Bank of Montreal 2013 Annual Report Download - page 49

MD&A
MANAGEMENT’S DISCUSSION AND ANALYSIS
Financial Condition Review
Summary Balance Sheet ($ millions)
As at October 31 2013 2012 2011 2010 2009
Assets
Cash and interest bearing
deposits with banks 32,601 26,282 25,656 20,554 13,295
Securities 134,981 128,324 122,115 123,399 110,813
Securities borrowed or
purchased under resale
agreements 39,799 47,011 37,970 28,102 36,006
Net loans and
acceptances 279,095 253,835 238,885 176,643 167,829
Other assets 50,823 69,997 75,949 62,942 60,515
537,299 525,449 500,575 411,640 388,458
Overview
Total assets increased $11.9 billion from the prior year to $537.3 billion.
The increase was comprised of net loans and acceptances of
$25.3 billion, securities of $6.7 billion and cash and interest bearing
deposits with banks of $6.3 billion, partially offset by decreases of
$19.2 billion in other assets and $7.2 billion in securities borrowed or
purchased under resale agreements.
Liabilities and shareholders’ equity increased $11.9 billion. The
increase was comprised of deposits of $43.1 billion and shareholders’
equity of $1.8 billion, partially offset by a decrease of $32.6 billion in
other liabilities and a decrease of $0.4 billion in non-controlling interest
in subsidiaries.
Cash and Interest Bearing Deposits with Banks
Cash and interest bearing deposits with banks increased $6.3 billion to
$32.6 billion in 2013, primarily reflecting an increase in balances held
with the U.S. Federal Reserve due to U.S. deposit growth.
Securities ($ millions)
As at October 31 2013 2012 2011 2010 2009
Trading 75,159 70,109 69,925 71,710 59,071
Available-for-sale 53,067 56,382 51,426 50,543 50,257
Held-to-maturity 6,032 875 – – –
Other 723 958 764 1,146 1,485
134,981 128,324 122,115 123,399 110,813
Securities increased $6.7 billion to $135.0 billion, primarily
reflecting increases in held-to-maturity securities and trading securities,
partially offset by a decrease in available-for-sale securities. The
increase in trading securities is primarily related to client-driven activ-
ities in BMO Capital Markets. The increase in held-to-maturity securities
reflects higher levels of supplemental liquid assets held to support
contingent liability requirements. Supplemental liquid assets held in
available-for-sale securities have declined from the prior year.
Securities Borrowed or Purchased Under Resale
Agreements
Securities borrowed or purchased under resale agreements
decreased $7.2 billion to $39.8 billion, mainly due to lower levels of
client-driven activities.
Loans and Acceptances ($ millions)
As at October 31 2013 2012 2011 2010 2009
Residential mortgages 99,328 87,870 81,075 48,715 45,524
Consumer instalment and
other personal 63,640 61,436 59,445 51,159 45,824
Credit cards 7,870 7,814 8,038 3,308 2,574
Businesses and
governments 101,450 90,402 84,883 68,338 68,169
Customers’ liability under
acceptances 8,472 8,019 7,227 7,001 7,640
Gross loans and
acceptances 280,760 255,541 240,668 178,521 169,731
Allowance for credit losses (1,665) (1,706) (1,783) (1,878) (1,902)
Net loans and acceptances 279,095 253,835 238,885 176,643 167,829
All 2010 and prior data is based on CGAAP in this section.
60 BMO Financial Group 196th Annual Report 2013
As at October 31 2013 2012 2011 2010 2009
Liabilities and
Shareholders’ Equity
Deposits 366,821 323,702 302,373 249,251 236,156
Other liabilities 134,538 167,102 164,197 135,933 126,719
Subordinated debt 3,996 4,093 5,348 3,776 4,236
Capital trust securities 463 462 821 800 1,150
Shareholders’ equity 30,409 28,655 26,353 21,880 20,197
Non-controlling interest in
subsidiaries (1) 1,072 1,435 1,483 – –
537,299 525,449 500,575 411,640 388,458
(1) Included in other liabilities under CGAAP.
Net loans and acceptances increased $25.3 billion to $279.1 billion,
primarily due to an $11.0 billion increase in loans to businesses and
governments across most operating groups and an $11.5 billion increase
in residential mortgages in Canadian P&C. The remaining $2.8 billion
increase includes an increase in consumer instalment and other personal
loans, primarily due to growth in auto loans and home equity loans, and
an increase in acceptances.
Table 11 on page 112 provides a comparative summary of loans by
geographic location and product. Table 13 on page 113 provides a
comparative summary of net loans in Canada by province and industry.
Loan quality is discussed on pages 84 and 85 and further details on
loans are provided in Notes 4, 5 and 8 to the financial statements,
starting on page 137.
Other Assets
Other assets decreased $19.2 billion to $50.8 billion, primarily reflecting
a $17.8 billion decrease in derivative financial instrument assets, largely
due to declines in the fair value of interest rate contracts as a result of
rising interest rates. The balance of other assets, which includes
accounts receivable, prepaid expenses, tax receivable and pension
assets, decreased $1.4 billion. Derivative instruments are detailed in
Note 10 on page 147 of the financial statements.
Deposits ($ millions)
As at October 31 2013 2012 2011 2010 2009
Banks
Businesses and
20,591 18,102 20,877 19,435 22,973
governments
Individuals
220,798 186,570 159,209
125,432 119,030 122,287
130,773
99,043
113,738
99,445
366,821 323,702 302,373 249,251 236,156
Deposits increased $43.1 billion to $366.8 billion. The increase was
largely driven by a $34.2 billion increase in deposits by businesses and
governments, reflecting higher levels of wholesale and customer depos-
its. Deposits by individuals increased $6.4 billion, primarily in Canada,
while deposits by banks increased $2.5 billion, primarily reflecting
higher levels of wholesale deposits. Further details on the composition
of deposits are provided in Note 15 on page 158 of the financial state-
ments and in the Liquidity and Funding Risk section on page 92.
Other Liabilities
Other liabilities decreased $32.6 billion to $134.5 billion, primarily driven
by a decrease of $16.8 billion in derivatives, a decrease of $10.9 billion
in securities lent or sold under repurchase agreements related to client-
driven activities, and a decrease of $1.0 billion in securities sold but not
yet purchased. Further details on the composition of other liabilities are
provided in Note 16 on page 159 of the financial statements.