Bank Of Montreal · TSX:BMO
Bank Of Montreal — Q1 2017 Earnings Presentation
38 slides from Bank Of Montreal's earnings presentation, April 2017
Slide 1: Investor Presentation Q1 2017
Investor Presentation April 2017 Q1 17 Investor Presentation Q1 2017 1
Slide 2: Forward looking statements & non-GAAP measures
Forward looking statements & non-GAAP measures Caution Regarding Forward-Looking Statements We caution that the foregoing list is not exhaustive of all possible factors. Other factors and Bank of Montreal’s public communications often include written or oral forward-looking risks could adversely aff
Slide 3: BMO Financial Group: Who we are
BMO Financial Group 8th largest bank in North America1 with an attractive and diversified business mix Who we are Q1 2017 Results * Adjusted2 Reported Net Revenue ($B)3 5.4 5.4 • Established in 1817, Canada’s first bank Net Income ($B) 1.5 1.5 • In Canada: a full service, universal bank across EPS (
Slide 4: Reasons to Invest
Reasons to Invest • Strong, diversified businesses that continue to • Well-capitalized with an attractive dividend yield deliver robust earnings growth and long-term value for shareholders: • Committed to customer experience, measured through a disciplined loyalty program – Large North American comm
Slide 5: Investor Presentation Q1 2017
Investor Presentation Q1 2017 5
Slide 6: BMO's Strategic Footprint
BMO’s Strategic Footprint Investor Presentation Q1 2017 6
Slide 7: Diversified by businesses, customer segments and geographies
Diversified by businesses, customer segments and geographies Adjusted Net Income by Canadian P&C Operating Group – LTM1,2 • Full range of financial products and services to eight million customers • Over 900 branches and nearly 3,300 ABMs • Strong commercial banking business, as evidenced by BMO’s n
Slide 8: Digital technology is transforming our business
Digital technology is transforming our business Extended technology capabilities delivering against a clear set of goals: • Personalized, intuitive applications • A unified customer experience across channels and geographies • Faster delivery to market • Enhanced risk management • Digitization of bu
Slide 9: Strong financial performance and shareholder returns
Strong financial performance and shareholder returns Dividends Declared ($ per share) 15-year CAGR +7% • Quarterly dividend of $0.88 per share, up 5% Y/Y • Dividend yield of 3.5%1 1 • BMO has the longest running dividend payout 3.24 3.40 3.52 record of any company in Canada, at 188 years 2.80 2.80 2
Slide 10: Strong Capital Position
Strong Capital Position Well capitalized with CET1 Ratio at 11.1% Common Equity Tier 1 Ratio +9 bps -2 bps 11.1% +10 bps +43 bps +31 bps 10.1% 2016 Q4 Internal capital Lower RWA Pension and Share issuances Other 2017 Q1 generation1 (excluding FX) other employee future benefit Basis points may not ad
Slide 11: Q1 2017 - Financial Highlights
Q1 2017 - Financial Highlights Strong results with good underlying performance and positive operating leverage • Reported net income of $1.5B up 39% Y/Y; EPS of $2.22 up 40% Y/Y • Adjusted1 net income of $1.5B and EPS of $2.28, both up 30% Y/Y • Results include net gain of $133MM from sale of Moneri
Slide 12: Operating Groups
Operating Groups Investor Presentation Q1 2017 12
Slide 13: Canadian Personal & Commercial Banking
Canadian Personal & Commercial Banking Strengths and Value Drivers Our Strategic Priorities • Highly engaged team of dedicated employees focused Focused on capturing key growth and loyalty on providing a personalized banking experience opportunities while capitalizing on the shift to digital • #2 ma
Slide 14: Canadian Personal & Commercial Banking
Canadian Personal & Commercial Banking Good performance with continued positive operating leverage • Net income up 40% Y/Y; the gain on sale of Moneris US ($168MM)2 contributed 31% • Revenue up 15% Y/Y reflecting higher non-interest revenue, including gain of $187MM and higher balances, partially of
Slide 15: U.S. Personal & Commercial Banking
U.S. Personal & Commercial Banking Strengths and Value Drivers Our Strategic Priorities • Rich heritage of 170 years in the U.S. Midwest, with a Aim to grow our business and be a leader in our markets deep commitment to our communities and helping our by creating a differentiated, intuitive customer
Slide 16: U.S. Personal & Commercial Banking
U.S. Personal & Commercial Banking Good net income growth with higher net interest margin • Adjusted1 net income of $272MM, up 3% Y/Y (reported $260MM, up 4%) Figures that follow are in U.S. dollars • Adjusted1 net income up 7% Y/Y (reported 8%) driven by higher deposit revenue and loan growth; incl
Slide 17: BMO Wealth Management
BMO Wealth Management Strengths and Value Drivers Our Strategic Priorities • Planning and advice-based approach that integrates Deliver on our clients’ wealth management needs now investment, insurance, specialized wealth management and and into the future by enhancing the client experience, core ba
Slide 18: BMO Wealth Management
BMO Wealth Management Strong Y/Y results in both Traditional Wealth and Insurance • Adjusted1 net income of $281MM, up 60% Y/Y (reported $266MM, up 81% Y/Y) – Traditional Wealth adjusted1 results up 16% Y/Y (reported up 30%) from improved market conditions and business growth – Insurance earnings up
Slide 19: BMO Capital Markets
BMO Capital Markets Strengths and Value Drivers Our Strategic Priorities • Unified coverage and integrated distribution across our Aim to be a lead North American investment bank North American platform and complementary global enabling clients to achieve their goals. We offer an footprint integrate
Slide 20: BMO Capital Markets
BMO Capital Markets Strong Y/Y net income growth and continued positive operating leverage • Adjusted1 and reported net income up 46% Y/Y, reflecting strong performance across our diversified businesses • Revenue up 21% Y/Y with strong Trading Products results and growth in Investment and Corporate
Slide 21: Risk Overview
Risk Overview Investor Presentation Q1 2017 21
Slide 22: Risk Management
Risk Management We have a disciplined and integrated approach to risk Our Approach to Risk Management Diversified Sources of Revenue1 • Understand and manage BMO Capital • Protect our reputation Markets • Diversify. Limit tail risk Canadian P&C Investment • Maintain strong capital and liquidity & Co
Slide 23: Our loans are well diversified by geography and industry
Our loans are well diversified by geography and industry Loans by Geography3 Gross Loans & Acceptances Canada & By Industry U.S. Total % of Total Other1 (C$B) Residential Mortgages 104.0 8.5 112.5 30% 31% Canada Consumer Instalment and Other Personal 50.8 10.7 61.5 17% 65% U.S. Cards 7.4 0.5 7.9 2%
Slide 24: Provision for Credit Losses (PCL)
Provision for Credit Losses (PCL) PCL By Operating Group • Q1’17 PCL ratio at 19 bps, flat Q/Q Q1 16 Q4 16 Q1 17 (C$MM) Consumer – Canadian P&C 113 102 98 Commercial – Canadian P&C 27 21 20 Total Canadian P&C 140 123 118 Consumer – U.S. P&C 48 6 26 Commercial – U.S. P&C 17 60 34 Total U.S. P&C 65 66
Slide 25: Oil and Gas and Alberta Consumer Portfolios
Oil and Gas and Alberta Consumer Portfolios Oil and Gas Balances – By Sector ($B) Oil and Gas – Corporate/Commercial $0.7 • Oil and Gas exposure of $7.0B in gross loans 10% and $8.8B in undrawn1, with ~50% of exposure investment grade • Portfolio represents 2% of total bank loans Consumer Exposure i
Slide 26: Canadian Residential Mortgages
Canadian Residential Mortgages • Total Canadian residential mortgage portfolio at $103.9B ─ 57% of the portfolio is insured ─ Loan-to-value (LTV)1 on the uninsured portfolio is 54% ─ 70% of the portfolio has an effective remaining amortization of 25 years or less ─ Loss rates for the trailing 4 quar
Slide 27: Appendix
Appendix Investor Presentation Q1 2017 27
Slide 28: Economic Outlook and Indicators
Economic Outlook and Indicators1 Canada United States Eurozone Economic Indicators (%)1, 2 2015 2016E2 2017E2 2015 2016E2 2017E2 2015 2016E2 2017E2 GDP Growth 0.9 1.4 2.5 2.6 1.6 2.4 1.9 1.7 1.5 Inflation 1.1 1.4 2.0 0.1 1.3 2.8 0.0 0.2 1.5 Interest Rate (3mth Tbills) 0.53 0.49 0.50 0.05 0.32 0.90 (
Slide 29: Canada's housing market remains resilient
Canada’s housing market remains resilient • Steady immigration, young buyers, low mortgage rates and foreign wealth continue to drive home sales • Toronto prices accelerating, raising concerns about overheating; Vancouver prices have declined moderately • Earlier weakness in the energy-producing pro
Slide 30: Canadian Personal and Commercial Banking - Balances
Canadian Personal and Commercial Banking - Balances Average Loans & Acceptances ($B) Average Deposits ($B) 210.7 212.7 201.7 97.4 98.4 93.3 150.1 139.5 146.0 44.5 44.7 93.2 95.0 43.9 87.6 8.7 8.7 8.8 55.8 60.1 60.8 55.1 51.9 52.8 Q1'16 Q4'16 Q1'17 Q1'16 Q4'16 Q1'17 Commercial Loans & Acceptances Cre
Slide 31: U.S. Personal & Commercial Banking – Balances
U.S. Personal & Commercial Banking – Balances Average Loans & Acceptances (US$B) Average Deposits (US$B) 77.7* 75.9* 72.1* 5.3 5.3 5.4 9.8 67.1 9.8 Personal 64.9 67.7 10.3 5.0 Loans 4.9 5.1 5.5 3.8 2.2 2.0 26.1 24.8 6.4 26.0 2.3 Commercial 49.9 50.1 Loans 42.6 38.9 41.6 42.3 Q1'16 Q4'16 Q1'17 Q1'16
Slide 32: Gross Impaired Loans (GIL) and Formations
Gross Impaired Loans (GIL) and Formations Formations Gross Impaired Loans • Impaired formations down By Industry $46MM Q/Q (C$MM) Canada & Canada & U.S. Total U.S. Total Other Other1 • GIL ratio 60 bps, down 2 bps Q/Q Consumer 181 106 287 378 568 946 Oil & Gas 4 2 6 55 272 327 Agriculture 18 41 59 7
Slide 33: Historical specific PCL as a percentage of average net loans and acceptances
Historical specific PCL as a percentage of average net loans and acceptances 0.54% 0.40% 0.34% 0.19% (1) Specific provisions excludes changes to the collective allowance (2) Effective Q1’12 PCL include the impact of IFRS accounting treatment and F2011 comparatives have been restated accordingly (3)
Slide 34: Trading-related Net Revenues versus Value at Risk
Trading-related Net Revenues versus Value at Risk Investor Presentation Q1 2017 34
Slide 35: Corporate Governance
Corporate Governance • Code of Conduct based on BMO’s values, provides ethical guidance and expectations of behaviour for all directors, officers and employees • Governance practices reflect emerging best practices and BMO meets or exceeds legal, regulatory, TSX, NYSE and Nasdaq requirements • Direc
Slide 36: Environmental, Social and Governance (ESG) at BMO
Environmental, Social and Governance (ESG) at BMO Operating our business responsibly and considering the ESG impacts of our activities Responsible • BMO was the first Canadian bank to launch an impact investing mutual fund focused on gender diversity – the BMO Women in Leadership Fund, launched in A
Slide 37: Adjusting Items
Adjusting Items Adjusting1 items – Pre-tax ($MM) Q1 17 Q4 16 Q1 16 Amortization of acquisition-related intangible assets2 (37) (37) (43) Acquisition integration costs2 (22) (31) (22) Cumulative accounting adjustment3 - - (85) Adjusting items included in reported pre-tax income (59) (68) (150) Adjust
Slide 38: Investor Relations
Investor Relations Contact Information bmo.com/investorrelations E-mail: investor.relations@bmo.com Jill Homenuk Christine Viau Head of Investor Relations Director, Investor Relations 416.867.4770 416.867.6956 jill.homenuk@bmo.com christine.viau@bmo.com Investor Presentation Q1 2017 38