Bank of Montreal 1999 Annual Report Download - page 60

54 Bank of Montreal Group of Companies 1999 Annual Report
Private Client Group
Financial Results
Net income of $92 million in 1999 represented a decline of $17 million or 15.2% from
1998 reflecting market volatility and investor uncertainty as a result of increasing
interest rates in the United States. During the year, Nesbitt Burns changed its year
end, resulting
in the inclusion of one additional month of results in 1999 compared
to 1998. The
inclusion of an additional month of results accounts for an additional
$56 million of
revenues and $53 million of expenses, with a positive net income impact
of $1.5 million.
Notwithstanding challenging financial markets,
assets under manage-
ment and administration grew $11 billion or 6.9%.
Revenue, excluding the additional month, declined as a result of reduced commission
revenue from Full-Service Investing as clients moved to relatively lower commission
generating products in response to market volatility, and a decline in trading returns
and management fees in the retail managed futures certificates of deposit program.
These declines were partly offset by higher commission revenues from Direct Investing
where market volatility generated incremental trading activity, as well as increased
U.S. Private Banking volumes and continued growth in Retail Investment Products.
Non-interest expenses, excluding the additional month, increased due to costs incurred
to support business growth in Retail Investment Products and Direct Investing, dedi-
cation of resources to the alignment of PCG’s wealth management businesses, an
increase in personnel related costs in the United States due to tight labour markets, as
well as various non-recurring expense items including Year 2000 preparation costs.
These
increases were partially offset by productivity improvements in Full-Service
Investing,
as well as decreases in revenue-driven compensation associated with the
retail managed
futures program and Full-Service Investing.
1998 results relative to 1997 were positively affected by market conditions and growth
in the Retail Investment Products and Institutional Asset Management businesses. First
Canadian Funds and Jones Heward experienced increased fee revenue compared to
1997 due to higher volumes and a shift to longer-term assets.
Private Client Group ($ millions except as noted)
As at or for the year ended October 31 1999 1998* 1997*
Net interest income 176 207 141
Other income 920 851 849
Total Revenue 1,096 1,058 990
Provision for credit losses 000
Non-interest expense 924 867 814
Income before taxes and goodwill 172 191 176
Income taxes 71 74 75
Goodwill, net of applicable tax 988
Net Income 92 109 93
Average assets 3,537 4,013 3,201
Average current loans 2,235 1,980 1,519
Average deposits 4,234 3,718 3,534
Assets under administration†101,953 95,218 86,180
Assets under management†60,820 57,040 49,452
Full-time equivalent staff 3,923 3,909 3,280
Expense-to-revenue ratio (%) 84.2 81.9 82.2
*Restated to give effect to the current year’s organization structure and presentation changes
Outlook
Looking forward, the Bank’s newly aligned wealth management businesses, with a strong focus
on enhanced client offerings, are expected to have a positive impact on revenue and asset growth
in fiscal 2000. These gains may be tempered by market uncertainties surrounding the economy
and interest rates.
999897
152.3
135.6
162.8
Assets under
Management and
Administration†
Assets under management
($ billions)
Assets under administration
($ billions)
†Defined in the glossary on page 104.