Bank of Montreal 1998 Annual Report Download - page 17

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13
BANK OF MONTREAL GROUP OF COMPANIES
It was a year of significant change, unre-
lenting competitive pressure and unusual
market conditions – a year from which no
major financial services firm in the world
emerged untouched, ours included. It was
also a year, I am pleased to report, that demon-
strated the resilience of the Bank of Montreal
Group of Companies.
We achieved our ninth consecutive year
of record earnings in 1998 with net income
of $1.35 billion, a 3.5% increase from the
previous year. We achieved our ninth consec-
utive year of growth in earnings per share
with fully diluted EPS of $4.66, up from
$4.62. And, with return on equity of 15.2%,
we achieved our ninth consecutive year of
ROE above 14%, a record unmatched by any
other Canadian or U.S. Money-Centre bank.
Our primary measure of success in
maximizing shareholder value – the five-year
annualized return on investment – was
23.3% in 1998, exceeding the Toronto Stock
Exchange 300 Composite Index by 1320
basis points over the same period.
From a longer-term perspective, market
capitalization grew from $3.8 billion at the
beginning of 1990 to $16.7 billion in 1998,
while common dividends paid out during the
same period added up to $3.0 billion, for
a total return to shareholders of $15.9 billion.
Revenues reached $7.27 billion in 1998
due to volume growth primarily in the
businesses serving personal and small and
medium-sized business customers across
Canada and in the U.S. Midwest. This sector
enjoyed an excellent year, continuing to
experience strong asset growth as a result of
a favourable North American economy,
product and service innovation and increased
consumer demand.
For example, Personal and Commercial
Financial Services in Canada achieved
earnings growth of 19.7%, contributing
$649 million to net income, while Harris
Bank achieved earnings growth of 23.4%,
contributing $229 million to net income.
This growth was offset in part by the
effects of abnormal market conditions in the
fourth quarter, leading to after-tax trading
losses of $90 million and lower contribu-
tions from several institutional businesses
and from our 16.2% equity investment in
Grupo Financiero Bancomer, Mexico’s lead-
ing financial institution.
While the unusual capital market condi-
tions kept us from achieving our objective of
10% earnings per share growth, we continue
to maintain this as our minimum target
moving forward.
MANAGING TO MAXIMIZE
SHAREHOLDER VALUE
Last year also presented unusual challenges
for employees, notably the announcement
THE YEAR IN REVIEW
PRESIDENT’S MESSAGE