Bank Of Montreal · TSX:BMO
Bank Of Montreal — BMO Financial Group — Q3 2020 Earnings Presentation
29 slides from Bank Of Montreal's earnings presentation, Aug 25, 2020
Slide 1: Investor Presentation Q3 20
BMO Financial Group Investor Presentation For the Quarter Ended July 31, 2020 August 25, 2020 Q3 20
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: Darryl White, Chief Executive Officer
Darryl White Chief Executive Officer Q3 20
Slide 4: Diversification driving financial strength and resiliency
Diversification driving financial strength and resiliency Q3’20 YTD Net Income1 $1,259MM $3,591MM • Q3 adjusted1 EPS $1.85; Reported $1,232MM $3,513MM good performance • Strong adjusted1 pre- PPPT1,2 $2,593MM $6,965MM provision, pre-tax earnings Reported $2,556MM $6,863MM (PPPT)2; up 12% Y/Y and 7%
Slide 5: Strong and consistent delivery across businesses
Strong and consistent delivery across businesses Canadian Personal & Commercial U.S. Personal & Commercial • YTD revenue up 2% and PPPT1,2 up 1% • YTD revenue up 3% and PPPT1,2 up 10% • Expenses flat Y/Y reflecting continued focus on • New low efficiency ratio1 of 52.8%; exceeding expense management
Slide 6: Proven strategy, strong, resilient earnings with capital strength
Proven strategy, strong, resilient earnings with capital strength Our Purpose: Boldly Grow the Good in business and life • Diversification across businesses and jurisdictions • Sustained capital strength Strong Foundation • Long-term track record of superior credit risk management, consistently appl
Slide 7: Financial Results
Financial Results For the Quarter Ended July 31, 2020 Tom Flynn Chief Financial Officer Q3 20
Slide 8: Q3 F2020 - Financial Highlights
Q3 F2020 - Financial Highlights Strong PPPT4 earnings and operating leverage2 absorbed higher provisions • Adjusted1 EPS $1.85 (reported $1.81) Reported Adjusted1 • Adjusted1 net income $1,259MM (reported $1,232MM) ($MM) Q3 20 Q2 20 Q3 19 Q3 20 Q2 20 Q3 19 • Adjusted1 PPPT4 $2,593MM, up 12% Y/Y, 11%
Slide 9: Strong Q3'20 CET1 ratio of 11.6%, up from Q2'20
Strong Q3’20 CET1 ratio of 11.6%, up from Q2’20 Common Equity Tier 1 Ratio +8 bps 11.6% +6 bps +10 bps +14 bps +14 bps 11.0% Q2 2020 Internal capital Lower source ECL provisioning Share issuances Other Q3 2020 generation currency RWA adjustment Basis points may not add due to rounding. • Q3’20 CET1
Slide 10: Canadian Personal & Commercial Banking
Canadian Personal & Commercial Banking Performance reflects environment with disciplined expense management • Net income4 $320MM Reported Adjusted1 • PPPT2,4 $1,002MM ($MM) Q3 20 Q2 20 Q3 19 Q3 20 Q2 20 Q3 19 • Revenue down 4% Y/Y Revenue (teb) 1,962 1,960 2,043 1,962 1,960 2,043 – Average loans up
Slide 11: U.S. Personal & Commercial Banking
U.S. Personal & Commercial Banking Adjusted1 PPPT3 up 12% Y/Y, with adjusted1 efficiency below 53% driven by lower expenses Figures that follow are in U.S. dollars Reported Adjusted1 • Adjusted1 net income $199MM (reported $192MM), (US$MM) Q3 20 Q2 20 Q3 19 Q3 20 Q2 20 Q3 19 impacted by higher credi
Slide 12: BMO Capital Markets
BMO Capital Markets Very strong adjusted1 PPPT2 and NIAT, up Y/Y • Adjusted1 and reported net income up 36% Y/Y Reported Adjusted1 • Adjusted1 PPPT2 up 73% Y/Y (reported up 72%) ($MM) Q3 20 Q2 20 Q3 19 Q3 20 Q2 20 Q3 19 • Revenue up 27% Y/Y Global Markets 981 564 667 981 564 667 – Global Markets up
Slide 13: BMO Wealth Management
BMO Wealth Management Record NIAT up 35% Y/Y driven by strong operating leverage • Adjusted1 net income $349MM (reported $341MM) Reported Adjusted1 • Adjusted1 Traditional Wealth net income $279MM, ($MM) Q3 20 Q2 20 Q3 19 Q3 20 Q2 20 Q3 19 up 19% (reported $271MM, up 20%) Net Revenue2 1,295 1,087 1,
Slide 14: Corporate Services
Corporate Services • Adjusted1 and reported net loss of $118MM compared Reported2 Adjusted1,2 with below trend net loss of $25MM in the prior year. ($MM) Q3 20 Q2 20 Q3 19 Q3 20 Q2 20 Q3 19 Results decreased, primarily due to lower treasury- related revenue and higher expenses driven by the Revenue
Slide 15: Risk Review
Risk Review For the Quarter Ended July 31, 2020 Patrick Cronin Chief Risk Officer Q3 20
Slide 16: Provision for Credit Losses (PCL)
Provision for Credit Losses (PCL) PCL By Operating Group Q3 20 Q2 20 Q3 19 • Q3’20 PCL ratio on Impaired Loans at 38 bps, ($MM) up 3 bps Q/Q $ bps $ bps $ bps • Allowance for Credit Losses on Performing Consumer – Canadian P&C 130 33 121 30 133 34 Loans increased PCL by $608MM Commercial – Canadian
Slide 17: Allowance and Provision on Performing Loans
Allowance and Provision on Performing Loans • The APL increased $602MM to $3,011MM, Allowance on Performing Loans (APL) and PCL on APL to driven by a $608MM provision for credit Q3 20 Performing Loans (PCL) Q2 20 Q3 20 Foreign Q3 20 Performing losses on performing loans, along with By Operating Grou
Slide 18: Gross Impaired Loans (GIL) and Formations
Gross Impaired Loans (GIL) and Formations By Industry Formations Gross Impaired Loans • GIL ratio 95 bps, up 21 bps Q/Q ($MM, as at Q3 20) Canada & U.S. Total Canada & U.S. Total Formations ($MM) Other Other1 Consumer 211 28 239 514 349 863 Oil & Gas 1 301 302 96 665 761 1,760 Service Industries 57
Slide 19: Loan Portfolio Growth
Loan Portfolio Growth Q/Q Change in Business and Government Loans Q/Q Change in Consumer Loans Q2’20 vs Q3’20 ($B) Q2’20 vs Q3’20 ($B) 1 2 • Reduction in Business & Government loans reflects lower utilization with existing borrowers, the impact of foreign exchange and low new borrower growth • Busin
Slide 20: Loan Portfolio Overview
Loan Portfolio Overview Gross Loans & Acceptances Canada & • Loans are well diversified by geography By Industry U.S. Total % of Total ($B, as at Q3 20) Other1 and industry Residential Mortgages 116 10 126 27% Consumer Instalment and Other 57 12 69 15% Personal Cards 7 1 8 2% Total Consumer 180 23 2
Slide 21: Sectors Impacted by COVID-19 Pandemic
Sectors Impacted by COVID-19 Pandemic Gross Loans & % of Total • Hotels ~90% secured with real estate; By Industry of Heightened Focus further supported with specific recourse Acceptances GL&A ($B, as at Q3 20) (GL&A) arrangements to ownership groups. Hotels 4.2 0.9% Formations since Q1 very low wit
Slide 22: Oil and Gas Industry Overview
Oil and Gas Industry Overview Industry by Sub-sector Industry by Risk Rating 4% 6% 7% 33% 25% $14B $14B 64% 61% Exploration and development Pipelines Services Manufacturing and refining Investment Grade Non Investment Grade Impaired • Of the $8.9B in Exploration and Development (E&D) gross loans and
Slide 23: Trading-related Net Revenues and Value at Risk
Trading-related Net Revenues and Value at Risk May 4, 2020 to July 31, 2020 (pre-tax basis and in millions of Canadian dollars) 50 40 30 20 10 0 (10) (20) (30) (40) (50) (60) Daily Revenue Total Trading VaR Risk Review August 25, 2020 23
Slide 24: Appendix
Appendix
Slide 25: Canadian Personal & Commercial Banking - Balances
Canadian Personal & Commercial Banking - Balances Gross Loans & Acceptances ($B) Deposits ($B) 213.1 217.4 251.4 251.0 253.0 250.6 206.9 239.1 197.1 177.1 105.0 105.9 100.8 103.6 104.5 126.6 127.5 123.2 120.9 111.5 48.6 48.3 48.5 48.2 46.8 8.9 8.2 8.0 8.3 9.1 85.6 83.7 90.8 90.3 90.0 91.5 88.2 76.2
Slide 26: U.S. Personal & Commercial Banking – Balances
U.S. Personal & Commercial Banking – Balances Figures that follow are in U.S. dollars Gross Loans & Acceptances ($B) Deposits ($B) 100.41 106.1 103.6 105.6 96.41 95.41 89.71 7.8 92.91 7.5 8.1 93.5 6.0 10.3 8.2 10.5 10.0 11.3 9.6 80.5 50.5 49.9 50.3 47.9 45.9 78.4 77.3 82.3 75.1 72.4 55.6 53.7 55.3 4
Slide 27: Canadian Residential-Secured Lending
Canadian Residential-Secured Lending Residential-Secured Lending by Region ($150.6B) • Total Canadian residential-secured lending HELOC $68.0 portfolio at $150.6B, representing 32% of total Uninsured Mortgages loans Insured Mortgages $29.6 24% ─ LTV1 on uninsured of 50% ─ 90 day delinquency rate for
Slide 28: Adjusting Items
Adjusting Items Adjusting items1 - Pre-tax ($MM) Q3 20 Q2 20 Q3 19 YTD Q3 20 YTD Q3 19 Acquisition integration costs2 (5) (3) (3) (11) (11) Amortization of acquisition-related intangible assets3 (32) (30) (29) (91) (90) Adjusting items included in reported pre-tax income (37) (33) (32) (102) (101) A
Slide 29: Investor Relations
BMO Financial Group Investor Relations Contact Information bmo.com/investorrelations E-mail: investor.relations@bmo.com JILL HOMENUK BILL ANDERSON Head, Investor Relations Director, Investor Relations 416.867.4770 416.867.7834 jill.homenuk@bmo.com bill2.anderson@bmo.com