For the period ended July 31, 2004 Third Quarter Report 2004 I am pleased to present BMO Financial Group’s Third Quarter 2004 Report to Shareholders. Tony Comper President and Chief Executive Officer August 24, 2004 Annual Meeting 2005 The next Annual Meeting of Shareholders will be held on Tuesday, February 22, 2005 in Toronto, Ontario.
Financial Highlights (Canadian $ in millions except as noted) For the three months ended For the nine months ended July 31, April 30, January 31, October 31, July 31, Change from July 31, July 31, Change from 2004 2004 2004 2003 2003 July 31, 2003 2004 2003 July 31, 2003 Income Statement Highlights Total revenue $ 2,391 $ 2,437 $ 2,363 $ 2,369 $ 2,307 3.7% $ 7,191 $ 6,750 6.6% Total revenue (teb) (a) 2,423 2,476 2,401 2,411 2,334 3.9 7,300 6,860 6.4 Provision for credit losses (110) 5 15 95 90 (+100) (90) 360 (+100) Non-interest expense 1,538 1,565 1,561 1,545 1,485 3.6 4,664 4,542 2.7 Net income 654 602 532 513 504 29.9 1,788 1,312 36.3 Common Share Data ($) Diluted earnings per share $ 1.24 $ 1.12 $ 1.00 $ 0.97 $ 0.95 $ 0.29 $ 3.36 $ 2.47 $ 0.89 Diluted cash earnings per share (a) 1.27 1.17 1.03 1.00 0.99 0.28 3.47 2.59 0.88 Dividends declared per share 0.40 0.40 0.35 0.35 0.33 0.07 1.15 0.99 0.16 Book value per share 24.31 23.82 22.87 22.09 21.92 2.39 24.31 21.92 2.39 Closing share price 55.40 51.90 57.79 49.33 44.65 10.75 55.40 44.65 10.75 Total market value of common shares ($ billions) 27.8 26.1 29.0 24.6 22.2 5.6 27.8 22.2 5.6 As at July 31, April 30, January 31, October 31, July 31, Change from 2004 2004 2004 2003 2003 July 31, 2003 Balance Sheet Highlights Assets $ 261,944 $ 273,056 $ 265,394 $ 256,494 $ 257,685 1.7% Net loans and acceptances 158,046 156,436 149,585 146,156 147,275 7.3 Deposits 181,059 184,927 178,069 171,551 170,902 5.9 Common shareholders’ equity 12,179 11,963 11,490 11,036 10,918 11.5 For the three months ended For the nine months ended July 31, April 30, January 31, October 31, July 31, July 31, July 31, 2004 2004 2004 2003 2003 2004 2003 Primary Financial Measures (%) (b) Average annual five year total shareholder return 18.7 14.8 15.2 12.9 7.3 18.7 7.3 Diluted earnings per share growth 30.5 45.5 33.3 29.3 46.2 36.0 28.0 Diluted cash earnings per share growth (a) 28.3 44.4 30.4 26.6 41.4 34.0 27.0 Return on equity 21.0 20.4 18.3 17.9 18.0 20.0 15.8 Cash return on equity (a) 21.7 21.1 19.0 18.5 18.8 20.6 16.6 Net economic profit (NEP) growth (a) 53.7 +100 94.9 74.1 +100 82.2 +100 Revenue growth 3.7 12.6 3.7 4.7 8.9 6.6 4.0 Revenue growth (teb) (a) 3.9 12.1 3.6 5.4 8.9 6.4 4.4 Non-interest expense-to-revenue ratio 64.3 64.2 66.1 65.2 64.4 64.9 67.3 Non-interest expense-to-revenue ratio (teb) (a) 63.5 63.2 65.0 64.0 63.7 63.9 66.2 Cash non-interest expense-to-revenue ratio (teb) (a) 62.4 62.2 63.9 63.1 62.6 62.8 65.0 Provision for credit losses-to-average loans and acceptances (annualized) (0.28) 0.01 0.04 0.25 0.24 (0.08) 0.32 Gross impaired loans and acceptances-to-equity and allowance for credit losses 7.83 9.04 11.03 12.15 12.91 7.83 12.91 Cash and securities-to-total assets ratio 27.3 29.2 29.1 29.1 28.6 27.3 28.6 Tier 1 capital ratio 9.44 9.67 9.65 9.55 9.21 9.44 9.21 Credit rating Standard & Poor’s AA- AA- AA- AA- AA- AA- AA- Moody’s Aa3 Aa3 Aa3 Aa3 Aa3 Aa3 Aa3 Other Financial Ratios (% except as noted) (b) Twelve month total shareholder return 27.5 33.1 44.1 33.4 30.6 27.5 30.6 Dividend yield 2.9 3.1 2.4 2.8 3.0 2.8 3.0 Price-to-earnings ratio (times) 12.5 12.5 15.4 14.1 13.6 12.5 13.6 Market-to-book value (times) 2.28 2.18 2.53 2.23 2.04 2.28 2.04 Net economic profit ($ millions) (a) 339 302 238 221 220 879 482 Return on average assets 0.96 0.88 0.79 0.77 0.74 0.88 0.67 Net interest margin 1.87 1.74 1.87 1.85 1.81 1.83 1.86 Net interest margin (teb) (a) 1.92 1.80 1.92 1.91 1.84 1.88 1.91 Non-interest revenue-to-total revenue 46.9 51.3 46.8 47.8 47.0 48.4 45.7 Non-interest revenue-to-total revenue (teb) (a) 46.3 50.5 46.0 47.0 46.5 47.6 45.0 Non-interest expense growth 3.6 5.4 (0.7) (3.6) (0.2) 2.7 2.6 Total capital ratio 11.19 11.53 11.67 12.09 12.09 11.19 12.09 Tier 1 capital ratio – U.S. basis 9.10 9.28 9.25 9.17 8.79 9.10 8.79 Equity-to-assets ratio 5.8 5.5 5.4 5.5 5.4 5.8 5.4 All ratios in this report are based on unrounded numbers. other than generally accepted accounting principles (GAAP) do not have standardized meanings (a) Refer to the “Non-GAAP Measures” section on pages 4 and 5 for an explanation of cash results, under GAAP and are unlikely to be comparable to similar measures used by other companies. reporting on a taxable equivalent basis (teb) and net economic profit. Securities regulators (b) For the period ended, or as at, as appropriate. require that companies caution readers that earnings and other measures adjusted to a basis
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