BMO Financial Group Reports Record Net Income of $4.2 Billion for Fiscal 2013

JCN Newswire / 2013年12月4日 13時52分

TORONTO, ONTARIO, Dec 4, 2013 - (JCN Newswire) - BMO Financial Group (TSX: BMO)(NYSE: BMO) and Bank of Montreal -

Financial Results Highlights:

Fiscal 2013 Compared with Fiscal 2012:

-- Net income of $4,248 million, up 1%; adjusted net income(1) of $4,276 million, up 5%
-- EPS(2) of $6.26, up 2%; adjusted EPS(1,2) of $6.30, up 5%
-- ROE of 14.9%, compared with 15.9%; adjusted ROE(1) of 15.0%, compared with 15.5%
-- Provisions for credit losses of $589 million, compared with $765 million; adjusted provisions for credit losses(1) of $359 million, compared with $471 million
-- Basel III Common Equity Tier 1 Ratio of 9.9%

Fourth Quarter 2013 Compared with Fourth Quarter 2012:

-- Net income of $1,088 million, up 1%; adjusted net income(1) of $1,102 million, down 2%
-- EPS(2) of $1.62, up 2%; adjusted EPS(1,2) of $1.64, down 1%
-- ROE of 15.0%, compared with 15.6%; adjusted ROE(1) of 15.2%, compared with 16.3%
-- Provisions for credit losses of $189 million, compared with $192 million; adjusted provisions for credit losses(1) of $140 million, compared with $113 million

For fiscal 2013, net income was $4,248 million and EPS was $6.26. Adjusted net income was $4,276 million and adjusted EPS was $6.30. For the fourth quarter ended October 31, 2013, BMO Financial Group reported net income of $1,088 million or $1.62 per share on a reported basis and net income of $1,102 million or $1.64 per share on an adjusted basis.

"BMO's fourth quarter results mark the finish to a year in which the Bank achieved record revenue, net income and earnings per share, while generating the best one-year total shareholder return among the Canadian banks at 29 per cent," said Bill Downe, Chief Executive Officer, BMO Financial Group. "This performance reflects a well-executed growth strategy and the benefits of a diversified business model.

"Canadian Personal and Commercial Banking had record earnings in the year. We delivered robust volume growth contributing to notably stronger revenue and income in the second half of the year. Wealth Management had a record year with earnings up significantly and increased market share, supported by strong asset growth and customer loyalty.

"Adjusted earnings from BMO's U.S. segment generated over $1 billion in 2013, benefiting from continued business growth, particularly strong results in Wealth Management and Capital Markets, and good credit performance. With the pace of U.S. economic growth expected to be higher and with consumers continuing to deleverage, we're well positioned given BMO's geographic diversification, large commercial banking business and integrated North American platform with a strong unified brand.

"Looking ahead, we have clear opportunities for growth across a diversified North American footprint," concluded Mr. Downe. "I want to thank our customers for their loyalty and all our employees for their commitment to the bank and to our customers."

(1) Results and measures in this document are presented on a GAAP basis. They are also presented on an adjusted basis that excludes the impact of certain items. Adjusted results and measures are non-GAAP and are detailed in the Adjusted Net Income section, and (for all reported periods) in the Non-GAAP Measures section, where such non-GAAP measures and their closest GAAP counterparts are disclosed.

(2) All Earnings per Share (EPS) measures in this document refer to diluted EPS unless specified otherwise. EPS is calculated using net income after deductions for net income attributable to non-controlling interest in subsidiaries and preferred share dividends.

Note: All ratios and percentage changes in this document are based on unrounded numbers.

Concurrent with the release of results, BMO announced a first quarter 2014 dividend of $0.76 per common share, up $0.02 from the preceding quarter and up $0.04 per share from a year ago, equivalent to an annual dividend of $3.04 per common share.

BMO's 2013 audited annual consolidated financial statements and accompanying management's discussion & analysis (MD&A) will be available online at www.bmo.com/investorrelations along with the supplementary financial information report.

Total Bank Overview

Net income was $1,088 million for the fourth quarter of 2013, up $6 million or 1% from a year ago.

Adjusted net income was $1,102 million, down $23 million or 2% from a year ago. There was continued momentum in Wealth Management and in Canadian P&C. There was lower income in BMO Capital Markets reflecting lower trading revenues and higher taxes compared to the same quarter a year ago. There were also higher securities gains, provisions for credit losses were above trend in the P&C businesses and recoveries of credit losses on the purchased credit impaired loan portfolio were lower.

Operating Segment Overview

Canadian P&C

Net income was $469 million in the fourth quarter, up $27 million or 6% from a year ago. Adjusted net income was $472 million, up $28 million or 6% from the prior year. Revenue increased $68 million or 4% year over year driven by strong volume growth across most products, partially offset by the impact of lower net interest margin. Provisions for credit losses in the quarter increased $20 million or 13% mainly due to one commercial account, offset in part by modestly lower consumer provisions. Expenses increased modestly by $12 million or 2% due to higher employee-related expenses and continued selective investment in the business, partially offset by productivity benefits from good expense management. This year we expanded our branch network capacity by opening or upgrading 86 locations across the country.

Stronger revenue growth in the second half of 2013 was driven by good balance sheet growth throughout the year and reduced margin compression. Continued momentum in revenue growth, combined with our focus on process simplification, is expected to drive future net income growth.

In personal banking, there was strong loan and deposit growth of 11% and 6%, respectively. Our recent 'Make the BMOst of Summer' Campaign attracted multi-product customers to BMO. We are making significant improvements to our processes, enabling front-line employees to spend more time acquiring new customers and strengthening existing relationships.

In commercial banking, there was strong growth in both commercial loans and deposits of 11% and 14%, respectively. We recently launched the 'BMO Biz Starter for Small Business' Campaign offering integrated products, services and advice to help small business customers grow their businesses. We rank second in Canadian business banking loan market share for small and medium-sized loans with a 20% market share.

In September, BMO was presented with a Gold level standing in the Progressive Aboriginal Relations (PAR) program by the Canadian Council for Aboriginal Business (CCAB) for its efforts to enhance partnerships with Canada's First Peoples.

U.S. P&C (all amounts in US$)

Net income of $102 million, decreased $39 million or 28% from $141 million a year ago. Adjusted net income of $113 million declined $43 million or 28% from a year ago due to above trend commercial provisions for credit losses in the current quarter and reduced revenue and expenses.

There were year-over-year and quarterly sequential increases in average current loans and acceptances, led by continued strong growth in the core commercial and industrial (C&I) loan portfolio. This portfolio increased by $3.8 billion or 19% from a year ago to $23.7 billion.

Growth in our commercial business and personal chequing and savings accounts was more than offset by planned reductions in higher cost deposit products resulting in a slight decline in deposits.

During the quarter, the Federal Deposit Insurance Corporation released their annual deposit market share results. In the Chicago area we maintained our strong second place ranking, as BMO Harris Bank's deposit market share improved to 12.1%. In Wisconsin we also held the second place ranking with an even higher deposit market share of 14.1%. We maintained our number four market share ranking within our primary footprint of Wisconsin, Illinois, Missouri, Kansas, Indiana, and Minnesota.

Wealth Management

Net income for the quarter of $312 million was almost double the level of a year ago. Adjusted net income of $319 million increased $150 million or 89% from a year ago. Net income for the quarter included a $121 million after-tax security gain resulting from a change from the equity to available-for-sale accounting treatment as a result of the dilution of an investment. Other wealth businesses also continued to produce strong performance with adjusted net income of $129 million, up $36 million or 38% driven by growth in client assets, increased transaction volumes and a continued focus on productivity. Adjusted net income in insurance was $69 million, down $7 million or 9% from a year ago.

Assets under management and administration grew by $66 billion or 14% from a year ago to $553 billion, driven by market appreciation, growth in new client assets and the stronger U.S. dollar.

BMO InvestorLine was named the 'Best Online Discount Brokerage Firm in Canada' by Surviscor's Online Discount Brokerage scorCard. BMO InvestorLine received three category honours with best marks in the 'Getting Started', 'Account Services' and 'Website Transactions' categories.

BMO Private Bank has been named the "Best Domestic Private Bank, U.S." by Global Financial Market Review and "Best Private Bank-U.S. (Midwest) 2013" by World Finance Magazine.

BMO Capital Markets

Net income was $229 million, down $85 million or 27% from a strong fourth quarter a year ago. The prior year included strong trading revenues and a recovery of prior periods' income taxes. Revenues were lower as higher mergers and acquisitions and debt underwriting fees were more than offset by lower trading revenues reflecting market uncertainty associated with the tapering of quantitative easing and the U.S. debt ceiling, as well as lower securities gains and equity underwriting fees.

We continue to demonstrate our commitment to our clients as BMO Capital Markets was selected during the quarter as a 2013 Greenwich Quality Leader in Canadian Fixed Income Research and a 2013 Greenwich Share Leader in Canadian Fixed Income, reflecting client recognition for providing high quality service and the industry's best coverage in fixed income research.

BMO Capital Markets participated in 362 new global issues in the quarter, including 169 corporate debt deals, 128 government debt deals and 65 equity transactions, raising $771 billion.

Corporate Services

Corporate Services net loss for the quarter was $28 million, compared with net income of $22 million a year ago. On an adjusted basis, the net loss was $36 million, compared with net income of $41 million a year ago. The decrease in reported results was smaller than the decrease in adjusted results primarily due to lower integration costs in the current quarter. Adjusting items are detailed in the Adjusted Net Income section and in the Non-GAAP Measures section. Adjusted results declined primarily due to lower revenues, due to a decline in treasury-related items and a variety of other items, none of which were individually significant.

Caution

This Operating Segment Overview section contains forward-looking statements. Please see the Caution Regarding Forward-Looking Statements.

Adjusted results in this Operating Segment Overview section are non-GAAP amounts or non-GAAP measures. Please see the Non-GAAP Measures section.

Adjusted Net Income

Adjusted net income was $1,102 million for the fourth quarter of 2013, down $23 million or 2% from a year ago. Adjusted earnings per share were $1.64, down $0.01 from $1.65 a year ago.

Management has designated certain amounts as adjusting items and has adjusted GAAP results so that we can discuss and present financial results without the effects of adjusting items to facilitate understanding of business performance and related trends. Management assesses performance on a GAAP basis and on an adjusted basis and considers both to be useful in the assessment of underlying business performance. Presenting results on both bases provides readers with a better understanding of how management assesses results. Adjusted results and measures are non-GAAP and, together with items excluded in determining adjusted results, are disclosed in more detail in the Non-GAAP Measures section, along with comments on the uses and limitations of such measures. Items excluded from fourth quarter 2013 results in the determination of adjusted results totalled $14 million of net loss or $0.02 per share, and were comprised of:

-- the $30 million after-tax net benefit for credit-related items in respect of the M&I purchased performing loan portfolio (the acquired loan portfolio), consisting of $98 million for the recognition in net interest income of a portion of the credit mark on the portfolio (including $53 million for the release of the credit mark related to early repayment of loans), net of a $49 million specific provision for credit losses and income taxes of $19 million. These credit-related items in respect of the acquired M&I performing loan portfolio can significantly impact both net interest income and the provision for credit losses in different periods over the life of the M&I purchased performing loan portfolio;

-- costs of $60 million ($37 million after tax) for the integration of M&I including amounts related to restructuring and other employee-related charges, technology costs post conversion and marketing costs related to rebranding activities;

-- $5 million for income taxes related to the collective allowance on loans other than the M&I purchased loan portfolio;

-- the $26 million ($20 million after tax) benefit from run-off structured credit activities; and

-- the amortization of acquisition-related intangible assets of $31 million ($22 million after tax).

All of the above adjusting items were recorded in Corporate Services except the amortization of acquisition-related intangible assets, which is charged to the operating groups.

The impact of adjusting items for comparative periods is summarized in the Non-GAAP Measures section.

Financial Review

The Financial Review commentary is as of December 3, 2013. Unless otherwise indicated, all amounts are in Canadian dollars and have been derived from financial statements prepared in accordance with International Financial Reporting Standards (IFRS). References to GAAP mean IFRS. The Financial Review should be read in conjunction with the audited consolidated financial statements for the year ended October 31, 2013, and Management's Discussion and Analysis (MD&A) for fiscal 2013. The material that precedes this section comprises part of this Financial Review.

The annual MD&A for fiscal 2013 includes a comprehensive discussion of our businesses, strategies and objectives, and can be accessed on our website at www.bmo.com/investorrelations. Readers are also encouraged to visit the site to view other quarterly financial information.

Bank of Montreal's Audit and Conduct Review Committee reviewed this document and Bank of Montreal's Board of Directors approved the document prior to its release.

Regulatory Filings

Our continuous disclosure materials, including our interim filings, annual MD&A and audited consolidated financial statements, Annual Information Form and Notice of Annual Meeting of Shareholders and Proxy Circular are available on our website at www.bmo.com/investorrelations, on the Canadian Securities Administrators' website at www.sedar.com and on the EDGAR section of the SEC's website at www.sec.gov .

Bank of Montreal uses a unified branding approach that links all of the organization's member companies. Bank of Montreal, together with its subsidiaries, is known as BMO Financial Group. As such, in this document, the names BMO and BMO Financial Group mean Bank of Montreal, together with its subsidiaries.

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 securities regulators or the U.S. Securities and Exchange Commission, or in other communications. All such statements are made pursuant to the "safe harbor" provisions of, and are intended to be forward-looking statements under, the United States Private Securities Litigation Reform Act of 1995 and any applicable Canadian securities legislation. Forward-looking statements may involve, but are not limited to, comments with respect to our objectives and priorities for 2014 and beyond, our strategies or future actions, our targets, expectations for our financial condition or share price, and the results of or outlook for our operations or for the Canadian, U.S. and international economies.

By their nature, forward-looking statements require us to make assumptions and are subject to inherent risks and uncertainties. There is significant risk that predictions, forecasts, conclusions or projections will not prove to be accurate, that our assumptions may not be correct and that actual results may differ materially from such predictions, forecasts, conclusions or projections. We caution readers of this document not to place undue reliance on our forward-looking statements as a number of factors could cause actual future results, conditions, actions or events to differ materially from the targets, expectations, estimates or intentions expressed in the forward-looking statements.

The future outcomes that relate to forward-looking statements may be influenced by many factors, including but not limited to: general economic and market conditions in the countries in which we operate; weak, volatile or illiquid capital and/or credit markets; interest rate and currency value fluctuations; changes in monetary, fiscal or economic policy; the degree of competition in the geographic and business areas in which we operate; changes in laws or in supervisory expectations or requirements, including capital, interest rate and liquidity requirements and guidance; judicial or regulatory proceedings; the accuracy and completeness of the information we obtain with respect to our customers and counterparties; our ability to execute our strategic plans and to complete and integrate acquisitions; critical accounting estimates and the effect of changes to accounting standards, rules and interpretations on these estimates; operational and infrastructure risks; changes to our credit ratings; general political conditions; global capital markets activities; the possible effects on our business of war or terrorist activities; disease or illness that affects local, national or international economies; natural disasters and disruptions to public infrastructure, such as transportation, communications, power or water supply; technological changes; and our ability to anticipate and effectively manage risks associated with all of the foregoing factors.

We caution that the foregoing list is not exhaustive of all possible factors. Other factors could adversely affect our results. For more information, please see the discussion on pages 30 to 31 of BMO's 2013 annual MD&A, which outlines in detail certain key factors that may affect Bank of Montreal's future results. When relying on forward-looking statements to make decisions with respect to Bank of Montreal, investors and others should carefully consider these factors, as well as other uncertainties and potential events, and the inherent uncertainty of forward-looking statements. Bank of Montreal does not undertake to update any forward-looking statements, whether written or oral, that may be made from time to time by the organization or on its behalf, except as required by law. The forward-looking information contained in this document is presented for the purpose of assisting our shareholders in understanding our financial position as at and for the periods ended on the dates presented, as well as our strategic priorities and objectives, and may not be appropriate for other purposes.

Assumptions about the level of default and losses on default were material factors we considered when establishing our expectations regarding the future performance of the transactions into which our credit protection vehicle has entered. Among the key assumptions were that the level of default and losses on default will be consistent with historical experience. Material factors that were taken into account when establishing our expectations regarding the future risk of credit losses in our credit protection vehicle and risk of loss to Bank of Montreal included industry diversification in the portfolio, initial credit quality by portfolio, the first-loss protection incorporated into the structure and the hedges into which Bank of Montreal has entered.

Assumptions about the performance of the Canadian and U.S. economies, as well as overall market conditions and their combined effect on our business, are material factors we consider when determining our strategic priorities, objectives and expectations for our business. In determining our expectations for economic growth, both broadly and in the financial services sector, we primarily consider historical economic data provided by the Canadian and U.S. governments and their agencies. See the Economic Developments and Outlook section on page 32 of BMO's 2013 annual MD&A.

Full release: http://bit.ly/1jjt4w0

INVESTOR AND MEDIA PRESENTATION

Investor Presentation Materials

Interested parties are invited to visit our website at www.bmo.com/investorrelations to review our 2013 annual MD&A and audited annual consolidated financial statements, this quarterly news release, presentation materials and a supplementary financial information package online.

Quarterly Conference Call and Webcast Presentations

Interested parties are also invited to listen to our quarterly conference call on Tuesday, December 3, 2013, at 2:00 p.m. (EST). At that time, senior BMO executives will comment on results for the quarter and respond to questions from the investor community. The call may be accessed by telephone at 416-695-9753 (from within Toronto) or 1-888-789-0089 (toll-free outside Toronto). A replay of the conference call can be accessed until Monday, February 24, 2014, by calling 905-694-9451 (from within Toronto) or 1-800-408-3053 (toll-free outside Toronto) and entering passcode 1254867.

A live webcast of the call can be accessed on our website at www.bmo.com/investorrelations. A replay can also be accessed on the site.

Contact Information

Media Relations Contacts
Ralph Marranca, Toronto
ralph.marranca@bmo.com
+1-416-867-3996

Ronald Monet, Montreal
ronald.monet@bmo.com
+1-514-877-1873

Investor Relations Contacts
Sharon Haward-Laird
Head, Investor Relations
sharon.hawardlaird@bmo.com
+1-416-867-6656

Andrew Chin
Director
andrew.chin@bmo.com
+1-416-867-7019

Chief Financial Officer
Tom Flynn, CFO
tom.flynn@bmo.com
+1-416-867-4689

Corporate Secretary
Barbara Muir, Senior Vice-President,
Deputy General Counsel,
Corporate Affairs and Corporate Secretary
corp.secretary@bmo.com
+1-416-867-6423





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