Bank of Montreal 2013 Annual Report Download - page 30

Trading-Related Revenues
Trading-related revenues are dependent on, among other things, the
volume of activities undertaken for clients who enter into transactions
with BMO to mitigate their risks or to invest. BMO earns a spread or
profit on the net sum of its client positions by profitably managing,
within prescribed limits, the overall risk of the net positions. On a lim-
ited basis, BMO also assumes proprietary positions with the intent of
earning trading profits.
Interest and non-interest trading-related revenues decreased
$204 million or 17% to $1,026 million in 2013. Adjusted trading-related
revenues were $972 million in 2013, up $22 million or 2%. Interest rate
trading-related revenues increased $30 million or 7%, primarily due to
increased client activity in our Canadian fixed income businesses. For-
eign exchange trading-related revenues were up $16 million or 6% from
2012, primarily driven by market volatility. Equities trading-related
revenues increased $86 million or 21%, primarily due to increased
activity with corporate and investor clients and an improved market
environment. Commodities trading-related revenues decreased
$23 million, mainly due to lower activity in the crude and natural gas
markets.
Revenues from run-off structured credit activities totalling
$34 million in 2013, compared to $284 million in 2012, are included in
other trading revenues in the adjacent table. The decline was due to
higher mark-to-market gains on the underlying assets in 2012. These
revenues are adjusting items and are excluded from adjusted trading-
related revenues.
The Market Risk section on page 87 provides more information on
trading-related revenues.
Trading-related revenues include net interest income and
non-interest revenue earned from on and off-balance sheet posi-
tions undertaken for trading purposes. The management of these
positions typically includes marking them to market on a daily
basis. Trading-related revenues also include income (expense) and
gains (losses) from both on-balance sheet instruments and interest
rate, foreign exchange (including spot positions), equity,
commodity and credit contracts.
Interest and Non-Interest Trading-Related Revenues (1)
($ millions) Change
(taxable equivalent basis) from 2012
For the year ended October 31 2013 2012 2011 (%)
Interest rates 479 449 388 7
Foreign exchange 285 269 288 6
Equities 499 413 322 21
Commodities 43 66 40 (35)
Other (2) 29 267 (126) (89)
Total (teb) 1,335 1,464 912 (9)
Teb offset 309 234 190 32
Total 1,026 1,230 722 (17)
Reported as:
Net interest income 486 439 363 11
Non-interest revenue – trading revenues 849 1,025 549 (17)
Total (teb) 1,335 1,464 912 (9)
Teb offset 309 234 190 32
Total 1,026 1,230 722 (17)
Adjusted net interest income net of teb
offset 157 209 199 (25)
Adjusted non-interest revenue – trading
revenues 815 741 573 10
Adjusted total 972 950 772 2
(1) Trading-related revenues are presented on a taxable equivalent basis.
(2) Includes revenues from run-off structured credit activities of $34 million ($284 million in
2012; loss of $25 million in 2011), which are adjusting items included in Corporate Services
results, and hedging exposures in BMO’s structural balance sheet.
MD&A
Adjusted results in this Revenue section are non-GAAP and are discussed in the Non-GAAP Measures section on page 34.
BMO Financial Group 196th Annual Report 2013 41