Bank Of Montreal · TSX:BMO

Bank Of Montreal — Q3 2012 Earnings Presentation

31 slides from Bank Of Montreal's earnings presentation, Sep 13, 2012

  1. Slide 1: Investor Presentation Q3 12

    Investor Presentation September 13, 2012 Q3 12

  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: Bank of Montreal (BMO Financial Group)

    Bank of Montreal (BMO Financial Group) Top ten North American bank1 Who we are YTD Q3 2012 Results (C$ billions) Adjusted2 Reported Established in 1817, BMO Financial Group serves more than 12 million personal, commercial, corporate and institutional customers in North America Revenue 11.1 12.0 and

  4. Slide 4: BMO Financial Group – North American Footprint

    BMO Financial Group – North American Footprint 9th largest bank in North America1; 2nd largest Canadian bank by retail branches in Canada and the U.S. Personal & Commercial (1,581 branches) Private Client Group 2 $198B Customer Deposits BMO Capital Markets 1 As measured by market capitalization as a

  5. Slide 5: BMO – A Strong Foundation

    BMO – A Strong Foundation We have the business platform, balance sheet and expertise to generate quality growth  Diversified business mix with retail focus  Over 75% of operating group revenue and adjusted net income from retail businesses  Commercial banking is a strength in Canada (#2 in lendin

  6. Slide 6: Economic Outlook

    Economic Outlook  The Canadian economy continues to grow at a modest pace, held back by the strong Canada Canadian dollar, weak global demand, 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 b

  7. Slide 7: Economic Indicators

    Economic Indicators North America should continue to grow modestly, while the eurozone economy remains very weak Canada United States Eurozone Economic Indicators (%)1 2011 2012E 2013E 2011 2012E 2013E 2011 2012E 2013E GDP Growth 2.4 2.0 2.0 1.8 2.2 2.0 1.5 (0.5) 0.3 Inflation 2.9 1.6 1.8 3.1 2.0 2.

  8. 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 single  Fragmented market regulator (OSFI)  Multiple regulators  Almost no subprime in this market  Governed by the Bank Act  Choice of State vs. National Charter allows  Foreign ownersh

  9. Slide 9: Operating Group Overview

    Operating Group Overview Over 75% of operating group revenue and adjusted net income from retail businesses Personal and Commercial Banking - Canada Q3 YTD F2012 Adjusted1 Revenue by  Over 7 million customers Operating Group (C$MM)  Over 920 branches and access to over 2,500 automated banking mach

  10. Slide 10: 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

  11. 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

  12. 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 Q3 12 Adjusted Revenue by Q3 12 Adjusted Net Income by Operating Group (C$MM) - $3,791MM Operating Group1 (C$MM) - $948MM P&C PCG P&C (Wealth PCG (Personal & (Personal & Management)

  13. Slide 13: 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

  14. Slide 14: 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/

  15. Slide 15: 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

  16. Slide 16: Personal & Commercial Banking Canada

    Personal & Commercial Banking Canada We remain focused on making money make sense for our customers  Q3’12 net income up 2.4% Y/Y and 1.5% Q/Q; on an actual loss basis up Revenue and Net Income* ~5% Y/Y and Q/Q (C$MM)  Good volume growth in Q3’12 1,542 1,558 1,556 1,523 1,556  Commercial loans up

  17. Slide 17: Personal & Commercial Banking Canada – Product Balances & Market Share

    Personal & Commercial Banking Canada – Product Balances & Market Share Market share gains in all loan and deposit products Personal  Mortgage balances up 6.1% Y/Y and 3.8% Q/Q  Good lending growth with balances up 6.3% Y/Y and 2.8% Q/Q Market Share (%) Q3 11 Q4 11 Q1 12 Q2 12 Q3 12  Deposit balan

  18. Slide 18: Personal & Commercial Banking U.S.

    Personal & Commercial Banking U.S. Business performing well with disciplined expense management Revenue and Adjusted Net Income*  Q/Q adjusted net income up 4% on lower expenses (US$MM) 781 771  Y/Y revenue and net income higher due to the acquired business 738 739  Continued good volume trends i

  19. Slide 19: Personal & Commercial Banking 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

  20. Slide 20: Personal & Commercial Banking 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 

  21. Slide 21: Private Client Group

    Private Client Group Wealth businesses performing well; creating new sources of growth  Good Q3’12 results with adjusted net income up 8% Y/Y and up Revenue and Adjusted Net Income* 10% excluding Insurance; Insurance impacted by movements in (C$MM) long-term interest rates  Excluding insurance, re

  22. Slide 22: BMO Capital Markets

    BMO Capital Markets Good results reflect focus on execution and benefit of diversified revenue mix  Net income lower by 14% Y/Y and 3% higher Q/Q Revenue and Net Income* (C$MM)  Revenues up Q/Q mainly due to higher trading and corporate banking revenue  Productivity ratio of 59.6% 822 789 806 772

  23. 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

  24. 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

  25. 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

  26. 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 wholesale

  27. 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

  28. Slide 28: Sustainability at BMO

    Sustainability at BMO Our Sustainability progress depends on how well we understand our impact on the world around us and are able to manage social, environmental, and governance concerns associated with our business. Sustainable growth comes from operating with integrity & respect for our stakehold

  29. Slide 29: Differentiated Customer-Focused Strategy

    Differentiated Customer-Focused Strategy Strategic Priorities Relentless Customer Focus Drive quality earnings growth across all North American 1 personal and commercial banking businesses by focusing on industry-leading customer experience and enhancing operating and sales force productivity.  Rem

  30. Slide 30: Reasons to Invest in BMO

    Reasons to Invest in BMO Continue to feel good about our businesses and differentiated levers for earnings growth  Upside from U.S. businesses  Stronger, expanded U.S. banking and wealth management platforms  Continued benefits from acquired retail businesses  Expect improved performance from in

  31. 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 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.

Bank of Montreal (BMO Financial Group) — Q3 2012 Earnings Presentation on 6ix