Bank Of Montreal · TSX:BMO
Bank Of Montreal — Q2 2014 Earnings Presentation
31 slides from Bank Of Montreal's earnings presentation, Jun 13, 2014
Slide 1: Investor Presentation Q2 14
Investor Presentation June 13, 2014 Q2 14
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: BMO Financial Group
BMO Financial Group 8th largest bank in North America1; 2nd largest Canadian bank by retail branches in Canada and the U.S. Who we are Q2’14 Results * Adjusted2 Reported Revenue ($B) 4.0 4.0 Established in 1817, Canada’s first bank Net Income ($B) 1.1 1.1 In Canada: a full service, universal ban
Slide 4: Clear and Consistent Strategy
Clear and Consistent Strategy Four areas of operating focus are going to be dominant in the execution of our strategy AREAS OF OPERATING FOCUS STRATEGIC PRIORITIES 1 Achieve industry-leading customer loyalty Continuing to build a strong, by delivering on our brand promise. differentiated brand 2 Enh
Slide 5: Operating Group Overview
Operating Group Overview Canadian Personal & Commercial Banking U.S. Personal & Commercial Banking • Over 7 million customers • Over 2 million customers • Over 900 branches; 2,900 ABMs • Over 600 branches; 1,300 ABMs • 2nd in Canadian business banking loan market • Footprint includes six contiguous
Slide 6: Reasons to Invest in BMO
Reasons to Invest in BMO Clear opportunities for growth across a diversified North American footprint Large North American commercial banking businesses with advantaged market share Good momentum in our well-established Canadian Personal & Commercial banking Award-winning wealth franchise wi
Slide 7: Proven Strength in Commercial Banking
Proven Strength in Commercial Banking Commercial loan growth remains robust across our large North American platform Canadian P&C U.S. P&C Strong commercial lending with growth1 of 10% Y/Y and Strong core C&I loan growth, up 19% Y/Y reflecting 4% Q/Q balance increases across all segments Stron
Slide 8: Continued Momentum in our Canadian P&C Banking Business
Continued Momentum in our Canadian P&C Banking Business Strong net income growth of 14% Y/Y benefitting from robust volume growth Operating leverage strong at 3.3% in Q2; 3rd consecutive quarter above 2% Solid improvement in efficiency ratio; Q2’14 50.2% down 160bps Y/Y Commercial loans1 up
Slide 9: Wealth Management
Wealth Management Strong wealth franchise with good growth prospects; contributes over 20% of total bank revenue Assets under management and administration over $600B Wealth Management BMO Nesbitt Burns (Full-service brokerage) F2013 Revenue by Line of Business (%) Highest client loyalty score f
Slide 10: BMO's Strategic Footprint
BMO’s Strategic Footprint Combined population and GDP of BMO’s U.S. Midwest States is greater than Canada BMO’s strategic footprint is anchored by our business in the heartland of the continental economy. Our three operating groups serve individuals, businesses, governments and corporate customers r
Slide 11: Balanced and Disciplined Approach to Capital Management
Balanced and Disciplined Approach to Capital Management Common Equity Tier 1 Ratio (%) CET1 Ratio of 9.7% increased approximately 40 bps from Q1’14 9.7 9.6 9.9 9.7 9.3 due to lower RWA and benefit from increased retained earnings RWA of $235B decreased $5B from Q1’14 due to reduced market risk e
Slide 12: Strong, Stable Long-Term Financial Trends
Strong, Stable Long-Term Financial Trends Revenue ($B) Net Income & Pre-Provision Pre-tax Earnings ($B) PPPT: 10 year CAGR 7.2% 3.6 3.7 4.6 5.2 5.8 5.8 3.2 3.5 2.7 3.3 10 year CAGR 6.0% 15.9 16.1 13.9 Net Income: 10 year CAGR 8.8% 12.2 4.2 4.2 11.1 9.8 10.0 10.2 9.3 9.3 3.1 2.7 2.8 2.3 2.4 2.1 2.0 1
Slide 13: Advantaged Business Mix
Advantaged Business Mix Diversified by both customer segment and geography Q2’14 Operating Group Q2’14 Adjusted Net Income Revenue* by Geography1 Wealth Management U.S. Canadian 21% 22% P&C 38% Other 5% BMO CM Canada 23% 73% U.S. P&C 18% * Excludes Corporate Services 1 Reported net income by Geograp
Slide 14: Q2 2014 - Financial Highlights
Q2 2014 - Financial Highlights Adjusted net income of $1.1B with EPS growth of 13% Adjusted ($MM) 1,2 Q2 13 Q1 14 Q2 14 Adjusted EPS up 13% Y/Y reflecting strong operating group performance Revenue 3,708 4,122 4,041 Revenue growth of 9% Y/Y reflecting good growth in Expense 2,384 2,653 2,566 Wea
Slide 15: Canadian Personal & Commercial Banking
Canadian Personal & Commercial Banking Continued momentum with strong net income growth and operating leverage Adjusted Net Income1 and Revenue ($MM) Net income of $482MM up 14% Y/Y 1,564 1,566 1,602 1,560 1,473 Strong operating leverage of 3.3%; above 2% for the 3rd consecutive quarter 489 486
Slide 16: U.S. Personal & Commercial Banking
U.S. Personal & Commercial Banking Good loan growth and stable revenue Q/Q (Amounts in U.S.$MM) Adjusted Net Income1 and Revenue (US$MM) 711 696 688 693 691 Adjusted net income down 6% Y/Y and 8% Q/Q Pre-Provision, Pre-tax earnings2 up 4% Q/Q Revenue stable Q/Q despite the impact of fewer days
Slide 17: Wealth Management
Wealth Management Continued strong performance with adjusted net income up 36% Y/Y Adjusted Net Income1 and Revenue ($MM) Adjusted net income up 36% Y/Y and 10% Q/Q. 1,040 867 867 878 Continued strong performance in traditional wealth with 763 adjusted net income up 23% and revenue up 11% 69 G
Slide 18: BMO Capital Markets
BMO Capital Markets Strong results reflect the benefit of a diversified business mix Adjusted net income up 17% Y/Y and 10% Q/Q with good Adjusted Net Income1 and Revenue ($MM) contribution from the U.S. business 974 953 840 860 797 Strong ROE of 20.8% 269 277 306 262 217 Revenue up 14% Y/Y du
Slide 19: Appendix
APPENDIX Investor Presentation | Q2 2014 19
Slide 20: Canadian Personal & Commercial Banking – Balances
Canadian Personal & Commercial Banking – Balances Average Loans & Acceptances Y/Y Growth (C$B) 185.6 187.2 9% Loans 171.8 Total loan growth of 9% Y/Y and 1% Q/Q 85.1 85.2 75.7 Good personal lending growth¹ with balances up 9% Y/Y and flat Q/Q 43.1 44.1 44.2 Strong commercial lending with growt
Slide 21: U.S. Personal & Commercial Banking – Commercial Balances
U.S. Personal & Commercial Banking – Commercial Balances All amounts in U.S. $B Average Commercial Loans Loans 30.9 28.6 1.0 Strong core C&I loan growth, up 19% Y/Y 27.1 1.1 3.6 2.1 3.2 2.9 Growth in core C&I reflects balance increases across all segments Good growth in Commercial Real Estate
Slide 22: U.S. Personal & Commercial Banking – Personal Balances
U.S. Personal & Commercial Banking – Personal Balances All amounts in U.S. $B Average Personal Loans 31.1* 31.2* 31.1* 4.5 4.8 4.9 Serviced Mortgages Loans Business Banking up 1% Q/Q; pipeline remains strong Mortgages** 12.4 12.0 11.8 Serviced mortgage portfolio up 9% Y/Y and 1% Q/Q Other Loans*
Slide 23: Loan Portfolio Overview
Loan Portfolio Overview Canadian and U.S. portfolios well diversified by industry Gross Loans & Acceptances Canada & % of By Industry U.S. Total Other1 Total (C$B) Residential Mortgages 89.8 7.8 97.6 33% 2% loan growth Q/Q driven primarily Personal Lending 49.6 15.0 64.6 22% by Canadian commercial
Slide 24: Provision for Credit Losses (PCL)
Provision for Credit Losses (PCL) Good credit performance continues PCL By Operating Group (C$MM) Q2 13 Q1 14 Q2 14 Specific PCL improved with a Q/Q Consumer – Canadian P&C 117 91 110 $9MM reduction excluding Commercial – Canadian P&C 36 50 23 Purchased Credit Impaired portfolio Total Canadian P&C
Slide 25: Canadian Residential Mortgages
Canadian Residential Mortgages Total Canadian residential mortgage portfolio at $89.8B represents 43% of Canadian gross loans and acceptances – smallest of the big five banks 60% of the portfolio is insured Loan-to-value (LTV)1 on the uninsured portfolio is 59%2 67% of the portfolio has an e
Slide 26: Liquidity and Funding Strategy
Liquidity and Funding Strategy BMO’s Cash and Securities to Total Assets Ratio reflects a strong liquidity position BMO’s large base of customer deposits, along with our strong capital base, reduces reliance on wholesale funding Cash and Securities to Total Assets Ratio (%) (1) Core and Customer
Slide 27: Diversified Wholesale Term Funding Mix
Diversified Wholesale Term Funding Mix BMO's wholesale funding principles seek to match the term of assets with the term of funding. Loans for example are funded with customer deposits and capital, with any difference provided by longer-term wholesale funding BMO has a well diversified wholesale
Slide 28: Corporate Governance
Corporate Governance Comprehensive code of business conduct and ethics, FirstPrinciples, guides conduct and ethical decision-making by our directors, officers and employees Governance practices reflect emerging best practices and BMO meets or exceeds legal, regulatory, TSX and NYSE requirements
Slide 29: Economic Outlook and Indicators
Economic Outlook and Indicators Canada United States Eurozone Economic Indicators (%)1 2013 2014E 2015E 2013 2014E 2015E 2013 2014E 2015E GDP Growth 2.0 2.3 2.5 1.9 2.5 3.1 (0.4) 0.9 1.2 Inflation 0.9 1.8 1.8 1.5 1.8 2.0 1.4 0.8 1.4 Interest Rate (3mth Tbills) 0.97 0.92 1.12 0.06 0.03 0.27 0.15 0.20
Slide 30: Adjusting Items
Adjusting Items Adjusting1 items – Pre-tax ($MM) Q2 13 Q1 14 Q2 14 Credit-related items on the purchased performing loan portfolio 119 - - Acquisition integration costs (50) - - Amortization of acquisition-related intangible assets (31) (31) (28) Decrease/(increase) in the collective allowance for c
Slide 31: 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 Director, Investor Relations 416.867.7019 andrew.chin@bmo.com