Bank of Montreal 1999 Annual Report Download - page 50

44 Bank of Montreal Group of Companies 1999 Annual Report
Operating Review of Client Groups
During the year the Bank was reorganized into three
client groups which are more closely aligned with our
client segments. These three client groups have
replaced our previous five operating groups.
The businesses and clients served by each of our
client groups are described in the accompanying group
sections. All financial information included in these
sections has been restated to reflect the 1999 organiza-
tional changes.
Net income earned and the average assets held by
each operating group are shown by geographic area in
the table below. In addition, the table shows business
mix by group.

Personal and Commercial Client Group
Net income was $1,106 million in 1999, an increase of
16.9% from the prior year. Revenue growth of $336 mil-
lion was offset in part by expense growth of $135 million
and a $9 million increase in the provision for credit
losses, as explained further on page 45.

Private Client Group
Net income was $92 million for the year, a decrease of
$17 million or 15.2% from the prior year. Increased rev-
enues of $38 million were more than offset by expense
growth of $57 million as detailed on page 52.

Investment Banking Group
Net income was $426 million in 1999, an increase of
$85 million or 24.9% from the prior year. Revenue
growth of $301 million was offset in part by higher
expenses of $87 million and an $87 million increase in
the provision for credit losses, as explained further on
page 55.

Corporate Support
The net loss for the year was $242 million compared to a
net loss of $45 million last year. Revenues declined $17 mil-
lion
and expenses increased $224 million, including the
one-time charges of $196 million described on page 27.
The provision for credit losses also increased $94 mil-
lion, contributing to the overall decline in earnings.
Corporate Support ($ millions except as noted)
As at or for the year ended October 31 1999 1998* 1997*
Net interest income (270) (180) 8
Other income 191 118 9
Total Revenue (79) (62) 17
Provision for credit losses 45 (49) 19
Non-interest expense
before restructuring charge 102 19 129
Restructuring charge 141 00
Total non-interest expense 243 19 129
Income before taxes, non-controlling
interest in subsidiary and goodwill (367) (32) (131)
Income taxes (148) (19) (28)
Non-controlling interest in subsidiary 514 25
Goodwill 18 18 14
Net Income (242) (45) (142)
Average assets (4,742) (3,008) 1,470
Average current loans (10,880) (4,141) (363)
Average deposits 4,462 1,513 1,019
Full-time equivalent staff 5,243 5,266 5,794
*Restated to give effect to the current year’s organization structure and
presentation changes
Net Income Business Mix and Average Assets by Operating Group
Personal & Commercial Private Investment Corporate Total
For the year Client Group Client Group Banking Group Support (a) Consolidated
ended October 31 1999 1998* 1997* 1999 1998* 1997* 1999 1998* 1997* 1999 1998* 1997* 1999 1998* 1997*
Net Income ($ millions)
Canada 632 641 588 56 63 70 82 80 205 (306) (73) (312) 464 711 551
United States 303 229 216 25 31 20 271 237 172 34 28 103 633 525 511
Mexico 111 21 74 0007453(1) 6 121 24 85
Other countries 60 54 58 11 15 3 66 20 36 27 161164 90 158
Total 1,106 945 936 92 109 93 426 341 418 (242) (45) (142) 1,382 1,350 1,305
Business Mix (%) 80.0 70.0 71.7 6.7 8.1 7.1 30.8 25.2 32.1 (17.5) (3.3) (10.9) 100.0 100.0 100.0
Average Assets ($ billions)
Canada 75.6 70.5 63.2 1.6 2.4 2.0 39.0 49.3 44.9 (8.0) (4.1) 0.5 108.3 118.0 110.6
United States 35.9 31.9 27.2 1.8 1.5 1.1 41.5 41.3 34.2 3.0 0.9 0.7 82.1 75.6 63.2
Mexico 0.7 0.7 0.7 0.0 0.0 0.0 0.8 0.7 0.6 0.1 0.1 0.2 1.7 1.6 1.4
Other countries 0.2 0.1 0.0 0.1 0.1 0.1 34.2 32.0 21.3 0.1 0.1 0.1 34.6 32.3 21.5
Total 112.4 103.2 91.1 3.5 4.0 3.2 115.5 123.3 101.0 (4.8) (3.0) 1.5 226.7 227.5 196.7
*Restated to give effect to the current year’s organization structure
(a) Corporate Support includes any residual revenues and expenses representing the difference between actual amounts incurred and the amounts allocated to operating groups. Corporate
Support also includes the impact of asset securitization as described in more detail in the capital adequacy section.
Basis of presentation of results of operating groups
Expenses are matched against the revenues to which they relate. Indirect expenses, such as overhead expenses and any revenue that may be associated thereto, are allocated to the operating
groups using appropriate allocation formulas applied on a consistent basis. For each currency, the net income effect of funds transferred from any group with a surplus to any group with a
shortfall is at market rates for the currency and appropriate term. Segmentation of assets by geographic region is based upon the ultimate risk of the underlying assets. Segmentation of net
income is based upon the geographic location of the unit responsible for managing the related assets, liabilities, revenues and expenses.