Bank Of Montreal · TSX:BMO
Bank Of Montreal — Q2 2013 Earnings Presentation
30 slides from Bank Of Montreal's earnings presentation, May 29, 2013
Slide 1: Investor Presentation Q2 13
Investor Presentation For the Quarter Ended – April 30, 2013 Q2 13 May 29 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 – April 30, 2013 Q2 13 May 29 2013 Bill Downe President & Chief Executive Officer
Slide 4: Q2 2013 Financial Results
Q2 2013 Financial Results Fifth consecutive quarter of adjusted earnings of $1 billion Reported net income of $975 million or $1.42 per share Adjusted net income of $997 million, up 2% Y/Y EPS of $1.46 Revenue of $3.8B ROE of 14.5% YTD adjusted EPS up 4%, with operating group adjusted ne
Slide 5: 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 6: Financial Results
Financial Results For the Quarter Ended – April 30, 2013 Q2 13 May 29 2013 Tom Flynn Executive Vice President & Chief Financial Officer
Slide 7: Q2 2013 - Financial Highlights
Q2 2013 - Financial Highlights Adjusted1 Adjusted EPS of $1.46, up 1% Y/Y Adjusted net income up 2% Y/Y Q2 12 Q1 13 Q2 13 Strong Y/Y net income growth in PCG excluding Net Income (C$MM) 982 1,041 997 Insurance, up 14% and BMO CM up 19% EPS ($) 1.44 1.52 1.46 Insurance results reduced by $34M
Slide 8: Revenue
Revenue Y/Y Revenue driven by good growth in PCG (excluding Insurance) and BMO CM Total Bank Adjusted1 Revenue (C$MM) Y/Y adjusted revenue up 1% NII down 2% as volume growth across all Groups, 3,861 3,759 particularly commercial, was more than offset by lower 3,727 NIM NIR up 4% driven by PCG
Slide 9: Non-Interest Expense
Non-Interest Expense Continued focus on disciplined expense management Total Bank Adjusted Non-Interest Expense (C$MM) Y/Y adjusted expenses up 2% 2,357 2,464 2,402 Higher employee costs and select initiative spending partially offset by continued focus on productivity Salaries 745 772 771 Q/Q
Slide 10: Capital & Risk Weighted Assets
Capital & Risk Weighted Assets Capital position is strong Basel III Q1 13 Q2 13 Common Shareholders’ Equity ($B) Common Equity Tier 1 Ratio (CET1) 9.4 9.7 (%)1 Tier 1 Capital Ratio (%) 11.1 11.3 Total Capital Ratio (%) 13.4 13.7 RWA ($B) 211 208 Assets to Capital Multiple2 16.1 16.3 Basel III CET1
Slide 11: Personal & Commercial Banking Canada
Personal & Commercial Banking Canada Focused on converting strong balance growth and productivity into net income growth Y/Y adjusted net income essentially unchanged, down 6% Q/Q As Reported ($MM) Q2 12 Q1 13 Q2 13 largely due to fewer days and higher PCL Revenue (teb) 1,529 1,563 1,532 Strong
Slide 12: Personal & Commercial Banking - U.S.
Personal & Commercial Banking - U.S. Continued momentum in core Commercial and Industrial (Amounts in US$MM) As Reported Q2 12 Q1 13 Q2 13 (US$MM) Y/Y adjusted net income up 3%; down from a very strong Q1 which benefited from year-end related Revenue (teb) 743 755 718 customer activity and unusual
Slide 13: BMO Capital Markets
BMO Capital Markets Stronger results Y/Y reflect traction on strategy As Reported ($MM) Q2 12 Q1 13 Q2 13 Y/Y adjusted net income up 19%; down from a very strong Q1 Trading Products Revenue 478 541 550 Y/Y revenue increased driven by higher trading Investment & Corp Banking Revenue 314 363 300 a
Slide 14: Private Client Group
Private Client Group Wealth Business continues to perform well; Insurance impacted in quarter by lower interest rates As Reported ($MM) Q2 12 Q1 13 Q2 13 Y/Y adjusted net income down 3%, 13% Q/Q Revenue (teb) 744 779 765 Excluding Insurance adjusted net income up 14% Y/Y PCL 1 2 1 and 8% Q/Q, du
Slide 15: Corporate Services
Corporate Services Adjusted results down Y/Y and up Q/Q Adjusted1 ($MM) Q2 12 Q1 13 Q2 13 Y/Y adjusted net income lower by $29MM Revenue (teb) (76) (137) (118) Adjusted revenues decreased $42MM due to a higher teb Group offset in the current quarter ($71MM vs. $56MM in PCL (recovery) (96) (51) (
Slide 16: Risk Review
Risk Review For the Quarter Ended – April 30, 2013 Q2 13 May 29 2013 Surjit Rajpal Executive Vice President & Chief Risk Officer
Slide 17: Loan Portfolio Overview
Loan Portfolio Overview Canadian and US portfolios well diversified by industry Gross Loans & Acceptances Canada & % of Consumer portfolio represents the majority By Industry US Total Other1 Total of loans (C$ B) Residential Mortgages 80.7 7.4 88.1 33% Consumer loans are 86% in Canada and 14% in
Slide 18: Provision for Credit Losses (PCL)
Provision for Credit Losses (PCL) PCL1 Q2’12 Q1’13 Q2’13 Total PCL down 19% Q/Q. Decrease due By Operating Group (C$ MM) to: Consumer – P&C Canada 131 109 118 Higher recoveries in Purchased Commercial – P&C Canada 36 19 36 Credit Impaired Loans Total P&C Canada 167 128 154 Consumer – P&C US 54 3
Slide 19: Gross Impaired Loans (GIL) and Formations
Gross Impaired Loans (GIL) and Formations Impaired Loans and Formations are down Q/Q Formations Gross Impaired Loans By Industry (C$ MM) Canada US Total Canada & US Total Total Bank Formations lower this quarter at $595MM Other2 (Q1’13: $630MM) Consumer 150 65 215 361 398 759 Purchased Performin
Slide 20: Canadian Residential Mortgages
Canadian Residential Mortgages Total Canadian residential mortgage portfolio at $81B (Q1’13: $79B) or 42% of Canadian loans and acceptances and 30% of total loans and acceptances – smallest of the big five 62% of the portfolio is insured Loan-to-value (LTV)1 on the uninsured portfolio is 59%2
Slide 21: Trading Revenue vs. VaR
Trading Revenue vs. VaR February 1, 2013 to April 30, 2013 (Presented on a Pre-Tax Basis) 50 30 10 01-Feb-13 07-Feb-13 13-Feb-13 20-Feb-13 26-Feb-13 04-Mar-13 08-Mar-13 14-Mar-13 20-Mar-13 26-Mar-13 02-Apr-13 08-Apr-13 12-Apr-13 18-Apr-13 24-Apr-13 30-Apr-13 (10) Daily Revenues Total Trading VaR Tot
Slide 22: Appendix
APPENDIX Financial Results | May 29 • 2013 22
Slide 23: Personal & Commercial Banking Canada – Loan Balances
Personal & Commercial Banking Canada – Loan Balances Average Loans & Acceptances1 (C$B) Y/Y Growth 10% Personal 171.8 Strong lending growth2 with balances up 10.0% Y/Y and 168.6 156.6 1.3% Q/Q Mortgage balances up 13.7% Y/Y. Balances up 1.9% Q/Q 76.4 reflecting softer market 75.0 67.2 Total pe
Slide 24: Personal & Commercial Banking Canada – Deposit Balances
Personal & Commercial Banking Canada – Deposit Balances Average Deposits1 (C$B) Y/Y Growth 109.9 111.8 7% 104.7 Personal Deposit balances up 4.0% Y/Y and 1.2% Q/Q Strong Y/Y growth of 9.0% in retail operating deposits Commercial Strong momentum in commercial deposit growth, up 12% Y/Y and 2.9%
Slide 25: Personal & Commercial Banking U.S. – Commercial Balances
Personal & Commercial Banking U.S. – Commercial Balances All amounts in U.S. $B Core C&I ($B) - Average Core Commercial Real Estate ($B) - Average Strong core C&I loan growth up 17% Y/Y, with Q2’13 being the 6th straight sequential quarter of growth 21.3 22.1 18.8 19.1 19.9 Growth in core C&I re
Slide 26: 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 ($B) - Average Mortgage portfolio declined as new Mortgages Serviced Mortgage originations of long term fixed rate loans are largely sold into the secondary 4.0 4.1 4.2 market. Servic
Slide 27: Operating Groups – Q2 2013 Quick Facts
Operating Groups – Q2 2013 Quick Facts 78% of adjusted revenue from retail businesses1 P&C Canada P&C U.S. Strong loan growth Y/Y and Q/Q. Y/Y personal loans up Continued momentum in core C&I loan portfolio, up 17% Y/Y 10% and commercial loans up 12%2 and 4% Q/Q Revenue consistent Y/Y as stron
Slide 28: Group Net Income
Group Net Income Net Income, Adjusted1 Q/Q Y/Y Q2 12 Q1 13 Q2 13 Inc/(Dec) Inc/(Dec) ($MM) P&C Canada 436 461 431 (6)% (1)% P&C U.S. 157 195 168 (15)% 6% Total P&C 593 656 599 (9)% 1% PCG 153 169 148 (13)% (3)% BMO Capital Markets 233 310 276 (11)% 19% Corporate Services 3 (94) (26) 73% (+100)% Tota
Slide 29: Adjusting Items
Adjusting Items Adjusting1 items – Pre-tax ($MM) Q2 12 Q1 13 Q2 13 Credit-related items on the M&I purchased performing loan portfolio 90 128 119 M&I integration costs (74) (92) (50) Amortization of acquisition-related intangible assets (33) (31) (31) Decrease/(increase) in the collective allowance
Slide 30: 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