Bank Of Montreal · TSX:BMO
Bank Of Montreal — Q3 2016 Earnings Presentation
26 slides from Bank Of Montreal's earnings presentation, Aug 23, 2016
Slide 1: Investor Presentation Q3 16
Investor Presentation For the Quarter Ended July 31, 2016 August 23, 2016 Q3 16 Financial Results Month xx, 2015 1
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, 2016 August 23, 2016 Bill Downe Chief Executive Officer Q3 16 Financial Results Month xx, 2015 3
Slide 4: Q3 2016 Financial Highlights
Q3 2016 Financial Highlights Strong results with adjusted1 net income up 5% Y/Y • $1.3B in adjusted1 net income, up 5% • Adjusted1 EPS of $1.94, up 4% • Pre-provision pre-tax2 earnings growth of 14% reflecting operating momentum and disciplined expense management • On an adjusted1 net revenue basis
Slide 5: Operating Group Performance
Operating Group Performance Results reflect benefits of BMO’s diversified business mix; positive operating leverage in all operating groups Operating Group • Personal and Commercial Banking adjusted1 Adjusted Net Income – LTM1 earnings up 7% Y/Y BMO CM – Canadian P&C PPPT1 growth of 6% 22% Canadian
Slide 6: Strategic Highlights
Strategic Highlights August 23, 2016 6
Slide 7: Financial Results
Financial Results For the Quarter Ended July 31, 2016 August 23, 2016 Tom Flynn Chief Financial Officer Q3 16 Financial Results Month xx, 2015 7
Slide 8: Q3 2016 - Financial Highlights
Q3 2016 - Financial Highlights Strong operating results with adjusted1 net income up 5% Y/Y and EPS of $1.94 • Adjusted1 net income of $1.3B up 5% and EPS up 4% Y/Y Adjusted1 ($MM) Q3 15 Q2 16 Q3 16 • Net revenue2 up 7% Y/Y, or 6% Y/Y in CCY3 Net Revenue2 4,608 4,694 4,942 • Adjusted1 expenses up 4%
Slide 9: Capital & Risk Weighted Assets
Capital & Risk Weighted Assets CET1 Ratio strong at 10.5% • Common Equity Tier 1 Ratio of 10.5%, up from 10.0% in Common Equity Tier 1 Ratio (%) Q2’16 – Higher CET1 capital from increase in AOCI and retained earnings growth – Higher RWA of ~$3B primarily due to FX movement 10.4 10.7 10.1 10.0 10.5 (
Slide 10: Canadian Personal & Commercial Banking
Canadian Personal & Commercial Banking Good PPPT1 growth of 6% Y/Y with continued positive operating leverage • Adjusted1 net income of $562MM, up 1% Y/Y with good PPPT1 Adjusted1 ($MM) Q3 15 Q2 16 Q3 16 growth of 6% Revenue (teb) 1,697 1,672 1,770 • Revenue up 4% Y/Y reflecting strong balance growt
Slide 11: U.S. Personal & Commercial Banking
U.S. Personal & Commercial Banking Strong growth with adjusted1 net income up 22% Y/Y or 19% in USD • Adjusted1 net income of $289MM, up 22% Y/Y. Figures that follow are in U.S. dollars Adjusted1 (US$MM) Q3 15 Q2 16 Q3 16 • Adjusted1 net income up 19% Y/Y including the benefit of Revenue (teb) 727 8
Slide 12: BMO Capital Markets
BMO Capital Markets Strong performance with net income up 18% Y/Y • Adjusted1 net income up 18% Y/Y, with strong PPPT2 Adjusted1 ($MM) Q3 15 Q2 16 Q3 16 growth of 23% Y/Y Trading Products • Revenue up 9% Y/Y or 8% in CCY2: 618 730 694 Revenue – Trading Products benefited from higher client activity
Slide 13: BMO Wealth Management
BMO Wealth Management Solid underlying performance • Adjusted1 net income of $227MM, down 2% Y/Y Adjusted1 ($MM) Q3 15 Q2 16 Q3 16 - Traditional Wealth results down 1% Y/Y as operating Net Revenue2 1,118 990 1,081 growth across most businesses was offset by impact of PCL 3 2 4 lower equity markets o
Slide 14: Corporate Services
Corporate Services • Adjusted1 net loss of $105MM compared to net loss of Adjusted ($MM)1,2,3 Q3 15 Q2 16 Q3 16 $68MM in the prior year mainly due to lower revenues and higher expenses, partially offset by better credit provisions Revenue (13) (62) (57) • Revenue (ex teb)2 of $(57)MM in Q3’16 is low
Slide 15: Risk Review
Risk Review For the Quarter Ended July 31, 2016 August 23, 2016 Surjit Rajpal Chief Risk Officer Q3 16 Financial Results Month xx, 2015 15
Slide 16: Provision for Credit Losses (PCL)
Provision for Credit Losses (PCL) PCL By Operating Group Q3 15 Q2 161 Q3 161 • PCL ratio at 29 bps, up 6 bps from prior ($MM) quarter largely due to higher Oil & Gas Consumer – Canadian P&C 86 105 106 provisions Commercial – Canadian P&C 23 22 46 Total Canadian P&C 109 127 152 Consumer – U.S. P&C1 2
Slide 17: Gross Impaired Loans (GIL) and Formations
Gross Impaired Loans (GIL) and Formations By Industry Formations Gross Impaired Loans • GIL increased this quarter, ($MM) Canada U.S. Total Canada U.S. Total with majority of increase due & Other & Other1 to FX Consumer 154 104 258 349 573 922 Oil & Gas 72 16 88 138 283 421 • GIL ratio remains stabl
Slide 18: Oil and Gas and Alberta Consumer Portfolios
Oil and Gas and Alberta Consumer Portfolios Oil and Gas Balances – By Sector ($B) Oil and Gas – Corporate/Commercial $0.8 • Oil and Gas loans of $7.6B; 2% of total bank 10% loans with close to half investment grade • $8.2B in undrawn exposure1, of which more than half is investment grade • New Pipel
Slide 19: Loan Portfolio Overview
Loan Portfolio Overview Gross Loans & Acceptances Canada & By Industry U.S. Total % of Total Other1 ($B) Residential Mortgages 101.2 8.5 109.7 30% • Loans are well diversified by Consumer Instalment and Other Personal 50.2 14.0 64.2 18% geography and industry Cards 7.5 0.5 8.0 2% • Credit quality re
Slide 20: Canadian Residential Mortgages
Canadian Residential Mortgages • Total Canadian residential mortgage portfolio at $101.2B or 43% of Canadian gross loans and acceptances ─ 57% of the portfolio is insured ─ Loan-to-value (LTV)1 on the uninsured portfolio is 56%2 ─ 70% of the portfolio has an effective remaining amortization of 25 ye
Slide 21: Trading Revenue vs. VaR
Trading Revenue vs. VaR May 2, 2016 to July 29, 2016 (in MM's and on a Pre-Tax Basis) 35 15 Jun 07 Jun 14 Jun 21 Jun 28 May 02 May 09 May 16 May 24 May 31 Jul 06 Jul 13 Jul 20 Jul 27 (5) (25) Daily Revenue Total Trading VaR Risk Review August 23, 2016 21
Slide 22: Appendix
APPENDIX Financial Results Month xx, 2015 22
Slide 23: Canadian Personal and Commercial Banking - Balances
Canadian Personal and Commercial Banking - Balances Average Loans & Acceptances ($B) Average Deposits ($B) 203.6 207.2 196.2 93.4 95.0 140.1 142.9 90.3 133.0 84.1 89.7 91.5 44.0 44.1 43.4 8.4 8.7 8.6 48.9 50.4 51.4 53.9 57.8 59.4 Q3'15 Q2'16 Q3'16 Q3'15 Q2'16 Q3'16 Commercial Loans & Acceptances Cre
Slide 24: U.S. Personal & Commercial Banking – Balances
U.S. Personal & Commercial Banking – Balances Average Loans & Acceptances (US$B) Average Deposits (US$B) 76.2* 76.8* 5.4 5.3 66.1* 67.2 10.1 10.0 Personal 65.6 5.2 61.7 5.0 Loans 5.0 10.8 5.7 6.0 2.2 2.2 25.5 26.3 4.9 24.3 6.9 2.8 Commercial 47.5 48.6 Loans 35.5 37.4 40.1 40.9 Q3'15 Q2'16 Q3'16 Q3'1
Slide 25: Adjusting Items
Adjusting Items Adjusting1 items – Pre-tax ($MM) Q3 15 Q2 16 Q3 16 Amortization of acquisition-related intangible assets2 (40) (40) (40) Acquisition integration costs2 (9) (24) (27) Restructuring costs3 - (188) - Adjusting items included in reported pre-tax income (49) (252) (67) Adjusting1 items –
Slide 26: Investor Relations
Investor Relations Contact Information bmo.com/investorrelations E-mail: investor.relations@bmo.com JILL HOMENUK CHRISTINE VIAU Head, Investor Relations Director, Investor Relations 416.867.4770 416.867.6956 jill.homenuk@bmo.com christine.viau@bmo.com Strategic Highlights August 23, 2016 26