Bank of Montreal 2003 Annual Report Download - page 44

BMO Financial Group 186th Annual Report 200340
Corporate Support, including Technology and Solutions
($ millions, except as noted)
As at or for the year ended October 31 2003 2002 2001
Net interest income (teb) (206) (166) (293)
Non-interest revenue 256 287 584
Total revenue (teb) 50 121 291
Provision for credit losses (79) 312 183
Non-interest expense 136 139 87
Income before the following (7) (330) 21
Income taxes (teb) (88) (317) (195)
Non-controlling interest in subsidiaries 60 60 42
Amortization of goodwill (after tax) –– 16
Net income (1) 21 (73) 158
Full-time equivalent staff 6,861 7,288 7,710
(1) Cash net income was $176 million in 2001.
Group Description
Corporate Support includes the corporate units that provide
expertise and governance support to BMO Financial Group in
areas such as strategic planning, law, finance, internal audit, risk
management, corporate communications, economics, human
resources and learning. Our operating results include revenues
and expenses associated with certain securitization activities,
the hedging of foreign-source earnings, and activities related
to the management of certain balance sheet positions and BMO’s
overall asset-liability structure.
Operating results for Technology and Solutions (T&S) are
included with Corporate Support for reporting purposes. How-
ever, costs of T&S services are transferred to P&C, PCG and IBG
and only minor amounts are retained in T&S results. As such,
results in this section largely reflect Corporate Support activities.
Financial Results
Net income was $21 million, compared with a loss of $73 million
in 2002. The improvement was attributable to a lower provision
for credit losses, partially offset by lower revenue and higher
income taxes. The revenue decline was due to lower revenue
from our securitizations and investment portfolios. Expenses
were substantially unchanged, as higher performance-based
compensation costs were offset by other expense reductions.
The provision for credit losses improved by $391 million due
to BMO’s improved credit performance over the year. BMO uses
an expected loss provisioning methodology, whereby the annual
provision for credit losses charged to each of the client operating
groups is based on its expected credit losses over an economic
cycle. Corporate Support is charged for differences between the
periodic provisions charged to the client operating groups and
BMO’s required provision under GAAP.
Corporate Support, including Technology and Solutions
Technology and Solutions
Lloyd F. Darlington
President and Chief Executive Officer, Technology and Solutions and Head, E-Business
“
We are delivering top -tier service in the deployment of technology and process improve ment throughout
BMO Financial Group. We’ve significantly reduced costs and enabled our employees to respond more
efficiently and effectively to customers’ needs – ultimately increasing productivity and shareholder wealth.”
software places customer information, account details, sales opportunities,
customer solutions, contact history and service requests at the sales forces’
fingertips. It will be introduced to our retail banking sales force in 2004.
▪ We aligned all of BMO’s real estate operations and distribution services
to enhance cost-effective coordination of physical infrastructure with
enterprise-wide premises standards, and we improved governance.
▪ We achieved certifications in several industry-recognized programs, includ-
ing: ISO 9001 certifications for Project Management, Quality Assurance/
Control and Requirements Management; certification for our progress in
software development processes (SEI/CMMI); and accreditation for our
Level Three maturity for IT service management. These standards signifi-
cantly improve productivity and T&S customer satisfaction levels.
Description and Strategy
Technology and Solutions manages, maintains and governs information technology, processing, real estate and sourcing for BMO Financial Group. We focus on
enterprise-wide priorities that maximize operational quality, effectiveness and efficiency to create shareholder value.
2003 Objective and Achievements
Improve profitability by applying the most efficient, effective and
economical technology and processes to generate ongoing savings and
increased revenues.
▪ T&S productivity initiatives included: centralizing IT functions; standard-
izing work processes and infrastructure; benchmarking, measuring and
rewarding performance through a Balanced Scorecard; and centralizing
demand management and cost-effective sourcing.
▪ We completed the national rollout of Pathway Connect, BMO’s integrated
sales and service retail banking technology platform, on time and under
budget.
▪ We successfully rolled out Optimizer to our Small Business and Direct
Banking sales forces. This relationship management and decision support
2004 Objective
▪Continue to realize improvements in productivity, standards, efficiency and year-over-year performance in alignment with BMO’s strategy.