Bank Of Montreal · TSX:BMO
Bank Of Montreal — Q2 2024 Earnings Presentation
43 slides from Bank Of Montreal's earnings presentation, May 29, 2024
Slide 1: Investor Presentation Q2 24
BMO Financial Group Investor Presentation For the Quarter Ended April 30, 2024 May 29, 2024 Q2 24
Slide 2: Caution Regarding Forward-Looking Statements
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 securities regulators or the U.S. Securities and E
Slide 3: Darryl White, Chief Executive Officer
Darryl White Chief Executive Officer Q2 24
Slide 4: Good operating performance across most businesses
Good operating performance across most businesses Strong foundation, disciplined expense control, positioned for growth Q2 2024 Net Income EPS PPPT2 Growth Total Assets Adjusted1 $2.0B Adjusted1 $2.59 Adjusted1 7% $1.4T Reported $1.9B Reported $2.36 Reported 37% Efficiency Ratio ROE ROTCE3 CET14 Adj
Slide 5: BMO U.S. well-positioned for growth
BMO U.S. well-positioned for growth Benefiting from the strength of BMO’s trillion-dollar balance sheet Top 10 Physical footprint in Digital platforms 4 million U.S. Bank1 32 states across all 50 states customers BMO U.S. Bank BMO U.S. Segment BMO Financial Group US$2672 billion in assets US$4412 bi
Slide 6: BMO U.S. Performance Highlights
BMO U.S. Performance Highlights Diversified business mix, expense savings driving above peer performance BMO U.S. Segment BMO U.S. Segment BMO U.S. Segment Pre-Provision Pre-tax Earnings1 (US$MM) Business Mix by Operating Group (%) Efficiency Ratio (%) +7% Adjusted2 Q2’24 Y/Y Q2’24 Last Twelve Month
Slide 7: Advancing our Digital First strategy
Advancing our Digital First strategy Delivering on our Digital First agenda, Driving tangible customer Being recognized as an industry leader powered by AI, data and tech modernization and business value and innovator • Driving tangible customer and business Active Digital Users, Retail1 (000) • Ran
Slide 8: Our Purpose
Our Purpose For a Thriving Economy • Announced the continuation of BMO Celebrating Women Grant Program, an initiative dedicated to Providing access to capital and supporting women-owned businesses that demonstrate they are addressing at least two of the United valuable financial advice – investing i
Slide 9: Financial Results
Financial Results For the Quarter Ended April 30, 2024 Tayfun Tuzun Chief Financial Officer Q2 24
Slide 10: Q2 F2024 - Financial Highlights
Q2 F2024 - Financial Highlights Strong PPPT1 growth and positive operating leverage offset by higher PCL • Adjusted2 EPS $2.59, down $0.30 Y/Y Reported Adjusted2 (reported $2.36, up $1.10) ($MM) Q2 24 Y/Y Q/Q Q2 24 Y/Y Q/Q • Adjusted2 net income down 7% Y/Y (reported Revenue 7,974 2% 4% 7,988 2% 2%
Slide 11: Balance Sheet
Balance Sheet Diversified loan and deposit portfolio • Average gross loans and acceptances up 2% Y/Y, or 4% Average Gross Loans and Acceptances ($B) excluding the impact of Indirect Retail Auto wind-down and RV loan portfolio sale2, due to: 646.9 655.0 657.1 – 2% growth in Business & Government loan
Slide 12: Net Interest Margin
Net Interest Margin1 • Reported NII down 6% Y/Y and 4% Q/Q NII ($MM) and NIM ex. trading and Insurance (%)2 • Adjusted2 NII ex. trading down 1% Y/Y as volume 1.90 1.92 1.90 1.84 1.82 growth was offset by lower margins; down 2% Q/Q or 2 6,900 relatively unchanged excluding the impact of two 1.90 1.92
Slide 13: Q2 F2024 Non-Interest Expense
Q2 F2024 Non-Interest Expense Delivering against expense commitments, driving positive operating leverage • Adjusted1 expenses down 1% Y/Y Non-Interest Expense Trend (reported down 12%) (1%) Adjusted1 – Expenses well-controlled; benefit from (12%) Reported efficiency savings and Bank of the West cos
Slide 14: Strong Q2'24 CET1 Ratio of 13.1%
Strong Q2’24 CET1 Ratio1 of 13.1% Common Equity Tier 1 Ratio1 +10 bps +1 bp -5 bps +1 bp 13.1% +11 bps +15 bps 12.8% Source Currency RWA-+5 bps Q1’24 Internal capital DRIP Market Risk Op Risk Credit Risk Other Q2’24 generation RWA RWA RWA • Q2’24 CET1 ratio1 of 13.1%, up from Q1’24 – Internal capita
Slide 15: Canadian Personal & Commercial Banking
Canadian Personal & Commercial Banking Continued strong revenue performance driving PPPT2 growth of 17% Y/Y • Adjusted1 net income up 7% Y/Y Reported Adjusted1 (reported up 6%) ($MM) Q2 24 Y/Y Q/Q Q2 24 Y/Y Q/Q • Adjusted1 and reported PPPT2 up 17% Y/Y Net interest income 2,154 12% 1% 2,154 12% 1% •
Slide 16: U.S. Personal & Commercial Banking
U.S. Personal & Commercial Banking Results reflect a challenging banking environment partially offset by lower expenses Amounts that follow are in U.S. dollars: Reported Adjusted1 1 (US$MM) Q2 24 Y/Y Q/Q Q2 24 Y/Y Q/Q • Adjusted net income down 25% Y/Y 3 (reported down 26%) Net interest income (teb)
Slide 17: BMO Wealth Management
BMO Wealth Management Solid operating performance with growth in client assets and good expense management • Adjusted1 and reported net income Reported Adjusted1 up 33% Y/Y ($MM) Q2 24 Y/Y Q/Q Q2 24 Y/Y Q/Q • Adjusted1 and reported revenue Wealth & Asset Management 1,291 4% 4% 1,291 4% 4% up 8% Y/Y
Slide 18: BMO Capital Markets
BMO Capital Markets Good client activity and record debt underwriting driving strong PPPT3 growth • Adjusted1 net income up 23% Y/Y Reported Adjusted1 (reported up 24%) ($MM) Q2 24 Y/Y Q/Q Q2 24 Y/Y Q/Q • Adjusted1 PPPT3 up 21% Y/Y Global Markets 1,008 8% 6% 1,008 8% 6% (reported up 22%) I&CB 653 1%
Slide 19: Corporate Services
Corporate Services • Adjusted2 net loss of $244MM and Reported Adjusted2 reported net loss of $328MM for the ($MM)1 Q2 24 Y/Y Q/Q Q2 24 Y/Y Q/Q quarter, compared with an adjusted2 net Revenue (277) (252) 172 (263) (245) 8 loss of $63MM and reported net loss of 3 Group teb offset (11) 81 17 (11) 81 1
Slide 20: Risk Review
Risk Review For the Quarter Ended April 30, 2024 Piyush Agrawal Chief Risk Officer Q2 24
Slide 21: Provision for Credit Losses (PCL)
Provision for Credit Losses (PCL) PCL By Operating Group • Q2’24 PCL ratio on impaired loans4 of 41 bps; Q2 23 Q3 23 Q4 23 Q1 24 Q2 24 ($MM) YTD 35 bps Personal & Business Banking 150 162 190 204 247 • Higher provisions across businesses, reflecting impact of the higher interest rate environment Com
Slide 22: Allowance and Provision on Performing Loans
Allowance and Provision on Performing Loans • The $47MM provision for credit losses on Allowance on Performing performing loans was primarily driven by portfolio Q2 24 Loans (APL) and PCL on APL to credit migration and uncertainty in credit Q1 24 Q2 24 Foreign Q2 24 Performing Loans (PCL) Performing
Slide 23: Gross Impaired Loans and Formations
Gross Impaired Loans and Formations • Gross impaired loans (GIL) ratio3 of 79 bps, up 14 bps Q/Q, Formations Gross Impaired Loans with the largest increases in the services industries, By Industry commercial real estate and wholesale trade ($MM, as at Q2 24) CA & CA & U.S. Total U.S. Total Other Oth
Slide 24: Business & Government Portfolio Overview
Business & Government Portfolio Overview Gross Loans & Acceptances B&G Portfolio Industry Diversification Canada & Total % of By Industry U.S. Other1 BMO Total Financing Products 2% ($B, as at Q2 24) Construction 2% Oil & Gas 1% 1 Others 3% Total Consumer 232.8 53.0 285.8 43% Utilities 3% Commercial
Slide 25: Appendix
Appendix
Slide 26: Loan Portfolio Overview
Loan Portfolio Overview Gross Loans & Acceptances • Portfolio is well-diversified by geography and Canada & Total % of segment By Industry U.S. Other1 BMO Total ($B, as at Q2 24) • Gross Loans & Acceptances up 2% Q/Q or 1% excluding the impact of the stronger Residential Mortgages 151.8 28.7 180.5 2
Slide 27: Commercial Real Estate
Commercial Real Estate • Commercial Real Estate (CRE) portfolio at $72.8B represents 11% of CRE by Geography1 Total bank Gross Loans & Acceptances (GL&A) British Columbia 13% • Portfolio is well-diversified across businesses, property types and Quebec 6% geographies Ontario 22% • Well-managed with c
Slide 28: Canadian Residential Secured Lending Portfolio Overview
Canadian Residential Secured Lending Portfolio Overview • Total Canadian residential-secured lending portfolio at $200.7B, representing 30% of total loans Residential-Secured Lending by Region ($200.7B) – LTV1 on uninsured of 52% $97.8 Amortizing HELOC – 90-day delinquency rate for RESL remains good
Slide 29: Canadian Mortgage Portfolio Profile
Canadian Mortgage Portfolio Profile • The impact of higher interest rates on payments is primarily realized upon renewal for both fixed and variable rate mortgages • Variable rate mortgages with fixed payments are impacted through an extension of amortization until renewal. At renewal, the product r
Slide 30: Trading-Related Net Revenue and Value-at-Risk
Trading-Related Net Revenue and Value-at-Risk February 1, 2024 to April 30, 2024 (pre-tax basis and in millions of Canadian dollars) 40 30 20 10 0 (10) (20) (30) (40) (50) Daily Revenue Total Trading VaR Risk Review • May 29, 2024 30
Slide 31: Highly diversified businesses delivering resilient performance
Highly diversified businesses delivering resilient performance Canadian Personal & Commercial Banking U.S. Personal & Commercial Banking Reported Revenue ($MM) Reported Revenue (teb1, US$MM) 2,716 2,796 2,778 2,819 2,490 1,875 1,811 1,822 1,833 1,753 757 803 Commercial 768 761 732 Commercial 1,117 1
Slide 32: Canadian Personal & Commercial Banking – Balances
Canadian Personal & Commercial Banking – Balances Average Gross Loans & Acceptances ($B) Average Deposits ($B) 317.3 319.9 297.3 304.7 288.8 268.3 129.3 136.5 137.3 199.6 203.3 6.8 6.7 187.6 6.4 50.7 51.9 52.0 10.8 12.8 13.0 107.5 109.4 110.8 94.0 80.7 89.2 Q2'23 Q1'24 Q2'24 Q2'23 Q1'24 Q2'24 1 Comm
Slide 33: U.S. Personal & Commercial Banking – Balances
U.S. Personal & Commercial Banking – Balances Amounts on this slide are in U.S. dollars1 Average Gross Loans & Acceptances (US$B) Average Deposits (US$B) 154.6 152.0 163.1 162.4 149.0 160.6 33.3 33.8 31.1 77.1 79.9 82.5 121.3 118.2 117.9 86.0 80.7 79.9 Q2'23 Q1'24 Q2'24 Q2'23 Q1'24 Q2'24 Commercial
Slide 34: Canadian and U.S. deposit trends
Canadian and U.S. deposit trends Canadian P&C and BMO Wealth Management deposits CDE$B, average balances 342 333 318 314 6% • Total Canadian deposits grew 9% Y/Y due to 290 7% 266 6% 6% new customer acquisition, a comprehensive 3% 238 2% 20% 20% 20% 21% onboarding program and increased customer 4% 2
Slide 35: Asset Yields and Liabilities Costs
Asset Yields1 and Liabilities Costs2 Average Earning Assets ($B) and Yield1 (%) Average Liabilities ($B) and Costs2 (%) 5.40% 3.56% 3.72% 5.26% 5.27% 3.18% 3.34% 4.86% 5.06% Yield on Total 2.92% Cost on Total Average Liabilities Earning Assets 1,196 1,218 1,261 1,236 1,265 1,246 1,272 1,162 1,162 1,
Slide 36: Interest Rate Sensitivity
Interest Rate Sensitivity • Year 1 benefit / exposure to an incremental +/- 100bps rate • Term rates decreased in Q2’24 and continue to be volatile, shock reflects a relatively neutral positioning but are still higher than historical rates • Year 2 benefit to rising rates (+100bps) of approximately
Slide 37: Non-GAAP and Other Financial Measures
Non-GAAP and Other Financial Measures Results and measures in this document are presented on a GAAP basis. Unless otherwise indicated, all amounts are in Canadian dollars and have been derived from our audited annual consolidated financial statements and our unaudited interim consolidated financial
Slide 38: Non-GAAP and Other Financial Measures
Non-GAAP and Other Financial Measures9 (Canadian $ in millions, except as noted) Q2 24 Q1 24 Q2 23 YTD 24 YTD 23 (1) Reported net income in Q1-2023 included losses of $1,461 million Reported Net interest income 4,515 4,721 4,814 9,236 8,835 ($2,011 million pre-tax) related to the acquisition of Bank
Slide 39: Summary of Reported and Adjusted Results by Operating Group
Summary of Reported and Adjusted Results by Operating Group (Canadian $ in millions unless otherwise stated) Q2 24 Q1 24 Q4 23 Q3 23 Q2 23 YTD 24 YTD 23 Total Bank Reported Net Income 1,866 1,292 1,710 1,565 1,029 3,158 1,162 Management of Fair Value Changes on the Purchase of Bank of the West — — —
Slide 40: Pre-Provision, Pre-Tax Earnings (PPPT) Reconciliation
Pre-Provision, Pre-Tax Earnings (PPPT) Reconciliation (Canadian $ in millions unless otherwise stated) Q2 24 Q1 24 Q4 23 Q3 23 Q2 23 YTD 24 YTD 23 Total Bank Reported Income before taxes 2,425 1,656 2,194 1,988 1,265 4,081 1,765 Total provision for (recovery of) credit losses 705 627 446 492 1,023 1
Slide 41: Revenue, Non-Interest Expense and Efficiency Ratio Reconciliation
Revenue, Non-Interest Expense and Efficiency Ratio Reconciliation (Canadian $ in millions unless otherwise stated) Q2 24 Q1 24 Q4 23 Q3 23 Q2 23 YTD 24 YTD 23 F2023 F2022 Total Bank Reported Revenue 7,974 7,672 8,319 8,052 7,789 15,646 12,888 29,259 33,710 Insurance claims, commissions and changes i
Slide 42: Summary of Reported and Adjusted Result by Operating Group
Summary of Reported and Adjusted Result by Operating Group Reported Adjusted Reported Adjusted (Canadian $ in millions unless otherwise stated) (Canadian $ in millions unless otherwise stated) Q2 24 Q1 24 Q2 23 Q2 24 Q1 24 Q2 23 Q2 24 Q1 24 Q2 23 Q2 24 Q1 24 Q2 23 Total Bank Revenue 7,974 7,672 7,78
Slide 43: Investor Relations
BMO Financial Group Investor Relations Contact Information bmo.com/investorrelations E-mail: investor.relations@bmo.com BILL ANDERSON PERRY CHEN-SEE Director, Investor Relations Director, Investor Relations 416.867.7834 416.359.8074 bill2.anderson@bmo.com perry.chensee@bmo.com