Bank Of Montreal · TSX:BMO
Bank Of Montreal — BMO Financial Group — Q3 2018 Earnings Presentation
25 slides from Bank Of Montreal's earnings presentation, Aug 28, 2018
Slide 1: BMO Financial Group Investor Presentation Q3 18
BMO Financial Group Investor Presentation For the Quarter Ended July 31, 2018 August 28, 2018 Q3 18 Investor Presentation August 2018 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: Darryl White, Chief Executive Officer
Darryl White Chief Executive Officer Q3 18 Investor Presentation August 2018 3
Slide 4: Q3 F2018 Financial Highlights
Q3 F2018 Financial Highlights Strong net income and EPS growth reflecting good performance in each of our operating groups Adjusted1 Reported • Adjusted1 net income up 14% Y/Y Net Income $1,565MM $1,536MM (reported up 11%) EPS $2.36 $2.31 • Adjusted1 EPS up 16% Y/Y (reported up 13%) Operating • Posi
Slide 5: U.S. Operations
U.S. Operations U.S. segment continuing to deliver strong results • U.S. segment represents 28% of the bank’s U.S. Segment Reported Adjusted1 YTD adjusted1 earnings (US$MM) Q3 18 Q2 18 Q3 17 Q3 18 Q2 18 Q3 17 • Q3’18 adjusted1 earnings up 30% Y/Y Revenue 1,432 1,386 1,366 1,432 1,386 1,366 led by st
Slide 6: Key Strategic Areas of Focus
Key Strategic Areas of Focus Focused on efficiency, Accelerating transformation through building on good progress technology investment and innovation Adjusted1 Efficiency Ratio2 Trend Leading Digital Engagement 340 bps 25% Sales through digital channels3 65.5% 64.1% 62.9% 62.1% 53% Active digital u
Slide 7: Financial Results Q3 18
Financial Results For the Quarter Ended July 31, 2018 Tom Flynn Chief Financial Officer Q3 18 Investor Presentation January 2018 7
Slide 8: Q3 2018 - Financial Highlights
Q3 2018 - Financial Highlights Strong net income growth and positive operating leverage across all Groups • Adjusted1 EPS $2.36, up 16% Y/Y (reported up 13%) Reported Adjusted1 • Adjusted1 net income up 14% (reported up 11%) ($MM) Q3'18 Q2'18 Q3'17 Q3'18 Q2'18 Q3'17 – U.S. Segment adjusted1 net inco
Slide 9: Strong Capital Position
Strong Capital Position Strong capital position with CET1 Ratio at 11.4% Common Equity Tier 1 Ratio +32 bps -12 bps -4 bps -2 bps 11.4% 11.3% Q2 2018 Internal capital Higher source Share Other Q3 2018 generation currency RWA repurchases Basis points may not add due to rounding. • CET1 Ratio of 11.4%
Slide 10: Canadian Personal & Commercial Banking
Canadian Personal & Commercial Banking Continued momentum in Commercial with loans up 11% and deposits up 8% • Adjusted1 and reported net income up 5% Y/Y • Revenue up 5% Y/Y Reported Adjusted1 – Average loans up 4% Y/Y. Commercial2 up 11%; Personal2 ($MM) Q3 18 Q2 18 Q3 17 Q3 18 Q2 18 Q3 17 flat, r
Slide 11: U.S. Personal & Commercial Banking
U.S. Personal & Commercial Banking Strong net income with good volume growth Figures that follow are in U.S. dollars Reported Adjusted1 • Adjusted1 net income up 34% Y/Y (reported up 35% Y/Y) (US$MM) Q3 18 Q2 18 Q3 17 Q3 18 Q2 18 Q3 17 • Revenue up 9% Y/Y – Higher deposit revenue and loan volumes (C
Slide 12: BMO Capital Markets
BMO Capital Markets Good net income growth and positive operating leverage • Adjusted1 and reported net income up 7% Y/Y Reported Adjusted1 • Revenue up 5% Y/Y driven by higher trading and ($MM) Q3 18 Q2 18 Q3 17 Q3 18 Q2 18 Q3 17 investment banking activity Trading Products 638 622 604 638 622 604
Slide 13: BMO Wealth Management
BMO Wealth Management Good underlying NIAT growth Y/Y • Adjusted1 net income up 6% Y/Y (reported up 8%) Reported Adjusted1 – Traditional Wealth up 3% Y/Y (reported up 6%); underlying ($MM) Q3 18 Q2 18 Q3 17 Q3 18 Q2 18 Q3 17 growth partially offset by a legal provision – Insurance results up 15% Y/Y
Slide 14: Corporate Services
Corporate Services • Adjusted1 net loss for the quarter was $57MM Reported2 Adjusted1,2 compared with $85MM in the prior year. Reported ($MM) Q3 18 Q2 18 Q3 17 Q3 18 Q2 18 Q3 17 net loss $62MM compared to a net loss of $44MM in the prior year. Results benefited from positive Revenue 4 (21) (8) 4 (21
Slide 15: Risk Review Q3 18
Risk Review For the Quarter Ended July 31, 2018 Surjit Rajpal Chief Risk Officer Q3 18 Investor Presentation January 2018 15
Slide 16: Provision for Credit Losses (PCL)
Provision for Credit Losses (PCL) PCL on Impaired Loans by Operating Q3 18 Q2 18 Q3 171 • Q3’18 PCL ratio on Impaired Loans at 18 bps, Group ($MM) flat Q/Q Consumer – Canadian P&C 96 118 96 • Allowance for Credit Losses on Performing Commercial – Canadian P&C 24 13 23 Loans increased PCL by $9 milli
Slide 17: Gross Impaired Loans (GIL) and Formations
Gross Impaired Loans (GIL) and Formations Formations Gross Impaired Loans • GIL ratio 53 bps, down 3 bps Q/Q By Industry ($MM, as at Q3 18) Canada & Canada & U.S. Total U.S. Total Other Other1 Consumer 202 54 256 453 461 914 Service Industries 12 39 51 63 228 291 Agriculture 13 15 28 74 138 212 Tran
Slide 18: Canadian Residential Mortgages
Canadian Residential Mortgages • Total Canadian residential mortgage portfolio at Residential Mortgages by Region ($B) $107.2 $107.2B, representing 27% of total loans – 68% of the portfolio has an effective remaining Uninsured amortization of 25 years or less Insured – Less than 1% of our uninsured
Slide 19: Appendix
APPENDIX Strategic Highlights December 5, 2017 19
Slide 20: Canadian Personal and Commercial Banking - Balances
Canadian Personal and Commercial Banking - Balances Average Gross Loans & Acceptances ($B) Average Deposits ($B) 217.1 222.2 224.8 158.0 159.8 154.1 99.8 99.7 99.2 98.3 98.4 99.5 45.1 45.3 45.2 8.6 8.9 8.6 64.1 68.7 70.9 55.8 59.6 60.3 Q3'17 Q2'18 Q3'18 Q3'17 Q2'18 Q3'18 Commercial Loans & Acceptanc
Slide 21: U.S. Personal & Commercial Banking – Balances
U.S. Personal & Commercial Banking – Balances Average Gross Loans & Acceptances (US$B) Average Deposits (US$B) 84.71 82.11 5.2 70.5 75.91 5.2 Personal 70.0 5.2 11.5 Loans 65.4 11.5 9.5 5.8 5.7 3.5 24.9 23.6 5.4 3.3 1.5 23.2 3.2 1.5 1.8 Commercial 54.9 57.2 Loans 50.8 46.8 42.2 45.1 Q3'17 Q2'18 Q3'18
Slide 22: Loan Portfolio Overview
Loan Portfolio Overview Gross Loans & Acceptances Canada & By Industry Other1 U.S. Total % of Total • Loans are well diversified by ($B, as at Q3 18) geography and industry Residential Mortgages 107.2 11.5 118.7 30% Consumer Instalment and Other Personal 52.7 9.8 62.5 16% Cards 7.7 0.5 8.2 2% Total
Slide 23: Trading-related Net Revenues and Value at Risk
Trading-related Net Revenues and Value at Risk May 1, 2018 to July 31, 2018 (pre-tax basis and in millions of Canadian dollars) 35 30 25 20 15 10 5 0 (5) (10) (15) Daily Revenue Total Trading VaR Risk Review August 28, 2018 23
Slide 24: Adjusting Items
Adjusting Items Adjusting items1 - Pre-tax ($MM) Q3 18 Q2 18 Q3 17 YTD 18 YTD 17 Amortization of acquisition-related intangible assets2 (28) (29) (35) (85) (115) Acquisition integration costs3 (8) (4) (20) (16) (63) Restructuring costs4 - (260) - (260) - Decrease (Increase) in collective allowance f
Slide 25: 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 May 30, 2018 25