Bank Of Montreal · TSX:BMO
Bank Of Montreal — Investor Presentation (January 2022)
51 slides from Bank Of Montreal's investor presentation, January 2022
Slide 1: Investor Presentation
Slide 2: Forward looking statements & non-GAAP measures
Forward looking statements & non-GAAP measures Caution Regarding Forward-Looking Statements ‘As noted in the following Caution Regarding Forward-Looking Statements, all forward-looking statements and information, by their nature, are subject to inherent risks and uncertainties, both general and spec
Slide 3: About Us
About Us Established in 1817, BMO Financial Group is a highly diversified financial services provider based in North America th err: ore 8" largest $988 billion 12+ million bank in North America in total assets customers globally by assets! Operating Groups Personal & Commercial Banking BMO Wealth M
Slide 4: Our Purpose
Our Purpose BOLDLY GROW THE GOOD For a thriving economy > Announced a 10-year, $12B commitment to finance affordable housing in Canada Deployed >US$2B in loans and investments against BMO EMpower™, a 5-year, US$5B commitment to address key barriers faced by minority businesses, communities and famil
Slide 5: Reasons to Invest in BMO
Reasons to Invest in BMO * Diversified businesses that continue to deliver resilient and robust earnings growth and long- term value for shareholders * Strong foundation built for growth and differentiating strengths that drive competitive advantage: Top 10 commercial lender in North America’ with a
Slide 6: Diversified business mix with strong, resilient revenue
Diversified business mix with strong, resilient revenue Diversified by business % of Operating Groups Reported Net Revenue’ -F20211 Canadian P&C 34% BMO Capital Markets 23% Canadian Commercial Banking Global Markets U.S. P&C BMO Wealth 21% Management 22% is a non-GAAP measure and is de s revenue net
Slide 7: Delivering strong shareholder returns
Delivering strong shareholder returns Dividends Declared ($ per share) se 5. + BMO has the longest-running dividend 15-year CAGR? (F2006-F2021) payout record of any company in Canada, at 193 years ivi i 3.24 340 + Dividend Yield’: 3.8% a7 280 280 280 280 282 294 3.08 2.26 PFE. gg gr ge gh PF PM Tota
Slide 8: Strong financial performance
Strong financial performance Medium Term Financial Objectives (Adjusted basis) Earnings Per Share ($) 12.96 EPS Growth 7% to 10% per year Return on Equity 15% of more Operating Leverage 2% or more Capital ratios that exceed regulatory 2019 2020 2021 Capital requirements mReported om Adjusted" S&P DB
Slide 9: Continued operating momentum
Continued operating momentum + Advantaged and diversified business mix positioned for resilience and growth + Leading adjusted’ PPPT'23 growth and efficiency? improvement, better than average net revenue? and expense growth, while continuing to invest in our businesses * Very strong credit performan
Slide 10: Continuous path to building a strong, more competitive bank
Continuous path to building a strong, more competitive bank ROE (%) \ Efficiency Ratio? (%) CET13 (%) 240by \N 13.7 ps 4 160bps NN Se 230bps - “\ n3 = a L Reported Adjusted 1 Reported Adjusted" F2018 F2021' m™F2018 mF2021 ™F2018 ™F2021 * Targeted actions to allocate capital and resources to areas ex
Slide 11: Advancing our digital experience in-line with customer preferences
Advancing our digital experience in-line with customer preferences Industry recognized digital leadership + #1 of 7 largest Canadian Fls by Insider Intelligence for digital money Management, security & card controls, mobile banking alerts Digital adoption, % 1 | 59.0% F'20 + Celent model bank award
Slide 12: Personal and Commercial Banking and Wealth Management footprint
• o o • • • Personal and Commercial Banking and Wealth Management footprint Additional Commercial Banking, Wealth Management and Capital Markets footprint
Slide 13: Canadian P&C - Strong flagship business
Canadian P&C - Strong flagship business * Flagship business contributing 34% of total Strong financial performance? vs peers - F2021 bank annual net revenue’2 * Top-tier performance and growing market share in key areas of focus * Good expense discipline; expenses up 4% Y/Y; efficiency 45.9% with pe
Slide 14: Proven strength in Commercial Banking with advantaged market share
Proven strength in Commercial Banking with advantaged market share + Arelationship-based commercial bank; top 10 commercial lender? in North America — In Canada: Top-tier commercial banking business, #2 in market share for business loans up to $25 million? — In the U.S.: Large, diversified national
Slide 15: BMO Wealth Management - Strong & stable growth engine
BMO Wealth Management - Strong & stable growth engine * Well-diversified competitive businesses, contributing Strong Momentum ~22% of BMO’s net revenue? mix in F21 + — Repositioned the business to accelerate growth . . a retell — _ Exited select high-efficiency, lower-return -" businesses 24.9 70.4
Slide 16: Leading track record in risk management
Leading track record in risk management * Long track record of outperforming peers on credit, with 30-year historical average loss rates well below peer banks * Prudent underwriting, consistent approach, unparalleled expertise and industry knowledge, effectiveness of work-out process. Deep expertise
Slide 17: F2021 and Q4'21 Highlights
Slide 18: F2021 - Financial Highlights
F2021 - Financial Highlights Strong full year performance with improved efficiency and positive operating leverage * Adjusted’ EPS $12.96, up 68% Y/Y (reported $11.58, up 53%) + Adjusted’ net income up 66% Y/Y (reported up 52%) + Adjusted’ ROE 16.7%, improved 640 bps Y/Y (reported? 14.9%, improved 4
Slide 19: Q4 F2021 - Financial Highlights
Q4 F2021 - Financial Highlights Continued strong performance with double digit PPPT' growth and positive operating leverage + Adjusted’ net income and EPS up 38% Y/Y (reported up 36%) HM) | a4 21 | 9321] 04 20 f a4 21 | 0321] 04 20 | + Adjusted’ ROE 16.5%, improved 390 bps Y/Y (reported Gross Revenu
Slide 20: Strong capital position
Strong capital position * CET1 Ratio! of 13.7%, up from prior quarter, well above regulatory minimum requirement of 10.5%? and target range of ~11%; Tier 1 Ratio of 15.4% and Total Capital Ratio of 17.6% + Sound leverage and liquidity ratios — Leverage Ratio 5.1%! - Liquidity Coverage Ratio 125%* Co
Slide 21: Net Interest Margin and Interest Rate Sensitivity
Net Interest Margin’ and Interest Rate Sensitivity Total bank NII & NIM ex trading 1.60 1.64 1.65 1.67 1.66 o= © > —e o Bo a Q4'20 Qi'21 Q2'21 Q3'21 Q4'21 EEE NII ex trading ($MM) ‘Smt Trading NII ($MM) =®==NIM ex trading (%) + Excluding trading, net interest margin was relatively stable, down 1 bas
Slide 22: BMO (“} ¢ January 2022
BMO (“} Financial Group Investor Presentation ¢ January 2022 22
Slide 23: Canadian Personal & Commercial Banking
Canadian Personal & Commercial Banking Strength and Value Drivers F2021 Financial Highlights * High-performing team focused on providing a personalized banking experience that helps our customers make real financial progress * Top-tier commercial banking business, #2 ranking in Canadian market share
Slide 24: Canadian Personal & Commercial Banking Performance
Canadian Personal & Commercial Banking Performance Revenue ($MM) 2,241 2,304 2,099 2,142 2,031 1,390 Q4'20 Qi'21 Q2'21 Q3'21 Q4'21 mPersonal = Commercial Digital Adoption’ 56% 59% 61% e— —e— © e ° 30% 43% 46% F19 F'20 F21 Average Gross Loans & Acceptances ($B) 271.1 251.0 264.6 106.0 Q4'20 Q3'21 Q4'
Slide 25: U.S. Personal & Commercial Banking
U.S. Personal & Commercial Banking Strength and Value Drivers F2021 Financial Highlights? * High-performing team focused on providing a personalized banking experience that helps every customer make real financial progress Reported * Large-scale, diversified national commercial business expanding in
Slide 26: U.S. Personal & Commercial Banking Performance
U.S. Personal & Commercial Banking Performance Revenue (US$MM)"* 1,099 1,092 1,098 1,101 1,007 328 766 764 770 Q4'20 qu21 Q2'21 Q3'21 Q4'21 ™ Commercial = Personal & Business Banking Average Gross Loans & Acceptances? (US$B)' 93.3 90.4 91.8 Q4'20 Q3'21 Q4'21 = Commercial ™ Personal & Business Bankin
Slide 27: BMO Wealth Management
BMO Wealth Management Strength and Value Drivers F2021 Financial Highlights + Planning and advice-based approach that integrates investment, insurance, d dj 1 specialized wealth management and core banking solutions, offered by a Reporte Adjuste team of highly skilled professionals Net Income $1,474
Slide 28: BMO Wealth Management Performance
BMO Wealth Management Performance Balances ($B) AUA, AUM ($B) 395 985, 951 498 ea 523 an 458 427 Q4'20 Q3'21 Qa'2t Q4'20 Q3'21 Q4'21 Avg Gross Loans Avg Deposits mAUA mAUM and Acceptances Net Revenue’ by Business - F2021 BMO Wealth Management U.S. ™BMO Insurance ™BMO Private Wealth BMO InvestorLine
Slide 29: BMO Capital Markets
BMO Capital Markets Strength and Value Drivers * Avvalued financial partner to our clients; leveraging our people, innovative solutions and capital to help them overcome their challenges and achieve their goals * Unified coverage and integrated North American platform, delivering a seamless and exce
Slide 30: BMO Capital Markets Performance
BMO Capital Markets Performance Revenue ($MM) 1,574 1,538 1,378 543 619 1,584 Q4'20 Qi'2t Revenue by Product® merchant Banking U.S. FTE as a % of Total (LTM as of Q4’21) As a % of LIM Q4’21 revenue excluding ‘Other’ ‘lebal Equity & Financing Solutions 1,430 m investment and Corporate Banking mGlobal
Slide 31: Risk Overview
Slide 32: Provision for Credit Losses ($MM)
• • • ─ • ─ Provision for Credit Losses ($MM)
Slide 33: Provision for Credit Losses (PCL)
Provision for Credit Losses (PCL) PCL By Operating Group ‘$MM $ bps § bps $ bps Total Canadian P&C Total U.S. P&C BMO Wealth Management BMO Capital Markets Corporate Services PCL on Impaired Loans PCL on Performing Loans Total PCL 2.00% 1.50% 1.00% 0.50% 0.00% PCL Ratio (bps) 89 89 131011518029 5 1
Slide 34: Allowance and Provision on Performing Loans
Allowance and Provision on Performing Loans Allowance on Performing Loans (APL) and PCL on Performing Loans (PCL) 21 By Operating Group L ($mm)? Consumer - Canadian P&C 874 (56) Commercial - Canadian P&C 542 (38) Total Canadian P&C 1,416 (94) Consumer ~ U.S. P&C 111 (10) Commercial - U.S. P&C 767 (2
Slide 35: Gross Impaired Loans and Formations
Gross Impaired Loans and Formations By Industry ($MM, as at Q4 21) Consumer Service Industries 23 4 Retail Trade 2 4 Agriculture 7 1 Manufacturing 44 1 Oil & Gas 0 0 Transportation 4 8 Wholesale Trade 4 1 Construction (non-real estate) 1 2 Commercial Real Estate 16 2 Other Business and Government” °
Slide 36: Loan Portfolio Overview
Loan Portfolio Overview Gross Loans & Acceptances By Industry? % of Total + Portfolio is well diversified by geography ($B, as at Q4 21) and industry Residential Mortgages 128.0 77 135.7 29% ronsumer Instalment and Other 64.0 32 772 16% , oye , to tina 6 () oans by Geography and Operating Group (% C
Slide 37: Canadian Residential-Secured Lending
Canadian Residential-Secured Lending Residential-Secured Lending by Region ($170.0B) HELOC Uninsured Mortgages mInsured Mortgages $27.1 30% 40% $78.0 $33.9 26% 25% $19.5 54% UA 60% 32% Alberta British Columbia All Other Canada British All Other alae Columbia Canada Ontario Total Ontai Canada Atlanti
Slide 38: Oil and Gas Industry Overview
Oil and Gas Industry Overview Industry by Sub-sector! Industry by Risk Rating 52% $6.08 mExploration & Development | Manufacturing & Refining m Services M Investment Grade Sub-Investment Grade ™ Impaired The oil and Gas Portfolio is geographically well diversified; 59% in Canada, 31% in the U.S. and
Slide 39: Sectors Impacted by COVID-19 Pandemic
Sectors Impacted by COVID-19 Pandemic Gross Loans & By Industry of Heightened Focus Acceptances ($B, as at Q4 21) (GL&A) Hotels Restaurants 44 Amusement & Recreational 3.2 CRE - Lodging REITS 0.6 CRE - Retail REITS 15 CRE - Retail Property Types 27 Retail Trade excl. Auto, Grocers & Pharmacies 49 Ai
Slide 40: Economic and Housing Market Overview
Slide 41: Economic outlook and indicators
Economic outlook and indicators’ Canada United States 4.0 3.5 5.6 3.5 25 5.2 4.0 2.5 GDP Growth 45 Inflation 3.3 3.5 25 Interest Rate (3mth Tbills) 0.10 0.60 1.55 Unemployment Rate 74 57 5.5 Current Account Balance / GDP3 0.2 0.0 (0.2) Budget Surplus / GDP? (6.0) (2.3) (1.7) Canada * Canadian real G
Slide 42: Canada's housing market is strong
Canada’s housing market is strong * National existing home sales remain well above normal levels, sup, in demand arising from working remotely ported by strong job growth, low mortgage rates and shifts * Benchmark prices have re-accelerated to a 25% y/y rate in November amid low supply relative to e
Slide 43: Structure of the Canadian residential mortgage market with comparisons to the United States
Structure of the Canadian residential mortgage market with comparisons to the United States * Conservative lending practices, strong underwriting and documentation discipline have led to low delinquency rates — Over the last 30 years, Canada’s 90-day residential mortgage delinquency rate has never e
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Slide 45: Our Commitment to Sustainability
Our Commitment to Sustainability At BMO, our Purpose to Boldly Grow the Good, in business and life is inspired by the Sustainable Development Goals (SDGs), and they are shaping our business and sustainability activities. We believe we can have the greatest impact on the SDGs that align with our stra
Slide 46: BMO's Net Zero Ambition
BMO’s Net Zero Ambition Be our Clients’ Lead Partner in the Transition to a Net Zero World Commitment Acting on our commitment to a sustainable future, we're playing our part to drive the transformation toward a net-zero world. This means setting targets to reduce greenhouse gas emissions from our o
Slide 47: Liquidity & Wholesale Funding Mix
Slide 48: Cash and Securities to Total Assets Ratio / Customer Deposits
Cash and Securities to Total Assets Ratio (%) • Customer Deposits1 ($B) •
Slide 49: Diversified Wholesale Term Funding Program
Diversified Wholesale Term Funding Program + 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 funded with longer-term wholesale funding + BMO has a well diversified whole
Slide 50: Diversified Wholesale Funding Platform
Diversified Wholesale Funding Platform * Programs provide BMO with diversification and cost effective funding Canadian MTN Shelf (C$10B) SEC Registered U U.S. Shelf (US$25B) Note Issuance Programme (US$20B) + Fortified Trust (C$5B) * Global Registered Covered Bond * Australian MTN Programme (A$5B) +
Slide 51: E-mail
E-mail: magazine Award winner Canada 2021
Bank of Montreal — Investor Presentation (January 2022) on 6ix