Bank Of Montreal · TSX:BMO
Bank Of Montreal — Q4 2012 Earnings Presentation
32 slides from Bank Of Montreal's earnings presentation, Dec 4, 2012
Slide 1: Investor Presentation Q4 12
Investor Presentation For the Quarter Ended – October 31, 2012 Q4 12 December 4th 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 – October 31, 2012 Q4 12 December 4th 2012 Bill Downe President & Chief Executive Officer
Slide 4: Annual Financial Results
Annual Financial Results Strong finish to a pivotal year for the Bank C$ Billions unless otherwise indicated Adjusted1 F2012 F2011 Revenue 15.1 13.7 Strong adjusted1 results with net income up 25% Net Income 4.1 3.3 EPS up 18% EPS ($) 6.00 5.10 Revenue growth 10% Efficiency Ratio (%) 63.1 61.5
Slide 5: Operating Group Performance
Operating Group Performance Confident each of our businesses is positioned to deliver high quality sustained earnings growth Annual Adjusted1 Net Income C$ millions unless otherwise indicated P & C Banking P & C Banking Private Client BMO Canada U.S. Group Capital Markets (US$) Y/Y 3%* 48% 12% 5% Gr
Slide 6: Turning the page on M&I
Turning the page on M&I Looking back 24 months since announcement, we’ve achieved what we said we would Conversion of our core banking platform completed Completed on schedule in October and we’ve upgraded U.S. online, branch, core banking and mobile banking platforms at the same time Rebranding c
Slide 7: Making money make sense
Looking Ahead… We’ve created a much stronger business platform and have clear opportunities for organic growth Commercial Banking strength in Canada and the U.S. Wealth Management momentum with a strengthened U.S. market position in asset management and private banking Leveraging investments i
Slide 8: Financial Results
Financial Results For the Quarter Ended – October 31, 2012 Q4 12 December 4th 2012 Tom Flynn Executive Vice President & Chief Financial Officer
Slide 9: Q4 2012 - Financial Highlights
Q4 2012 - Financial Highlights Strong Performance with Adjusted Net Income of $1.1B, Increasing EPS by 38% from a Year Ago Common Net Specific Equity Revenue EPS ROE Efficiency Income PCL Ratio (Basel II) Reported $4,176MM $1,082MM $1.59 15.6% 64.7% $216MM 10.5% Results Adjusted $3,920MM $1,125MM $1
Slide 10: F2012 - Financial Highlights
F2012 - Financial Highlights Strong Annual Performance with Adjusted Income of $4.1B, Increasing EPS by 18% from a Year Ago Specific Common Net Revenue EPS ROE Efficiency Equity Ratio Income PCL (Basel II) Reported $16,130MM $4,189MM $6.15 15.9% 63.5% $762MM 10.5% Results Adjusted $15,067MM $4,092MM
Slide 11: Revenue
Revenue Revenue growth driven by strong BMO CM and PCG results Total Bank Adjusted Revenue (C$MM) Net Interest Margin 13.4% 8.5% 14.9% 8.8% 6.8% Y/Y (bps) Growth 3,920 3,670 3,743 3,727 3,677 213 221 210 203 202 1,956 1,996 2,092 1,969 2,012 NII 201 205 189 188 183 Q4 Q1 Q2 Q3 Q4 1,674 1,758 1,964 1
Slide 12: Non-Interest Expense
Non-Interest Expense Focused on disciplined expense management Non-Interest Q4 11 Q3 12 Q4 12 Q/Q Y/Y Total Bank Adjusted Non-Interest Expense Expense ($MM) B/(W) B/(W) (C$MM) 2,341 2,378 2,357 2,342 2,436 Reported 2,432 2,484 2,701 (9)% (11)% Adjusted 2,341 2,342 2,436 (4)% (4)% 748 766 737 745 739
Slide 13: Capital & Risk Weighted Assets
Capital & Risk Weighted Assets Capital position strong Ratios remain strong Announced intention to seek approval to commence Normal Course Common Shareholders’ Equity Issuer Bid to repurchase up to 15 million common shares & Basel II Tier 1 Capital Basel II F2011 F2012 Common Equity Ratio (%)1 9
Slide 14: Adjusting Items
Adjusting Items Adjusting1 items – Pre-tax Annual Annual Q4 11 Q3 12 Q4 12 ($MM) F2011 F2012 Credit-related items on the M&I purchased performing loan portfolio 173 76 57 173 407 Hedge costs related to foreign currency risk on purchase of M&I - - - (20) - M&I integration costs (53) (105) (153) (131)
Slide 15: Operating Groups – Q4 2012 Quick Facts
Operating Groups – Q4 2012 Quick Facts 77% of adjusted revenue from retail businesses1 P&C Canada P&C U.S. Net income up 6.2% Y/Y on an actual loss basis Adjusted net income2 of US$147MM, down from a Revenue relatively flat Y/Y and Q/Q with higher volumes strong quarter a year ago; up $4MM Q/Q
Slide 16: Personal & Commercial Banking – Canada
Personal & Commercial Banking – Canada Strong loan growth and continued focus on actively managing expenses As Reported Q/Q Y/Y F2012 net income of $1.8B, up 3.4% on an actual Q4 11 Q3 12 Q4 12 ($MM) B/(W) B/(W) loss basis, and 0.6% on a reported (EL) basis. Personal Revenue 970 963 970 1% - Efficie
Slide 17: Personal & Commercial Banking - U.S.
Personal & Commercial Banking - U.S. Good momentum with second straight quarter of sequential adjusted net income growth (Amounts in US$MM) As Reported Q/Q Y/Y F2012 adjusted net income of $579MM, up 48% Q4 11 Q3 12 Q4 12 (US$MM) B/(W) B/(W) Revenue 781 739 743 1% (5)% Q4 Highlights PCL 78 83 83 1%
Slide 18: Private Client Group
Private Client Group Solid financial performance on higher revenues As Reported Q/Q Y/Y Q4 11 Q3 12 Q4 12 F2012 adjusted net income of $546MM, up ($MM) B/(W) B/(W) 12%; Ex. Insurance business up 9%; Revenue 706 678 783 16% 11% Insurance up 20% Expenses 534 544 563 (4)% (5)% Net Income 137 109 166 51
Slide 19: BMO Capital Markets
BMO Capital Markets Strong Q4 results As Reported Q/Q Y/Y F2012 net income of $948MM, up 5%; Q4 11 Q3 12 Q4 12 ($MM) B/(W) B/(W) with strong ROE of 20.1% Trading Products 436 488 584 20% 34% Revenue Q4 Highlights Investment & Corp 257 318 314 (1)% 22% Y/Y net income more than doubled due to an Ban
Slide 20: Corporate Services
Corporate Services Adjusted results up Y/Y and Q/Q Adjusted As Reported Q4 11 Q3 12 Q4 12 Q4 11 Q3 12 Q4 12 ($MM) ($MM) Revenue (teb) (74) (114) (51) Revenue (teb) 78 87 205 PCL – Specific 32 (140) (141) PCL – Specific 50 (28) (38) – Collective -- -- -- – Collective 63 8 (24) Expenses 73 79 114 Expe
Slide 21: Group Net Income
Group Net Income Strong adjusted net income growth of 25% with all Groups up Net Income, Adjusted B/(W) F2011 F2012 ($MM) $ Y/Y P&C Canada 1,781 1,794 13 1% P&C U.S. 387 581 194 50% Total P&C 2,168 2,375 207 9% PCG 486 546 60 12% BMO Capital Markets 902 949 47 5% Corporate Services (281) 222 503 +10
Slide 22: Personal & Commercial Banking Canada – Product Balances & Market Share
Personal & Commercial Banking Canada – Product Balances & Market Share Personal Good lending growth with balances up 7.8% Y/Y and 3.1% Q/Q Market Share (%) Q4 11 Q1 12 Q2 12 Q3 12 Q4 12 Deposit balances up 3.5% Y/Y and 0.7% Q/Q Total personal lending market share up 10 bps Q/Q and personal Tot
Slide 23: Personal & Commercial Banking U.S. – Commercial Balances
Personal & Commercial Banking U.S. – Commercial Balances All amounts in U.S. $B Core C&I ($B) - Average Core Commercial Real Estate ($B) - Average Strong C&I loan growth, with Q4’12 being the 4th straight sequential quarter of growth; growth of 15% since Q4’11 19.1 19.9 17.3 18.0 18.8 New client
Slide 24: 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 originations of $821MM up $33MM or 4.2% Q/Q and $271MM or 49% 3.9 3.9 4.0 4.1 4.2 Y/Y Mortgage portfolio declines as new originat
Slide 25: Risk Review
Risk Review For the Quarter Ended – October 31, 2012 Q4 12 December 4th 2012 Surjit Rajpal Executive Vice President & Chief Risk Officer
Slide 26: Loan Portfolio Overview
Loan Portfolio Overview Canadian and US portfolios are well diversified by industry P&C business represents the majority of loans Retail portfolios are predominantly secured – 88% in Canada and 97% in the US Canada & By Industry % of Other US Total (C$ B) total Countries1 Residential Mortgages 7
Slide 27: Provision for Credit Losses (PCL)
Provision for Credit Losses (PCL) Down 19% q/q and 47% y/y Fiscal 2012 adjusted specific provisions are $471MM (Fiscal 2011: $1,108MM) and include $509MM in recoveries related to the Purchased Credit Impaired Loans (Fiscal 2011: $ nil) During the quarter US Consumer provisions have increased pri
Slide 28: Specific Provision Segmentation – Legacy Portfolio
Specific Provision Segmentation – Legacy Portfolio Canadian provisions are $144MM (Q3 '12: $140MM) US Legacy provisions are $102MM (Q3 '12: $96MM) Other Countries provisions are recoveries of $1MM (Q3 '12 recoveries of $2MM) Consumer portfolio accounts for ~84% of legacy provisions in both t
Slide 29: Impaired Loans and Formations
Impaired Loans and Formations Legacy Impaired Loans and formations up slightly q/q but down y/y During the quarter US Consumer formations have increased primarily due to US regulatory guidance issued requiring changes to impairment classification for certain loans in our P&C US portfolio, adding ~
Slide 30: Canadian Residential Mortgages
Canadian Residential Mortgages Total Canadian portfolio $76.7B (Q3 '12: $73.9B) ~64% of the portfolio is insured (Q3 '12: ~65%) Average LTV1 of portfolio 62% (Q3 '12: 61%) insured portfolio 64% (Q3 '12: 64%) uninsured portfolio 58% (Q3 '12: 56%) Residential Mortgages by Province Insured Un
Slide 31: Trading & Underwriting Net Revenues vs. Market Value Exposure
Trading & Underwriting Net Revenues vs. Market Value Exposure August 1, 2012 to October 31, 2012 (Presented on a Pre-Tax Basis) 50 30 10 01-Aug-12 08-Aug-12 14-Aug-12 20-Aug-12 24-Aug-12 30-Aug-12 06-Sep-12 12-Sep-12 18-Sep-12 24-Sep-12 28-Sep-12 04-Oct-12 11-Oct-12 17-Oct-12 23-Oct-12 29-Oct-12 (10
Slide 32: 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 ANDREW CHIN Senior Manager 416.867.7019 andrew.chin@bmo.com