide 25: US Personal & Commercial Banking – Commercial Balances
US Personal & Commercial Banking – Commercial Balances All amounts in US $B Strong core C&I loan growth up 19% Core C&I ($B) - Average Core Commercial Real Estate ($B) - Average Y/Y and 3% Q/Q Growth in core C&I reflects increases across a number of businesses including Corporate Finance, 23.0 2
Slide 26: US Personal & Commercial Banking – Personal Balances
US Personal & Commercial Banking – Personal Balances All amounts in U.S. $B Mortgages ($B) - Average Home Equity ($B) - Average Mortgages Serviced Mortgage WM Overall mortgage portfolio up slightly driven 11.5 11.3 11.4 11.5 11.6 by growth in serviced portfolio. Serviced 1.0 1.0 1.1 1.2 1.3 portfo
Slide 27: Provision for Credit Losses (PCL)
Provision for Credit Losses (PCL) PCL By Operating Group Specific PCL up Q/Q due to higher P&C F2012 F2013 Q3 13 Q4 13 provisions in both Canada and the US and (C$ MM) Consumer – Canadian P&C 506 442 101 114 reduced recoveries on the PCI portfolio Commercial – Canadian P&C 109 132 25 52 ¾ Canadian
Slide 28: Loan Portfolio Overview
Loan Portfolio Overview Canadian and US portfolios well diversified by industry Gross Loans & Acceptances Canada & % of By Industry US Total Other1 Total (C$ B) 2% loan growth Q/Q, spread across Residential Mortgages 88.6 7.7 96.3 34% Canada/US and the Consumer/Commercial Personal Lending 49.3 14.
Slide 29: Canadian Residential Mortgages
Canadian Residential Mortgages Total Canadian residential mortgage portfolio at $88.6B represents 43% of Canadian loans and acceptances and 32% of total loans and acceptances – smallest of the big five peer banks ¾ 59% of the portfolio is insured ¾ Loan-to-value (LTV)1 on the uninsured portfolio i
Slide 30: Liquidity and Funding Strategy
Liquidity and Funding Strategy BMO’s Cash and Securities to Total Assets Ratio reflects a strong liquidity position BMO’s large base of customer deposits, along with our strong capital base, reduces reliance on wholesale funding Cash and Securities to Total Assets Ratio (%) (1) Core and Customer
Slide 31: Diversified Wholesale Term Funding Mix
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 32: 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 33: Sustainability at BMO
Sustainability at BMO BMOs ESG scorecard reflects the non-financial elements that matter most to our stakeholders. Managing them well will contribute to success in the long term. Select 2013 Business Activities with a Social Impact: • Supported small businesses in Canada ($10 billion over 3 years) •
Slide 34: Economic Outlook
Economic Outlook The Canadian economy is growing at a moderate pace, The US economy is growing moderately, held back by held back by the strong Canadian dollar, weak global fiscal restraint and political uncertainty demand, elevated household debt and fiscal consolidation, but supported by low i
Slide 35: Economic Indicators
Economic Indicators Canada United States Eurozone Economic Indicators (%)1 2012 2013E 2014E 2012 2013E 2014E 2012 2013E 2014E GDP Growth 1.7 1.7 2.3 2.8 1.7 2.7 (0.6) (0.5) 0.8 Inflation 1.5 0.9 1.3 2.1 1.4 1.4 2.5 1.3 1.2 Interest Rate (3mth Tbills) 0.9 1.0 0.9 0.1 0.1 0.1 0.5 0.1 0.1 Unemployment
Slide 36: Reported Results
Reported Results Inc/(Dec) P&L, Reported Q/Q Y/Y Q4 12 Q1 13 Q2 13 Q3 13 Q4 13 F2011 F2012 F2013 F2013 vs. (C$MM) Inc/(Dec) Inc/(Dec) F2012 Net interest income 2,145 2,216 2,098 2,146 2,085 (3)% (3)% 7,474 8,808 8,545 (3)% Non-interest revenue 2,031 1,865 1,846 1,904 2,103 10% 4% 6,469 7,322 7,718 5
Slide 37: Adjusting Items
Adjusting Items Adjusting1 items – Pre-tax ($MM) Q4 12 Q1 13 Q2 13 Q3 13 Q4 13 F2011 F2012 F2013 Credit-related items on the M&I purchased performing loan portfolio 57 128 119 110 49 173 407 406 M&I integration costs (153) (92) (50) (49) (60) (131) (402) (251) M&I acquisition-related costs - - - - -
Slide 38: Investor Relations Contact Information
Investor Relations Contact Information www.bmo.com/investorrelations E-mail: investor.relations@bmo.com Fax: 416.867.3367 SHARON HAWARD-LAIRD Head, Investor Relations 416.867.6656 sharon.hawardlaird@bmo.com ANDREW CHIN Director, Investor Relations 416.867.7019 andrew.chin@bmo.com