Bank Of Montreal · TSX:BMO
Bank Of Montreal — Q2 2015 Earnings Presentation
27 slides from Bank Of Montreal's earnings presentation, May 27, 2015
Slide 1: Investor Presentation Q2 15
Investor Presentation For the Quarter Ended – April 30, 2015 May 27, 2015 Q2 15 May 27, 2015 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
Strategic Highlights For the Quarter Ended – April 30, 2015 May 27, 2015 Bill Downe Chief Executive Officer Q2 15 May 27, 2015 3
Slide 4: Q2 2015 Financial Highlights
Q2 2015 Financial Highlights Good underlying operating group performance • $1.1 billion in adjusted1 net income • Adjusted1 EPS up 5% Y/Y to $1.71 • Good performance from our operating groups • Strong capital with CET1 ratio of 10.2% • Quarterly dividend increased $0.02 to $0.82 per common share • 3
Slide 5: Operating Group Performance
Operating Group Performance Results reflect benefit of diversification and our advantaged business mix Q2 F2015 Operating Group* Adjusted1 Net Income • Personal and Commercial Banking earnings up 8% Y/Y – Canadian P&C net income up 1% Y/Y, with BMO CM revenue growth of 4% Canadian 24% – U.S. P&C net
Slide 6: Good progress in our U.S. Segment
Good progress in our U.S. Segment Competitive position transformed since F2011 Strategic Highlights May 27, 2015 6
Slide 7: Clear and Consistent Strategy
Clear and Consistent Strategy 1 Achieve industry-leading customer loyalty by delivering on our brand promise. 2 Enhance productivity to drive performance and shareholder value. 3 Leverage our consolidated North American platform to deliver quality earnings growth. 4 Expand strategically in select gl
Slide 8: Financial Results
Financial Results For the Quarter Ended – April 30, 2015 May 27, 2015 Tom Flynn Chief Financial Officer Q2 15 Financial Results Month xx, 2015 8
Slide 9: Q2 2015 - Financial Highlights
Q2 2015 - Financial Highlights Adjusted net income of $1.1B, with EPS growth of 5% Y/Y Adjusted ($MM) 1 Q2 14 Q1 15 Q2 15 • Adjusted net income and EPS up 5% Y/Y Revenue 4,369 5,055 4,526 - Good results from Wealth Management, U.S. P&C and CM and solid CCPB2 328 747 24 results in Canadian P&C Net Re
Slide 10: Capital & Risk Weighted Assets
Capital & Risk Weighted Assets CET1 Ratio strong at 10.2% Common Equity Tier 1 Ratio (%) • Common Equity Tier 1 Ratio of 10.2%, ~10 bps higher than Q1’15 10.1 10.1 10.2 - ~15 bps decrease due to CET1 capital: 9.7 9.6 o retained earnings growth (~+20 bps) o lower AOCI, net of lower capital deductions
Slide 11: Canadian Personal & Commercial Banking
Canadian Personal & Commercial Banking Revenue growth of 4% Y/Y Adjusted ($MM)1 Q2 14 Q1 15 Q2 15 Revenue (teb) 1,538 1,628 1,605 • Adjusted net income up 1% Y/Y. Down 3% Q/Q due to impact of 3 fewer days PCL 131 132 143 • Revenue up 4% Y/Y reflecting higher balances and non- Expenses 764 834 812 in
Slide 12: U.S. Personal & Commercial Banking
U.S. Personal & Commercial Banking Good net income and loan growth Y/Y Adjusted (US$MM)1 Q2 14 Q1 15 Q2 15 • Adjusted net income of $219MM up 29% Y/Y in Canadian Revenue (teb) 714 720 707 dollar terms. Figures that follow are in U.S. dollars PCL 48 33 14 • Adjusted net income up 14% Y/Y and 3% Q/Q E
Slide 13: BMO Capital Markets
BMO Capital Markets Results up from Q1 reflecting good performance and benefits of diversified business model Adjusted ($MM)1 Q2 14 Q1 15 Q2 15 Trading Products 599 569 660 • Adjusted net income down 3% Y/Y; up 34% Q/Q Revenue I&CB Revenue 352 352 352 • Revenue up 6% Y/Y and 10% Q/Q due to higher re
Slide 14: Wealth Management
Wealth Management Net Income up 34% Y/Y; continued good growth in Traditional Wealth and higher rates in Insurance Adjusted1 ($MM) Q2 14 Q1 15 Q2 15 • Traditional Wealth net income up 23% Y/Y driven by good organic growth and the acquired F&C business; up 9% Q/Q Revenue 1,207 1,782 1,188 • Insurance
Slide 15: Corporate Services
Corporate Services • Adjusted net loss of $121MM compared to a net loss of Adjusted ($MM)1,2 Q2 14 Q1 15 Q2 15 $58MM in the prior year and $74MM in the prior quarter Revenue 25 55 (57) • Y/Y lower non-teb revenue primarily due to lower Group teb offset2 (138) (190) (100) purchased performing portfol
Slide 16: Risk Review
Risk Review For the Quarter Ended – April 30, 2015 May 27, 2015 Surjit Rajpal Chief Risk Officer Q2 15 Financial Results Month xx, 2015 16
Slide 17: Provision for Credit Losses (PCL)
Provision for Credit Losses (PCL) PCL By Operating Group (C$MM) Q2 141 Q1 15 Q2 15 • PCL consistent Q/Q Consumer – Canadian P&C 109 104 114 • Lower provisions in U.S. P&C Commercial – Canadian P&C 22 28 29 Total Canadian P&C 131 132 143 were offset by lower recoveries Consumer – U.S. P&C 21 30 24 in
Slide 18: Gross Impaired Loans (GIL) and Formations
Gross Impaired Loans (GIL) and Formations Formations Gross Impaired Loans By Industry (C$MM) Canada & Canada & • Formations increased Q/Q but U.S. Total U.S. Total Other Other1 remain below level of 4 quarters Consumer 163 135 298 392 774 1,166 last year Service Industries 2 10 12 21 164 185 • GIL d
Slide 19: Loan Portfolio Overview
Loan Portfolio Overview Gross Loans & Acceptances Canada & By Industry U.S. Total % of Total Other1 (C$B) Residential Mortgages 93.4 8.4 101.8 32% • Loans are well diversified by Personal Lending 48.7 15.6 64.3 20% geography and industry Cards 7.4 0.5 7.9 3% Total Consumer 149.5 24.5 174.0 55% • Exp
Slide 20: Canadian Residential Mortgages
Canadian Residential Mortgages • Total Canadian residential mortgage portfolio at $93.4B represents 43% of Canadian gross loans and acceptances ─ 61.3% of the portfolio is insured ─ Loan-to-value (LTV)1 on the uninsured portfolio is 58%2 ─ 69% of the portfolio has an effective remaining amortization
Slide 21: Trading Revenue vs. VaR
Trading Revenue vs. VaR The largest daily P&L gains for the quarter are as follows: • Feb 3 Primarily reflects normal trading and underwriting activity $22 million • Feb 27 Primarily reflects normal trading and underwriting activity $37 million • Mar 11 Primarily reflects normal trading and underwri
Slide 22: Appendix
APPENDIX Financial Results May 27, 2015 22
Slide 23: Canadian Personal & Commercial Banking – Balances
Canadian Personal & Commercial Banking – Balances Average Loans & Acceptances Y/Y Growth (C$B) 186.6 191.7 192.5 3% Loans • Total loan growth of 3% Y/Y 85.2 89.0 88.9 - Mortgages up 4% Y/Y - Consumer loans down 2% Y/Y due in part to reducing 44.2 43.5 43.2 exposure to certain auto loans 8.3 8.5 8.3
Slide 24: U.S. Personal & Commercial Banking – Commercial Balances
U.S. Personal & Commercial Banking – Commercial Balances All amounts in US$B Average Commercial Loans 34.5 35.3 30.9 0.6 0.5 3.8 3.9 1.0 3.6 Loans • Strong core C&I loan growth, up 17% Y/Y 30.1 30.9 • Core Commercial Real Estate portfolio up 11% Y/Y 26.3 Q2'14 Q1'15 Q2'15 C&I CRE Run-off Loans Avera
Slide 25: U.S. Personal & Commercial Banking – Personal Balances
U.S. Personal & Commercial Banking – Personal Balances All amounts in US$B Average Personal Loans Loans 31.6* 30.9* 30.7* • Core Business Banking up 3% Y/Y 4.9 Serviced Mortgages 5.0 5.1 • Indirect Auto up 2% Y/Y Mortgages** • Mortgage portfolio down 7% Y/Y 11.8 11.2 11.0 • Serviced mortgage portfol
Slide 26: Adjusting Items
Adjusting Items Adjusting1 items – Pre-tax ($MM) Q2 14 Q1 15 Q2 15 Amortization of acquisition-related intangible assets (28) (40) (40) Acquisition integration costs - (13) (11) Restructuring costs2 - - (149) Adjusting items included in reported pre-tax income (28) (53) (200) Adjusting1 items – Afte
Slide 27: Investor Relations Contact Information
Investor Relations Contact Information www.bmo.com/investorrelations E-mail: investor.relations@bmo.com Fax: 416.867.3367 LISA HOFSTATTER WILLA HOFFMANN Managing Director, Investor Relations Director, Investor Relations 416.867.7019 416.867.6956 lisa.hofstatter@bmo.com willa.hoffmann@bmo.com Financi