Bank Of Montreal · TSX:BMO
Bank Of Montreal — BMO Financial Group — Q1 2012 Earnings Presentation
30 slides from Bank Of Montreal's earnings presentation, Feb 28, 2012
Slide 1: Investor Presentation Q1 12
Investor Presentation Q1 12 February 28 y 2012 Risk Review • February 28 • 2012 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: Strategic Highlights Q1 12
Strategic Highlights Q1 12 Bill Downe President & Chief Executive Officer BMO Financial Group February Risk Review • February 2012y 2012 3 28 • 28
Slide 4: Financial Results
Financial Results Record first quarter net income of $1.1 billion, kicking off the year with very strong earnings C$ millions unless otherwise indicated Q1 11 Q4 11 Q1 12 Revenue 3,468 3,822 4,117 PCL 323 362 141 Adjusted1 net income up 19% Expense 2,058 2,432 2,554 Adjusted1 revenue growth 9% N
Slide 5: Differentiated Customer-focused Strategy
Differentiated Customer-focused Strategy Strategic Priorities Q1 2012 Adjusted1 Revenue by Operating Group (C$MM) Drive quality earnings growth across all North PCG, 1 $695, American personal and commercial banking P&C 18% Canada, businesses, by focusing on industry-leading BMO CM, CM Total $1,556,
Slide 6: Financial Results Q1 12
Financial Results Q1 12 Tom Flynn Executive Vice President & Chief Financial Officer BMO Financial Group Risk ReviewFebruary • 2012y 2012 6 28th • February 28
Slide 7: Q1 2012 - Financial Highlights
Q1 2012 - Financial Highlights BMO Reports Very Strong First Quarter Net Income Common Net Specific Equity Revenue EPS ROE Productivity Income PCL Ratio (Basel II) Reported $4,117MM $1,109MM $1.63 17.2% 62.0% $122MM 9.6% Results Adjusted $3,743MM $972MM $1.42 15.0% 63.5% $91MM 9.6% Results Adjuste
Slide 8: Revenue
Revenue Y/Y revenue growth driven by M&I acquired business Total Bank Adjusted Revenue (C$MM) Net Interest Margin 13.7% 6.1% 16.0% 13.4% 8.5% Y/Y (bps) Growth 3,670 3,743 3,448 3,378 228 3,245 223 221 217 213 1,726 1,996 2,092 201 NII 1,708 1,819 182 205 178 176 1,722 1,537 1,559 1,674 1,651 NIR Q1
Slide 9: Non-Interest Expense
Non-Interest Expense Y/Y growth largely reflects acquisitions; Q/Q growth modest Non-Interest Q1 11 Q4 11 Q1 12 Q/Q Y/Y Total Bank Adjusted Non-Interest Expense Expense ($MM) B/(W) B/(W) (C$MM) Reported 2,058 2,432 2,554 (5%) (24%) 2,341 2,378 Adjusted 2,049 2,341 2,378 (2%) (16%) 2,070 2,049 1,994
Slide 10: Update on the Acquired M&I Business
Update on the Acquired M&I Business Strong contribution from M&I with Q1’12 adjusted net income of $215MM (Q4’11 $149MM) Operating Groups of $100MM (Q4’11 $124MM), including Credit-Related Adjusting Items on the Acquired Q4 11 Q1 12 P&C US $90MM (Q4’11 $112MM). As M&I Performing Loan Portfolio
Slide 11: Capital & Risk Weighted Assets
Capital & Risk Weighted Assets Capital position strong Basel II Q1 11 Q4 11 Q1 12 Tier 1 Capital & Common Equity Ratio (%)1 10.2 9.6 9.6 Common Shareholders’ Equity Tier 1 Capital Ratio (%) 13.0 12.0 11.7 Total Capital Ratio (%) 15.2 14.9 14.6 23.6 24.3 24.5 25.1 24.7 24.4 RWA ($B) 165 209 209 21.5
Slide 12: Operating Groups – Q1'12 Quick Facts
Operating Groups – Q1’12 Quick Facts Over 75% of adjusted revenue and adjusted net income from retail businesses1 P&C Canada P&C U.S. Revenue relatively flat Q/Q Revenue declined 1.2% Q/Q, reflecting expected impact Net income up 5.4% Q/Q on an actual loss basis of lower interchange and spread
Slide 13: Personal & Commercial Banking - Canada
Personal & Commercial Banking - Canada Focused on the customer and managing profitability in lower economic growth environment As Reported Q/Q Y/Y Highlights Q1 11 Q4 11 Q1 12 ($MM) B/(W) B/(W) Personal Revenue 968 970 963 (1)% (1)% Revenue flat Q/Q and Y/Y excluding a one- time securities gain in
Slide 14: Personal & Commercial Banking - U.S.
Personal & Commercial Banking - U.S. Y/Y growth reflects benefit of acquisition (Amounts in US$MM) As Reported Q/Q Y/Y Highlights Q1 11 Q4 11 Q1 12 (US$MM) B/(W) B/(W) Revenue 356 781 771 (1)% +100% Strong growth Y/Y PCL 36 78 85 (10)% (+100)% Q/Q adjusted net income decreased $19MM or 11% Expen
Slide 15: Private Client Group
Private Client Group Results lower due to unfavourable impact of long-term interest rates on Insurance business, solid Y/Y growth excluding Insurance As Reported Q/Q Y/Y Highlights Q1 11 Q4 11 Q1 12 ($MM) B/(W) B/(W) Y/Y PCG net income up 12% on a basis that Revenue 669 706 695 (2)% 4% excludes th
Slide 16: BMO Capital Markets
BMO Capital Markets Q1 results reflect improved market environment compared to the previous quarter As Reported Q/Q Y/Y Highlights Q1 11 Q4 11 Q1 12 ($MM) B/(W) B/(W) Y/Y net income and revenue performance Trading Products reflect very strong results a year ago 595 436 513 18% (14)% Revenue Q/Q
Slide 17: Corporate Services
Corporate Services Adjusted net income up Y/Y and Q/Q driven largely by PCL improvement Adjusted As Reported Q1 11 Q4 11 Q1 12 Q1 11 Q4 11 Q1 12 ($MM) ($MM) Revenue (teb) (118) (74) (61) Revenue (teb) (98) 78 313 PCL – Specific 112 32 (161) PCL – Specific 124 96 (130) – Collective -- -- -- – Collect
Slide 18: Group Net Income
Group Net Income Net Income, Adjusted B/(W) Q1 11 Q4 11 Q1 12 ($MM) Q/Q Y/Y P&C Canada 479 441 448 2% (6%) P&C U.S. 59 172 154 (10%) +100% Total P&C 538 613 602 (2%) 12% PCG 145 143 110 (23%) (24%) BMO Capital Markets 260 143 198 39% (24%) Corporate Services (126) (67) 62 +100% +100% Total Bank 817
Slide 19: Select Balance Sheet Information
Select Balance Sheet Information Average Net Loans & Acceptances Q1 11 Q2 11 Q3 11 Q4 11 Q1 12 Y/Y increase in loans and deposits largely ($B) driven by acquired M&I business Consumer Instalment & other personal 51.5 51.8 54.4 59.3 59.8 Loans Non-residential Mortgages1 7.5 7.1 6.8 8.3 6.8 Q/Q in
Slide 20: Personal & Commercial Banking Canada – Product Balances & Market Share
Personal & Commercial Banking Canada – Product Balances & Market Share Personal Y/Y total personal lending balances up 4.8% and personal deposit balances up 4.0% Commercial Market Share (%) 1 Q1 11 Q2 11 Q3 11 Q4 11 Q1 12 Commercial deposit balances increasing over the past 11 quarters, up $2.6B
Slide 21: Personal & Commercial Banking U.S. – Product Balances
Personal & Commercial Banking U.S. – Product Balances All amounts in U.S. $B Mortgages ($B) - As At Home Equity ($B) - As At Personal Y/Y product balances up significantly driven by M&I acquired business 9.7 9.7 9.4 Q/Q personal loans down given 8.0 7.7 7.5 environment and selling of mortgage 4.
Slide 22: Adjusting Items
Adjusting Items Adjusting items – Pre-tax Q1 11 Q4 11 Q1 12 ($MM) Credit-related items on the acquired M&I performing loan portfolio - 173 184 Run-off structured credit activities 20 (119) 136 M&I integration costs - (53) (70) M&I acquisition-related costs - (4) - Amortization of acquisition-related
Slide 23: Risk Review Q1 12
Risk Review Q1 12 Surjit Rajpal Executive Vice President & Chief Risk Officer BMO Financial Group February Risk Review • February 2012y 201223 28 • 28
Slide 24: Loan Portfolio – Well Diversified by Segment and Business
Loan Portfolio – Well Diversified by Segment and Business Canadian and US portfolios well diversified. The M&I loan portfolio contributes ~12% of total loans P&C business represents the majority of loans X Retail portfolios are predominantly secured – 87% in Canada and 97% in the US By Segment C
Slide 25: Provision for Credit Losses
Provision for Credit Losses Q1 '12 Adjusted specific provisions at $91MM are Business Segment down from last quarter (Q4 '11: $281MM) (By Business Line Segment) Q1 ‘11 Q4 ‘11 Q1 ‘12 X Main driver of the decrease is a $142MM (C$ MM) recovery related to the Purchased Credit Impaired Loans (PCIs) Con
Slide 26: Specific Provision Segmentation
Specific Provision Segmentation % of Canadian provisions lower at $153MM (Q4 '11: (C$MM) Canada US Total total $180MM) with the Personal Lending and Cards’ sectors the largest contributors. Commercial Cards 86 7 93 76% provisions well diversified Personal Lending 36 31 67 55% Recovery of $31MM i
Slide 27: Impaired Loans and Formations
Impaired Loans and Formations 1 Q1 '12 formations lower quarter over quarter at $624MM (Q4 '11: $732MM) X US formations are $387MM (Q4 '11: $426MM) including $259MM from the acquired portfolios, of which $27MM is covered by FDIC loss share agreement. CRE/Investor Owned Mortgages and Consumer Loans
Slide 28: European Exposure
European Exposure Country1 Repo Style Lending2 Securities2 Derivatives4 (C$ MM) Transactions3 Total Exposure Bank Corporate Sovereign5 Total Bank Corporate Sovereign5 Total Total Bank Corporate Sovereign5 Total GIIPS (2%) 105 2 - 107 - 26 - 26 - 21 1 - 22 155 Eurozone (55%) (excluding GIIPS) 495 188
Slide 29: Trading & Underwriting Net Revenues vs. Market Value Exposure
Trading & Underwriting Net Revenues vs. Market Value Exposure November 1, 2011 to January 31, 2012 (Presented on a Pre-Tax Basis) 50 January 31 November 28 $39.7 MM $37.5 MM November 24 January 3 January 10 $33.1 MM $32.1 MM $32.0 MM 30 10 01-Nov-11 07-Nov-11 14-Nov-11 18-Nov-11 24-Nov-11 30-Nov-11
Slide 30: Investor Relations Contact Information
Investor Relations Contact Information www.bmo.com/investorrelations E-mail: investor.relations@bmo.com Fax: 416.867.3367 VIKI LAZARIS MICHAEL CHASE ANDREW CHIN Senior Vice President Director Senior Manager 416.867.6656 416.867.5452 416.867.7019 viki.lazaris@bmo.com michael.chase@bmo.com andrew.chin