Bank Of Montreal · TSX:BMO
Bank Of Montreal — Q3 2013 Earnings Presentation
31 slides from Bank Of Montreal's earnings presentation, Aug 27, 2013
Slide 1: Investor Presentation Q3 13
Investor Presentation For the Quarter Ended – July 31, 2013 Q3 13 August 27 2013
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, 2013 Q3 13 August 27 2013 Bill Downe President & Chief Executive Officer
Slide 4: Q3 2013 Financial Results
Q3 2013 Financial Results Disciplined growth strategy which is well diversified by geography and business mix Reported net income of $1.1 billion or $1.68 per share Adjusted net income of $1.1 billion, up 12% Y/Y EPS of $1.68, up 13% Pre-provision pre-tax earnings up 7% ROE improved to 15.
Slide 5: Operating Group Performance
Operating Group Performance Operating group results underpinned by successful execution of well-established strategies Adjusted1 Net Income C$ millions unless otherwise indicated P & C Banking P & C Banking Private Client BMO Canada U.S. Group Capital Markets (US$) Y/Y 8% 4% 97% 13% Growth 500 462 2
Slide 6: Strategic Priorities
Strategic Priorities A clear vision: To be the bank that defines great customer experience 1 Achieve industry-leading customer loyalty by delivering on our brand promise 2 Enhance productivity to drive performance and shareholder value 3 Leverage our consolidated North American platform to deliver q
Slide 7: Financial Results
Financial Results For the Quarter Ended – July 31, 2013 Q3 13 August 27 2013 Tom Flynn Executive Vice President & Chief Financial Officer
Slide 8: Q3 2013 - Financial Highlights
Q3 2013 - Financial Highlights Good performance reflecting execution on strategies and benefits of diversification Adjusted1 Q3 12 Q2 13 Q3 13 Adjusted EPS up 13% Y/Y Net Income (C$MM) 1,013 997 1,136 Good operating group performance, especially P&C Canada and PCG EPS ($) 1.49 1.46 1.68 Good r
Slide 9: Revenue
Revenue Good Y/Y growth driven by diversified business mix Y/Y adjusted revenue up 6% Adjusted NII down 1% as good volume growth across most Total Bank Adjusted1 Revenue (C$MM) products was offset by lower NIM Adjusted NIR up 14% 3,892 3,677 3,759 P&C Canada up in both Personal and Commercia
Slide 10: Non-Interest Expense
Non-Interest Expense Continued investment with disciplined expense management Total Bank Adjusted Non-Interest Expense (C$MM) Y/Y adjusted expenses up 5% 2,402 2,458 Higher employee costs reflecting investment in front- 2,342 line roles, higher revenue-based costs, and higher severance and techn
Slide 11: Capital & Risk Weighted Assets
Capital & Risk Weighted Assets Capital position is strong Basel III Q2 13 Q3 13 Common Shareholders’ Equity ($B) Common Equity Tier 1 Ratio (CET1) (%) 9.7 9.6 Tier 1 Capital Ratio (%) 11.3 11.2 Total Capital Ratio (%) 13.7 13.5 RWA ($B) 208 214 27.1 27.4 26.2 26.6 Assets to Capital Multiple1 16.3 16
Slide 12: Personal & Commercial Banking Canada
Personal & Commercial Banking Canada Strong volume growth drives good revenue and net income growth As Reported ($MM) Q3 12 Q2 13 Q3 13 Adjusted net income up 8% Y/Y and 16% Q/Q driven by higher revenue and lower PCL partially offset by increased expenses Revenue (teb) 1,562 1,532 1,620 Y/Y reve
Slide 13: Personal & Commercial Banking - U.S.
Personal & Commercial Banking - U.S. Y/Y net income up; down slightly Q/Q (Amounts in US$MM) As Reported Q3 12 Q2 13 Q3 13 (US$MM) Adjusted net income up 4% Y/Y driven by lower PCL and expenses; down 3% Q/Q due to lower revenue partly offset Revenue (teb) 744 718 705 by lower PCL PCL 74 53 39 To
Slide 14: BMO Capital Markets
BMO Capital Markets Continued good performance reflecting client focus and execution on strategies As Reported ($MM) Q3 12 Q2 13 Q3 13 Y/Y adjusted net income up 13%; up 2% Q/Q Trading Products Revenue 492 550 569 Y/Y revenue increase driven by good performance across our diversified businesses,
Slide 15: Private Client Group
Private Client Group PCG earnings up significantly with record results in Traditional Wealth at 37% Y/Y growth As Reported ($MM) Q3 12 Q2 13 Q3 13 Y/Y adjusted net income up 97%, 52% Q/Q Revenue 679 765 869 Strong Traditional Wealth PCL 5 1 (1) Adjusted net income up 37% Y/Y and 16% Q/Q Expens
Slide 16: Corporate Services
Corporate Services Adjusted results down Y/Y and Q/Q Y/Y adjusted net income lower by $67MM Adjusted ($MM) Q3 12 Q2 13 Q3 13 Lower adjusted revenues primarily driven by higher group teb offset Revenue (teb)1 (129) (118) (199) Higher expenses primarily due to higher technology costs PCL (recove
Slide 17: Risk Review
Risk Review For the Quarter Ended – July 31, 2013 Q3 13 August 27 2013 Surjit Rajpal Executive Vice President & Chief Risk Officer
Slide 18: Loan Portfolio Overview
Loan Portfolio Overview Canadian and US portfolios well diversified by industry Gross Loans & Acceptances Canada & % of By Industry US Total Other1 Total (C$ B) 3% loan growth Q/Q, spread across Residential Mortgages 85.5 7.6 93.1 34% Canada/US and the Consumer/Commercial Personal Lending 48.9 14.
Slide 19: Provision for Credit Losses (PCL)
Provision for Credit Losses (PCL) Lower PCL Q/Q and Y/Y PCL1 Q3’12 Q2’13 Q3’13 By Operating Group (C$ MM) Total PCL down Q/Q due to: Consumer – P&C Canada 125 118 101 Greater US loan sales with larger Commercial – P&C Canada 22 36 25 recoveries in the Purchased Credit Total P&C Canada 147 154 12
Slide 20: Gross Impaired Loans (GIL) and Formations
Gross Impaired Loans (GIL) and Formations Formations Gross Impaired Loans Total formations consistent Q/Q due to an By Industry Canada & increase in the US Commercial portfolio (C$ MM) Canada US Total Other2 US Total related to a few large accounts, offset by reductions in the Purchased Performing
Slide 21: Canadian Residential Mortgages
Canadian Residential Mortgages Total Canadian residential mortgage portfolio at $85.5B represents 43% of Canadian loans and acceptances and 31% of total loans and acceptances – smallest of the big five peer banks 59% of the portfolio is insured Loan-to-value (LTV)1 on the uninsured portfolio i
Slide 22: Trading Revenue vs. VaR
Trading Revenue vs. VaR May 1, 2013 to July 31, 2013 (Presented on a Pre-Tax Basis) 50 30 10 05-Jun-13 11-Jun-13 17-Jun-13 21-Jun-13 27-Jun-13 04-Jul-13 10-Jul-13 16-Jul-13 22-Jul-13 26-Jul-13 01-May-13 07-May-13 13-May-13 17-May-13 24-May-13 30-May-13 (10) Daily Revenues Total Trading VaR Total AFS
Slide 23: Appendix
APPENDIX Financial Results | August 27 • 2013 23
Slide 24: Personal & Commercial Banking Canada – Loan Balances
Personal & Commercial Banking Canada – Loan Balances Average Loans & Acceptances (C$B) Y/Y Growth 10% Personal 171.8 177.3 Strong lending growth¹ with balances up 10% Y/Y and 3% Q/Q 161.1 Mortgage balances up 14% Y/Y and 4% Q/Q Total personal lending¹ market share² up 19 bps Q/Q 76.4 79.8 69.8
Slide 25: Personal & Commercial Banking Canada – Deposit Balances
Personal & Commercial Banking Canada – Deposit Balances Average Deposits (C$B) Y/Y Growth Personal 8% Deposit balances up 4% Y/Y and 2% Q/Q 111.8 114.9 106.4 Strong growth in retail operating deposits of 8% Y/Y and 2% Q/Q 72.5 Personal deposit market share down (3) bps Q/Q 71.4 69.7 Commercial
Slide 26: Personal & Commercial Banking U.S. – Commercial Balances
Personal & Commercial Banking U.S. – Commercial Balances All amounts in U.S. $B Strong core C&I loan growth up 4% Core C&I ($B) - Average Core Commercial Real Estate ($B) - Average Q/Q, with Q3’13 being the 7th straight sequential quarter of growth Growth in core C&I reflects increases across a
Slide 27: Personal & Commercial Banking U.S. – Personal Balances
Personal & Commercial Banking U.S. – Personal Balances All amounts in U.S. $B Mortgages ($B) - Average Home Equity ($B) - Average Overall mortgage portfolio is up slightly Mortgages Serviced Mortgage PCG driven by growth in serviced portfolio as we 11.4 11.5 11.3 11.4 11.5 continue to sell long-te
Slide 28: Operating Groups – Q3 2013 Quick Facts
Operating Groups – Q3 2013 Quick Facts Over 75% of adjusted revenue and net income from retail businesses1 P&C Canada P&C U.S. Revenue up 4% Y/Y driven by strong volume across Adjusted net income3 of US$160MM, up 4% Y/Y and down most products, partially offset by lower margins 3% Q/Q Adjusted
Slide 29: Group Net Income
Group Net Income Net Income, Adjusted1 Q/Q Y/Y ($MM) Q3 12 Q2 13 Q3 13 Inc/(Dec) Inc/(Dec) P&C Canada 462 431 500 16% 8% P&C U.S. 155 168 165 (1)% 6% Total P&C 617 599 665 11% 8% PCG 114 148 225 52% 97% BMO Capital Markets 250 276 281 2% 13% Corporate Services 32 (26) (35) (40)% (+100)% Total Bank 1
Slide 30: Adjusting Items
Adjusting Items Adjusting1 items – Pre-tax ($MM) Q3 12 Q2 13 Q3 13 Credit-related items on the M&I purchased performing loan portfolio 76 119 110 M&I integration costs (105) (50) (49) Amortization of acquisition-related intangible assets (33) (31) (32) Decrease/(increase) in the collective allowance
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 416.867.7019 andrew.chin@bmo.com Financial Results | February 26 • 2013