Slide 1: BMO Financial Group Investor Presentation Q4 18
BMO Financial Group Investor Presentation For the Quarter Ended October 31, 2018 December 4, 2018 Q4 18
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
Slide 4: F2018 - Financial Highlights
F2018 - Financial Highlights Adjusted1 Reported • Adjusted1 net income up 9% Y/Y Net Income $5,979MM $5,450MM (reported up 2%) EPS $8.99 $8.17 • Adjusted1 EPS up 10% Y/Y (reported up 3%) • Positive operating leverage2, having achieved Operating 1.2% 2.5% 2% in each of the last two years Leverage2 •
Slide 5: U.S. Operations
U.S. Operations U.S. segment continuing to deliver strong results • U.S. segment represents 28% of the bank’s U.S. Segment Reported Adjusted1 adjusted1 earnings (US$MM) F2018 F2017 F2016 F2018 F2017 F2016 • F2018 adjusted1 earnings up 26% Y/Y Revenue 5,679 5,413 5,127 5,679 5,413 5,127 led by strong
Slide 6: Strategic Priorities
Strategic Priorities • Well-diversified, double-digit commercial loan Drive leading growth in priority growth and good deposit growth areas by earning customer loyalty • Improved loyalty scores across businesses • Established EI3 Group to drive enterprise-wide, Simplify, speed up, and improve sustai
Slide 7: Financial Results Q4 18
Financial Results For the Quarter Ended October 31, 2018 Tom Flynn Chief Financial Officer Q4 18
Slide 8: F2018 - Financial Highlights
F2018 - Financial Highlights Good full year performance with strong growth in the P&C businesses • Adjusted1 EPS $8.99, up 10% Y/Y (reported up 3%) Reported Adjusted1 • Adjusted1 net income up 9% (reported up 2%) ($MM) F2018 F2017 F2018 F2017 2 – U.S. Segment adjusted1 net income up 26% Y/Y (reporte
Slide 9: Q4 2018 - Financial Highlights
Q4 2018 - Financial Highlights Adjusted1 net income up 17% Y/Y, with strong growth in P&C businesses • Adjusted1 EPS $2.32, up 19% Y/Y (reported up 42%) Reported Adjusted1 • Adjusted1 net income up 17% (reported up 38%) ($MM) Q4 18 Q3 18 Q4 17 Q4 18 Q3 18 Q4 17 2 – U.S. Segment adjusted1 net income
Slide 10: Strong Capital Position
Strong Capital Position Capital position strong with CET1 Ratio at 11.3% Common Equity Tier 1 Ratio +37 bps -23 bps -22 bps 11.4% -4 bps +1 bp 11.3% Q3 2018 Internal capital Higher source Acquisition Share Other Q4 2018 generation currency RWA repurchases Basis points may not add due to rounding. •
Slide 11: Canadian Personal & Commercial Banking
Canadian Personal & Commercial Banking Net income up 8% Y/Y with continued momentum in commercial business • Adjusted1 and reported net income up 8% Y/Y Reported Adjusted1 • Revenue up 4% Y/Y ($MM) Q4 18 Q3 18 Q4 17 Q4 18 Q3 18 Q4 17 – Average loans up 4% Y/Y. Commercial2 up 12%; Revenue (teb) 1,968
Slide 12: U.S. Personal & Commercial Banking
U.S. Personal & Commercial Banking Continued strong performance Figures that follow are in U.S. dollars Reported Adjusted1 • Adjusted1 net income up 31% Y/Y (reported up 33% Y/Y) (US$MM) Q4 18 Q3 18 Q4 17 Q4 18 Q3 18 Q4 17 • Revenue up 8% Y/Y Revenue (teb) 996 985 924 996 985 924 Total PCL 60 31 52
Slide 13: BMO Capital Markets
BMO Capital Markets Solid performance, primarily driven by I&CB • Adjusted1 and reported net income lower than prior year Reported Adjusted1 reflecting current market conditions impacting Trading ($MM) Q4 18 Q3 18 Q4 17 Q4 18 Q3 18 Q4 17 Products as well as higher expenses Trading Products 629 638 6
Slide 14: BMO Wealth Management
BMO Wealth Management Good underlying net income growth Y/Y in Traditional Wealth • Adjusted1 net income up 21% Y/Y (reported up 25%) Reported Adjusted1 – Traditional Wealth down 2% Y/Y (reported flat); legal ($MM) Q4 18 Q3 18 Q4 17 Q4 18 Q3 18 Q4 17 provision, net of favourable U.S. tax item, had 8
Slide 15: Corporate Services
Corporate Services • Adjusted1 net loss for the quarter $68MM compared with Reported2 Adjusted1,2 $102MM in the prior year due to higher revenues and ($MM) Q4 18 Q3 18 Q4 17 Q4 18 Q3 18 Q4 17 lower expenses. Reported net income $131MM compared Revenue 25 4 (18) 25 4 (18) to a net loss of $158MM in t
Slide 16: Risk Review Q4 18
Risk Review For the Quarter Ended October 31, 2018 Patrick Cronin Chief Risk Officer Q4 18
Slide 17: Provision for Credit Losses (PCL)
Provision for Credit Losses (PCL) PCL By Operating Group Q4 18 Q3 18 Q4 171 • Q4’18 PCL ratio on Impaired Loans at 18 bps, ($MM) flat Q/Q Consumer – Canadian P&C 99 96 98 • Allowance for Credit Losses on Performing Commercial – Canadian P&C 19 24 32 Loans decreased PCL by $2 million Total Canadian P
Slide 18: Gross Impaired Loans (GIL) and Formations
Gross Impaired Loans (GIL) and Formations By Industry Formations Gross Impaired Loans • GIL ratio 48 bps, down 5 bps Q/Q ($MM, as at Q4 18) Canada & Canada & U.S. Total U.S. Total Other Other1 Consumer 203 75 278 426 470 896 Service Industries 5 18 23 57 180 237 Agriculture 7 22 29 55 154 209 Transp
Slide 19: Canadian Residential Mortgages
Canadian Residential Mortgages • Total Canadian residential mortgage portfolio Residential Mortgages by Region ($B) at $108.0B, representing 27% of total loans $108.0 – 68% of the portfolio has an effective Uninsured remaining amortization of 25 years or less Insured – Less than 1% of our uninsured
Slide 20: Oil and Gas Portfolio
Oil and Gas Portfolio Oil & Gas Drawn Exposure ($B) • $9.2B drawn exposure % of Total Loans • WCS drawn exposure: – 15% of total Oil & Gas; 0.4% of total loans – 78% investment grade • Of the total Exploration & Development 9.2 drawn exposure, approximately two-thirds is 2.3% borrowing base lending
Slide 21: Appendix
CO O APPENDIX
Slide 22: Canadian Personal and Commercial Banking - Balances
Canadian Personal and Commercial Banking - Balances Average Gross Loans & Acceptances ($B) Average Deposits ($B) 219.1 224.8 227.0 159.8 162.5 154.3 99.7 100.0 100.3 99.5 101.0 98.1 45.3 45.7 45.5 8.9 8.9 8.6 64.7 70.9 72.4 56.2 60.3 61.5 Q4'17 Q3'18 Q4'18 Q4'17 Q3'18 Q4'18 Commercial Loans & Accept
Slide 23: U.S. Personal & Commercial Banking – Balances
U.S. Personal & Commercial Banking – Balances Average Gross Loans & Acceptances (US$B) Average Deposits (US$B) 84.71 86.71 78.81 5.2 5.2 5.2 11.5 73.7 11.5 Personal 70.5 Loans 65.0 9.5 6.0 5.8 5.5 3.5 3.6 25.7 3.2 1.5 1.3 23.6 1.7 22.1 Commercial 57.2 59.1 Loans 53.7 46.8 48.0 42.9 Q4'17 Q3'18 Q4'18
Slide 24: Loan Portfolio Overview
Loan Portfolio Overview Gross Loans & Acceptances Canada & By Industry U.S. Total % of Total • Loans are well diversified by Other1 ($B, as at Q4 18) geography and industry Residential Mortgages 108.0 11.6 119.6 29% Consumer Instalment and Other 53.2 10.0 63.2 16% Personal Cards 7.8 0.5 8.3 2% Total
Slide 25: Trading-related Net Revenues and Value at Risk
Trading-related Net Revenues and Value at Risk August 1, 2018 to October 31, 2018 (pre-tax basis and in millions of Canadian dollars) 70 60 50 40 30 20 10 0 (10) (20) (30) Daily Revenue Total Trading VaR Risk Review December 4, 2018 25
Slide 26: Adjusting Items
Adjusting Items Adjusting items1 - Pre-tax ($MM) Q4 18 Q3 18 Q4 17 F2018 F2017 Amortization of acquisition-related intangible assets2 (31) (28) (34) (116) (149) Acquisition integration costs2 (18) (8) (24) (34) (87) Benefit from the remeasurement of an employee benefit liabilitiy3 277 - - 277 - Rest
Slide 27: 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