Bank of Montreal 2014 Annual Report Download - page 18

MD&A
‰Reviewed our cost structure to find greater efficiency:
oContinued to roll out new branch formats offering smaller, more
flexible and more cost-effective points of distribution across North
America.
oImproved technological and analytical capabilities, which in turn
improved oversight and management of BMO’s procurement
expenses, including travel, recruitment and print services.
‰Grew our distribution capacity:
oContinued to build sales capacity in our North American branch
network, opening or upgrading more than 130 branches and
expanding our ABM network.
oImproved online sales processes, resulting in greater sales volumes
on our online channel. Online retail banking sales levels across
Canada and the United States are now equivalent to sales at
over 120 branches.
3. Leverage our consolidated North American platform to deliver
quality earnings growth.
‰Continued to develop consolidated North American capabilities and
platforms in priority areas:
oDeveloped consistent branding in Canadian and U.S. P&C busi-
nesses, building on common customer insights and changing
expectations of the banking industry.
oMaintained key North-South leadership mandates to achieve
greater consistency and eliminate duplication.
‰Continued to expand our business and capabilities in the United
States:
oIn Premier Services, our mass affluent client service model placed
more than 100 banker-advisor teams in markets across the
country. This program provides clients with personalized, holistic
financial solutions.
oIncreased total sales generated per mortgage banker by 37%
through enhanced coaching focused on the realtor and purchase
business and a more effective approach to the credit approval
process.
oPosted our best ever investment banking performance in the
United States, with record revenue performance for Mergers &
Acquisitions, Acquisitions & Divestitures and Equity Capital Markets.
‰Introduced compelling offers in Canada that increased sales and
established and strengthened client relationships, including the BMO
World Elite MasterCard UPGRADE, our Spring Home Financing and
Summer Everyday Banking campaigns.
4. Expand strategically in select global markets to create
future growth.
‰Completed the acquisition of F&C Asset Management plc (F&C). This
acquisition strengthens the position of BMO Global Asset Manage-
ment as a globally significant money manager, adding scale, capa-
bilities and resources to its asset management platform and
providing attractive cross-selling opportunities.
‰Ranked among Top 20 global investment banks, and 13th-largest
investment bank in North and South America based on fees by
Thomson Reuters.
‰Expanded our Capital Markets footprint in London, the hub of our
Europe, Middle East and Africa activity, supporting our focused leader-
ship expertise and enhancing our ability to execute global deals.
‰Added Trade Finance capabilities in Hong Kong, further strengthening
our overall Asia platform.
5. Ensure our strength in risk management underpins everything
we do for our customers.
‰Significantly reduced our U.S. impaired loan portfolio.
‰Received approval to use the Advanced Measurement Approach to
manage operational risk.
‰Further embedded our risk culture across the enterprise with the
rotation of more than 100 employees and executives across risk
management and the operating groups.
‰Enhanced our risk appetite framework with stronger linkages to
strategic planning, performance management and compensation.
‰Continued to develop our risk infrastructure to support the efficiency
and effectiveness of risk management.
Factors That May Affect Future Results
As noted in the following Caution Regarding Forward-Looking State-
ments, all forward-looking statements and information, by their nature,
are subject to inherent risks and uncertainties, both general and specific,
which may cause actual results to differ materially from the expect-
ations expressed in any forward-looking statement. The Enterprise-Wide
Risk Management section starting on page 77 describes a number of
risks, including credit and counterparty, market, liquidity and funding,
operational, insurance, legal and regulatory, business, model, strategic,
reputation, environmental and social. Should our risk management
framework prove ineffective, there could be a material adverse impact
on our financial position.
Caution Regarding Forward-Looking Statements
Bank of Montreal’s public communications often include written or oral forward-looking statements. Statements of this type are included in this document, and may be included
in other filings with Canadian securities regulators or the U.S. Securities and Exchange Commission, or in other communications. All such statements are made pursuant to the
“safe harbor” provisions of, and are intended to be forward-looking statements under, the United States Private Securities Litigation Reform Act of 1995 and any applicable
Canadian securities legislation. Forward-looking statements may involve, but are not limited to, comments with respect to our objectives and priorities for 2015 and beyond, our
strategies or future actions, our targets, expectations for our financial condition or share price, and the results of or outlook for our operations or for the Canadian, U.S. and
international economies.
By their nature, forward-looking statements require us to make assumptions and are subject to inherent risks and uncertainties. There is significant risk that predictions,
forecasts, conclusions or projections will not prove to be accurate, that our assumptions may not be correct and that actual results may differ materially from such predictions,
forecasts, conclusions or projections. We caution readers of this document not to place undue reliance on our forward-looking statements as a number of factors could cause
actual future results, conditions, actions or events to differ materially from the targets, expectations, estimates or intentions expressed in the forward-looking statements.
The future outcomes that relate to forward-looking statements may be influenced by many factors, including but not limited to: general economic and market conditions in
the countries in which we operate; weak, volatile or illiquid capital and/or credit markets; interest rate and currency value fluctuations; changes in monetary, fiscal or economic
policy; the degree of competition in the geographic and business areas in which we operate; changes in laws or in supervisory expectations or requirements, including capital,
interest rate and liquidity requirements and guidance; judicial or regulatory proceedings; the accuracy and completeness of the information we obtain with respect to our
customers and counterparties; our ability to execute our strategic plans and to complete and integrate acquisitions, including obtaining regulatory approvals; critical accounting
estimates and the effect of changes to accounting standards, rules and interpretations on these estimates; operational and infrastructure risks; changes to our credit ratings;
general political conditions; global capital markets activities; the possible effects on our business of war or terrorist activities; disease or illness that affects local, national or
international economies; natural disasters and disruptions to public infrastructure, such as transportation, communications, power or water supply; technological changes; and our
ability to anticipate and effectively manage risks associated with all of the foregoing factors.
We caution that the foregoing list is not exhaustive of all possible factors. Other factors and risks could adversely affect our results. For more information, please see the
discussion in the Risks That May Affect Future Results section on page 78, and the credit and counterparty, market, liquidity and funding, operational, insurance, legal and regu-
latory, business, model, strategic, reputation, and environmental and social risk sections starting on page 84, which outline in detail certain of these key factors and risks that
may affect Bank of Montreal’s future results. When relying on forward-looking statements to make decisions with respect to Bank of Montreal, investors and others should care-
fully consider these factors and risks, as well as other uncertainties and potential events, and the inherent uncertainty of forward-looking statements. Bank of Montreal does not
undertake to update any forward-looking statements, whether written or oral, that may be made from time to time by the organization or on its behalf, except as required by
law. The forward-looking information contained in this document is presented for the purpose of assisting our shareholders in understanding our financial position as at and for
the periods ended on the dates presented, as well as our strategic priorities and objectives, and may not be appropriate for other purposes.
Assumptions about the level of default and losses on default were material factors we considered when establishing our expectations regarding the future performance of
the transactions into which our credit protection vehicle has entered. Among the key assumptions were that the level of default and losses on default would be consistent with
historical experience. Material factors that were taken into account when establishing our expectations regarding the risk of future credit losses in our credit protection vehicle
and risk of loss to Bank of Montreal included industry diversification in the portfolio, initial credit quality by portfolio, the first-loss protection incorporated into the structure and
the hedges into which Bank of Montreal has entered.
Assumptions about the performance of the Canadian and U.S. economies, as well as overall market conditions and their combined effect on our business, are material fac-
tors we consider when determining our strategic priorities, objectives and expectations for our business. In determining our expectations for economic growth, both broadly and
in the financial services sector, we primarily consider historical economic data provided by the Canadian and U.S. governments and their agencies. See the Economic Develop-
ments and Outlook section of this document.
BMO Financial Group 197th Annual Report 2014 29