Bank Of Montreal · TSX:BMO
Bank Of Montreal — BMO Financial Group — Q2 2018 Earnings Presentation
25 slides from Bank Of Montreal's earnings presentation, May 30, 2018
Slide 1: BMO Financial Group Investor Presentation Q2 18
BMO Financial Group Investor Presentation For the Quarter Ended April 30, 2018 May 30, 2018 Q2 18 Investor Presentation January 2018 1
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 Q2 18 Investor Presentation January 2018 3
Slide 4: Q2 F2018 Financial Highlights
Q2 F2018 Financial Highlights Strong earnings growth and positive operating leverage2 Adjusted1 Reported • Adjusted1 net income up 13% Y/Y (reported flat due to a Net Income $1,463MM $1,246MM restructuring charge this quarter) • Adjusted1 EPS up 15% Y/Y (reported up 1%), strong performance EPS $2.20
Slide 5: U.S. Operations
U.S. Operations U.S. segment continuing to deliver strong results Adjusted1 • U.S. segment represents 27% of the bank’s U.S. Segment Reported YTD adjusted1 earnings (US$MM) Q2 18 Q1 18 Q2 17 Q2 18 Q1 18 Q2 17 Revenue 1,386 1,397 1,333 1,386 1,397 1,333 • Q2’18 adjusted1 earnings up 41% Y/Y and PCL o
Slide 6: Key Strategic Areas of Focus
Key Strategic Areas of Focus Strong performance in U.S. segment with continued momentum Accelerating transformation through technology investment and deployment Focused on efficiency, building on good progress Employees, culture and values that are a competitive advantage Strategic Highlights May
Slide 7: Financial Results
Financial Results For the Quarter Ended April 30, 2018 Tom Flynn Chief Financial Officer Q2 18 Investor Presentation January 2018 7
Slide 8: Q2 2018 - Financial Highlights
Q2 2018 - Financial Highlights Strong performance with double digit NIAT growth in P&C businesses and Wealth Reported Adjusted1 • Reported EPS $1.86 and net income $1.2B • Adjusted1 EPS $2.20, up 15% Y/Y; adjusted1 net income ($MM) Q2 18 Q1 18 Q2 17 Q2 18 Q1 18 Q2 17 $1.5B, up 13% Net Revenue2 5,285
Slide 9: Strong Capital Position
Strong Capital Position Well capitalized with CET1 Ratio at 11.3% Common Equity Tier 1 Ratio +22 bps -3 bps -18 bps +45 bps -33 bps 11.3% 11.1% 2018 Q1 Elimination of Internal capital Other Share Higher source 2018 Q2 Basel I Floor generation1 repurchases currency RWA Basis points may not add due to
Slide 10: Canadian Personal & Commercial Banking
Canadian Personal & Commercial Banking Good revenue growth and positive operating leverage • Adjusted1 and reported net income up 11% Y/Y Reported Adjusted1 • Revenue up 8% Y/Y ($MM) Q2 18 Q1 183 Q2 17 Q2 18 Q1 183 Q2 17 – Average loans up 4% Y/Y. Commercial2 up 10%; personal2 up 1%, reflecting part
Slide 11: U.S. Personal & Commercial Banking
U.S. Personal & Commercial Banking Continued momentum with strong revenue growth and positive operating leverage • Reported net income of $348MM, up 46% Y/Y Reported Adjusted1 • Adjusted1 net income of $359MM, up 43% Y/Y (US$MM) Q2 18 Q1 18 Q2 17 Q2 18 Q1 18 Q2 17 Figures that follow are in U.S. dol
Slide 12: BMO Capital Markets
BMO Capital Markets Net income down Y/Y • Adjusted1 and reported net income down from Reported Adjusted1 prior year reflecting market conditions ($MM) Q2 18 Q1 18 Q2 17 Q2 18 Q1 18 Q2 17 • Revenue down 12% Y/Y Trading Products 622 650 675 622 650 675 • Expenses down 2% Y/Y I&CB 419 432 511 419 432 5
Slide 13: BMO Wealth Management
BMO Wealth Management Good growth in Traditional Wealth businesses Reported Adjusted1 • Reported net income $296MM • Adjusted1 net income $307MM, up 12% Y/Y ($MM) Q2 18 Q1 18 Q2 17 Q2 18 Q1 18 Q2 17 – Traditional Wealth up 18% Y/Y (reported up 26%) Net Revenue2 1,250 1,244 1,162 1,250 1,244 1,162 –
Slide 14: Corporate Services
Corporate Services • Adjusted1 net loss of $80MM compared $74MM in Reported2 Adjusted1,2 the prior year. Reported net loss of $274MM ($MM) Q2 18 Q1 18 Q2 17 Q2 18 Q1 18 Q2 17 compared to $87MM in prior year Revenue (21) (2) 23 (21) (2) 23 • Reported results in the quarter include restructuring 2 cha
Slide 15: Risk Review
Risk Review For the Quarter Ended April 30, 2018 Surjit Rajpal Chief Risk Officer Q2 18 Investor Presentation January 2018 15
Slide 16: Provision for Credit Losses (PCL)
Provision for Credit Losses (PCL) PCL By Operating Group Q2 18 Q1 18 Q2 171 • Q2’18 PCL ratio on Impaired Loans at 18 bps, ($MM) down 1 bp Q/Q Consumer – Canadian P&C 118 91 99 • Allowance for Credit Losses on Performing Loans Commercial – Canadian P&C 13 6 22 reduced PCL by $12 million, primarily d
Slide 17: Gross Impaired Loans (GIL) and Formations
Gross Impaired Loans (GIL) and Formations Formations Gross Impaired Loans • GIL ratio 56 bps, down 1 bp Q/Q By Industry ($MM, as at Q2 18) Canada & Canada & U.S. Total U.S. Total Other Other1 Consumer 218 62 280 470 478 948 Service Industries 4 11 15 49 214 263 Agriculture 37 38 75 79 177 256 Oil &
Slide 18: Canadian Residential Mortgages
Canadian Residential Mortgages Residential Mortgages by Region ($B) • Total Canadian residential mortgage portfolio at $106.4 $106.4B, representing ~28% of total loans Uninsured ─ 70% of the portfolio has an effective Insured remaining amortization of 25 years or less ─ Less than 1% of our uninsured
Slide 19: Appendix
APPENDIX Strategic Highlights December 5, 2017 19
Slide 20: Canadian Personal & Commercial Banking - Balances
Canadian Personal & Commercial Banking - Balances Average Gross Loans & Acceptances ($B) Average Deposits ($B) 214.3 220.2 222.2 157.6 158.0 151.4 100.3 99.8 98.3 98.4 98.4 96.7 45.4 45.1 44.9 8.8 8.6 8.4 62.7 65.7 68.7 54.7 59.2 59.6 Q2'17 Q1'18 Q2'18 Q2'17 Q1'18 Q2'18 Commercial Loans & Acceptance
Slide 21: U.S. Personal & Commercial Banking – Balances
U.S. Personal & Commercial Banking – Balances Average Gross Loans & Acceptances (US$B) Average Deposits (US$B) 80.11 82.11 75.31 5.2 5.2 5.3 11.5 70.0 11.2 Personal Loans 65.4 67.6 9.6 5.6 5.7 5.3 3.2 3.3 3.3 1.6 1.5 23.3 24.9 1.9 23.0 54.9 Commercial 49.9 53.2 Loans 42.4 44.3 45.1 Q2'17 Q1'18 Q2'18
Slide 22: Loan Portfolio Overview
Loan Portfolio Overview Gross Loans & Acceptances Canada & By Industry U.S. Total % of Total • Loans are well diversified by Other1 ($B, as at Q2 18) geography and industry Residential Mortgages 106.4 11.4 117.8 31% Consumer Instalment and Other 52.1 9.6 61.7 16% Personal Cards 7.7 0.5 8.2 2% Total
Slide 23: Trading-related Net Revenues and Value at Risk
Trading-related Net Revenues and Value at Risk February 1, 2018 to April 30, 2018 (pre-tax basis and in millions of Canadian dollars) 30 25 20 15 10 5 0 (5) (10) (15) Daily Revenue Total Trading VaR Risk Review May 30, 2018 23
Slide 24: Adjusting Items
Adjusting Items Adjusting items1 - Pre-tax ($MM) Q2 18 Q1 18 Q2 17 YTD Q2 18 YTD Q2 17 Amortization of acquisition-related intangible assets2 (29) (28) (43) (57) (80) Acquisition integration costs2 (4) (4) (21) (8) (43) Restructuring costs3 (260) - - (260) - Adjusting items included in reported pre-
Slide 25: Investor Relations
Investor Relations Contact Information bmo.com/investorrelations E-mail: investor.relations@bmo.com JILL HOMENUK CHRISTINE VIAU Head, Investor Relations Director, Investor Relations 416.867.4770 416.867.6956 jill.homenuk@bmo.com christine.viau@bmo.com Strategic Highlights May 30, 2018 25