BMO Financial Group Reports Net Income of $1.1 Billion for the First Quarter of 2014

JCN Newswire / 2014年2月26日 13時22分

Toronto, Ontario, Feb 26, 2014 - (JCN Newswire) - BMO Financial Group (TSX:BMO)(NYSE:BMO) and Bank of Montreal -

Financial Results Highlights:

First Quarter 2014 Compared with First Quarter 2013:

- Net income of $1,061 million, up 2%; adjusted net income(1) of $1,083 million, up 5%
- EPS(2) of $1.58, up 5%; adjusted EPS(1,2) of $1.61, up 7%
- ROE of 14.2%, compared with 14.9%; adjusted ROE(1) of 14.5%, compared with 14.8%
- Provisions for credit losses of $99 million, compared with $178 million; adjusted provisions for credit losses(1) of $99 million, compared with $96 million
- Basel III Common Equity Ratio is 9.3%

For the first quarter ended January 31, 2014, BMO Financial Group reported net income of $1,061 million or $1.58 per share on a reported basis and net income of $1,083 million or $1.61 per share on an adjusted basis.

"BMO's first quarter results reflect continued revenue growth and strong operating group performance, especially in Canadian Personal and Commercial Banking. The bank is showing sustained momentum and a growing balance sheet," said Bill Downe, Chief Executive Officer, BMO Financial Group.

"We gained market share in domestic personal lending complemented by double-digit growth in both commercial loans and deposits. Our U.S. commercial banking team also continued to deliver excellent volume growth with core commercial and industrial loans up 14% from a year ago. Margins were stable on both sides of the border, and Wealth Management and Capital Markets posted robust revenue growth.

"We recently announced an agreement to acquire F&C Asset Management, a diversified, U.K.-based investment manager. The acquisition will expand our BMO Global Asset Management business which had grown to over US$130 billion in assets under management and 175 investment professionals at the end of 2013.

"We're seeing the benefits of our diversified North American presence. We have clear opportunities for growth across our U.S. businesses in an environment of improved household finances and growing consumer confidence. In addition, progress in debt ceiling and budget negotiations in the United States will benefit business investment and our large North American commercial banking platform," concluded Mr. Downe.

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

Our complete First Quarter 2014 Report to Shareholders, including our unaudited interim consolidated financial statements for the period ended January 31, 2014, is available online at www.bmo.com/investorrelations and at www.sedar.com .

(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.

Total Bank Overview

Net income was $1,061 million for the first quarter of 2014, up $25 million or 2% from a year ago.

Adjusted net income was $1,083 million, up $54 million or 5% from a year ago. There was continued momentum in Canadian P&C and Wealth Management, improved results from the prior quarter in U.S. P&C and solid results from BMO Capital Markets.

Operating Segment Overview

Canadian P&C

Net income was $484 million, up $37 million or 8% from a year ago. Adjusted net income was $486 million, up $36 million or 8% from the prior year. Results reflect continued momentum from the second half of last year with good revenue growth and a second consecutive quarter with above 2% operating leverage. Revenue was up $99 million or 7% year over year driven by strong volume growth across most products, partially offset by the impact of lower net interest margin. There was year-over-year loan growth of 10% and deposit growth of 11%. Expenses increased $33 million or 4% due to continued investment in the business.

In personal banking, there was strong loan and deposit growth of 10% and 9% respectively. Our recent BMO World Elite MasterCard(R) 'UPGRADE' campaign has been successful in attracting new customers to the Bank. In commercial banking, momentum continued with strong loan and deposit growth of 11% and 14%, respectively. We remain second in Canadian business banking loan market share for small and medium-sized loans. In both personal and commercial banking, we continue to make improvements in our processes, enabling front-line employees to spend more time acquiring more customers and strengthening existing relationships.

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

Net income of $153 million decreased $27 million or 15% from a strong first quarter a year ago. Adjusted net income of $164 million declined $30 million or 15% from a year ago. The prior year included strong revenues on sales of newly originated mortgages, commercial lending fees, due to customers' response to anticipated U.S. tax changes that accelerated commercial lending, and higher net interest margin. Adjusted net income was up $55 million compared to the prior quarter, benefiting from lower provisions for credit losses that were above trend in the fourth quarter.

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 loan portfolio. This portfolio increased by $3.0 billion or 14% from a year ago to $24.3 billion.

Growth in our commercial business and personal chequing and savings accounts was more than offset by planned reductions in higher-cost deposit products and a transfer of certain customer balances to Wealth Management at the beginning of the quarter, which resulted in a decline in deposits.

During the quarter, we were awarded 24 competitive Affordable Housing Program projects by the Federal Home Loan Bank of Chicago. These projects allow us to support our communities through the development of affordable housing, and also provide us with opportunities to cross-sell our products and services.

Wealth Management

Wealth Management continued to produce good results. Net income of $175 million increased $13 million or 8% from a year ago. Adjusted net income of $183 million also increased 8%. Adjusted net income in our traditional wealth businesses was $123 million, up $19 million or 17% from strong growth in client assets and increased transaction volumes. Adjusted net income in insurance was $60 million, down $4 million or 7%.

Assets under management and administration grew by $97 billion or 19% from a year ago to $597 billion, driven by market appreciation, the stronger U.S. dollar and growth in new client assets.

BMO InvestorLine was named the top bank-owned online brokerage firm in Canada for the third consecutive year in the 15th annual Globe and Mail ranking of online brokers and was also named Best Online Brokerage 2013 at the 19th annual Morningstar Awards.

In January, BMO announced an agreement on the terms of a cash offer to acquire all of the shares of F&C Asset Management plc (F&C), a diversified U.K.-based investment manager, at an aggregate purchase price of approximately GBP 708 million ($1.3 billion) that would see F&C become part of BMO Financial Group. Subject to F&C shareholder approval and satisfaction of all regulatory and other conditions, the acquisition is expected to close after May 1, 2014.

BMO Capital Markets

Net income for the current quarter was $277 million, down $21 million or 7% from the first quarter a year ago, as good revenue growth primarily from our U.S. businesses was more than offset by higher expenses, lower loan recoveries and a higher effective tax rate. Return on equity of 18.8% was strong, increasing 3.8% from 15.0% in the prior quarter. Revenues increased $79 million or 9% year over year due to good revenue performance in both the Investment and Corporate Banking and the Trading Products businesses, and in particular from our U.S. segment. Expenses increased $85 million or 16% year over year due to higher employee-related expenses, including severance, and increased support costs, both related to a changing business and regulatory environment.

Our continued focus on our core clients was recognized as BMO Capital Markets was selected during the quarter as a 2013 Greenwich Quality Leader in Canadian Mergers and Acquisitions and in Canadian Equity Capital Markets. We were also selected as a 2013 Greenwich Share Leader in Canadian Investment Banking and Canadian Debt Capital Markets for Market Penetration.

BMO Capital Markets participated in 374 new global issues in the quarter, including 192 corporate debt deals, 110 government debt deals and 72 equity transactions, raising $818 billion.

Corporate Services

Corporate Services net loss for the first quarter of 2014 was $41 million, compared with a net loss of $50 million a year ago. The adjusted net loss in the quarter was $41 million, compared with an adjusted net loss of $79 million a year ago. Beginning in the first quarter of 2014, credit-related items in respect of the purchased performing loan portfolio are included in adjusted results. Credit-related items consist of $79 million for the recognition in net interest income of a portion of the credit mark on the portfolio, a $34 million specific provision for credit losses and related income taxes of $17 million. Adjusted revenues were higher mainly due to credit-related revenue in respect of the purchased performing loan portfolio, partially offset by a group taxable equivalent basis (teb) offset that was $21 million higher than the prior year. Adjusted expenses were lower primarily due to lower support costs retained in Corporate and reduced costs associated with the impaired real estate secured asset portfolio. Adjusted recoveries of credit losses of $59 million improved by $8 million primarily due to a $58 million increase in recoveries on the purchased credit impaired loan portfolio from the prior year, partially offset by $34 million of provisions in respect of the purchased performing loan portfolio.

Adjusted Net Income

Adjusted net income was $1,083 million for the first quarter of 2014, up $54 million or 5% from a year ago. Adjusted earnings per share were $1.61, up 7% from $1.50 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. The only item excluded from first quarter 2014 results in the determination of adjusted results was the amortization of acquisition-related intangible assets of $31 million ($22 million after tax; $0.03 per share), which is charged to the operating groups. There was no net change in the collective allowance for credit losses. Previously, amounts excluded from adjusted results also included credit-related items in respect of the purchased performing loan portfolio, acquisition integration costs and run-off structured credit activities. 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. The impact of adjusting items for comparative periods is summarized in the Non-GAAP Measures section.

Caution

The foregoing sections contain forward-looking statements. Please see the Caution Regarding Forward-Looking Statements.

Adjusted results in these Total Bank Overview and Operating Segment Overview sections are non-GAAP amounts or non-GAAP measures. Please see the Non-GAAP Measures section.

Management's Discussion and Analysis

Management's Discussion and Analysis (MD&A) commentary is as of February 25, 2014. 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 MD&A should be read in conjunction with the unaudited interim consolidated financial statements for the period ended January 31, 2014, as well as the audited consolidated financial statements for the year ended October 31, 2013, and the MD&A for fiscal 2013 in BMO's 2013 Annual Report. The material that precedes this section comprises part of this MD&A.

The annual MD&A 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 management, under the supervision of the CEO and CFO, has evaluated the effectiveness, as at January 31, 2014, of Bank of Montreal's disclosure controls and procedures (as defined in the rules of the Securities and Exchange Commission and the Canadian Securities Administrators) and has concluded that such disclosure controls and procedures are effective.

There were no changes in our internal control over financial reporting during the quarter ended January 31, 2014, that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Because of inherent limitations, disclosure controls and procedures and internal control over financial reporting can provide only reasonable assurance and may not prevent or detect misstatements.

As in prior quarters, 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.

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 Report, this quarterly news release, presentation materials and 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, February 25, 2014, 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 Tuesday, May 27, 2014, by calling 905-694-9451 (from within Toronto) or 1-800-408-3053 (toll-free outside Toronto) and entering passcode 6766952.

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.

Full press release: http://mwne.ws/1fSrAEh

Contact Information

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

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

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

Andrew Chin
Director, Investor Relations
andrew.chin@bmo.com
416-867-7019

Tom Flynn
Chief Financial Officer
tom.flynn@bmo.com
416-867-4689

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





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