Bank of Montreal 2000 Annual Report Download - page 27

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Bank of Montreal Group of Companies Annual Report 2000 ■3
Fully Diluted Earnings per Share Growth (EPS growth)
Objective
■Grow EPS by minimum 10.0% per annum
2000 Target
■To achieve minimum 10.0% EPS growth from
a 1999 adjusted base of $5.14 (adjusted for the
one-time charges incurred in 1999)
2000 Performance
■Achieved EPS growth of 27.6% from an adjusted
base of $5.14
2001 Target
■To achieve 10.0% to 15.0% EPS growth (excluding
the effects of non-recurring items)
2000 Target
■
To increase ROE by 1.0 to 1.5 percentage points
over 1999 adjusted
base
ROE of 15.4% (adjusted for
the one-time charges incurred in 1999)
2000 Performance
■Increased ROE by 2.6 percentage points to 18.0%
2001 Target
■To increase ROE (excluding the effects of
non-recurring items) to 17.0% to 17.5%
2000 Target
■To maintain a Tier 1 Capital Ratio of at least 8.0%
2000 Performance
■Achieved a Tier 1 Capital Ratio of 8.83%
2001 Target
■To maintain a Tier 1 Capital Ratio of at least 8.0%
■To achieve a cash and securities-to-total assets
ratio consistent with the 2000 ratio
Supporting targets are:
■Modest growth in risk-weighted assets
Supporting targets excluding the effects of non-recurring items are:
■Revenue growth of 7.0% to 9.0%
■An expense-to-revenue ratio consistent with the 2000 ratio
■A provision for credit losses consistent with the 2000 ratio
■A tax rate (taxable equivalent basis1) averaging approximately 37.0%
Return on Common Shareholders’ Equity (ROE)
Objective
■Increase ROE by 1.0 to 1.5 percentage points per
annum to 19.0% to 20.0% by 2002
Tier 1 Capital Ratio
Objective
■Maintain strong regulatory capital position
consistent with our peers
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Financial Performance Objectives and Targets
The following diagram illustrates our vision and purpose,
governing objective and financial performance and condition
measures, which have evolved as part of our implementation
of a Value Based Management framework over the past few
years. Our governing objective is to maximize the value of
our common shares and the total return to our shareholders
over time by achieving top quartile total shareholder return
relative to our Canadian and North American peer groups.
In this regard, we have established objectives and targets
for fully diluted earnings per share growth and return on
common shareholders’ equity. These two financial performance
measures, which significantly influence share price perfor-
mance, are instrumental in achieving our governing objective.
Measures, Objectives and Targets
Governing Objective
To maximize the value of our common shares and total return to shareholders over time by achieving
top quartile total shareholder return relative to our Canadian and North American peer groups
Vision and Purpose
To be the best North American financial institution
Financial Performance Objectives Financial Condition Objectives
Financial Condition Targets
Financial Performance Measures
■Five-Year Total Shareholder Return
■Fully Diluted Earnings per Share Growth
■Return on Common Shareholders’ Equity
■Net Economic Profit Growth
■Revenue Growth
■Expense-to-Revenue Ratio
■Provision for Credit Losses as a % of Average Loans
and Acceptances
Financial Condition Measures
■Gross Impaired Loans and Acceptances as
a % of Equity and Allowance for Credit Losses
■Cash and Securities-to-Total Assets
■Tier 1 Capital Ratio
■Credit Rating
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Non-Recurring Items
For years 1996 through 2000, the Bank’s results of operations included a number of non-recurring items. Non-recurring items are generally infrequent,
material and quantifiable. These items are unusual in that they are not considered to be part of the ongoing operations of the Bank and are not expected
to recur in the near future. Throughout this MAO, we have calculated our performance against our primary financial performance and condition measures
both including and excluding these non-recurring items. Our analysis of each financial performance and condition measure focuses primarily on our results
excluding these non-recurring items. All non-recurring items are described in detail in Table 19 of the Supplemental Information on page 82.
1Defined in the glossary on page 88.
Financial Performance Targets