Bank of Montreal 1997 Annual Report Download - page 40

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Bank of Montreal 180th Annual Report 199734
Effective Risk Management to Ensure an Appropriate
Risk-Return Relationship
•
Co-sponsored CreditMetrics, a credit risk management
initiative designed to create further liquidity in the global
loan markets. Our leadership in credit risk management
lead to our co-sponsorship of this initiative.
•Enhanced our focus on position risk and credit risk
measurement and control methodologies. We are in the
process of implementing “Value at Risk” scenario analysis
and stress testing methodologies to further improve our
day-to-day risk management capabilities and to meet
regulatory capital requirements for position risk.
•
These methodologies identify the economic contribution
generated
against the capital required to underpin all
risks involved. This allows us to measure performance on
a uniform basis.
Financial Results
Net income for GTG was $403 million in 1997, up from $318 million in 1996. GTG’s perfor-
mance in 1997 reflects the belief that success is not defined solely by traditional products,
nor by Canadian boundaries. Revenue growth of 33.8% was driven by several factors
including the implementation of strategic initiatives such as Global Distribution, Project
Finance, Derivatives and Managed Futures. GTG has also experienced significant revenue
growth from cash collections ($79 million) due to the improved North American economy.
Earnings from equities and bonds of lesser developed countries increased $48 million
over 1996. Trading revenue contributed an incremental $29 million to revenue.
Income growth in 1996 was driven by higher trading revenues. Revenue increased
$92 million or 11.8% over 1995 while expense growth was 9.8%.
979695
779 871
1,166
Mexico Canada
Other U.S.
Revenue Diversification
($ millions)
Global Treasury Group
($ millions except as noted)
As at or for the year ended October 31
1997 1996* 1995* 1994* 1993*
Net interest income 747 533 514 530 578
Other income 419 338 265 244 232
Provision for credit losses 3(22) (22) 277 445
Non-interest expense 465 339 308 259 262
Income before taxes 698 554 493 238 103
Income taxes 295 236 211 105 46
Net income 403 318 282 133 57
Average assets 69,203 44,769 40,506 32,504 29,237
Average current loans 18,071 12,965 11,855 10,733 10,643
Average deposits 49,111 37,265 33,689 26,632 23,655
Assets under management 1,417 0000
Full-time equivalent staff
(a)
692 725 NA NA NA
Expense-to-revenue ratio
(%)
39.9 38.9 39.6 33.4 32.3
*Restated to give effect to the current year’s organization structure.
(a) As at October 31.
NA – Not available.
Global Treasury Group Continued