Bank of Montreal 1999 Annual Report Download - page 55

Bank of Montreal Group of Companies 1999 Annual Report 49
Financial Results
Personal and Commercial Client Group
Net income for the Personal and Commercial Client Group (P&C) was $1.1 billion in
1999, up 16.9% over 1998. Revenue increased $336 million, or 7.0%, due to volume growth
across most lines of business and higher revenues from credit card operations and
other fee-related income, partly driven by product and distribution initiatives. Volume
growth was partially offset by narrower spreads. Revenue growth also benefited from
improvedmarketconditionsandbusinessgrowthinMexico,whichresultedina$90mil-
lion increase in the contribution from our investment in Bancomer. Revenue for the
group also included a $27 million gain from the sale of our Global Custody business
during the year. The 4.5% rise in expenses from a year ago was the result of ongoing
business operations, costs related to productivity improvements, and strategic initia-
tives including continued investment in alternate delivery channels.
Net income of $945 million in 1998 rose $9 million over 1997. Revenue growth of
$179 million, together with a decrease of $59 million in the provision for credit losses,
more than offset expense growth of $198 million. Strong loan volume growth and
other fee revenues were partially offset by narrower spreads. The provision for credit
losses decreased as a result of the sale of our U.S. card business. Expense growth was
due to growth in our technology-related businesses and expanding banking opera-
tions in the United States. Both revenues and expenses for our U.S. operations were
affected by the U.S./Canadian dollar exchange rate.
Personal and Commercial Client Group ($ millions except as noted)
As at or for the year ended October 31 1999 1998* 1997*
Net interest income 3,634 3,456 3,435
Other income 1,513 1,355 1,197
Total Revenue 5,147 4,811 4,632
Provision for credit losses 204 195 254
Non-interest expense 3,149 3,014 2,816
Income before taxes, non-controlling interest in subsidiary and goodwill 1,794 1,602 1,562
Income taxes 663 637 614
Non-controlling interest in subsidiary 16 11 0
Goodwill, net of applicable tax 9912
Net Income 1,106 945 936
Average assets 112,407 103,181 91,096
Average current loans 91,019 84,466 74,362
Average deposits 86,669 85,633 79,648
Full-time equivalent staff 21,734 22,108 22,701
Expense-to-revenue ratio (%) 61.2 62.6 60.8
*Restated to give effect to the current year’s organization structure and presentation changes
Personal and Commercial Client Group
– Canada
P&C Canada contributed $734 million to the net income for total P&C in 1999. Revenue
growth of $114 million in 1999 was partly offset by expense growth of $89 million.
Revenuegrowthof3.1%wasgeneratedbyvolumegrowth,partiallyoffsetbynarrower
spreads in the Canadian retail market. Volume growth, primarily from mortgages,
commercial loans and commercial deposits, was driven by product and distribution
initiatives coupled with continued client demand in response to favourable economic
conditions. In addition, strong growth occurred in credit card operations and trust
and other fee-related income, which included the $27 million gain from the sale of
our Global Custody business.
Expense growth of 3.8% was driven by key investment and capacity-creating initia-
tives as well as technology. Key initiatives included customer knowledge management,
organizational streamlining, automation of commercial and personal lending decisions,
workflow innovation and migration of transactions to automated channels.
The provision for credit losses increased in line with the increased loan volume in
1999.
*Represents mortgage volumes in Mortgage line
of business within P&C Canada.
999897
35.0
30.3
38.0
P&C – Canada
Average Residential
Mortgages*
($ billions)