Bank of Montreal 1999 Annual Report Download - page 23

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Bank of Montreal Group of Companies 1999 Annual Report 21
Measures and Objectives
To assess our financial performance and condition, we
consistently monitor a set of primary measures which
balance profitability and financial condition.
During the year, we have continued our implementation
of the value based management (VBM) framework. As part
of this implementation, our financial performance mea-
sures were reviewed with net economic profit (NEP) being
added to our current measures. Our primary financial
performance and condition measures are detailed in the
diagram below.
Our financial objectives and standards have also evolved as
part of the implementation of the value based management
framework. The diagram illustrates these changes.
Primary Financial Performance and Condition Measures
–
Going Forward
Five-Year Total Shareholder Return*
Net Economic Profit Growth
Earnings per Share Growth
Return on Equity
Revenue Growth
Expense-to-Revenue Ratio
Forward-Looking Statements
From time to time we make written and verbal forward-looking statements. These may be included in the Annual Report, filings with
Canadian regulators or the U.S. Securities and Exchange Commission, in reports to shareholders and in other communications. These forward-
looking statements include but are not limited to comments
with respect to our objectives and strategies, financial
condition, the results of
our operations and our businesses, our outlook for the Canadian economy and our risk management discussion including the Year 2000 issue.
However, by their nature these forward-looking statements involve numerous assumptions, inherent risks and uncertainties, both general
and specific, and the risk that
predictions and other forward-looking statements will not be
achieved. We caution readers of this Annual Report
not to place undue reliance on these forward-looking statements as a number of important factors could cause actual future results to
differ materially from the plans, objectives, expectations, estimates and intentions expressed in such forward-looking statements.
Forward-looking statements may be influenced by the
following factors: fluctuations in interest rates and currency values; regulatory develop-
ments; the effects of competition in the geographic and business areas in which we operate, including continued pricing pressure on loan
and
deposit
products; and changes in political and economic conditions includ
ing, among other things, inflation and technological
changes.
We caution that the foregoing list of important factors is not exhaustive and that when relying on forward-looking statements to make decisions
with respect to Bank of Montreal, investors and others should carefully consider the
foregoing factors as well as other uncertainties and events.
*Total shareholder return (TSR) is equivalent to return on investment (ROI). To ensure consistency, TSR has replaced all references to ROI throughout the annual report.
Financial Performance Objectives
1999 Going Forward
Vision and Purpose
To be the most trusted, respected and profitable provider
of financial services wherever we operate
Governing Objective
To increase long-term
shareholder value
Achieve annual
earnings per
share (EPS)
growth of at
least 10%
Achieve return
on equity (ROE)
of 15–17%
Maintain strong
regulatory capital
position consis-
tent with our
peers
Financial Performance and Condition Objectives

Vision and Purpose
To be the best financial services company
wherever we choose to compete
Governing Objective
To maximize the value of our common shares and total
return to shareholders over time
Grow earnings per
share (EPS) by at
least 10% per annum
Increase return on
equity (ROE) by
1–1.5%
per annum to
19–20%
by 2002
Manage each line of
business
to maximize
its value
contribution
to shareholders and to
grow its annual net
economic profit (NEP)
consistent with that
valuation requirement
Maintain strong
regulatory capital
position consistent
with our peers
Financial Performance and Condition Standards
This means
achieving
top quartile
total
shareholder
return (TSR)
relative to
our peers
Provision for Credit Losses as a % of Average Loans and Acceptances
Gross Impaired Loans & Acceptances as a % of Equity and
Allowance for Credit Losses
Liquidity Ratio
Tier 1 Capital Ratio
Credit Rating