Bank of Montreal 2013 Annual Report Download - page 15

MANAGEMENT’S DISCUSSION AND ANALYSIS
Management’s Discussion and Analysis
MD&A
BMO’s Chief Executive Officer and its Chief Financial Officer have signed a statement outlining management’s responsibility for financial information in
the annual consolidated financial statements and Management’s Discussion and Analysis (MD&A). The statement, which can be found on page 122,
also explains the roles of the Audit and Conduct Review Committee and Board of Directors in respect of that financial information.
The MD&A comments on BMO’s operations and financial condition for the years ended October 31, 2013 and 2012. The MD&A should be read in
conjunction with our consolidated financial statements for the year ended October 31, 2013. The MD&A commentary is as of December 3, 2013. Unless
otherwise indicated, all amounts are stated in Canadian dollars and have been derived from financial statements prepared in accordance with Interna-
tional Financial Reporting Standards (IFRS). References to generally accepted accounting principles (GAAP) mean IFRS.
Since November 1, 2011, BMO’s financial results have been reported in accordance with IFRS. Results for years prior to 2011 have not been
restated and are presented in accordance with Canadian GAAP as defined at that time (CGAAP). As such, certain growth rates and compound annual
growth rates (CAGR) may not be meaningful. Certain other prior year data has also been reclassified to conform with the current year’s presentation,
including restatements arising from methodology changes and transfers of certain businesses between operating groups. See pages 44 and 45.
Index
27 Who We Are provides an overview of BMO Financial Group, explains
the links between our financial objectives and our overall vision, and
outlines “Reasons to Invest in BMO” along with relevant key perform-
ance data.
28 Enterprise-Wide Strategy outlines our enterprise-wide strategy and
the context in which it is developed, as well as our progress in relation
to our priorities.
29 Caution Regarding Forward-Looking Statements advises readers
about the limitations and inherent risks and uncertainties of forward-
looking statements.
30 Factors That May Affect Future Results outlines certain industry and
company-specific factors that investors should consider when assessing
BMO’s earnings prospects.
32 Economic Developments and Outlook includes commentary on the
Canadian, U.S. and international economies in 2013 and our expect-
ations for 2014.
33 Value Measures reviews financial performance on the four key
measures that assess or most directly influence shareholder return. It
also includes explanations of non-GAAP measures, a reconciliation to
their GAAP counterparts for the fiscal year, and a summary of adjusting
items that are excluded from results to assist in the review of key
measures and adjusted results.
33 Total Shareholder Return
34 Non-GAAP Measures
35 Earnings per Share Growth
36 Net Economic Profit Growth
36 Return on Equity
37 2013 Financial Performance Review provides a detailed review of
BMO’s consolidated financial performance by major income statement
category. It also includes summaries of the impact of business acquis-
itions and changes in foreign exchange rates.
Operating Group Review outlines the strategies and key priorities of
our operating groups and the challenges they face, along with their
strengths and value drivers. It also includes a summary of their
achievements in 2013, their focus for 2014, and a review of their
financial performance for the year and the business environment in
which they operate.
44 Summary
46 Personal and Commercial Banking
47 Canadian Personal and Commercial Banking
50 U.S. Personal and Commercial Banking
53 Wealth Management
56 BMO Capital Markets
59 Corporate Services, including Technology and Operations
Financial Condition Review comments on our assets and liabilities
by major balance sheet category. It includes a review of our capital
adequacy and our approach to optimizing our capital position to
support our business strategies and maximize returns to our share-
holders. It outlines proposed regulatory changes that are expected to
impact capital and liquidity management as well as certain business
operations. It also includes a review of off-balance sheet arrange-
ments and certain select financial instruments and European balances.
60 Summary Balance Sheet
61 Enterprise-Wide Capital Management
65 Select Financial Instruments
67 Select Geographic Exposures
69 U.S. Regulatory Developments
70 Off-Balance Sheet Arrangements
Accounting Matters and Disclosure and Internal Control reviews
critical accounting estimates and changes in accounting policies in
2013 and for future periods. It also outlines our evaluation of
disclosure controls and procedures and internal control over financial
reporting, and provides an index of disclosure recommended by the
Enhanced Disclosure Task Force.
70 Critical Accounting Estimates
73 Changes in Accounting Policies in 2013
73 Future Changes in Accounting Policies
73 Transactions with Related Parties
74 Disclosure Controls and Procedures and Internal Control over
Financial Reporting
74 Shareholders’ Auditors’ Services and Fees
75 Enhanced Disclosure Task Force
77 Enterprise-Wide Risk Management outlines our approach to
managing key financial risks and other related risks we face.
78 Overview
78 Top and Emerging Risks
79 Framework and Risks
82 Credit and Counterparty Risk
87 Market Risk
92 Liquidity and Funding Risk
94 Operational Risk
95 Insurance Risk
96 Legal and Regulatory Risk
96 Business Risk
96 Model Risk
98 Strategic Risk
98 Reputation Risk
99 Environmental and Social Risk
100 2012 Financial Performance Review, Review of Fourth Quarter
2013 Performance and Summary Quarterly Earnings Trends provide
commentary on results for relevant periods other than fiscal 2013.
104 Supplemental Information presents other useful financial tables and
more historical detail.
Regulatory Filings
Our continuous disclosure materials, including our interim financial statements and interim MD&A, annual audited consolidated financial statements and annual MD&A,
Annual Information Form and Notice of Annual Meeting of Shareholders and Management Proxy Circular, are available on our website at www.bmo.com/investorrelations,
on the Canadian Securities Administrators’ website at www.sedar.com and on the EDGAR section of the SEC’s website at www.sec.gov. BMO’s Chief Executive Officer and its
Chief Financial Officer certify the appropriateness and fairness of BMO’s annual and interim consolidated financial statements, MD&A and Annual Information Form, and the
effectiveness of BMO’s disclosure controls and procedures and material changes in our internal control over financial reporting.
26 BMO Financial Group 196th Annual Report 2013