Bank Of Montreal · TSX:BMO
Bank Of Montreal — BMO Financial Group — Q1 2018 Earnings Presentation
26 slides from Bank Of Montreal's earnings presentation, Feb 27, 2018
Slide 1: BMO Financial Group Investor Presentation Q1 18
BMO Financial Group Investor Presentation For the Quarter Ended January 31, 2018 February 27, 2018 Q1 18 Investor Presentation January 2018 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: Darryl White, Chief Executive Officer
Darryl White Chief Executive Officer Q1 18 Investor Presentation January 2018 3
Slide 4: Q1 F2018 Financial Highlights
Q1 F2018 Financial Highlights Strong operating results benefiting from diversified business mix Adjusted1 Reported • Adjusted1 net income down 7% (reported down 35% Net Income $1,422MM $973MM due to revaluation of U.S. net deferred tax asset) • Adjusted1 EPS down 7% (reported down 36%) EPS $2.12 $1.
Slide 5: U.S. Operations
U.S. Operations Increasing contribution from U.S. segment Adjusted1 • The U.S. segment is a strategic strength for U.S. Segment Reported BMO, representing ~25% of the bank’s (US$MM) Q1 18 Q4 17 Q1 17 Q1 18 Q4 17 Q1 17 adjusted1 earnings Revenue 1,397 1,397 1,317 1,397 1,397 1,317 PCL on impaired loa
Slide 6: Operating Group Performance
Operating Group Performance Good operating performance particularly in P&C and Wealth businesses Operating Group • Good underlying earnings growth and positive operating Adjusted1 Net Income – LTM leverage in Canadian P&C driven by consistent, profitable loan and deposit growth and higher margins BM
Slide 7: Key Strategic Areas of Focus
Key Strategic Areas of Focus Strong performance in U.S. segment with continued growth opportunities Accelerating transformation through technology investment and deployment Focused on efficiency, building on good progress already made Employees, culture and values that are a competitive advantage St
Slide 8: Financial Results
Financial Results For the Quarter Ended January 31, 2018 Tom Flynn Chief Financial Officer Q1 18 Investor Presentation January 2018 8
Slide 9: Q1 2018 - Financial Highlights
Q1 2018 - Financial Highlights Good performance with strong operating revenue growth in P&C businesses • Reported EPS $1.43 and net income $973MM Reported Adjusted1 – Includes $425MM charge for revaluation of U.S. net deferred tax ($MM) Q1 18 Q4 17 Q1 17 Q1 18 Q4 17 Q1 17 asset given U.S. tax reform
Slide 10: Strong Capital Position
Strong Capital Position Well capitalized with CET1 Ratio at 11.1% Common Equity Tier 1 Ratio +28 bps +2 bps -11 bps -17 bps 11.4% -24 bps 11.1% 2017 Q4 Internal capital Other Share U.S. net DTA Higher source 2018 Q1 generation1 repurchases revaluation currency RWA Basis points may not add due to rou
Slide 11: Canadian Personal & Commercial Banking
Canadian Personal & Commercial Banking Continued good operating performance and revenue growth • Net income of $647MM down (13)% Y/Y Reported Adjusted1 – Negative impact of 22% from net gains3 in Q1’18 and Q1’17 ($MM) Q1 183 Q4 17 Q1 173 Q1 183 Q4 17 Q1 173 • Revenue down 2% Y/Y – 8% net negative im
Slide 12: U.S. Personal & Commercial Banking
U.S. Personal & Commercial Banking Strong net income and revenue growth with positive operating leverage • Reported net income of $310MM, up 24% Y/Y Reported Adjusted1 • Adjusted1 net income of $321MM, up 23% Y/Y (US$MM) Q1 18 Q4 17 Q1 17 Q1 18 Q4 17 Q1 17 Figures that follow are in U.S. dollars Rev
Slide 13: BMO Capital Markets
BMO Capital Markets With less constructive markets and lower client activity, net income down from strong Q1’17 • Adjusted1 and reported net income down from strong Reported Adjusted1 performance in prior year reflecting market conditions ($MM) Q1 18 Q4 17 Q1 17 Q1 18 Q4 17 Q1 17 • Revenue down 11%
Slide 14: BMO Wealth Management
BMO Wealth Management Good business growth • Reported net income $266MM Reported Adjusted1 • Adjusted1 net income $276MM, down 3% Y/Y ($MM) Q1 18 Q4 174 Q1 17 Q1 18 Q4 174 Q1 17 – Traditional Wealth up 8% Y/Y (reported up 12%) from business growth and improved equity markets Net Revenue2 1,244 1,111
Slide 15: Corporate Services
Corporate Services • Adjusted1 net loss of $93MM compared to a net loss of Reported2 Adjusted1,2 $127MM in the prior year. Reported net loss of $521MM compared to a net loss of $141MM in the prior year ($MM) Q1 18 Q4 17 Q1 17 Q1 18 Q4 17 Q1 17 • Current quarter reported results include one-time non-
Slide 16: Risk Review
Risk Review For the Quarter Ended January 31, 2018 Surjit Rajpal Chief Risk Officer Q1 18 Investor Presentation January 2018 16
Slide 17: Provision for Credit Losses (PCL)
Provision for Credit Losses (PCL) PCL By Operating Group Q1 18 Q4 17 Q1 17 • Q1’18 PCL ratio on Impaired Loans at 19 bps, ($MM) down 3 bps Q/Q Consumer – Canadian P&C 91 98 94 • Allowance for Credit Losses on Performing Loans Commercial – Canadian P&C 6 32 19 declined, reducing PCL by $33 million, w
Slide 18: Gross Impaired Loans (GIL) and Formations
Gross Impaired Loans (GIL) and Formations Formations Gross Impaired Loans • GIL ratio 57 bps, down 2 bp Q/Q By Industry ($MM, as at Q1 18) Canada & Canada & U.S. Total U.S. Total Other Other1 Consumer 213 83 296 475 480 955 Agriculture 6 4 10 51 158 209 Service Industries 3 65 68 56 224 280 Transpor
Slide 19: Canadian Residential Mortgages
Canadian Residential Mortgages Residential Mortgages by Region ($B) $106.4 • Total Canadian residential mortgage portfolio at $106.4B, representing 28% of total loans Uninsured ─ 68% of the portfolio has an effective Insured remaining amortization of 25 years or less ─ Less than 1% of our uninsured
Slide 20: Appendix
APPENDIX Strategic Highlights December 5, 2017 20
Slide 21: Canadian Personal and Commercial Banking - Balances
Canadian Personal and Commercial Banking - Balances Average Gross Loans & Acceptances ($B) Average Deposits ($B) 212.8 219.1 220.2 154.3 157.6 150.1 100.3 100.3 98.4 95.0 98.1 98.4 44.9 45.5 45.4 8.6 8.6 8.8 60.9 64.7 65.7 55.1 56.2 59.2 Q1'17 Q4'17 Q1'18 Q1'17 Q4'17 Q1'18 Commercial Loans & Accepta
Slide 22: U.S. Personal & Commercial Banking – Balances
U.S. Personal & Commercial Banking – Balances Average Gross Loans & Acceptances (US$B) Average Deposits (US$B) 76.0* 78.8* 80.1* 5.2 5.2 5.3 9.5 11.3 67.6 9.7 Personal 67.1 65.0 5.6 5.7 Loans 5.5 3.2 3.2 3.8 1.7 1.5 23.3 1.7 24.7 22.1 Commercial 50.0 53.6 53.2 Loans 42.4 42.9 44.3 Q1'17 Q4'17 Q1'18
Slide 23: Loan Portfolio Overview
Loan Portfolio Overview Gross Loans & Acceptances Canada & By Industry Other1 U.S. Total % of Total • Loans are well diversified by ($B, as at Q1 18) geography and industry Residential Mortgages 106.4 10.7 117.2 32% Consumer Instalment and Other 51.9 9.2 61.1 16% Personal Cards 7.5 0.5 8.0 2% Total
Slide 24: Trading-related Net Revenues and Value at Risk
Trading-related Net Revenues and Value at Risk November 1, 2017 to January 31, 20181 (pre-tax basis and in millions of Canadian dollars) 35 30 25 20 15 10 5 0 (5) (10) Daily Revenue Total Trading VaR 1 The composition of Net Revenues has been revised to remove certain non-trading activities that are
Slide 25: Adjusting Items
Adjusting Items Adjusting items1 - Pre-tax ($MM) Q1'18 Q4'17 Q1'17 Amortization of acquisition-related intangible assets2 (28) (34) (37) Acquisition integration costs2 (4) (24) (22) Restructuring costs3 - (59) - Adjusting items included in reported pre-tax income (32) (117) (59) Adjusting items1 - A
Slide 26: 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 Strategic Highlights February 27, 2018 26