Bank Of Montreal · TSX:BMO

Bank Of Montreal — BMO Financial Group — Q3 2014 Earnings Presentation

29 slides from Bank Of Montreal's earnings presentation, Aug 29, 2014

1. Slide 1: Investor Presentation Q3 14

   Investor Presentation August 29, 2014 Q3 14

2. 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

3. 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 Q3’14 Results * Adjusted2 Reported Revenue ($B) 4.2 4.2  Established in 1817, Canada’s first bank Net Income ($B) 1.2 1.1  In Canada: a full service, universal ban

4. Slide 4: 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

5. Slide 5: Operating Group Overview

   Operating Group Overview Canadian Personal & Commercial Banking U.S. Personal & Commercial Banking • Over 7 million customers • Over 2 million customers • Over 900 branches; 2,900 ABMs • Over 600 branches; 1,300 ABMs • 2nd in Canadian business banking loan market • Footprint includes six contiguous

6. Slide 6: Reasons to Invest in BMO

   Reasons to Invest in BMO  Clear opportunities for growth across a diversified North American footprint  Large North American commercial banking businesses with advantaged market share  Good momentum in our well-established Canadian Personal & Commercial banking  Award-winning wealth franchise wi

7. Slide 7: Proven Strength in Commercial Banking

   Proven Strength in Commercial Banking Commercial loan growth remains robust across our large North American platform Canadian P&C U.S. P&C  Strong commercial lending growth1, balances up 9% Y/Y  Strong core C&I loan growth, up 18% Y/Y with and 2% Q/Q increases across all segments  Strong competit

8. Slide 8: Continued Momentum in our Canadian P&C Banking Business

   Continued Momentum in our Canadian P&C Banking Business  Strong adjusted net income growth of 8% Y/Y on good revenue growth and operating leverage  Operating leverage of 2.1% in Q3; 4th consecutive quarter above 2%  Adjusted efficiency ratio1 of 49.5% improved 100 bps Y/Y  Commercial loans2 up 9

9. Slide 9: Wealth Management

   Wealth Management Strong wealth franchise with good growth prospects; contributes over 20% of total bank revenue  Assets under management and administration of $776B BMO Nesbitt Burns (Full-service brokerage)  Highest client loyalty score for investment advisors Wealth Management (2013 Full Servic

10. Slide 10: BMO's Strategic Footprint

    BMO’s Strategic Footprint Combined population and GDP of BMO’s U.S. Midwest States is greater than Canada BMO’s strategic footprint is anchored by our business in the heartland of the continental economy. Our three operating groups serve individuals, businesses, governments and corporate customers r

11. Slide 11: Balanced and Disciplined Approach to Capital Management

    Balanced and Disciplined Approach to Capital Management Common Equity Tier 1 Ratio (%)  CET1 Ratio of 9.6% decreased approximately 10 bps from Q2’14 primarily due to the F&C acquisition, largely offset by 9.9 9.7 9.6 9.3 9.6 lower RWA and retained earnings growth  RWA of $226 billion at July 31, 2

12. Slide 12: Strong, Stable Long-Term Financial Trends

    Strong, Stable Long-Term Financial Trends Revenue ($B) Net Income & Pre-Provision Pre-tax Earnings ($B) PPPT: 10 year CAGR 7.2% 3.6 3.7 4.6 5.2 5.8 5.8 3.2 3.5 2.7 3.3 10 year CAGR 6.0% 15.9 16.1 13.9 Net Income: 10 year CAGR 8.8% 12.2 4.2 4.2 11.1 9.8 10.0 10.2 9.3 9.3 3.1 2.7 2.8 2.3 2.4 2.1 2.0 1

13. Slide 13: Advantaged Business Mix

    Advantaged Business Mix Diversified by both customer segment and geography Q3’14 Operating Group Q3’14 Net Income Revenue* by Geography Wealth U.S. Management 16% Canadian 23% Other P&C 6% 38% BMO CM Canada 22% 78% U.S. P&C 17% * Excludes Corporate Services Investor Presentation | Q3 2014 13

14. Slide 14: Q3 2014 - Financial Highlights

    Q3 2014 - Financial Highlights Adjusted Net Income of $1.2B with double digit underlying earnings growth1 Adjusted ($MM) 2,3 Q3 13 Q2 14 Q3 14  Growth reflects continued business momentum Revenue 3,842 4,041 4,215  Adjusted EPS up 4% Y/Y Expense 2,442 2,566 2,708  Double digit earnings growth, ex

15. Slide 15: Canadian Personal & Commercial Banking

    Canadian Personal & Commercial Banking Strong net income growth with continued good operating leverage Adjusted Net Income1 and Revenue ($MM)  Adjusted net income1 of $528MM up 8% Y/Y 1,660 1,564 1,566 1,602 1,560  Strong operating leverage of 2.1%; above 2% for the 4th consecutive quarter 528 489

16. Slide 16: U.S. Personal & Commercial Banking

    U.S. Personal & Commercial Banking Net income and pre-provision, pre-tax earnings up with improved revenue trend (Amounts in U.S.$MM) Adjusted Net Income1 and Revenue (US$MM) 707  Adjusted net income up 1% Y/Y and 4% Q/Q 696 688 693 691  Pre-provision, pre-tax earnings2 up 2% Y/Y and 4% Q/Q  Reve

17. Slide 17: Wealth Management

    Wealth Management Strong organic growth of 19% Y/Y excluding the impact of interest rates on insurance Adjusted Net Income1 and Revenue ($MM) 1,040  Adjusted net income up 7% Q/Q; Y/Y growth impacted by 988 867 867 878 rates 318  Traditional wealth adjusted net income up 27% Y/Y reflecting 69 224

18. Slide 18: BMO Capital Markets

    BMO Capital Markets Strong results reflect the benefit of a diversified business mix  Adjusted net income up 14% Y/Y driven by good revenue Adjusted Net Income1 and Revenue ($MM) growth, particularly in Investment and Corporate Banking 974 953 986 860 797  Strong ROE of 22.4% 269 277 306 306  Rev

19. Slide 19: Appendix

    APPENDIX Investor Presentation | Q3 2014 19

20. Slide 20: Canadian Personal & Commercial Banking – Balances

    Canadian Personal & Commercial Banking – Balances Average Loans & Acceptances Y/Y Growth (C$B) 187.2 189.6 7% 177.3 Loans 85.2 86.5 79.1  Total loan growth of 7% Y/Y and 1% Q/Q  Good personal lending growth¹, balances up 7% Y/Y and 43.5 44.2 44.1 1% Q/Q; mortgages up 9% Y/Y and 2% Q/Q 8.8 9.0 8.9

21. Slide 21: U.S. Personal & Commercial Banking – Commercial Balances

    U.S. Personal & Commercial Banking – Commercial Balances All amounts in U.S. $B Average Commercial Loans 31.6 Loans 30.9 27.7 1.0 0.8 3.7  Strong core C&I loan growth, up 18% Y/Y and 3% Q/Q with 3.6 1.7 increases across all segments 3.0  Core Commercial Real Estate portfolio continues to grow, up

22. Slide 22: U.S. Personal & Commercial Banking – Personal Balances

    U.S. Personal & Commercial Banking – Personal Balances All amounts in U.S. $B Average Personal Loans Loans 31.2* 31.1* 31.1* 4.6 4.9 4.9  Core Business Banking up 2% Y/Y and Q/Q; pipeline Serviced Mortgages remains strong Mortgages**  Indirect Auto up 15% Y/Y and 6% Q/Q 12.2 11.8 11.5  Serviced m

23. Slide 23: Loan Portfolio Overview

    Loan Portfolio Overview Gross Loans & Acceptances By Industry Canada & US Total % of Total  Loans are well diversified by Other1 (C$B) geography and industry Residential Mortgages 91.7 7.9 99.7 34% Personal Lending 49.3 15.0 64.3 22% Cards 7.5 0.5 8.0 3% Total Consumer 148.6 23.4 172.0 58% Financia

24. Slide 24: Provision for Credit Losses (PCL)

    Provision for Credit Losses (PCL) Improved PCL Q/Q PCL By Operating Group (C$MM) Q3 13 Q2 14 Q3 14  PCL improved Q/Q primarily due to Consumer – Canadian P&C 100 110 110 increased recoveries in Corporate Commercial – Canadian P&C 25 23 24 Services Total Canadian P&C 125 133 134 Consumer – US P&C 40

25. Slide 25: Canadian Residential Mortgages

    Canadian Residential Mortgages  Total Canadian residential mortgage portfolio at $91.7B represents 43% of Canadian gross loans and acceptances – smallest of the big five banks  64% of the portfolio is insured  Loan-to-value (LTV)1 on the uninsured portfolio is 58%2  68% of the portfolio has an e

26. Slide 26: 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

27. Slide 27: Economic Outlook and Indicators

    Economic Outlook and Indicators Canada United States Eurozone Economic Indicators (%)1 2013 2014E 2015E 2013 2014E 2015E 2013 2014E 2015E GDP Growth 2.0 2.3 2.5 2.2 2.1 3.1 (0.4) 0.8 1.2 Inflation 0.9 2.0 1.9 1.5 2.0 2.2 1.4 0.6 1.0 Interest Rate (3mth Tbills) 0.97 0.93 1.15 0.06 0.04 0.33 0.15 0.22

28. Slide 28: Adjusting Items

    Adjusting Items Adjusting1 items – Pre-tax ($MM) Q3’13 Q4’13 Q1’14 Q2’14 Q3’14 Credit-related items on the purchased performing loan portfolio 110 49 - - - Acquisition integration costs (49) (60) - - (9) Amortization of acquisition-related intangible assets (32) (31) (31) (28) (39) Decrease/(increas

29. Slide 29: 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

BMO Financial Group — Q3 2014 Earnings Presentation on 6ix