Bank of Montreal 1999 Annual Report Download - page 87

Bank of Montreal Group of Companies 1999 Annual Report 81
The following table sets out the outstanding amounts that we have classified as impaired:
Canada United States Mexico Other countries Total
1999 1998 1999 1998 1999 1998 1999 1998 1999 1998
Residential mortgages $ 133 $ 109 $
– $ – $ – $ – $ – $ – $ 133 $ 109
Consumer instalment and
other personal loans 53 38 35
–––– 56 43
Loans to businesses
and governments 437 361 317 221 10
– 98 90 862 672
Securities purchased
under resale agreements
––––––––––
Securities of designated
countries
––––––––––
Loan substitute securities ––––––––––
Acceptances 41 ––––––– 41 –
Total impaired loans
and acceptances 664 508 320 226 10
– 98 90 1,092 824
Allowance for credit losses (963) (868) (335) (268) –– (50) (30) (1,348) (1,166)
Total net impaired
loans and acceptances $ (299) $ (360) $ (15) $ (42) $ 10 $ – $ 48 $ 60 $ (256) $ (342)
Average net impaired
loans and acceptances $ (339) $ (350) $14 $ (45) $ 1 $ – $ 57 $ 20 $ (267) $ (375)
Average gross impaired
loans and acceptances $ 593 $ 543 $ 297 $ 200 $1 $ – $ 90 $ 34 $ 981 $ 777
Canada United States Mexico Other countries Total
1999 1998 1997 1999 1998 1997 1999 1998 1997 1999 1998 1997 1999 1998 1997
Gross interest income
received on impaired loans
and acceptances $ 28 $ 23 $ 54 $ 44 $ 41 $ 90 $
– $ – $ – $ 46 $ 15 $ 60 $ 118 $ 79 $ 204
Interest income received
on impaired loans
and acceptances, net of
interest reversals $ 12 $ 5 $ 39 $ 41 $ 40 $ 90 $ – $ – $ – $ 46 $ 15 $ 60 $ 99 $ 60 $ 189
Designated countries are determined by the Superintendent of Financial Institutions Canada
as having difficulty in servicing all or part of their external debt to commercial banks. We did
not have any net impaired loans to designated countries as at October 31, 1999 or October 31,
1998. Approximately 5% of the gross exposure to designated countries was classified as
impaired as at October 31, 1999 and 4% as at October 31, 1998.
The allowance for credit losses does not include $79 as at October 31, 1999 and $98 as
at October 31, 1998 of country risk allowance that is in excess of gross impaired loans to
designated countries.
Credit Instruments
As a part of our business, we enter into various commitments
to provide our customers with sources of credit. In making
these commitments, we expose ourselves to credit risk, being
the risk that we may incur a loss if a counterparty fails to meet
its obligations.
These commitments include:
■Guarantees and standby letters of credit which represent our
obligation to make payments to third parties on behalf of our
customers if our customers are unable to make the required
payments or meet other contractual requirements;
■
Securities lending which represents our credit exposure
when we lend our securities, or our customers’ securities, to
third parties;
Included in impaired loans is other real estate owned and securities received from
customers in satisfaction of their loans totalling $40 as at October 31, 1999 and $48 as at
October 31, 1998.
Fully secured loans with past due amounts between 90 and 180 days that we have not
classified as impaired totalled $54 as at October 31, 1999 and $44 as at October 31, 1998.
■Documentary and commercial letters of credit which repre-
sent our agreement to honour drafts presented by a third
party upon completion of specific activities;
■Commitments to extend credit to our customers in the form
of loans or other financings for specific amounts and maturi-
ties, subject to meeting certain conditions;
■
Note issuance and revolving underwriting facilities and
similar arrangements, including facilities under which we
acquire short-term notes issued by our customers for a pre-
determined price in the event that the customer is unable to
sell the notes to third parties.