Bank Of Montreal · TSX:BMO
Bank Of Montreal — Q2 2012 Earnings Presentation
31 slides from Bank Of Montreal's earnings presentation, Jun 8, 2012
Slide 1: Investor Presentation Q2 12
Investor Presentation Q2 12 June 8 y 2012
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: Bank of Montreal (BMO Financial Group)
Bank of Montreal (BMO Financial Group) Top-ten North American Bank as measured by assets1 (8th) and market capitalization1 (9th) 100% ownership of Chicago-based BMO Harris Bank Q2 F2012 Results2 Listings Adjusted3 Revenue / Revenue NYSE, TSX (Ticker: BMO) C$3.7B (US$3.8B) / C$4.0B (US$4.0B) Shar
Slide 4: BMO Financial Group – North American Footprint
BMO Financial Group – North American Footprint P&C Canada (924 branches) P&C US (663 branches) Private Client Group BMO Capital Markets Investor Presentation • Q2 2012 3
Slide 5: Reasons to Invest in BMO
Reasons to Invest in BMO Clear and attractive investor proposition Clear growth strategy X Consistent and focused North American growth strategy X Growing global presence to support our customers X Commitment to our medium-term financial objectives Well-positioned businesses in the current envir
Slide 6: Economic Outlook
Economic Outlook Canada The Canadian economy continues to grow at a modest pace, held back by the strong Canadian dollar, elevated household debt and fiscal consolidation, but supported by low interest rates and firm commodity prices Modest GDP growth of 2.0% is expected in 2012, led by business
Slide 7: Economic Indicators
Economic Indicators North America should grow modestly, with the U.S. outpacing Canada for first time in 7 years Canada United States Eurozone Economic Indicators (%)1 2011 2012E 2013E 2011 2012E 2013E 2011 2012E 2013E GDP Growth 2.5 2.0 2.5 1.7 2.4 2.6 1.5 (0.2) 0.8 Inflation 2.9 2.2 2.1 3.1 2.3 2.
Slide 8: Systemic Differences Between Canadian & U.S. Banks
Systemic Differences Between Canadian & U.S. Banks Canada U.S. Mature oligopoly: 6 chartered banks with a Fragmented market single regulator (OSFI) Multiple regulators Almost no subprime in this market Governed by the Bank Act Choice of State vs. National Charter allows Foreign ownersh
Slide 9: Operating Group - Overview
Operating Group - Overview Personal and Commercial Banking - Canada Q2 YTD F2012 Adjusted1 Revenue by Over 7 million customers Operating Group (C$MM) Over 900 branches Access to over 2,100 automated banking machines Personal and Commercial Banking – U.S. Over 2 million customers Total Over
Slide 10: Q2 2012 - Financial Highlights
Q2 2012 - Financial Highlights Another Strong Quarter, Second Quarter Results of $1.03B, up 27% Y/Y Common Net Specific Equity Revenue EPS ROE Productivity Income PCL Ratio (Basel II) Reported $3,959MM $1,028MM $1.51 16.2% 63.1% $195MM 9.9% Results Adjusted $3,727MM $982MM $1.44 15.4% 63.2% $151MM 9
Slide 11: Adjusting Items
Adjusting Items1 Adjusting items – Pre-tax Q2 11 Q1 12 Q2 12 ($MM) Credit-related items on the acquired M&I performing loan portfolio - 184 90 Run-off structured credit activities 100 136 76 Hedge costs related to foreign currency risk on purchase of M&I (11) - - M&I integration costs (25) (70) (74)
Slide 12: Diversified Business Mix with Retail Focus
Diversified Business Mix with Retail Focus Over 75% of adjusted revenue and adjusted net income from retail businesses Q2 12 Adjusted Revenue by Q2 12 Adjusted Net Income by Operating Group (C$MM) - $3,787MM* Operating Group1 (C$MM) - $961MM* P&C PCG P&C (Wealth PCG (Personal & (Personal & Managemen
Slide 13: Revenue
Revenue Y/Y revenue growth in all retail businesses Total Bank Adjusted Revenue (C$MM) Net Interest Margin Y/Y (bps) 6.1% 16.0% 13.4% 8.5% 14.9% Growth 3,670 3,743 3,727 3,244 3,378 228 221 217 213 210 1,996 2,092 1,969 NII 1,708 1,819 182 176 205 201 189 1,536 1,559 1,674 1,651 1,758 Q2 Q3 Q4 Q1 Q2
Slide 14: Non-Interest Expense
Non-Interest Expense Expenses being managed closely and focused on longer term productivity improvements Non-Interest Q2 11 Q1 12 Q2 12 Q/Q Y/Y Total Bank Adjusted Non-Interest Expense Expense ($MM) B/(W) B/(W) (C$MM) 2,341 2,378 2,357 Reported 2,030 2,554 2,499 2% (23)% Adjusted 1,994 2,378 2,357 1
Slide 15: Capital & Risk Weighted Assets
Capital & Risk Weighted Assets Capital position strong Basel II Q2 11 Q1 12 Q2 12 Common Shareholders’ Equity Common Equity Ratio (%)1 10.7 9.6 9.9 & Basel II Tier 1 Capital Tier 1 Capital Ratio (%) 13.8 11.7 12.0 Total Capital Ratio (%) 17.0 14.6 14.9 24.3 25.1 24.2 24.4 24.5 24.8 RWA ($B) 159 209
Slide 16: Personal & Commercial Banking Canada
Personal & Commercial Banking Canada We remain focused on making money make sense for our customers Revenue and Net Income* Q2’12 net income up 7.8% Y/Y and on an actual loss basis 8.5%; (C$MM) consistent Q/Q despite fewer days Positive operating leverage of 2.3% reflecting efforts around effici
Slide 17: 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 3.8% Commercial Market Share (%) 1 Q2 11 Q3 11 Q4 11 Q1 12 Q2 12 Y/Y total commercial loan and acceptance balances up $1.2B or 3.2% Total P
Slide 18: Personal & Commercial Banking U.S.
Personal & Commercial Banking U.S. Y/Y growth reflects benefit of acquisition and solid organic revenue growth Q2’12 revenue and net income more than doubled Y/Y due to the Revenue and Adjusted Net Income* acquired business (US$MM) Commercial & Industrial loan growth of $0.8B Q/Q; 16% on an annu
Slide 19: Personal & Commercial Banking U.S. – Commercial Balances
Personal & Commercial Banking U.S. – Commercial Balances All amounts in U.S. $B Second straight quarter of C&I loan growth post-acquisition. Growth of $0.8B Q/Q or 4.1% Continued strong growth, representing a 16% annualized rate, in Corporate Finance and Financial Institutions segments, with str
Slide 20: Personal & Commercial Banking U.S. – Personal Balances
Personal & Commercial Banking U.S. – Personal Balances All amounts in U.S. $B Y/Y product balances up significantly driven by the acquired business Mortgage portfolio continues to reflect practice of selling originations in the secondary market and some deleveraging Home Equity portfolio refle
Slide 21: Private Client Group
Private Client Group Best financial performance in 2 years confirms sound underlying business fundamentals Strong Q2’12 adjusted net income of $150 million, up 62% Y/Y Revenue and Net Income* (C$MM) Excluding insurance, revenues up 18% Y/Y due to contributions from acquisitions and organic growt
Slide 22: BMO Capital Markets
BMO Capital Markets Good results reflect focus on execution and benefit of diversified business mix Net income up 14% Q/Q in a better capital markets environment; in line Revenue and Net Income* with last year (C$MM) Revenues up Q/Q due to a rebound in investment & corporate banking Diversifie
Slide 23: Loan Portfolio Overview
Loan Portfolio Overview Canadian and US portfolios are well diversified P&C business represents the majority of loans X Retail portfolios are predominantly secured – 88% in Canada and 97% in the US By Segment Canada & % of Other US2 Total (C$B) total Countries1 Residential Mortgages 70.5 8.0 78.
Slide 24: Provision for Credit Losses
Provision for Credit Losses Q2 '12 Adjusted specific provisions are $151MM Business Segment (Q1 '12: $91MM) (By Business Line Segment) Q2 ‘11 Q1 ‘12 Q2 ‘12 X Lower recovery related to the Purchased (C$ MM) Credit Impaired Loans at $(117)MM vs. Consumer – P&C Canada 138 125 129 $(142)MM Commercial
Slide 25: Liquidity and Funding Strategy
Liquidity and Funding Strategy BMO’s large base of customer deposits, along with our strong capital base, reduces reliance on wholesale funding. Our wholesale funding principles seek to match the term of assets with the term of funding (e.g. to fund loans with longer term funds). In addition, ou
Slide 26: Issuance
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 wholesa
Slide 27: 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 28: Sustainability at BMO
Sustainability at BMO Companies are judged by how well they manage the sustainability impacts that can affect performance. For a Financial Institution, these include: • Corporate Governance • Ethical Conduct • Human Capital Development • Access to Financial Services / Financial Literacy • Environmen
Slide 29: Differentiated Customer-Focused Strategy
Differentiated Customer-Focused Strategy Strategic Priorities Drive quality earnings growth across all North Relentless Customer Focus 1 American personal and commercial banking businesses by focusing on industry-leading Remain focused on our strategy and our customer experience and enhancing oper
Slide 30: Looking Ahead…
Looking Ahead… We have the business platform, balance sheet and expertise to generate quality growth We’re confident in our ability to perform strongly against peers through a number of differentiated growth levers: Continued benefits from acquired business; Strength in commercial banking north an
Slide 31: 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 MICHAEL CHASE ANDREW CHIN Head, Investor Relations Director Senior Manager 416.867.6656 416.867.5452 416.867.7019 sharon.hawardlaird@bmo.com michael.chase@bmo