Bank of Montreal 2010 Annual Report Download - page 26

Our Performance (Note 1)
BMO Financial Group
Canadian peer group average
North American peer group average
2009 2010200820072006
0.9
19.1
14 . 2
1.8 5.9
11.2
(20.2)
(8.5)
2009 2010200820072006
(18.1)
54.2
2009 2010200820072006
(6.4)
9.2
1.5
8.4
10.4
2009 2010200820072006
(51.0) (32.8)
10.3
(116.7)
1309.8
2009 2010200820072006
70.6
67.6
63.6 62.2
66.7
2009 2010200820072006
13.0
19.2
14.4
9.9
14.9
P 32
P 33
P 34
P 34
P 37
P 41
Five-Year Total
Shareholder Return (TSR)
•
BMO shareholders have earned an average annual
return of 5.9% over the past five years.
• The one-year TSR in 2010 was a strong 26.4%, well
above the comparable market indices in both
Canada and the United States. BMO’s one-year TSR
has exceeded 20% in three of the past five years.
Earnings per Share (EPS) Growth
• EPS grew 54% to $4.75 in 2010. Net income
increased more than $1 billion to $2.8 billion,
while the average number of common shares
outstanding increased modestly.
• EPS growth was driven by strong growth in
revenues and lower provisions for credit losses.
Return on Equity (ROE)
•
ROE improved from 9.9% to 14.9% in 2010,
primarily due to an increase of more than
$1 billion in earnings available to common
shareholders, while we continued to enhance
our strong capital position.
• BMO has achieved an ROE of 13% or better
in 20 of the past 21 years.
Net Economic Profit (NEP) Growth
•
NEP, a measure of added economic value,
was $818 million, up from a loss of $68 million
in 2009.
• The improvement was attributable to the
significant increase in earnings, net of a higher
charge for capital as a result of an increase
in shareholders’ equity.
Revenue Growth
•
Revenue increased $1,146 million or 10.4% to
$12,210 million in 2010, following growth of 8.4%
in 2009 and 9.2% in 2008. The consistently high
growth rates demonstrate the benefit of our
diversified business mix.
• There was solid growth in each of the operating
groups except P&C U.S., where revenues were
modestly higher on a U.S. dollar basis.
Productivity Ratio
(Expense-to-Revenue Ratio)
• The productivity ratio was 62.2%, an improvement
of 450 basis points from 2009. Similarly, the cash
productivity ratio improved 440 basis points
to 61.9%.
• The improvement was due to strong revenue growth
combined with effective expense management.
Note 1. Results stated on a cash basis as well as NEP
are non-GAAP measures. Please see page 91 for a discussion
of the use of non-GAAP measures.
Certain BMO and peer group prior year data has been restated to
conform with the current year’s basis of presentation.
Results are as at or for the years ended October 31 for Canadian banks
and as at or for the years ended September 30 for U.S. banks.
Financial Performance and Condition at a Glance
Peer Group Performance
Five-Year TSR
• The Canadian peer group average annual five-year TSR was
7.9%. The one-year TSR was 22.5%.
• The North American peer group average annual five-year TSR of
–0.5% and one-year TSR of 13.4% were well below the Canadian
averages, as U.S. bank results continued to be more affected
by credit losses.
EPS Growth (%)
• The Canadian peer group average EPS increased 42%, compared
with 9.6% in 2009. All banks in the peer group saw healthy increases
in EPS, due in part to lower credit losses.
•
Net income available to common shareholders of the North American
peer group was low in 2009, as five of our peers recorded losses due
to the difficult credit conditions and weak economic environment,
resulting in overall peer group EPS growth of –80%. Net income
available to common share holders in 2010 was 14 times as high as the
2009 level, due to lower credit losses and low funding costs in 2010.
ROE (%)
• The Canadian peer group average ROE of 15.2% increased
from the average return in 2009, as ROE improved for each
bank in the peer group due to higher earnings.
• ROE for the North American peer group was 8.8%.
ROE for each of our U.S. peers was less than BMO’s and
three U.S. banks reported negative returns.
NEP Growth (%)
• The Canadian peer group average NEP growth was 212.0%,
as some banks in the peer group recorded significant increases
in NEP from the low levels of a year ago.
• NEP growth for the North American peer group was 86.4%,
as NEP was significantly higher for all but one of our U.S. peers.
Revenue Growth (%)
• Revenue growth for the Canadian peer group
averaged 5.9%.
• Revenue growth for the North American peer group
averaged 9.8%, reflecting particularly strong growth
recorded by a few members of the peer group.
Peer group data for 2009 is not to scale.
Productivity Ratio (%)
• The Canadian peer group average productivity ratio
was 59.9%, improving from 63.7% in 2009 due to solid
revenue growth and good expense control.
• The average productivity ratio for the North American
peer group was 60.9%, a level that remains worse than
the average of our Canadian peers but better than
the ratio in 2009.
24 BMO Financial Group 193rd Annual Report 2010
North American 2008 to 2010 peer group data is not to scale.
The result for BMO in 2010 is not to scale.