Bank of Montreal 1998 Annual Report Download - page 23

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CANADIAN BANK
PEER GROUP COMPARISON
1998 19 97 Five-Year Average
Bank of Six Bank of Six Bank of Six
Montreal Bank Montreal Bank Montreal Bank
Performance Rank Average*Performance Rank Average*
Performance
Rank Average*
Primary Financial Performance Measures (%)
Five-year return on
common shareholders’
investment (ROI) 23.3 221.8 26.1 127.3 23.3(a) 221.8(a)
Fully diluted EPS growth
(b) 0.9 4(10.6)(c) 11.9 121.6 13.0 121.4
Return on average
common shareholders’
equity (ROE) 15.2 414.2(c) 17.1 118.0 15.9 215.2
Revenue growth (b) 1.4 17.9 15.1 118.0 8.5 110.4
Expense-to-revenue ratio 66.5 466.5 64.4 163.0 64.1 163.3
Primary Financial Condition Measures (%)
Provision for credit
losses as a % of
average loans
and acceptances 0.09 20.35(c) 0.23 20.33 0.30 20.43
Gross impaired loans
and acceptances
as a % of equity
and allowance for
credit losses 6.66 212.43 7.65 213.68 6.66(d) 212.43(d)
Tier 1 ratio 7.26 17.38 6.80 16.89 7.26(d) 17.38(d)
Cash and securities-
to-total assets 28.4 225.1 35.6 225.4 28.4(d) 225.1(d)
Credit rating AA
-
4AA
-
AA
-
4AA
-
AA
-
(d) 4AA
-
(d)
*The six banks used to calculate the average were: Bank of Montreal, The Bank of Nova Scotia,
Canadian Imperial Bank of Commerce, National Bank of Canada, Royal Bank of Canada and The
Toronto-Dominion Bank.
(a) Reflects five-year ROI for the period ending October 31, 1998.
(b)
Ratios shown are the actual reported ratios with the exception of fully diluted EPS growth for
National Bank of Canada, which was restated as per note (c). Non-recurring items are excluded for
ranking purposes.
(c) The reported numbers for National Bank of Canada were restated to reflect the addition to the
general allowance for credit losses as a charge to current year income instead of a direct charge to
retained earnings.
(d) Condition ratios are as at October 31, 1998.
2Top T i e r 4Above Average/Average 1Below Average
1998 COMPARISON
Our ranking in the Canadian peer group in 1998 was top tier in four of our ten financial mea-
sures, up from three in 1997, due to the improvement in our five-year ROI position. We were
above average/average in four of our measures, improved from one in 1997, because of our
higher ranking in fully diluted EPS growth, ROE and the expense-to-revenue ratio.
We were below average in two measures, namely revenue growth and Tier 1 ratio. Our lower
revenue growth in 1998 reflected the unusual market conditions in the fourth quarter that
resulted in lower contributions primarily from several institutional businesses and Group
Financiero Bancomer, as well as foregone revenue due to the sale of our U.S. credit card business.
These factors partially offset continued business volume growth. While our Tier 1 ratio is
below the Canadian peer group average of 7.38%, it is above the 7% expectation of our primary
regulator and we consider our capital position to be strong.
FIVE-YEAR AVERAGE
Our ranking relative to the Canadian peer group on a five-year average basis was top tier in
five of our ten financial measures, up from four in 1997, due to the improvement in our five-
year ROI position. We were above average/average in respect of our credit rating measure,
consistent with 1997.
We were below average in four measures, namely fully diluted EPS growth, revenue growth,
expense-to-revenue ratio and Tier 1 ratio. Our ranking on the first three of these measures
reflected stronger industry performance in 1994, 1996 and 1997. Our Tier 1 ratio is discussed
under 1998 comparison above.