Bank of Montreal 1997 Annual Report Download - page 32

Other income is comprised of all revenue other than net
interest income, such as service charges, lending fees,
capital market fees, card services fees, mutual fund fees,
commission revenue and trading income.
Other income increased $465 million to $2,981 million
in 1997, or 18.5%, following an increase of 19.7% in 1996.
Growth in other income was primarily due to higher
capi
tal market fees, increased i nvestment management
and custodial fees, and higher
mutual fund revenues.
Growth in income from deposit and payment service
charges resulted from an increase in the number of transactions as opposed to an increase in service charges relative
to 1996. The increase in lending fees reflected a number of sizeable underwriting deals that were completed in our Global
Distribution area. Income from capital market fees includes commission revenue, and underwriting and advisory fees.
The increase in capital market fees resulted from the continued strong capital markets in North America, increased issue
activity and secondary trading volumes. The increase in card services income was due to growth in our credit card vol-
umes and the accounting treatment of the credit card securitizations, which includes a reclassification of income from
net interest income to other income. The increase in mutual fund revenues mainly resulted from growth in assets under
management which grew 51.1% from $34,978 million to $52,869 million in 1997. Other fees and commissions include
revenue from insurance-related activities, foreign exchange revenue other than trading, investment securities gains and
losses, and gains and losses from disposal of premises and equipment. The increase from this area was primarily due to
revenues from insurance-related activities reflecting increased premiums as well as an increase due to a 1996 write-down
of capital assets.
Trading revenue includes net interest and other income
derived from on- or off-balance sheet positions considered
by management to be undertaken for trading purposes.
All trading portfolios are marked-to-market†daily.
Total revenue from trading-related activities, which
includes trading income recorded in net interest income as
well as that which is recorded in other income, decreased
2.1% in 1997 compared to a 17.0% increase in 1996. The
relatively flat performance in 1997 was primarily due to
an increase in foreign exchange revenues and financing
portfolios due to market volatility
†
, more than offset by a
decrease in public debt related revenues, where we continue
to face challenging market conditions in North America
as governments reduce deficits and spreads narrow.
Components of Other Income ($ millions)
For the year ended October 31 1997 1996* 1995* 1994* 1993*
Deposit and payment
service charges 508 473 451 437 430
Lending fees 240 194 186 180 145
Capital market and other fees 919 760 495 313 238
Card services fees 283 234 230 211 208
Investment management and
custodial fees 299 221 240 197 194
Mutual fund revenues 155 87 53 56 30
Trading revenue 276 277 225 226 202
Other fees and commissions 301 270 222 251 207
Total 2,981 2,516 2,102 1,871 1,654
*Reclassified to conform with the current year’s presentation.
Trading-Related Revenue (a) ($ millions)
For the year ended October 31 1997 1996* 1995* 1994* 1993*
Total Trading
Global financial products 52 42 17 36 15
Foreign exchange 92 83 56 35 96
Financing portfolios 22 (2) 0 (7) 1
Institutional equities/public debt 85 108 137 143 93
Other 33 58 38 42 73
284 289 248 249 278
Reported in
Net interest income 812 23 23 76
Other income – trading revenue 276 277 225 226 202
(a) Includes organizational units whose predominant business is maintaining trading
positions which are marked-to-market.
*Reclassified to conform with the current year’s presentation.
Other Income Growth Due to an Increase in
Fee-Related Businesses
Bank of Montreal 180th Annual Report 1997
26
Revenue Growth Continued
†
Defined in the Glossary on page 90