Bank Of Montreal · TSX:BMO
Bank Of Montreal — Q4 2024 Earnings Presentation
44 slides from Bank Of Montreal's earnings presentation, Dec 5, 2024
Slide 1: Investor Presentation Q4 24
BMO Financial Group Investor Presentation For the Quarter Ended October 31, 2024 December 5, 2024 Q4 24
Slide 2: Caution Regarding Forward-Looking Statements
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 securities regulators or the U.S. Securities and Ex
Slide 3: Darryl White, Chief Executive Officer
Darryl White Chief Executive Officer Q4 24
Slide 4: Good operating performance
Good operating performance Positive operating leverage and PPPT2 growth across all operating groups F2024 Net Income EPS PPPT2 Y/Y Growth Operating Leverage Adjusted1 $7.4B Adjusted1 $9.68 Adjusted2 5% Adjusted1 1.6% Adjusted 1 Reported $7.3B Reported $9.51 Reported2 64% Reported 19.8% Reported Effi
Slide 5: Diversified businesses delivering resilient performance
Diversified businesses delivering resilient performance Canadian Personal & Commercial Banking U.S. Personal & Commercial Banking Reported Revenue ($MM) Reported Revenue (teb2, US$MM) PPPT1 Y/Y Growth PPPT1 Y/Y Growth 10,559 11,439 7,185 Adjusted1 4% Adjusted1 11% 6,800 Reported1 10% Reported1 3% 3,
Slide 6: A clear path to rebuilding Return on Equity
A clear path to rebuilding Return on Equity Medium Term Financial Objectives2 15% EPS Growth 7% to 10% per year Return on Equity 15% or more Return on Tangible 18% or more Common Equity 10% Operating 2% or more Leverage Capital ratios that exceed Capital regulatory requirements F2024 U.S. Segment No
Slide 7: Our Purpose
Our Purpose For a Thriving Economy • Delivered $12.9 billion of our more than US$40 billion BMO EMpower 2.0 five-year commitment to help underserved communities, businesses and families in the U.S. make real financial progress Providing access to capital and valuable financial advice – investing • R
Slide 8: Financial Results
Financial Results For the Quarter Ended October 31, 2024 Tayfun Tuzun Chief Financial Officer Q4 24
Slide 9: Q4 F2024 - Financial Highlights
Q4 F2024 - Financial Highlights Good PPPT1 growth and positive operating leverage offset by higher PCL • Adjusted2 EPS $1.90, down $1.03 Y/Y Reported Adjusted2 (reported $2.94, up $0.75) ($MM) Q4 24 Y/Y Q/Q Q4 24 Y/Y Q/Q • Adjusted2 net income down 31% Y/Y Revenue 8,957 8% 9% 8,368 -% 2% (reported u
Slide 10: Balance Sheet
Balance Sheet Diversified loan and deposit portfolio • Average gross loans and acceptances up 2% Y/Y, or 5% Average Gross Loans and Acceptances ($B) excluding the impact of Indirect Retail Auto wind-down and RV loan portfolio sale2, due to: 657.0 669.3 671.3 – 3% growth in Business & Government loan
Slide 11: Net Interest Margin
Net Interest Margin1 • Reported net interest income (NII) up 10% Y/Y NII ($MM) and NIM ex. trading and Insurance (%)2 primarily due to the reversal of accrued interest on 7,200 1.90 2.13 the fiscal 2022 legal provision 1.83 6,700 1.84 1.82 2 6,200 5,700 1.90 • Adjusted2 NII ex. trading and Insurance
Slide 12: Q4 F2024 Non-Interest Expense
Q4 F2024 Non-Interest Expense Delivered against expense commitments, driving positive operating leverage • Adjusted1 expenses down 2% Y/Y Non-Interest Expense Trend (reported down 22%) (2%) Adjusted1 1% Adjusted1 – Primarily driven by Bank of the West cost (22%) Reported (8%) Reported synergies and
Slide 13: Strong Q4'24 CET1 Ratio of 13.6%
Strong Q4’24 CET1 Ratio1 of 13.6% • Q4’24 CET1 ratio1 of 13.6%, up from Q3’24 Common Equity Tier 1 (CET1) Ratio1 primarily reflecting the impacts of the reversal +3 bps +5 bps 13.6% of the fiscal 2022 legal provision2 +48 bps +3 bps • The impact of FX movements on the CET1 Ratio largely offset 13.0%
Slide 14: Canadian Personal & Commercial Banking
Canadian Personal & Commercial Banking Positive operating leverage and continued balance sheet growth • Adjusted1 net income down 17% Y/Y Reported Adjusted1 (reported down 18%) ($MM) Q4 24 Y/Y Q/Q Q4 24 Y/Y Q/Q • Adjusted PPPT2 up 6% Y/Y (reported up 5%) Net interest income 2,304 10% 2% 2,304 10% 2%
Slide 15: U.S. Personal & Commercial Banking
U.S. Personal & Commercial Banking Positive operating leverage offset by higher PCL Amounts on this slide are in U.S. dollars: Reported Adjusted1 1 (US$MM) Q4 24 Y/Y Q/Q Q4 24 Y/Y Q/Q • Adjusted net income down 51% Y/Y (reported down 56%) Net interest income (teb) 3 1,506 (1)% 0% 1,506 (1)% 0% • Adj
Slide 16: BMO Wealth Management
BMO Wealth Management Strong growth in client assets • Adjusted1 and reported net income Reported Adjusted1 down 7% Y/Y ($MM) Q4 24 Y/Y Q/Q Q4 24 Y/Y Q/Q • Revenue up 1% Y/Y Wealth & Asset Management 1,399 12% 4% 1,399 12% 4% Insurance 87 (60)% (10)% 87 (60)% (10)% – Wealth and Asset Management reve
Slide 17: BMO Capital Markets
BMO Capital Markets Results mainly impacted by higher PCL • Adjusted1 net income down 43% Y/Y Reported Adjusted1 (reported down 47%) ($MM) Q4 24 Y/Y Q/Q Q4 24 Y/Y Q/Q • Revenue2 down 3% Y/Y: Global Markets 938 (1)% (6)% 938 (1)% (6)% – Global Markets down 1% as lower equities I&CB 662 (6)% (1)% 662
Slide 18: Corporate Services
Corporate Services • Adjusted2 net loss of $147MM and reported Reported Adjusted2 net income of $721MM for the quarter, ($MM)1 Q4 24 Y/Y Q/Q Q4 24 Y/Y Q/Q compared with an adjusted2 net loss of Revenue 480 466 746 (109) (137) 143 $180MM and reported net loss of $626MM in 3 Group teb offset (11) 84 (
Slide 19: Risk Review
Risk Review For the Quarter Ended October 31, 2024 Piyush Agrawal Chief Risk Officer Q4 24
Slide 20: Provision for Credit Losses (PCL)
Provision for Credit Losses (PCL) Provision for Credit Losses (PCL) • F2024 PCL ratio on impaired loans2 47 bps vs 19 bps in By Operating Group Q4 23 Q1 24 Q2 24 Q3 24 Q4 24 the prior year ($MM) • Q4’24 PCL ratio on impaired loans2 of 66 bps Personal & Business Banking 190 204 247 274 275 • Higher p
Slide 21: Business & Government Portfolio Overview
Business & Government Portfolio Overview B&G Portfolio Industry Diversification Gross Loans & Acceptances Canada & Total % of Financing Products, 2% By Industry U.S. Construction, 2% Oil & Gas, 1% Other BMO Total ($B, as at Q4 24) Other¹, 2% Commercial Real Utilities, 3% Estate, 20% Total Consumer 2
Slide 22: Allowance and Provision on Performing Loans
Allowance and Provision on Performing Loans • The $416 million provision for credit losses on performing loans in the current quarter was Allowance on Performing Q4 24 primarily driven by portfolio credit migration, as Loans (APL) and PCL on APL to Q3 24 Q4 24 Foreign Q4 24 well as uncertainty in cr
Slide 23: Gross Impaired Loans and Formations
Gross Impaired Loans and Formations • Gross impaired loans (GIL) ratio3 86 bps, Formations Gross Impaired Loans down 3 bps Q/Q due to write-offs in the quarter By Industry ($MM, as at Q4 24) CA & CA & Formations ($MM) U.S. Total U.S. Total Other Other1 2,218 1,988 1,847 1,766 Total Consumer 392 74 4
Slide 24: Appendix
Appendix SSS SS EE
Slide 25: Loan Portfolio Overview
Loan Portfolio Overview Well diversified by geography and industry Gross Loans & Acceptances Impaired PCL • Gross Loans & Acceptances up 1% Q/Q or ($B) ($MM) flat excluding the impact of the stronger U.S. dollar By Industry Canada & Total Canada & Total U.S. U.S. (As at Q4 24) Other1 BMO Other1 BMO
Slide 26: Commercial Real Estate
Commercial Real Estate • Commercial Real Estate (CRE) portfolio at $75.4B represents CRE by Geography2 11% of Total Bank Gross Loans & Acceptances (GL&A) British Columbia 12% • Portfolio is well-diversified across businesses, property types Ontario 26% and geographies Quebec 7% • Well-managed with c
Slide 27: Canadian Consumer Portfolio Overview
Canadian Consumer Portfolio Overview • Total Canadian Consumer lending portfolio balances of Canadian Consumer Portfolio $240.9B in Q4’24, representing 35% of total loans – 89% of the portfolio is secured – 90+ day delinquency rate for the portfolio at 36 bps Residential Mortgages – Average FICO sco
Slide 28: Canadian Residential Secured Lending Portfolio Overview
Canadian Residential Secured Lending Portfolio Overview • Total Canadian residential-secured lending (RESL) portfolio Residential-Secured Lending by Region ($208.8B) at $208.8B, representing 31% of total loans $103.6 Amortizing HELOC – LTV1 on uninsured of 52% 18% $39.9 Revolving HELOC – 90+ day del
Slide 29: Canadian Mortgage Portfolio Profile
Canadian Mortgage Portfolio Profile • The impact of higher interest rates on payments is primarily realized upon renewal for both fixed and variable rate mortgages • Variable rate mortgages with fixed payments are impacted through an extension of amortization until renewal. At renewal, the product r
Slide 30: Trading-Related Net Revenue and Value-at-Risk
Trading-Related Net Revenue and Value-at-Risk August 1, 2024 to October 31, 2024 (pre-tax basis and in millions of Canadian dollars) 40 30 20 10 0 (10) (20) (30) (40) (50) Daily Revenue Total Trading VaR Risk Review • December 5, 2024 30
Slide 31: F2024 - Financial Highlights
F2024 - Financial Highlights Good expense management and positive operating leverage offset by higher PCL • Adjusted2 EPS $9.68, down $2.13 Y/Y Reported Adjusted2 (reported $9.51, up $3.75) ($MM) F2024 Y/Y F2024 Y/Y • Adjusted2 net income down 15% Y/Y Revenue 32,795 12% 32,412 3% (reported up 65%) E
Slide 32: Advancing our Digital First strategy
Advancing our Digital First strategy Delivering on our Digital First agenda, Driving tangible customer Being recognized as an industry leader powered by AI, data and tech modernization and business value and innovator • Driving tangible customer and business Active Digital Users, Retail1 (000) • Ran
Slide 33: Canadian Personal & Commercial Banking – Balances
Canadian Personal & Commercial Banking – Balances Average Gross Loans & Acceptances ($B) Average Deposits ($B) 326.0 333.0 314.2 306.4 312.5 283.9 140.2 143.9 134.8 208.6 211.9 6.8 7.1 194.8 6.5 51.8 52.5 53.1 12.1 13.6 13.9 109.0 112.8 114.9 97.8 100.5 89.1 Q4'23 Q3'24 Q4'24 Q4'23 Q3'24 Q4'24 Comme
Slide 34: U.S. Personal & Commercial Banking – Balances
U.S. Personal & Commercial Banking – Balances Amounts on this slide are in U.S. dollars1 Average Gross Loans & Acceptances (US$B) Average Deposits (US$B) 163.9 167.2 158.0 152.7 151.3 150.3 36.3 32.4 33.7 83.4 84.0 77.3 116.4 118.9 116.6 80.7 80.5 83.2 Q4'23 Q3'24 Q4'24 Q4'23 Q3'24 Q4'24 Commercial
Slide 35: Canadian and U.S. deposit trends
Canadian and U.S. deposit trends Canadian P&C and BMO Wealth Management deposits CDE$B, average balances 353 359 347 318 328 7% 7% • Q4’24 Canadian deposits grew 10% Y/Y with 7% 290 6% 7% term customers taking advantage of relatively 266 3% 20% 21% 238 2% 20% 21% 20% attractive rates ahead of antici
Slide 36: Asset Yields and Liabilities Costs
Asset Yields1 and Liabilities Costs2 Average Earning Assets ($B) and Yield1 (%) Average Liabilities ($B) and Costs2 (%) 3.72% 3.75% 5.40% 5.40% 3.56% 5.26% 5.27% 5.26% Yield on Total 3.40% Cost on Total 3.34% Average Liabilities Earning Assets 1,260 1,274 1,265 1,272 1,306 1,336 1,177 1,196 1,218 1,
Slide 37: Interest Rate Sensitivity
Interest Rate Sensitivity • Earnings benefit / exposure to an incremental +/- 100 bps rate • Long-term investment rates forecast remains higher than shock reflects a relatively neutral positioning historical ladder levels and continue to support NIM • BMO strategy emphasizes margin stability; non ra
Slide 38: Non-GAAP and Other Financial Measures
Non-GAAP and Other Financial Measures Results and measures in this document are presented on a generally accepted accounting principles (GAAP) basis. Unless otherwise indicated, all amounts are in Canadian dollars and have been derived from our audited annual consolidated financial statements, prepa
Slide 39: Non-GAAP and Other Financial Measures
Non-GAAP and Other Financial Measures9 (1) Management of the impact of interest rate changes between the announcement (Canadian $ in millions, except as noted) Q4 24 Q3 24 Q4 23 F2024 F2023 and closing of the acquisition of Bank of the West on its fair value and goodwill, Reported Net interest incom
Slide 40: Summary of Reported and Adjusted Results by Operating Group
Summary of Reported and Adjusted Results by Operating Group (Canadian $ in millions unless otherwise stated) Q4 24 Q3 24 Q2 24 Q1 24 Q4 23 F2024 F2023 Total Bank Reported Net Income 2,304 1,865 1,866 1,292 1,710 7,327 4,437 Management of Fair Value Changes on the Purchase of Bank of the West — — — —
Slide 41: Pre-Provision, Pre-Tax Earnings (PPPT) Reconciliation
Pre-Provision, Pre-Tax Earnings (PPPT) Reconciliation (Canadian $ in millions unless otherwise stated) Q4 24 Q3 24 Q2 24 Q1 24 Q4 23 F2024 F2023 Total Bank Reported Income before taxes 3,007 2,447 2,425 1,656 2,194 9,535 5,947 Total provision for (recovery of) credit losses 1,523 906 705 627 446 3,7
Slide 42: Revenue, Non-Interest Expense and Efficiency Ratio Reconciliation
Revenue, Non-Interest Expense and Efficiency Ratio Reconciliation (Canadian $ in millions unless otherwise stated) Q4 24 Q3 24 Q2 24 Q1 24 Q4 23 F2024 F2023 F2022 Total Bank Reported Revenue 8,957 8,192 7,974 7,672 8,319 32,795 29,259 33,710 Insurance claims, commissions and changes in policy benefi
Slide 43: Summary of Reported and Adjusted Results by Operating Group
Summary of Reported and Adjusted Results by Operating Group Reported Adjusted Reported Adjusted (Canadian $ in millions unless otherwise stated) (Canadian $ in millions unless otherwise stated) Q4 24 Q3 24 Q4 23 Q4 24 Q3 24 Q4 23 Q4 24 Q3 24 Q4 23 Q4 24 Q3 24 Q4 23 Total Bank Revenue 8,957 8,192 8,3
Slide 44: Investor Relations
BMO Financial Group Investor Relations Contact Information bmo.com/investorrelations E-mail: investor.relations@bmo.com BILL ANDERSON PERRY CHEN-SEE Managing Director, Investor Relations Director, Investor Relations 416.867.7834 416.359.8074 bill2.anderson@bmo.com perry.chensee@bmo.com