Bank of Montreal 2002 Annual Report Download - page 41

BMO FINANCIAL GROUP ANNUAL REPORT 2002 37
PERSONAL AND COMMERCIAL CLIENT GROUP
Group Description and Strategy
Personal and Commercial Client Group (P&C) is committed to
providing more than eight million customers across Canada and
the United States with a fully integrated approach to managing
all aspects of their financial affairs. We offer a full range of
products and services through our highly skilled financial
service providers in more than 1,100 BMO Bank of Montreal
Business Environment and Outlook
During the last quarter of 2001 and in 2002, the economic outlook
brightened as the United States emerged from its short recession
of 2001. Economic growth in 2002 was moderate in the United
States and relatively strong in Canada because of stronger
consumer demand and stronger production and employment
growth. Both countries pursued stimulative monetary policies,
and the United States pursued highly expansionary fiscal
policies. Low interest rates produced significant spread com-
pression in retail deposits, but fuelled 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 port-
folios to interest-bearing deposit accounts, notwithstanding
the low interest rates available.
Heading into 2003, GDP growth is expected to remain strong
in Canada and to pick up in the United States. The sustained
recovery should lead central banks in both countries to increase
interest rates in 2003. In the Canadian retail segment, growth in
consumer loans and deposits is expected to be a moderate 5%.
Demand for retail mortgages is expected to remain relatively
strong with growth approximating 6%. Business investment is
expected to improve in 2003, producing modest commercial
loan growth in the range of 2% to 3%.
and Harris Bank branches, as well as through direct banking
channels such as bmo.com, harrisbank.com and a network of
more than 2,200 automated banking machines (ABMs).
Our goal is to be the only financial services provider our cus-
tomers ever need. We will earn this right by treating our
customers as individuals and by providing personal attention
and customized solutions consistently through all our channels.
2002 Group Objectives and Achievements
2003 Group Objectives
In Canada:
Increase our market share of full-service personal banking.
▪Total personal banking market share rose 40 basis points (bps) to 13.69%.
Total personal banking includes personal loans (excluding credit cards),
residential mortgages (including third-party mortgages), retail operating
deposits, mutual funds and term investments.
Increase our share of the full-service banking market for small business
and commercial lending.
▪Continued to rank second in small business loans of up to $5 million and
increased our market share 61 bps over 12 months to 19.48%, based on the
latest available data.
▪ In a low-demand market we were able to achieve significant growth in
commercial lending.
Increase our customer loyalty scores in both the personal and small
business banking segments.
▪ Personal banking loyalty scores, as measured independently by a third
party, increased to 27.6%. We closed the shortfall relative to the competi-
tion by 340 bps to 370 bps.
▪Small business banking loyalty scores improved to 29.0%, an increase of
100 bps. However, the average loyalty score of the competition increased
by 170 bps to 33%.
▪ Drive revenue growth by improving customer retention and loyalty,
expanding existing customer relationships and acquiring new customers.
These objectives will be supported by sustaining continued improvements
in our distribution capabilities.
▪Continue to drive improvements in productivity.
▪ Continue to improve our customer loyalty scores and close the shortfall
relative to the competition, in both the personal and small business bank-
ing segments.
Continue replacement of our sales and marketing technology platform.
▪More than 85% of our branches have been converted to Pathway Connect,
our new sales and service technology platform.
Achieve asset growth while maintaining existing high asset quality
standards through continuing development of technology, state-of-
the-art risk management techniques and strict internal discipline.
▪Loans and acceptances increased $6 billion or 8%, after adding back the
effects of securitizations. Our provisions were consistent with our expecta-
tions and we continued to refine and improve our processes and internal
controls related to lending decisions.
In the United States:
Continue to target a US$1 billion annual increase in retail and small
business loans for the next several years, and assess strategic merger
and acquisition opportunities.
▪Chicagoland Banking’s retail and small business loans increased US$1.7 bil-
lion or 26%. The acquisition of Joliet accounted for US$500 million or seven
percentage points of the increase.
In addition to the above achievements, we improved our group
productivity ratio by 269 bps to 60.0%.
▪Leverage our position in Commercial and Small Business Banking to con-
tinue to build momentum in balance sheet and market share growth.
▪
Extend the services offered through our online banking channel.
▪Continue to target a US$1 billion increase in retail and small business
loans in the United States.
▪Grow market share in Chicagoland by expanding our distribution network
through a combination of new branch openings and acquisitions.