Bank of Montreal 1998 Annual Report Download - page 45

37
BANK OF MONTREAL GROUP OF COMPANIES
FINANCIAL RESULTS (all dollar amounts are in Canadian dollars)
Net income of $229 million increased 23.4% over 1997, continuing the good growth shown
last year, with loans up 22.1% from $15,070 million in 1997. Revenues increased 23.9% from
1997, resulting from volume increases in corporate, private and community banking loans,
as well as securities gains, higher revenues from trust and syndication fees and income from
other customer services. Non-interest expenses increased by $149 million, or 21.8%, in 1998
as a result of expanding banking operations, and the resulting business growth. The provision
for credit losses increased to $37 million in 1998 as a result of loan volume growth and the
impact of the U.S./Canadian dollar exchange rate.
Both revenues and expenses were affected by the U.S./Canadian dollar exchange rate
because virtually all of Harris’ business transactions are in U.S. dollars. These amounts are
converted from U.S. dollars to Canadian dollars for reporting purposes. As a result, the
movement in the exchange rate from an average rate of $1.38 in 1997 to an average rate of
$1.47 for 1998
affects the comparison of 1998 results to those of 1997. If we exclude the
exchange rate impact, revenues increased 15.9% and non-interest expenses increased 13.9%.
Harris’ expense-to-revenue ratio was 67.0% for 1998, compared to 68.1% in 1997. This
improvement is the result of revenue growth of 23.9%, driven by volume growth and expan-
sion, exceeding the increase in non-interest expense of 21.8%, which also reflected the costs
of expansion.
Net income of $186 million in 1997 rose 17.1% over 1996. This increase was driven by
revenue growth of 11.9% due to the acquisition of Household Bank in June 1996, and strong
increases in loan and deposit volumes, partly offset by a decline in the net interest margin.
Non-interest expense increased 12.1% in 1997, caused primarily by the costs of acquiring,
operating and integrating the Household Bank locations into the Harris retail network, and
by volume growth across all lines of business.
HARRIS REGIONAL BANKING ($ millions except as noted)
As at or for the year ended October 31 1998 1997*1996*1995*1994*
Net interest income 823 703 622 569 444
Other income 423 303 276 313 332
Provision for credit losses 37 13 28 36 35
Non-interest expense 834 685 610 587 624
Income before taxes 375 308 260 259 117
Non-controlling interest in subsidiary (a) 11 0000
Income taxes 135 122 102 97 34
Net income 229 186 158 162 83
Average assets 31,104 25,849 23,032 20,477 16,936
Average current loans 18,406 15,070 12,710 10,980 8,879
Average commercial loans 12,667 10,787 9,669 8,583 7,230
Average deposits 20,656 17,931 16,468 14,737 12,243
Assets under administration (b) 111,521 89,424 71,804 247,160 197,306
Assets under management 40,475 32,936 24,381 39,221 19,222
Full-time equivalent staff (c) 6,417 6,262 NA NA NA
Expense-to-revenue ratio (%) 67.0 68.1 68.0 66.5 80.4
*Restated to give effect to the revised 1998 organization structure
(a) This represents dividends paid to holders of publicly-traded preferred shares issued by Harris Preferred Capital Corporation,
a Real Estate Investment Trust incorporated in 1998. All common stock of this company is owned by Harris.
(b) The decrease in assets under administration at October 31, 1996 reflects the sale of Harris’ securities custody and related
trustee services business for large institutions in January 1996.
(c) As at October 31
NA – Not available
9897969594
AVERAGE CURRENT LOANS
AND ANNUAL GROWTH
22.1
18.6
15.8
23.7
11.9
Average current loans ($ billions)
Annual growth (%)
18.4
15.1
11.0
8.9
12.7
9897969594
TOTAL REVENUE AND
ANNUAL GROWTH
23.9
11.9
1.9
13.5
2.2
1,246
1,006
898
882
776
Total revenue ($ millions)
Annual growth (%)
HARRIS BANK‡
Harris Bank contributed 20.9%
of total net income in 1998.
■Key 1998 results for
Harris Bank include:
(US$, Canadian GAAP)
Net income increased 11.5%;
Non-interest income
increased 14.7%;
Loans grew 7.8%.
■Rapidly expanding retail/
wealth management business
with retail market share in
Chicagoland tripled to 8.2% in
1998 from 2.7% in 1994.
‡
Harris Bank includes Harris Regional
Banking,
Harris Electronic Financial Services
and Harris
Global Asset Management