Bank of Montreal 2002 Annual Report Download

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TO OUR FELLOW SHAREHOLDERS
185TH ANNUAL REPORT 2002
Trust is the essence of our business. We earn trust by delivering strong returns for our
shareholders. We earn trust by providing our customers with excellent service and financial
solutions tailored to meet their individual needs. We earn trust, too, by treating our employees
and communities responsibly and with respect and dignity. As importantly, we inspire
trust by conducting our business according to the principles of honesty, transparency and
accountability. In practice, this means doing as we say we will, listening
–
and responding
–
to criticism and, always, behaving ethically and fairly. At BMO Financial Group, trust is the
foundation of our success
–
and our promise for the future.
YOUR BMO FINANCIAL GROUP MANAGEMENT TEAM
YVAN J.P. BOURDEAU
ROBERT W. PEARCE
F. ANTHONY COMPER
LLOYD F. DARLINGTON WILLIAM A. DOWNE
KAREN E. MAIDMENT
GILLES G. OUELLETTE
ROSE M. PATTEN RONALD G. ROGERS FRANK J. TECHAR

Table of contents

  • Page 1
    ... DE RS Trust is the essence of our business. We earn trust by delivering strong returns for our shareholders. We earn trust by providing our customers with excellent service and financial solutions tailored to meet their individual needs. We earn trust, too, by treating our employees and communities...

  • Page 2
    ... Enterprise-Wide Risk Management Enterprise-Wide Capital Management Review of Operating Groups Performance Personal and Commercial Client Group Private Client Group Investment Banking Group Corporate Support, including Technology and Solutions Harris Bank Economic and Financial Services Developments...

  • Page 3
    ... the BMO Nesbitt Burns and Harris Nesbitt ® brands, the Investment Banking Group (IBG) offers corporate, institutional and government clients complete financial services, including advisory, capitalraising, investment and operating services. Supported by top-ranked research, BMO Nesbitt Burns is...

  • Page 4
    ... of credit. â-ª Maintain leadership in the Canadian high-return fee businesses of equity, debt, securitization, and mergers and acquisitions. â-ª Continue to build on the success of the Harris Nesbitt mid-market franchise. â-ª Selectively expand into new products and trading strategies that relate...

  • Page 5
    ...-running dividendpaying company in Canada. Casting forward, we unified our diverse businesses under the umbrella of BMO Financial Group, our new name for a new century and a reminder that "bank," in its past sense, describes only one part of the enterprise we are building in the service of our...

  • Page 6
    ... for growth throughout its North American operations when market conditions improve. In our Investment Banking Group, where revenues fell substantially more than expenses due to net securities losses and weaker trading-related activity, earnings improved due to a much lower provision for credit...

  • Page 7
    ...the investments and trust of many Canadians and Americans and keeping the markets bouncing down and up, BMO Financial Group once again cleanly emerged as a North American leader in corporate governance. We were cited many times last year as one of the first and few companies to expense stock options...

  • Page 8
    ...actively execute our growth strategy of building an integrated, full-service, mid-market North American investment bank, capitalizing on industry specialties and distinctive capabilities. KAREN E. MAIDMENT Executive Vice-President and Chief Financial Officer, BMO Financial Group BMO Financial Group...

  • Page 9
    ...workforce. GILLES G. OUELLETTE President and Chief Executive Officer, Private Client Group, BMO Financial Group and Deputy Chair, BMO Nesbitt Burns Despite the uncertain markets of recent years, the outlook for the wealth management business is very favourable. Our long-standing experience and our...

  • Page 10
    ... products, improved our service levels, gained market share and experienced the highest market share growth among small business banks in Canada. Our goal is to provide financial solutions "for the world you live in." TM F R A N K J. T E C H A R President and Chief Executive Officer, Harris Bank...

  • Page 11
    ... and Mail 's survey of corporate governance practices ranked BMO Financial Group first among the country's banks. We became one of the first companies on the continent to announce our intention to expense stock options. As well, Chairman and CEO Tony Comper and Chief Financial Officer Karen Maidment...

  • Page 12
    ... directors on the various aspects of BMO's operations. BOARD OF DIRECTORS CONTINUED EVA LEE K WOK Vancouver, British Columbia Chair and Chief Executive Officer Amara International Investment Corp. BRUC E H. MIT CHELL Toronto, Ontario Chairman and Chief Executive Officer Permian Industries Limited...

  • Page 13
    ... governance benefits our shareholders, employees, communities - and our business. For a more detailed report on our corporate governance program, please refer to our Proxy Circular. J. R O B E R T S . P R I C H A R D , O . C . , O . Ont . Toronto, Ontario President and Chief Executive Officer...

  • Page 14
    ... condition measures: the ratio of gross impaired loans and acceptances to equity and allowances for credit losses, and the ratio of cash and securitiesto-total assets. Enterprise-Wide Capital Management (page 35) provides an overview of our approach to managing capital. It also includes an analysis...

  • Page 15
    ... general economic growth rates and limit expense growth to equal to or less than revenue growth, over time. We strive for efficiencies in expense management and a balance between current profitability and the need to invest for future growth. When possible, expense efficiencies partially or totally...

  • Page 16
    ...revenue ratio of 67.4% (a) was just above the Canadian peer group average of 67.0% and well above the North American peer group average of 58.4%. â-ª Improving productivity is BMO's top priority for 2003. â-ª Excluding acquired businesses and severance costs, expenses were unchanged from a year ago...

  • Page 17
    ... loans and acceptances were 15.2% of equity and allowances for credit losses, just above the Canadian peer group average of 14.6% and above the North American peer group average of 10.0%. 1998 1999 2000 2001 2002 Cash and Securities-to-Total Assets â-ª Liquidity remains strong, supported...

  • Page 18
    ... groups in 2002 due to the effects of acquired 14 businesses. Improving productivity is BMO's top priority for 2003. BMO's ratio of gross impaired loans and acceptances to equity and allowances for credit losses was fourth best of the Canadian peer group and fourth quartile relative to the North...

  • Page 19
    ... 2001, excluding non-recurring items. Total Shareholder Return BMO's governing objective is to maximize the total return to shareholders and generate, over time, first-quartile total shareholder returns (TSR) relative to our Canadian and North American peer groups. The five-year average annual TSR...

  • Page 20
    ... million or 2%. Strong growth in retail and business banking and from acquired wealth management businesses and higher Corporate Support securitization revenue more than offset a sharp reduction in wholesale banking and market-related revenues in Private Client Group. Revenue growth is discussed on...

  • Page 21
    .... 1998 1999 2000 2001 2002 As reported Excluding non-recurring items Cash return on common shareholders' equity is calculated as above but adjusts net income by adding back the amortization of both goodwill, if any, and intangible assets. Net Economic Profit Growth The last of our four...

  • Page 22
    ..., net of income taxes Cash net income Non-recurring items Gain on sale of Partners First Gain on sale of U.S. Corporate Trust Gain on sales of branches Gain on sale of Bancomer Write-down of equity investments in CBOs Revenues Reversal of loss provision on sale of LDC securities Increase of general...

  • Page 23
    ... Investor Group online accounts Acquired May 2002 for $153 million Northwestern Trust and Investment Advisory Company Acquired April 2002 for $19 million CSFBdirect Acquired February 2002 for $854 million Guardian Group of Funds Ltd. Acquired July 2001 for $187 million Total Private Client Group...

  • Page 24
    ... balances exceed its loans balances. Investment Banking Group average assets fell $4.3 billion due to the weak corporate lending environment and strategic reductions in non-relationship loans. The interest margin was largely unchanged. The effects of higher spreads in capital markets businesses...

  • Page 25
    ... and off-balance sheet interest rate, foreign exchange (including spot positions), equity, commodity and credit contracts. Securities commissions and fees Deposit and payment service charges Trading revenues Lending fees Card fees Investment management and custodial fees Mutual funds Securitization...

  • Page 26
    ... due to volume growth in the Personal and Commercial Client Group and acquired businesses in Private Client Group while Investment Banking Group benefited from the declining interest rate environment, higher levels of dividend income on merchant banking securities and improved spreads. Non-interest...

  • Page 27
    ...due to higher holdings of equities and corporate and Government of Canada bonds. The fixed income increase is a result of asset mix changes that reflect opportunities and trading strategies at the time. Higher levels of equities are attributable to new product offerings. Investment securities at $21...

  • Page 28
    ... of our Enterprise-Wide Capital Management processes and strategies can be found on page 35. Residential mortgages Consumer instalment and other personal Credit cards Businesses and governments* Acceptances Securities purchased under resale agreements Gross loans and acceptances Allowance for...

  • Page 29
    .... Accounting for Securitizations Securitization involves selling loans to off-balance sheet specialpurpose entities or trusts (securitization entities), which then issue interest bearing investor certificates in order to fund the purchase of the loans. When these loans are securitized, they...

  • Page 30
    ... banking, mid-market investment banking, full-service investing, personal banking and private banking, including trust and discretionary asset management; and â-ª recognized for delivering top-tier shareholder returns through a focus on improving operating efficiency and business growth. Strategic...

  • Page 31
    ... of risk through a control Desired total shareholder returns Desired credit rating, given target business mix Enterprise Risk Appetite Approved by the Board of Directors for each major category of risk and delegated to management in the lines of business through the Chief Executive Officer Two...

  • Page 32
    ... at Risk by Operating Group (As at October 31, 2002) Strategic 11% Operational 24% Credit 38% Market 27% P&C 40% PCG 8% IBG 51% Corp 1% Capital at Risk (CaR) is the foundation for risk-based capital management and permits the cost of capital to be charged to the lines of business. CaR...

  • Page 33
    ... account and portfolio basis, and reporting to the Counterparty Risk Council and to the Risk Review Committee of the Board of Directors. Corporate Audit regularly reviews management processes to ensure that established credit policies are followed. The Credit Review Unit of the Risk Management Group...

  • Page 34
    ...homogeneous portfolio segment (e.g. mortgages), while other models estimate loss for portfolios of corporate loans and investments that can be referenced to market data. Management's professional judgments regarding portfolio quality, business mix and economic as well as credit market conditions are...

  • Page 35
    ... Trading and Underwriting VaR Summary For the year ended October 31, 2002 (Pre-tax Canadian equivalent) ($ millions)* Year-end Average High Low We also measure exposure to concentrations of market risk, such as changes in particular interest rates, foreign exchange rates, equity or commodity prices...

  • Page 36
    ... the credit-related risk and other concentrations of risk embedded in those positions. Structural market risk arises primarily from retail and commercial asset and liability interest rate mismatches and embedded options, and from foreign currency transaction risk that affects net income. BMO manages...

  • Page 37
    ... of the Board of Directors; â-ª an independent liquidity and funding risk oversight group within Corporate Treasury; â-ª a Board-approved limit structure to support active liquidity and funding risk management; â-ª effective processes and models to monitor and manage liquidity and funding risk...

  • Page 38
    ... risk. In addition, the Risk Management Group monitors and reports on significant enterprise issues and operational events to the Chief Executive Officer and the Risk Review Committee of the Board of Directors. Where appropriate and cost-effective, Risk Management Group buys corporate insurance...

  • Page 39
    ...wealth management businesses aligns with reductions in Investment Banking Group's non-relationship loan portfolio. The quarterly dividend on common shares of $0.30 declared in 2002, up from $0.28 in 2001, resulted in a payout ratio of 44%, slightly higher than our long-term goal. BMO's credit rating...

  • Page 40
    ... Business Mix and Average Assets by Operating Group Personal and Commercial Client Group For the year ended October 31 2002 2001 2000 2002 Private Client Group 2001 2000 Harris Bank (pages 49 to 50) On a U.S. dollar/U.S. GAAP basis, Harris Bank net income was $278 million in 2002, an improvement...

  • Page 41
    ...record home sales and high consumer demand for mortgages. Economic uncertainty and weak stock markets prompted safety-seeking investors to shift funds from mutual fund portfolios to interest-bearing deposit accounts, notwithstanding the low interest rates available. Heading into 2003, GDP growth is...

  • Page 42
    ... Net income Net economic profit Cash return on equity (%) Average net interest margin (%) Non-interest expense-to-revenue ratio (%) Average common equity Average assets Total risk-weighted assets Average current loans Average deposits Assets under administration Assets under management Full-time...

  • Page 43
    ...the number of Investment Fund Specialists and Resident Investment Advisors to more than 800. 2003 Focus We increased our share of our customers' business for personal banking products through significant growth in our Premium Rate Savings account and mortgage balances. However, in 2002 the benefits...

  • Page 44
    ... 440,000 customers who can access products and services, including cash management and loans and deposits, through various channels. Small Business Banking's goal is to become Canada's number one bank for small business with leading market share growth and customer loyalty. Overview of Performance...

  • Page 45
    ...range of wealth management products and services, including retail investment products, direct and full-service investing, private banking and institutional asset management. Operating as BMO Private Client Group in Canada and The Harris in the United States, we provide North American investors with...

  • Page 46
    ... Net income Net economic profit Cash return on equity (%) Average net interest margin (%) Non-interest expense-to-revenue ratio (%) Average common equity Average assets Total risk-weighted assets Average current loans Average deposits Assets under administration Assets under management Full-time...

  • Page 47
    ... through financial planning, insurance, managed asset and fee-based programs, and online services. â-ª Increase sales force productivity through improved training, professional development and performance management. â-ª Enhance cross-marketing and cross-selling activities across BMO Financial Group...

  • Page 48
    ... â-ª Maintain Canadian leadership in the high-return fee businesses of equity, debt, securitization, and mergers and acquisitions. â-ª Continue to build on the success of the Harris Nesbitt mid-market franchise. â-ª Selectively expand into new products and trading strategies that relate to our...

  • Page 49
    ... Net income Net economic profit Cash return on equity (%) Average net interest margin (%) Non-interest expense-to-revenue ratio (%) Average common equity Average assets Total risk-weighted assets Average current loans Average deposits Assets under administration Assets under management Full-time...

  • Page 50
    ... capital raising services through debt and equity underwriting and a full range of lending products, balance sheet management solutions and cash management services. Our strategy is to reinforce our leadership position in Canada while growing in the U.S. Midwest mid-market through Harris Nesbitt...

  • Page 51
    ... to build and manage a portfolio of private equity investments in mid-market companies that produce superior returns over time. Overview of Line Performance The International line of business provides financial institutions and select multinational corporations with best-in-class client service and...

  • Page 52
    ... former equity investments in Bancomer, and activities related to the management of certain balance sheet positions and BMO's overall asset/ liability structure. The operating results of Technology and Solutions (T&S) are included with Corporate Support for reporting purposes. Costs of T&S services...

  • Page 53
    ... Individual Investor Group online client accounts, which expanded Harrisdirect 's high-end client base and provided opportunity to further leverage Harrisdirect 's scale and leading edge technology. T&S is responsible for the creation, development and support of BMO's e-business services. Our group...

  • Page 54
    ... These offices offer clients full-service investing, direct investing, private banking and investment management services. Accelerate the development of top-tier, multi-product, lead-client relationships and continue our double-digit growth in investment banking revenues at Harris Nesbitt. â-ª Ended...

  • Page 55
    ... in the summer of 2003. Business credit is expected to improve as capital investment picks up. Although mortgage growth will likely moderate from record highs, consumer credit growth should remain firm amid rising employment. Canadian Financial Services Legislation In the regulatory arena, focus...

  • Page 56
    ... ($) Dividend payout ratio (%) Excluding non-recurring items (%) Dividend yield (%) Total Shareholder Return (%) Five-year annual average One-year return Common Share Information Number outstanding (in thousands) End of period Average basic Average diluted Number of shareholder accounts Book value...

  • Page 57
    ... Cash resources Securities Loans (net) Customers' liability under acceptances Other assets Total assets Liabilities and Shareholders' Equity Deposits Other liabilities Subordinated debt Share capital Preferred Common Retained earnings Total liabilities and shareholders' equity Average Daily Balances...

  • Page 58
    ... service charges Trading revenues Lending fees Card fees Investment management and custodial fees Mutual fund revenues Securitization revenues Underwriting and advisory fees (a) Investment securities gains (losses) (b) Foreign exchange, other than trading Insurance income Other revenues (c) Total...

  • Page 59
    ...-year growth (%) Government Levies and Taxes (b) Government levies other than income taxes Payroll levies Property taxes Provincial capital taxes Business taxes Goods and services tax and sales tax Total government levies other than income taxes Provision for (recovery of) income taxes reported in...

  • Page 60
    ... Assets Canadian Dollars Deposits with other banks Securities Loans Residential mortgages Non-residential mortgages Consumer instalment and other personal Credit card Businesses and governments (a) Total loans Other non-interest bearing assets Total Canadian dollars U.S. Dollar and Other Currencies...

  • Page 61
    ... due to change in: Average Average balance rate Total For the year ended October 31 Assets Canadian Dollars Deposits with other banks Securities Loans Residential mortgages Non-residential mortgages Consumer instalment and other personal Credit card Businesses and governments Total loans Other non...

  • Page 62
    ...,683 Securities purchased under resale agreements 8,138 8,397 6,693 8,523 6,350 7,173 6,557 9,615 11,202 13,715 Total commercial, corporate and institutional Lesser-developed countries (LDCs) Total loans and acceptances, net of specific allowances for credit losses General allowance Total net loans...

  • Page 63
    ... net loans and acceptances in Canada Net Diversified Commercial Loans by Industry (d) Commercial mortgages Commercial real estate Construction (non-real estate) Retail trade Wholesale trade Agriculture Communications Manufacturing Mining Oil and gas Transportation Utilities Forest products Service...

  • Page 64
    ...-developed countries - Allocation of Recoveries by Market Individuals 22 Commercial, corporate and institutional 6 Net write-offs as a % of average loans and acceptances NA TA B L E 16 Allocation of Allowance for Credit Losses - Segmented Information ($ millions, except as noted) Canada United...

  • Page 65
    ... mortgages Cards Personal loans Total loans to individuals Diversified Commercial (d) Commercial mortgages Commercial real estate Construction (non-real estate) Retail trade Wholesale trade Agriculture Communications Manufacturing Mining Oil and gas Transportation Utilities Forest products Service...

  • Page 66
    ...Dollar and Other Currencies Assets Cash resources Securities Loans Other Total assets Liabilities and Shareholders' Equity Deposits Subordinated debt Other Shareholders' equity Total liabilities and shareholders' equity On-balance sheet gap position Off-balance sheet gap position Total Interest Rate...

  • Page 67
    ... balance Balance Balance sheet items Cash resources Securities Mortgages Other loans and acceptances Other assets Total balance sheet items Off-balance sheet items Guarantees and standby letters of credit Securities lending Documentary and commercial letters of credit Commitments to extend credit...

  • Page 68
    ... other securities Canadian governments U.S. governments Mortgage-backed securities Corporate debt Corporate equity Other governments Total government debt and other securities Grupo Financiero Bancomer Lesser-developed countries Equity investment in 724 Solutions Inc. Total investment securities NA...

  • Page 69
    ...Gain on sale of U.S. Corporate Trust Gain on sales of branches Gain on sale of Bancomer Write-down of equity investments in CBOs Total non-interest revenue Provision for Credit Losses Reversal of loss provision on sale of LDC securities Increase of general allowance Total provision for credit losses...

  • Page 70
    ... 31 Other Statistical Information 2002 2001 2000 1999 1998 1997 1996 1995 1994 1993 Other Information Employees (a) Bank branches Automated banking machines (Canada) Rates Average Canadian prime rate (%) Average U.S. prime rate (%) Canadian/U.S. dollar exchange rates ($) High Low Average End...

  • Page 71
    ...-management directors, and to its Risk Review Committee. The Shareholders' Auditors and the Bank's Chief Auditor have full and free access to the Board of Directors and its committees to discuss audit, financial reporting and related matters. F. Anthony Comper Chairman and Chief Executive Officer...

  • Page 72
    ...144,644 (1,949) 142,695 Other Customers' liability under acceptances Premises and equipment (Note 8) Other assets (Note 9) 6,901 2,159 38,089 47,149 Total Assets Liabilities and Shareholders' Equity Deposits (Note 12) Banks Businesses and governments Individuals $ 252,864 $ 15,273 71,411 75,154...

  • Page 73
    ... and payment service charges Trading revenues Lending fees Card fees Investment management and custodial fees Mutual fund revenues Securitization revenues (Note 6) Underwriting and advisory fees Investment securities gains (losses) (Note 3) Foreign exchange, other than trading Insurance income Other...

  • Page 74
    ... Issued under the Shareholder Dividend Reinvestment and Share Purchase Plans Issued under the Stock Option Plan Issued on the exchange of shares of subsidiary corporations Issued on the acquisition of businesses (Note 10) Cancellation of stock options granted on acquisition of an investment (Note 15...

  • Page 75
    ... payable on derivative contracts Net (increase) decrease in trading securities Net (decrease) in current income taxes payable Changes in other items and accruals, net Net Cash Provided by (Used in) Operating Activities Cash Flows from Financing Activities Net increase (decrease) in deposits Net...

  • Page 76
    .... Changes in Accounting Policies New accounting policies issued by standard setters adopted in the current year and those that will become effective next year are described in Notes 3, 7, 9, 16, 23 and 25. NOTE 2 Cash Resources 2002 2001 Cash and non-interest bearing deposits with Bank of Canada...

  • Page 77
    ... 157 7.74 Total investment securities Trading Securities Issued or guaranteed by: Canadian federal government Canadian provincial and municipal governments U.S. federal government U.S. states, municipalities and agencies Other governments Corporate debt Corporate equity Total trading securities Loan...

  • Page 78
    ... mortgages), while other models estimate loss for portfolios of corporate loans and investments that can be referenced to market data. In addition, the level of allowance already in place and management's professional judgement regarding portfolio quality, business mix and economic as well as credit...

  • Page 79
    ..., subject to meeting certain conditions. Summarized below is information related to various commitments. 2002 Contract amount Risk-weighted equivalent Contract amount 2001 Risk-weighted equivalent Credit Instruments Guarantees and standby letters of credit Securities lending Documentary and...

  • Page 80
    ... mortgages 2002 2001 2000 Consumer instalment and other personal loans 2002 2001 2000 2002 Credit card loans 2001 2000 2002 Business and government loans 2001 2000 Retained interests Investment in securitization vehicles Deferred purchase price Cash deposits with securitization vehicles Servicing...

  • Page 81
    ... Grade Structured Investment SPEs Off-balance sheet special-purpose entities ("SPEs") are either corporate entities or trusts whose activities are set out in the legal agreements that govern them. We have ongoing relationships with two types of SPEs: asset securitization SPEs and asset management...

  • Page 82
    ... and Commercial Client Group Private Client Group Corporate Support, including Investment Technology and Banking Group Solutions For the Year Ended October 31, 2002 Total Balance at beginning of year Acquisitions made during the year Disposals during the year Effects of foreign exchange and...

  • Page 83
    ... assets, loans and deposits, is presented in the tables on pages 36 to 47 of our Management's Discussion and Analysis. We conduct our business through operating segments, each of which has a distinct market and product mandate. Our Personal and Commercial Client Group provides financial services...

  • Page 84
    ... acceptances is recorded as a liability and our corresponding claim is recorded as an asset in our Consolidated Balance Sheet. Securities Sold but not yet Purchased Securities sold but not yet purchased represent our obligation to deliver securities which we did not own at the time of sale. These...

  • Page 85
    ... Compensation Pension and other future employee benefits expenses are determined as the cost of employee benefits earned in the current year, interest expense on the accrued benefit obligation, expected investment return on the market value of plan assets, the amortization of deferred past service...

  • Page 86
    ... return on plan assets Bank contributions Voluntary employee contributions Benefits paid to pensioners and employees Other, primarily foreign exchange Fair value of plan assets, end of year Plan funded status Unrecognized actuarial (gain) loss Unrecognized past service costs Unrecognized transition...

  • Page 87
    ... certain senior executives and certain key employees in our Investment Banking and Private Client Groups. Under these plans, payment of annual bonuses can be deferred as stock units of our common shares. The amount of deferred bonus is adjusted to reflect dividends and changes in the market value of...

  • Page 88
    ... Shareholders' Equity Income tax expense (benefit) related to items recognized directly in retained earnings Total Components of Total Income Taxes Canada: Current income taxes Federal Provincial $ 2002 2001 2000 We report our provision for income taxes in our Consolidated Statement of Income based...

  • Page 89
    .... Effective September 1, 1999, new loans and mortgages to executive officers were no longer available at preferred rates, other than mortgages for Bank-initiated transfers; a select suite of customer loan and mortgage products is now offered to employees at rates normally accorded to preferred...

  • Page 90
    ... We enter into interest rate, foreign exchange, commodity, equity and credit contracts to enable our customers to manage risk, and for asset/liability management purposes where we manage the risk associated with our balance sheet positions. Customer Trading Derivatives In accordance with our...

  • Page 91
    ... buy or sell a specific amount of a currency, commodity, equity or financial instrument at a fixed price either at a fixed future date or at any time within a fixed future period. For options written by us, we receive a premium from the purchaser for accepting market risk. For options purchased...

  • Page 92
    ...838 - 3,388 - - - - 3,388 284 - 284 1 11,989 (6,281) Exchange traded Futures Purchased options Written options 891 432 536 1,859 Total Commodity Contracts Equity Contracts Over-the-counter Exchange traded Total Equity Contracts Credit Contracts - Over-the-counter Subtotal Impact of Master Netting...

  • Page 93
    ... Contracts Foreign Exchange Contracts Cross-currency swaps Cross-currency interest rate swaps Forward foreign exchange contracts, futures and options Total Foreign Exchange Contracts Commodity Contracts Swaps Futures and options Total Commodity Contracts Total Equity Contracts Total Credit Contracts...

  • Page 94
    ... options Foreign Exchange Contracts Cross-currency swaps Cross-currency interest rate swaps Forward foreign exchange contracts Futures Purchased options Written options Commodity Contracts Swaps Futures Purchased options Written options Equity Contracts Credit Contracts Total Fair Value Total Book...

  • Page 95
    ... Canada. Condensed Consolidated Balance Sheet As at October 31 (Canadian $ in millions) Assets Cash Resources Securities Loans, net of the allowance for credit losses Other Total Assets Liabilities and Shareholders' Equity Deposits Other Liabilities Subordinated Debt Shareholders' Equity (1) Total...

  • Page 96
    ...in a foreign operation Unrealized holding gains (losses) arising on available for sale securities, net of hedging activities (b) Realized (gains) losses and write-downs on available for sale securities recognized in net income (c) Net transition adjustment gain on derivatives designated as cash flow...

  • Page 97
    ... useful life of the software. (iii) Under United States GAAP, both pension and other future employee benefits are recorded in our Consolidated Statement of Income in the period services are provided by our employees. The related obligations are valued using current market rates. Under Canadian GAAP...

  • Page 98
    ... Harris Trust/Bank of Montreal BMO Capital Corporation BMO Investments Inc. BMO InvestorLine Inc. BMO Ireland Finance Company BMO Life Insurance Company BMO Nesbitt Burns Equity Partners Inc. BMO (N.S.) Holdings Co. BMO (U.S.) Finance, LLC dealerAccess Inc. dealerAccess Canada Inc. Guardian Group...

  • Page 99
    ... Nesbitt Burns and Global Head, Investment and Corporate Banking Eric C. Tripp Vice-Chair, BMO Nesbitt Burns and Head, Equity Division Ronald G. Rogers* Deputy Chair Enterprise Risk & Portfolio Management Group Harris Bankcorp, Inc. Franklin J. Techar* President and Chief Executive Officer Harris...

  • Page 100
    ... loans, the economic environment and the allowance for credit losses already established. Regulatory Capital Ratios The percentage of risk-weighted assets supported by capital, as defined by OSFI under the framework of risk-based capital standards developed by the Bank for International Settlements...

  • Page 101
    ... write to Shareholder Services at the Corporate Secretary's Department, 21st Floor, 1 First Canadian Place, Toronto, Ontario M 5 X 1A1, e-mail to corp.secretary@ bmo.com, call (416) 867-6785, or fax (416) 867-6793. Market for Securities of Bank of Montreal The common shares of Bank of Montreal...

  • Page 102
    ... of BMO Nesbitt Burns Corporation Limited TM1/®1 Trade marks/registered trade marks of Harris Trust and Savings Bank TM2 Trade mark of Credit Suisse Group TM3 Trade mark of myCFO, Inc. ®2 Registered trade mark of Moody's Investors Service, Inc. TM/® Shareholder Inquiries For dividend information...