Bank Of Montreal · TSX:BMO
Bank Of Montreal — Debt Investor Presentation (August 2014)
31 slides from Bank Of Montreal's debt investor presentation, Aug 29, 2014
Slide 1: Fixed Income Investor Presentation Q3 14
Q3 14 Fixed Income Investor Presentation August 29, 2014 Fixed Income Investor Presentation | August 2014 0
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 Q3’14 Results * Adjusted2 Reported Revenue ($B) 4.2 4.2 Established in 1817, Canada’s first bank Net Income ($B) 1.2 1.1 In Canada: a full service, universal ban
Slide 4: 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 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: Advantaged Business Mix
Advantaged Business Mix Diversified by both customer segment and geography Q3’14 Operating Group Q3’14 Net Income Revenue* by Geography Wealth U.S. Management 16% Canadian 23% Other P&C 6% 38% BMO CM Canada 22% 78% U.S. P&C 17% * Excludes Corporate Services Fixed Income Investor Presentation | Augus
Slide 7: 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 8: 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 9: 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 growth1, balances up 9% Y/Y Strong core C&I loan growth, up 18% Y/Y with and 2% Q/Q increases across all segments Strong competit
Slide 10: Continued Momentum in our Canadian P&C Banking Business
Continued Momentum in our Canadian P&C Banking Business Strong adjusted net income growth of 8% Y/Y on good revenue growth and operating leverage Operating leverage of 2.1% in Q3; 4th consecutive quarter above 2% Adjusted efficiency ratio1 of 49.5% improved 100 bps Y/Y Commercial loans2 up 9
Slide 11: Wealth Management
Wealth Management Strong wealth franchise with good growth prospects; contributes over 20% of total bank revenue Assets under management and administration of $776B BMO Nesbitt Burns (Full-service brokerage) Highest client loyalty score for investment advisors Wealth Management (2013 Full Servic
Slide 12: Balanced and Disciplined Approach to Capital Management
Balanced and Disciplined Approach to Capital Management Common Equity Tier 1 Ratio (%) CET1 Ratio of 9.6% decreased approximately 10 bps from Q2’14 primarily due to the F&C acquisition, largely offset by 9.9 9.7 9.6 9.3 9.6 lower RWA and retained earnings growth RWA of $226 billion at July 31, 2
Slide 13: Strong, Stable Long-Term Financial Trends
Strong, Stable Long-Term Financial Trends Revenue ($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 14: Q3 2014 - Financial Highlights
Q3 2014 - Financial Highlights Adjusted Net Income of $1.2B with double digit underlying earnings growth1 Adjusted ($MM) 2,3 Q3 13 Q2 14 Q3 14 Growth reflects continued business momentum Revenue 3,842 4,041 4,215 Adjusted EPS up 4% Y/Y Expense 2,442 2,566 2,708 Double digit earnings growth, ex
Slide 15: Loan Portfolio Overview
Loan Portfolio Overview Gross Loans & Acceptances By Industry Canada & US Total % of Total Loans are well diversified by Other1 (C$B) geography and industry Residential Mortgages 91.7 7.9 99.7 34% Personal Lending 49.3 15.0 64.3 22% Cards 7.5 0.5 8.0 3% Total Consumer 148.6 23.4 172.0 58% Financia
Slide 16: 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 2.2 2.1 3.1 (0.4) 0.8 1.2 Inflation 0.9 2.0 1.9 1.5 2.0 2.2 1.4 0.6 1.0 Interest Rate (3mth Tbills) 0.97 0.93 1.15 0.06 0.04 0.33 0.15 0.22
Slide 17: The Canadian Housing Market Remains Healthy
The Canadian Housing Market Remains Healthy Consistent immigration flows into Canada Immigration to Canada Canadian Household Debt to GDP continue to drive household demand 100 The prime-home buying age group 280,000 95 (30 to 34 year olds) is growing about 90 twice as fast as the general 240,00
Slide 18: Canadian Residential Mortgages – A Snapshot of Key Features
Canadian Residential Mortgages – A Snapshot of Key Features Structure of Canadian residential mortgage market lower risk compared to U.S. due to: No lending with loan to value above 80% without government backed insurance Shorter terms (i.e.,1-10 years) Prepayment charges borne by the borrow
Slide 19: Canadian Residential Mortgages
Canadian Residential Mortgages Total Canadian residential mortgage portfolio at $91.7B represents 43% of Canadian gross loans and acceptances – smallest of the big five banks 64% of the portfolio is insured Loan-to-value (LTV)1 on the uninsured portfolio is 58%2 68% of the portfolio has an e
Slide 20: BMO’s Canadian Consumer Loan Portfolio
BMO’s Canadian Consumer Loan Portfolio Total Canadian Consumer Loans: Q3’14 $149B BMO’s Canadian consumer loan portfolio is well (88% is secured) diversified, supported by prudent historical and current adjudication practices 15% Consumer loans as a percentage of total bank loans is the 5% lowes
Slide 21: Liquidity and Funding Strategy
Liquidity and Funding Strategy BMO’s Cash and Securities to Total Assets Ratio reflects a strong liquidity position BMO’s large base of customer deposits, along with our strong capital base, reduces reliance on wholesale funding Cash and Securities to Total Assets Ratio (%) 1 Core and Customer D
Slide 22: Diversified Wholesale Term Funding Mix
Diversified Wholesale Term Funding Mix BMO's wholesale funding principles seek to match the term of assets with the term of funding. Loans for example are funded with customer deposits and capital, with any difference provided by longer-term wholesale funding BMO has a well diversified wholesale
Slide 23: APPENDIX
APPENDIX Fixed Income Investor Presentation | August 2014 22
Slide 24: Canadian Personal & Commercial Banking
Canadian Personal & Commercial Banking Strong net income growth with continued good operating leverage Adjusted Net Income1 and Revenue ($MM) Adjusted net income1 of $528MM up 8% Y/Y 1,660 1,564 1,566 1,602 1,560 Strong operating leverage of 2.1%; above 2% for the 4th consecutive quarter 528 489
Slide 25: U.S. Personal & Commercial Banking
U.S. Personal & Commercial Banking Net income and pre-provision, pre-tax earnings up with improved revenue trend (Amounts in U.S.$MM) Adjusted Net Income1 and Revenue (US$MM) 707 Adjusted net income up 1% Y/Y and 4% Q/Q 696 688 693 691 Pre-provision, pre-tax earnings2 up 2% Y/Y and 4% Q/Q Reve
Slide 26: Wealth Management
Wealth Management Strong organic growth of 19% Y/Y excluding the impact of interest rates on insurance Adjusted Net Income1 and Revenue ($MM) 1,040 988 Adjusted net income up 7% Q/Q; Y/Y growth impacted by 867 867 878 rates 318 Traditional wealth adjusted net income up 27% Y/Y reflecting 69 224
Slide 27: BMO Capital Markets
BMO Capital Markets Strong results reflect the benefit of a diversified business mix Adjusted net income up 14% Y/Y driven by good revenue Adjusted Net Income1 and Revenue ($MM) growth, particularly in Investment and Corporate Banking 974 953 986 860 797 Strong ROE of 22.4% 269 277 306 306 Rev
Slide 28: Provision for Credit Losses (PCL)
Provision for Credit Losses (PCL) Improved PCL Q/Q PCL By Operating Group (C$MM) Q3 13 Q2 14 Q3 14 PCL improved Q/Q primarily due to Consumer – Canadian P&C 100 110 110 increased recoveries in Corporate Commercial – Canadian P&C 25 23 24 Services Total Canadian P&C 125 133 134 Consumer – US P&C 40
Slide 29: 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 30: Adjusting Items
Adjusting Items Adjusting1 items – Pre-tax ($MM) Q3’13 Q4’13 Q1’14 Q2’14 Q3’14 Credit-related items on the purchased performing loan portfolio 110 49 - - - Acquisition integration costs (49) (60) - - (9) Amortization of acquisition-related intangible assets (32) (31) (31) (28) (39) Decrease/(increas
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 Fixed Income Invest
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