Bank Of Montreal · TSX:BMO
Bank Of Montreal — Q3 2015 Earnings Presentation
26 slides from Bank Of Montreal's earnings presentation, Aug 25, 2015
Slide 1: Investor Presentation Q3 15
Investor Presentation For the Quarter Ended – July 31, 2015 August 25, 2015 Q3 15 August 25, 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, 2015 August 25, 2015 Bill Downe Chief Executive Officer Q3 15 August 25, 2015 3
Slide 4: Q3 2015 Financial Highlights
Q3 2015 Financial Highlights Adjusted EPS Growth of 8% with good operating group performance • Adjusted1 EPS up 8% Y/Y to $1.86 • $1.2 billion in adjusted1 net income, up 6% from very good results a year ago • Credit performance continued to be good • CET1 ratio of 10.4% • Good operating group perfo
Slide 5: Operating Group Performance
Operating Group Performance Results reflect benefit of diversification and our advantaged business mix Q3 F2015 Operating Group Adjusted Net Income1 • Canadian P&C net income up 6% Y/Y, with revenue growth of 4%. Performance is consistent with our expectations for improved second half BMO CM 21% • U
Slide 6: Clear and Consistent Strategy
Clear and Consistent Strategy 1 Achieve industry-leading customer loyalty by delivering on our brand promise. 2 Enhance productivity to drive performance and shareholder value. 3 Leverage our consolidated North American platform to deliver quality earnings growth. 4 Expand strategically in select gl
Slide 7: Financial Results
Financial Results For the Quarter Ended – July 31, 2015 August 25, 2015 Tom Flynn Chief Financial Officer Q3 15 Financial Results Month xx, 2015 7
Slide 8: Q3 2015 - Financial Highlights
Q3 2015 - Financial Highlights Adjusted net income of $1.2B, EPS up 8% Y/Y; good operating group results Adjusted ($MM)1 Q3 14 Q2 15 Q3 15 • EPS up 8%; adjusted net income up 6% Y/Y Revenue 4,735 4,526 4,826 • Net revenue up 9% Y/Y including 4% benefit from the stronger CCPB2 520 24 218 U.S. dollar
Slide 9: Capital & Risk Weighted Assets
Capital & Risk Weighted Assets CET1 Ratio strong at 10.4% Common Equity Tier 1 Ratio (%) • Common Equity Tier 1 Ratio of 10.4%, ~20 bps higher than Q2’15 10.1 10.1 10.2 10.4 - ~60 bps increase due to CET1 capital: 9.6 o retained earnings growth (~+30 bps) o higher AOCI, net of higher capital deducti
Slide 10: Canadian Personal & Commercial Banking
Canadian Personal & Commercial Banking Good net income growth of 6%, in line with expectations for second half of year Adjusted ($MM)1 Q3 14 Q2 15 Q3 15 • Adjusted net income up 6% Y/Y and 14% Q/Q driven by Revenue (teb) 1,638 1,605 1,698 revenue growth and lower credit losses. Expense PCL 129 143 1
Slide 11: U.S. Personal & Commercial Banking
U.S. Personal & Commercial Banking Adjusted net income up 36% in CAD; 15% in USD with good loan growth and credit performance Adjusted (US$MM)1 Q3 14 Q2 15 Q3 15 • Adjusted net income of $235MM up 36% Y/Y in Canadian Revenue (teb) 728 707 727 dollar terms. Figures that follow are in U.S. dollars PCL
Slide 12: BMO Capital Markets
BMO Capital Markets Results reflect stable revenue and focus on expenses offset by higher provisions Adjusted ($MM)1 Q3 14 Q2 15 Q3 15 • Adjusted net income down 11% Y/Y from strong results in Trading Products the prior year; down 8% Q/Q 597 660 619 Revenue • Revenue up 2% Y/Y; down 1% Q/Q. Excludin
Slide 13: Wealth Management
Wealth Management Good net income growth of 10 % Y/Y Adjusted ($MM)1 • Traditional Wealth net income up 8% Y/Y and 5% Q/Q Q3 14 Q2 15 Q3 15 • Insurance net income up 16%; prior year results impacted by Revenue 1,508 1,188 1,336 movements in interest rates CCPB2 520 24 218 • Net revenue up 13% Y/Y wi
Slide 14: Corporate Services
Corporate Services Adjusted ($MM)1,2 Q3 14 Q2 15 Q3 15 • Adjusted net loss of $69MM compared to net loss of $54MM Revenue (29) (57) (15) in the prior year and $121MM in the prior quarter Group teb offset2 (154) (100) (114) • Y/Y and Q/Q better non-teb revenue primarily due to higher Total Revenue (t
Slide 15: Risk Review
Risk Review For the Quarter Ended – July 31, 2015 August 25, 2015 Surjit Rajpal Chief Risk Officer Q3 15 Financial Results Month xx, 2015 15
Slide 16: Provision for Credit Losses (PCL)
Provision for Credit Losses (PCL) PCL By Operating Group Q3 141 Q2 15 Q3 15 (C$MM) Consumer – Canadian P&C 107 114 86 • PCL remained stable at 20bps Commercial – Canadian P&C 22 29 23 Total Canadian P&C 129 143 109 Consumer – U.S. P&C 33 24 25 Commercial – U.S. P&C 24 (6) (6) Total U.S. P&C 57 18 19
Slide 17: Gross Impaired Loans (GIL) and Formations
Gross Impaired Loans (GIL) and Formations Formations Gross Impaired Loans By Industry • GIL ratio remained steady at 66 bps (C$MM) Canada & Canada & U.S. Total U.S. Total Other Other1 • GIL increased Q/Q due to FX Consumer 133 111 244 353 799 1,152 • Impaired formations increased Q/Q Manufacturing 1
Slide 18: Loan Portfolio Overview
Loan Portfolio Overview Gross Loans & Acceptances Canada & By Industry U.S. Total % of Total (C$B) Other1 • Loans are well diversified by Residential Mortgages 95.4 9.2 104.6 32% geography and industry Personal Lending 49.0 16.7 65.7 20% • Exposure to Oil & Gas remains Cards 7.4 0.6 8.0 3% modest at
Slide 19: Canadian Residential Mortgages
Canadian Residential Mortgages • Total Canadian residential mortgage portfolio at $95.4B represents 43% of Canadian gross loans and acceptances ─ 59.5% of the portfolio is insured ─ Loan-to-value (LTV)1 on the uninsured portfolio is 58%2 ─ 71% of the portfolio has an effective remaining amortization
Slide 20: Trading Revenue vs. VaR
Trading Revenue vs. VaR Risk Review August 25, 2015 20
Slide 21: Appendix
APPENDIX Financial Results August 25, 2015 21
Slide 22: Canadian Personal & Commercial Banking – Balances
Canadian Personal & Commercial Banking – Balances Average Loans & Acceptances Y/Y Growth (C$B) 192.5 195.3 189.1 3% Loans 90.1 • Total loan growth of 3% Y/Y 86.6 88.9 - Mortgages up 4% Y/Y - Consumer loans down 2% Y/Y due in part to reducing 43.2 43.3 44.1 exposure to certain auto loans 8.4 8.3 8.5
Slide 23: U.S. Personal & Commercial Banking – Commercial Balances
U.S. Personal & Commercial Banking – Commercial Balances All amounts in US$B Average Commercial Loans 35.3 35.6 31.6 4.4 4.6 4.5 Loans • Good core C&I loan growth, up 14% Y/Y 30.9 31.0 • Core Commercial Real Estate portfolio up 14% Y/Y 27.1 • Q/Q balances reflect higher than normal payoffs Q3'14 Q2'
Slide 24: U.S. Personal & Commercial Banking – Personal Balances
U.S. Personal & Commercial Banking – Personal Balances All amounts in US$B Average Personal Loans 31.6* 30.7* 30.6* Loans 4.9 5.1 5.2 Serviced Mortgages • Core Business Banking up 1% Y/Y • Indirect Auto down 3% Y/Y Mortgages** 11.5 11.0 10.8 • Mortgage portfolio down 7% Y/Y Other Loans*** • Serviced
Slide 25: Adjusting Items
Adjusting Items Adjusting1,2 items – Pre-tax ($MM) Q3 14 Q2 15 Q3 15 Amortization of acquisition-related intangible assets (39) (40) (40) Acquisition integration costs (9) (11) (9) Restructuring costs3 - (149) - Adjusting items included in reported pre-tax income (48) (200) (49) Adjusting1,2 items –
Slide 26: Investor Relations Contact Information
Investor Relations Contact Information www.bmo.com/investorrelations E-mail: investor.relations@bmo.com Fax: 416.867.3367 LISA HOFSTATTER CHRISTINE VIAU Managing Director, Investor Relations Director, Investor Relations 416.867.7019 416.867.6956 lisa.hofstatter@bmo.com christine.viau@bmo.com Financi