Bank of Montreal 1998 Annual Report Download - page 25

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BANK OF MONTREAL GROUP OF COMPANIES
FINANCIAL CONDITION
Enterprise-wide Risk Management
■Our strong risk management culture drives a prudent
and professional approach to risk-taking.
■We manage risk with a view to balancing the risk-
reward relationship.
Credit Risk Management
■Our asset quality remained high.
■The provision for credit losses as a percentage of
average loans and acceptances for 1998 was 0.09%
compared to 0.23% for 1997.
■Loan portfolios continued to be well diversified.
■Gross impaired loans and acceptances as a percentage
of equity and allowance for credit losses was 6.7%
compared to 7.6% at the end of 1997.
■
The decrease in 1998 was due to reversals and
recoveries as well as a low incidence of problem loans.
Liquidity Risk Management
■Our liquidity ratio decreased to 28.4% as at
October 31, 1998.
■Deposits were well-diversified by customer, type,
currency and geography.
■Liquid assets included $41.4 billion of pledged assets
at October 31, 1998.
Capital Management
■
Our Tier 1 Ratio was 7.26% at October 31, 1998
com-
pared to 6.80% at October 31, 1997.
■The increase was due to retained earnings growth
and preferred shares issued during the year, as well as
securitizations and other balance sheet initiatives.
Credit Rating
■Credit rating composite remained unchanged.
9897969594
0.09
0.23
0.23
0.30
0.63
9897969594
6.7
7. 6
15.7
20.5
29.9
9897969594
63,195
74,0 34
60,796
53,336
41,194
28.4
35.6
35.8
35.1
29.8
9897969594
7.26
6.80
6.71
7. 0 2
7. 2 0
PROVISION FOR CREDIT
LOSSES AS A % OF AVERAGE
LOANS AND ACCEPTANCES
GROSS IMPAIRED LOANS AND
ACCEPTANCES AS A % OF
EQUITY AND ALLOWANCE FOR
CREDIT LOSSES
More information can be found on
page 44.
CASH RESOURCES
($ millions)
SECURITIES
CASH AND SECURITIES-TO-
TOTAL ASSETS (%)
More information can be found on
page 47.
TIER 1 RATIO (%)
TIER 1 REGULATORY
REQUIREMENT (4%)
More information can be found on
page 49.
FOUR PRINCIPAL RISKS
More information can be found on
page 43.
COMPOSITE CREDIT RATING
The credit rating represents a composite
of Moody’s and Standard & Poor’s
debt ratings.
AA-
■Credit Risk
■Market Risk
■Liquidity Risk
■Operational Risk
19