Bank Of Montreal · TSX:BMO
Bank Of Montreal — Q3 2012 Earnings Presentation
29 slides from Bank Of Montreal's earnings presentation, Aug 28, 2012
Slide 1: Investor Presentation – Q3 12
Investor Presentation For the Quarter Ended – July 31, 2012 Q3 12 August 28, 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: Strategic Highlights
Strategic Highlights For the Quarter Ended – July 31, 2012 Q3 12 August 28, 2012 Bill Downe President & Chief Executive Officer
Slide 4: Financial Results
Financial Results Our business continues to deliver consistent and attractive profitability within a sound risk framework C$ millions unless otherwise indicated Q3 11 Q2 12 Q3 12 Revenue 3,320 3,959 3,878 Strong adjusted1 results with net PCL 230 195 237 income up 18% Y/Y to over $1 billion Expens
Slide 5: Operating Group Performance
Operating Group Performance Over 75% of adjusted net income from retail businesses C$ millions unless otherwise indicated Adjusted2 Net Income P & C Banking P & C Banking Private Client BMO Canada U.S. Group Capital Markets (US$) 5%1 4% 11%3 3% Q/Q Growth 444 449 456 270 226 232 150 160 137 143 141
Slide 6: Financial Results
Financial Results For the Quarter Ended – July 31, 2012 Q3 12 August 28th 2012 Tom Flynn Executive Vice President & Chief Financial Officer
Slide 7: Q3 2012 - Financial Highlights
Q3 2012 - Financial Highlights Strong Results, Third Quarter Adjusted Income of $1.0B, up 18% Y/Y Common Net Specific Equity Revenue EPS ROE Productivity Income PCL Ratio (Basel II) Reported $3,878MM $970MM $1.42 14.5% 64.1% $229MM 10.3% Results Adjusted $3,677MM $1,013MM $1.49 15.2% 63.7% $116MM 10
Slide 8: Revenue
Revenue Y/Y revenue growth in all retail businesses Total Bank Adjusted Revenue (C$MM) Net Interest Margin Y/Y (bps) 16.0% 13.4% 8.5% 14.9% 8.8% Growth 3,670 3,743 3,727 3,677 3,380 217 221 213 210 1,969 203 1,996 2,092 2,012 NII 1,818 201 205 189 188 176 1,562 1,674 1,651 1,758 1,665 Q3 Q4 Q1 Q2 Q3
Slide 9: Non-Interest Expense
Non-Interest Expense Disciplined expense management Non-Interest Q2 12 Q3 12 Q/Q Y/Y Total Bank Adjusted Non-Interest Expense Q3 11 B/(W) B/(W) Expense ($MM) (C$MM) 2,341 2,378 2,357 2,342 Reported 2,221 2,499 2,484 1% (12)% Adjusted 2,069 2,357 2,342 1% (13)% 2,069 759 737 745 738 Salaries 666 Y/
Slide 10: Capital & Risk Weighted Assets
Capital & Risk Weighted Assets Capital position strong Basel II Q3 11 Q2 12 Q3 12 Common Shareholders’ Equity Common Equity Ratio (%)1 9.1 9.9 10.3 & Basel II Tier 1 Capital Tier 1 Capital Ratio (%) 11.5 12.0 12.4 Total Capital Ratio (%) 14.2 14.9 14.8 25.1 25.5 25.4 24.3 24.2 24.4 24.5 24.8 RWA ($B
Slide 11: Adjusting Items
Adjusting Items Adjusting1 items – Pre-tax Q3 11 Q2 12 Q3 12 ($MM) Credit-related items on the acquired M&I performing loan portfolio - 90 76 Run-off structured credit activities (51) 76 (15) Hedge costs related to foreign currency risk on purchase of M&I (9) - - M&I integration costs (53) (74) (105
Slide 12: Operating Groups – Q3 2012 Quick Facts
Operating Groups – Q3 2012 Quick Facts Over 75% of adjusted revenue and net income from retail businesses1 P&C Canada P&C U.S. Revenue up 1% Y/Y with volume growth across most Revenue up US$235MM Y/Y, reflecting benefit of the products acquisition Net income up 5% Y/Y and Q/Q on an actual loss
Slide 13: Personal & Commercial Banking – Canada
Personal & Commercial Banking – Canada Solid net income performance and good loan growth As Reported Q/Q Y/Y Q3 11 Q2 12 Q3 12 ($MM) B/(W) B/(W) Net income up 5% Y/Y and Q/Q on an actual loan Personal Revenue 963 961 963 0% 0% loss basis Commercial Revenue 579 562 593 6% 3% Y/Y revenue growth dr
Slide 14: Personal & Commercial Banking - U.S.
Personal & Commercial Banking - U.S. Net Income up Y/Y and Q/Q (Amounts in US$MM) As Reported Q/Q Y/Y Q3 11 Q2 12 Q3 12 (US$MM) B/(W) B/(W) Strong revenue and net income growth Y/Y due Revenue 504 738 739 0% 47% to acquired business PCL 54 84 83 1% (54)% Adjusted1 net income up 4% Q/Q on lower e
Slide 15: Private Client Group
Private Client Group Wealth business performing well; Insurance weaker in the quarter As Reported Q/Q Y/Y Q3 11 Q2 12 Q3 12 ($MM) B/(W) B/(W) Adjusted net income up 8% Y/Y Revenue 622 743 678 (9)% 9% Insurance business impacted by lower interest Expenses 488 553 544 2% (12)% rates in Q3’12 ($45M
Slide 16: BMO Capital Markets
BMO Capital Markets Good Q3 results given environment reflecting focus on execution and benefit of diversified business As Reported Q/Q Y/Y Q3 11 Q2 12 Q3 12 ($MM) B/(W) B/(W) Y/Y revenue down from relatively stronger Trading Products M&A and equity underwriting fees a year ago, 500 473 488 3% (3)
Slide 17: Corporate Services
Corporate Services Adjusted results up Y/Y and Q/Q Adjusted1 As Reported Q3 11 Q2 12 Q3 12 Q3 11 Q2 12 Q3 12 ($MM) ($MM) Revenue (teb) (94) (60) (114) Revenue (teb) (151) 172 87 PCL – Specific 24 (100) (140) PCL – Specific 24 (56) (28) – Collective -- -- -- – Collective (15) -- 8 Expenses 65 121 80
Slide 18: Group Net Income
Group Net Income Net Income, Adjusted1 B/(W) Q3 11 Q2 12 Q3 12 ($MM) Q/Q Y/Y P&C Canada 444 449 456 1% 2% P&C U.S. 99 136 145 7% 48% Total P&C 543 585 601 3% 11% PCG 105 150 115 (24)% 8% BMO Capital Markets 270 226 232 3% (14)% Corporate Services (62) 21 65 +100% +100% Total Bank 856 982 1,013 3% 18
Slide 19: P&C Canada – Product Balances & Market Share
Personal & Commercial Banking Canada – Product Balances & Market Share Personal Good lending growth with balances up 6.3% Y/Y and 2.8% Q/Q Deposit balances up 4.0% Y/Y and 1.5% Q/Q Market Share (%) Q3 11 Q4 11 Q1 12 Q2 12 Q3 12 Total personal lending market share up 16 bps Q/Q and personal dep
Slide 20: P&C U.S. – Commercial Balances
Personal & Commercial Banking U.S. – Commercial Balances All amounts in U.S. $B Solid C&I loan growth, with Q3’12 being the C&I ($B) - Average Core Commercial Real Estate ($B) - Average 3rd straight sequential quarter of growth since Q4’11; growth of 10.2% since Q4’11 C&I loans of $19.8B at July
Slide 21: P&C U.S. – Personal Balances
Personal & Commercial Banking U.S. – Personal Balances All amounts in U.S. $B Mortgages ($B) - Average Home Equity ($B) - Average Mortgages Serviced Mortgage Mortgage portfolio continues to reflect practice of selling originations in the 3.9 3.9 4.0 4.1 secondary market and some deleveraging 3.8
Slide 22: Risk Review
Risk Review For the Quarter Ended – July 31, 2012 Q3 12 August 28th 2012 Surjit Rajpal Executive Vice President & Chief Risk Officer
Slide 23: Loan Portfolio Overview
Loan Portfolio Overview Canadian and US portfolios are well diversified P&C business represents the majority of loans Retail portfolios are predominantly secured – 87% in Canada and 97% in the US Canada & By Industry % of Other US2 Total (C$ B) total Countries1 Residential Mortgages 73.9 8.1 8
Slide 24: Provision for Credit Losses (PCL)
Provision for Credit Losses (PCL) Q3 '12 adjusted specific provisions are $116MM (Q2 '12: $151MM) Recovery related to the Purchased Credit Impaired Loans is $(118)MM vs. Q2 '12 at $(117)MM By Business Line Segment Q3 11 Q2 12 Q3 12 (C$ MM) Consumer – P&C Canada 124 129 122 Commercial – P&C Canad
Slide 25: Specific Provision Segmentation – Legacy Portfolio
Specific Provision Segmentation – Legacy Portfolio Canadian provisions are $140MM (Q2 '12: $177MM) US Legacy provisions are $96MM (Q2 '12: $91MM) Other Countries provisions are recoveries of $2MM (Q2 '12: NIL) Consumer portfolio accounts for ~75% of legacy provisions in both the US and Canad
Slide 26: Impaired Loans and Formations
Impaired Loans and Formations Legacy portfolio formations (excluding M&I purchased performing portfolio) are lower for the quarter at $405MM (Q2 '12: $455MM) M&I Purchased Performing loan formations are $386MM (Q2 '12: $444MM). The potential for impairment and losses in this portfolio was adequa
Slide 27: Trading & Underwriting Net Revenues vs. Market Value Exposure
Trading & Underwriting Net Revenues vs. Market Value Exposure May 1, 2012 to July 31, 2012 (Presented on a Pre-Tax Basis) June 29 $36.5 MM June 26 $19.2 MM June 27 May 22 $18.4 MM $21.9MM July 24 $18.7 MM The largest daily P&L gains for the quarter are as follows: • May 22 – C$21.9MM which primarily
Slide 28: Canadian Residential Mortgages
Canadian Residential Mortgages Total Canadian portfolio $73.9B (Q2 '12: $70.5B) ~65% of the portfolio is insured (Q2 '12: ~70%) Average LTV1 of portfolio 61% (Q2 '12: 62%) o insured portfolio 64% (Q2 '12: 65%) o uninsured portfolio 56% (Q2 '12: 56%) Residential Mortgages by Province Insured Un
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 MICHAEL CHASE Director 416.867.5452 michael.chase@bmo.com ANDREW CHIN Senior Manager 416.867.