Bank Of Montreal · TSX:BMO
Bank Of Montreal — Q4 2017 Earnings Presentation
26 slides from Bank Of Montreal's earnings presentation, Dec 5, 2017
Slide 1: Investor Presentation Q4 17
Investor Presentation For the Quarter Ended October 31, 2017 December 5, 2017 Q4 17 Financial Results Month xx, 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 – Darryl White, CEO
Darryl White Chief Executive Officer Q4 17 Strategic Highlights December 5, 2017 3
Slide 4: F2017 Financial Highlights
F2017 Financial Highlights Strong net income growth and positive operating leverage Adjusted1 Reported Net Income $5,508MM $5,350MM • Adjusted1 net income up 10% (reported up 16%) EPS $8.16 $7.92 • Adjusted1 EPS up 9% (reported up 14%) Net Operating • Building on adjusted1,2 net operating leverage o
Slide 5: F2017 Operating Group Performance
F2017 Operating Group Performance Good performance across diversified and competitively advantaged businesses Adjusted1 Net Income ($MM) • Good underlying performance in Canadian P&C with improved efficiency and well-diversified 14% balance growth 2,515 2,204 5% • Solid performance in U.S. P&C in a
Slide 6: Key Strategic Areas of Focus
Key Strategic Areas of Focus Strong performance in U.S. segment with continued growth opportunities Accelerating transformation through technology investment and deployment Focused on efficiency, building on good progress already made Employees, culture and values that are a competitive advantage St
Slide 7: Financial Results – Tom Flynn, CFO
Financial Results For the Quarter Ended October 31, 2017 Tom Flynn Chief Financial Officer Q4 17 Financial Results Month xx, 2015 7
Slide 8: F2017 Financial Highlights
F2017 Financial Highlights Strong results with adjusted1 net income growth of 10% and positive operating leverage • Reported net income $5.35B, up 16%; EPS $7.92, up 14% • Adjusted1 net income $5.5B, up 10%; adjusted1 EPS $8.16, up 9% • Net revenue2 up 6% • Adjusted1 expenses up 4% (reported4 2%) •
Slide 9: Q4 2017 - Financial Highlights
Q4 2017 - Financial Highlights Good underlying performance • Reported net income $1.2B ,down 9% Y/Y; EPS $1.81, down 10% Y/Y • Adjusted1 net income $1.3B, down 6% Y/Y; adjusted1 EPS $1.94, down 8% Y/Y • $112MM elevated reinsurance claims reduced net income growth by ~8% and EPS by $0.17. Reported re
Slide 10: Strong Capital Position
Strong Capital Position Well capitalized with CET1 Ratio at 11.4% Common Equity Tier 1 Ratio +2 bps -3 bps +5 bps -8 bps +23 bps 11.4% 11.2% 2017 Q3 Internal capital Pension and Other Share Higher source 2017 Q4 generation other employee repurchases currency RWA future benefit Basis points may not a
Slide 11: Canadian Personal & Commercial Banking
Canadian Personal & Commercial Banking Good performance with net income up 6% and 1.7% operating leverage • Net income up 6% Y/Y • Revenue up 5% Y/Y reflecting higher balances and NIM • NIM up 6 bps Y/Y; up 5 bps Q/Q reflecting higher deposit spreads and interest recoveries • Average loans up 4% (pe
Slide 12: U.S. Personal & Commercial Banking
U.S. Personal & Commercial Banking Solid performance with net income up 2% Y/Y • Adjusted1 net income of $291MM, down 3% Y/Y (reported $280MM, down 3% Y/Y) Figures that follow are in U.S. dollars • Adjusted1 and reported net income up 2% Y/Y • Revenue up 3% Y/Y driven by higher interest rates and co
Slide 13: BMO Capital Markets
BMO Capital Markets Good Q4’17 performance, down from record in Q4’16 • Adjusted1 and reported net income down 17% Y/Y from record performance in Q4’16 • Revenue down 4% Y/Y – Trading Products largely unchanged Y/Y reflecting constructive markets with more moderate client flows – Investment and Corp
Slide 14: BMO Wealth Management
BMO Wealth Management Underlying growth offset by elevated reinsurance claims and prior year gain on sale • Adjusted1 net income of $186MM down 38% (reported $172MM) as elevated reinsurance claims of $112MM in the current quarter and a gain from an equity investment a year ago had a negative impact
Slide 15: Corporate Services
Corporate Services • Adjusted1 net loss of $119MM compared to a net loss of $188MM in prior year. Reported net loss of $175MM compared to a net loss of $202MM in prior year • Current quarter reported results include a restructuring charge of $41MM after-tax3 • Adjusted net loss $69MM better Y/Y with
Slide 16: Risk Review – Surjit Rajpal, CRO
Risk Review For the Quarter Ended October 31, 2017 Surjit Rajpal Chief Risk Officer Q4 17 Financial Results Month xx, 2015 16
Slide 17: Provision for Credit Losses (PCL)
Provision for Credit Losses (PCL) PCL By Operating Group Q4 17 Q3 17 Q4 16 ($MM) • Q4’17 Specific PCL ratio at 22 bps, flat Q/Q Consumer – Canadian P&C 103 102 102 • Fiscal year Specific PCL ratio at 23 bps Commercial – Canadian P&C 31 23 21 Total Canadian P&C 134 125 123 Consumer – U.S. P&C 11 17 6
Slide 18: Gross Impaired Loans (GIL) and Formations
Gross Impaired Loans (GIL) and Formations Formations Gross Impaired Loans • GIL ratio 57 bps, up 1 bp Q/Q By Industry ($MM, as at Q4 17) Canada & Canada & U.S. Total U.S. Total Other Other1 Consumer 182 82 264 394 507 901 Agriculture 9 16 25 61 188 249 Service Industries 3 75 78 56 176 232 Oil & Gas
Slide 19: Canadian Residential Mortgages
Canadian Residential Mortgages • Total Canadian residential mortgage portfolio at $106.7B, representing 28% of total loans ─ 51% of the portfolio is insured; loan-to-value (LTV)1 on the uninsured portfolio is 52% ─ 69% of the portfolio has an effective remaining amortization of 25 years or less ─ Le
Slide 20: Loan Portfolio Overview
Loan Portfolio Overview Gross Loans & Acceptances Canada & By Industry U.S. Total % of Total • Loans are well diversified by Other1 ($B, as at Q4 17) Residential Mortgages 106.7 8.6 115.3 30% geography and industry Consumer Instalment and Other 52.1 9.8 61.9 17% Personal Cards 7.5 0.6 8.1 2% Total C
Slide 21: Appendix
APPENDIX Financial Results Month xx, 2015 21
Slide 22: Canadian Personal and Commercial Banking - Balances
Canadian Personal and Commercial Banking - Balances Average Loans & Acceptances ($B) Average Deposits ($B) 216.9 218.9 210.7 99.2 100.2 97.4 154.1 154.3 146.0 44.5 44.9 45.3 98.3 98.1 93.2 8.7 8.9 8.9 60.1 63.9 64.5 52.8 55.8 56.2 Q4'16 Q3'17 Q4'17 Q4'16 Q3'17 Q4'17 Commercial Loans & Acceptances Cr
Slide 23: U.S. Personal & Commercial Banking – Balances
U.S. Personal & Commercial Banking – Balances Average Loans & Acceptances (US$B) Average Deposits (US$B) 77.7* 78.8* 75.9* 5.3 5.2 5.2 9.8 9.6 67.7 9.6 Personal 65.4 65.0 5.0 5.1 Loans 5.0 3.2 5.5 3.2 1.9 2.2 1.9 26.1 23.3 22.2 53.8 Commercial 49.9 51.0 Loans 41.6 42.1 42.8 Q4'16 Q3'17 Q4'17 Q4'16 Q
Slide 24: Trading-related Net Revenues versus Value at Risk
Trading-related Net Revenues versus Value at Risk August 1, 2017 to October 31, 2017 (in MM's and on a Pre-Tax Basis) 30 25 20 15 10 5 0 (5) (10) Daily Revenue Total Trading VaR Risk Review December 5, 2017 24
Slide 25: Adjusting Items
Adjusting Items Adjusting1 items – Pre-tax ($MM) Q4 17 Q3 17 Q4 16 F2017 F2016 Amortization of acquisition-related intangible assets2 (34) (35) (37) (149) (160) Acquisition integration costs2 (24) (20) (31) (87) (104) Decrease in the collective allowance for credit losses3 - 76 - 76 - Cumulative acc
Slide 26: Investor Relations
Investor Relations Contact Information bmo.com/investorrelations E-mail: investor.relations@bmo.com JILL HOMENUK CHRISTINE VIAU Head, Investor Relations Director, Investor Relations 416.867.4770 416.867.6956 jill.homenuk@bmo.com christine.viau@bmo.com Strategic Highlights December 5, 2017 26