Bank of Montreal 1998 Annual Report Download - page 37

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29
BANK OF MONTREAL GROUP OF COMPANIES
*Note: Investment Revenue represents capital market fees, investment management and custodial fees and mutual fund revenues;
Canadian Retail Service Charges represent deposit and payment service charges; Employees segment represents employee salaries
a
nd benefits expenses; Suppliers segment represents total expenses less employee expenses and government-related expenses;
Government segment represents income taxes and other government levies; Shareholders segment represents net income and
minority interest; Increased Capital in the Bank segment represents net income less dividends.
WHERE BANK REVENUE COMES FROM...
AND WHERE IT GOES TO
WITHIN THE CONTEXT OF THE ECONOMY AT LARGE, WE ACT AS A FINANCIAL INTERMEDIARY, WITH REVENUES
FROM CUSTOMERS FLOWING TO EMPLOYEES, SUPPLIERS, THE GOVERNMENT AND SHAREHOLDERS. WE RETAIN PART
OF THE SHAREHOLDER PORTION TO SUPPORT FUTURE GROWTH AND INVESTMENT.
WHERE BANK REVENUE COMES FROM*...
AND WHERE IT GOES TO*
Other Revenue 20%
Investment Revenue 21%
Net Interest Income 56%
Canadian Retail Service Charges 3% Net Income Before
Government Taxes and Levies 38%
Suppliers 26%
Employees 34%
Loan Losses 2%
Shareholders 56%
Government 44%
Increased Capital in the Bank
Dividends
GOVERNMENT TAXES AND LEVIES REPRESENTED MORE THAN 40% OF OUR PRE-TAX EARNINGS
Total government taxes and levies of $1,080 million in 1998 represented over 40% of our net income before taxes and
government levies.
The provision for taxes in the Income Statement as a percentage of pre-tax income was 36.9% versus 38.7% in 1997, as
shown in note 15 to the consolidated financial statements on page 81.
GOVERNMENT TAXES AND LEVIES ($ millions except as noted)
For the year ended October 31
1998 1997 1996 1995 1994
Government levies other than income taxes 513 478 460 429 375
Provision for taxes – Income Statement 804 840 757 662 560
Provision for taxes – Retained Earnings (237) (92) 10 9 (23)
Total government taxes and levies 1,080 1,226 1,227 1,100 912
Net income 1,350 1,305 1,168 986 825
INVESTMENT SPENDING
We define investment spending as (i) strategic acquisition spending (ii) capital spending on
technology, and (iii) other capital spending. The illustration at right shows our relative
spending in these three categories.
We spent $434 million on capital for technology purposes this year as part of our invest-
ment in alternate delivery channels, as we continue to create a modern banking environment.
S
trategic acquisitions in 1998 related to our acquisition of a 69% interest (49% voting) in
Partners First, a credit card venture in the United States.
Note: Strategic acquisition spending represents the acquisition of an equity position or capital assets of another entity acquired for
strategic purposes. Capital spending on technology includes capital assets purchased, less sales, for technology purposes and
internal development expenses including salaries and other amounts for technology development reported in non-interest expense.
Other capital spending represents net purchases of capital assets for purposes other than technology development.
9897969594
STRATEGIC ACQUISITION
AND CAPITAL SPENDING
892
636
1,486
401
1,010
Strategic acquisitions ($ millions)
Capital spending on technology
($ millions)
Other capital spending ($ millions)