Bank of Montreal 2014 Annual Report Download - page 39
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MD&A
MANAGEMENT’S DISCUSSION AND ANALYSIS
Business Environment, Outlook
and Challenges
U.S. P&C has a significant footprint in eight states, primarily concentrated
in six contiguous states (Illinois, Wisconsin, Indiana, Minnesota, Missouri
and Kansas).
After modest growth in 2013, the U.S. Midwest economy is on pace
to grow by 2.1% in 2014, with that rate expected to reach 2.7% in 2015.
An increase in business investments, expansion in the automobile sector
and a continued recovery in housing markets supported growth in 2014,
while fiscal policies became less restrictive. Growth in consumer and
commercial loans accelerated in 2014, although residential mortgage
growth was strained by tighter mortgage lending rules. Consumer loan
volumes are expected to trend higher in 2015 due to relatively low
interest rates, improved household finances and pent-up demand for
automobiles. Residential mortgage growth will likely pick up as
housing affordability remains healthy. Commercial loan growth should
remain strong in response to higher levels of expected activity across
our footprint.
The banking environment in the U.S. Midwest remains highly
competitive and the low interest rate environment continues to be
challenging for the banking industry. We are continuing to concentrate
on our customer-focused growth strategy and commercial sector
expertise to generate growth in our loan and deposit balances and
improve our financial performance, while actively managing costs to
achieve greater efficiency. We expect to deliver growth while still
operating within the parameters of our risk appetite, and we will con-
tinue to actively manage risks and regulatory compliance through a
reinforced oversight and control structure.
The U.S. economic environment in 2014 and outlook for 2015 are
discussed in more detail in the Economic Developments and Outlook
section on page 30.
Caution
This U.S. 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 32.
50 BMO Financial Group 197th Annual Report 2014