Bank of Montreal 2013 Annual Report Download - page 38
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Business Environment, Outlook
and Challenges
Canada’s economy is expected to improve in 2014, reflecting moderate
increases in employment and personal income, as well as in response to
a strengthening U.S. economy.
In the Canadian personal banking sector, retail operating deposits
are projected to grow in 2014 by approximately 5%, similar to growth in
2013 and in line with the expected increase in personal income. Credit
card loan balances grew nominally in 2013 and growth is projected to
strengthen gradually next year. Overall residential mortgage growth
moderated in 2013, as tighter mortgage underwriting guidelines
constrained the demand for housing. This was reflected in a moderate
decline in resales, a sharp drop in housing starts and some slowing in
house price increases. Anticipated moderate increases in employment
in fiscal 2014 should keep the demand for housing and house prices
fairly steady.
In the commercial banking sector, growth in commercial operating
deposits (CODs) was strong in 2013. Businesses are continuing to hold
back on strategic investments due to global economic uncertainty.
Industry COD growth is projected to decelerate in 2014, as improving
economic conditions reduce the need for precautionary savings and
encourage business investment.
We expect growth in consumer lending to slow given relatively
high levels of household debt, which we will address through our focus
on targeting growth in under-penetrated customer segments and prod-
ucts, as well as by continuing to improve our sales force productivity.
While the industry faces increasingly complex regulatory, information
security and fraud prevention requirements, our strong governance
framework continues to position us well to monitor any such changes
and respond accordingly. With competition for skilled resources
becoming more intense, we continue to monitor employee engagement
to ensure that BMO remains at or above the financial industry average.
The Canadian economic environment in 2013 and outlook for 2014
are discussed in more detail in the Economic Developments and Outlook
section on page 32.
Caution
This Canadian P&C Banking section contains forward-looking statements. Please see the Caution
Regarding Forward-Looking Statements.
Adjusted results in this section are non-GAAP and are discussed in the Non-GAAP Measures section
on page 34.
MD&A
BMO Financial Group 196th Annual Report 2013 49