Bank of Montreal 2000 Annual Report Download - page 36

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This section provides an analysis of our financial performance for 2000 and 1999 and focuses
on the statement of income and the balance sheet. The analysis is based on our consolidated
financial statements, which are presented on page 43.
Statement of Income
Revenue Growth
Volumes continue to drive revenue growth, partially offset by lower spreads
Performance Review
Total revenue increased 9.3% in 2000 to $8,664 million from $7,928 million in 1999, compared
with 9.0% growth in 1999. Excluding non-recurring items, total revenue increased 6.1% in 2000
to $8,438 million from $7,956 million in 1999. Revenues from normal operations increased 8.1%
as the additional month’s results from BMO Nesbitt Burns in 1999 and a lower contribution
from Bancomer reduced reported revenue growth in 2000 by 2.0%. The increase of 6.1% in
total revenue resulted from a $561 million (15.8%) increase in other income, partially offset by
a $79 million (1.8%) decline in net interest income.
Total Revenue (excluding non-recurring items) ($ millions)
For the year ended October 31 2000 1999 1998 1997 1996
Net interest income (TEB) 4,338 4,417 4,152 4,186 3,711
Year-over-year growth (%) (1.8) 6.4 (0.8) 12.8 4.1
Other income 4,100 3,539 3,118 2,981 2,516
Year-over-year growth (%) 15.8 13.5 4.6 18.5 19.7
Total revenue 8,438 7,956 7,270 7,167 6,227
Year-over-year growth (%) 6.1 9.4 1.4 15.1 9.9
Net Interest Income Declines 1.8%
Net interest income is comprised of earnings on assets, including interest and dividend income
and the Bank’s share of income on investments accounted for using the equity method of
accounting, less interest expense paid on liabilities. It is the difference between what the Bank
earns on assets such as loans and securities, and what it pays on liabilities such as deposits.
Average net interest margin
1
is the ratio of net interest income to average assets.
Highlights
■Revenue growth from normal operations was 8.1%, as the extra month’s results from BMO Nesbitt Burns in
1999 and the lower contribution from Bancomer reduced reported revenue growth in 2000 by 2.0%
■
Revenue growth excluding non-recurring items resulted from a combination of a decline in net interest income
of 1.8% and an increase in other income of 15.8%
■Reduced net interest income was due to lower trading revenues and the lower contribution from Bancomer,
partially offset by improved business volumes
■Other income increased driven by improved business volumes
■Managed expense growth excluding non-recurring items to 3.0% in 2000, compared with 7.6% growth
in 1999. Growth includes $263 million in cost reduction initiatives which is expected to produce $403 million
in cost savings in 2001
Change in Net Interest Income, Average Assets and Average Net Interest Margin
Net interest income (TEB) Average assets Average net interest margin
($ millions) ($ millions) (in basis points)
For the year ended October 31 2000 1999* % change 2000 1999* % change 2000 1999* Change
Personal and Commercial Client Group (P&C)
P&C Canada 2,600 2,412 7.8 83,490 78,020 7.0 311 309 2
P&C Harris 419 393 6.6 15,379 15,004 2.5 272 262 10
P&C, excluding Bancomer 3,019 2,805 7.6 98,869 93,024 6.3 305 302 3
Bancomer 64 119 (46.4) 796 732 8.7 800 1,623 (823)
Total Personal and Commercial Client Group 3,083 2,924 5.4 99,665 93,756 6.3 309 312 (3)
Private Client Group 504 395 27.6 4,115 3,258 26.3 1,225 1,212 13
Investment Banking Group 1,154 1,369 (15.7) 137,475 134,473 2.2 84 102 (18)
Corporate Support (403) (271) (48.1) (6,311) (4,773) (32.2) 637 569 68
Total Bank 4,338 4,417 (1.8) 234,944 226,714 3.6 185 195 (10)
*Restated to give effect to the current year’s organization structure and presentation changes as outlined on page 29. 1Defined in the glossary on page 88.
Financial Statement Analysis
12 ■Bank of Montreal Group of Companies Annual Report 2000
Revenue and Annual Growth
(excluding non-recurring items)
9.9
15.1
1.4
9.4 6.1
6,227 7,167
7, 2 70
7,95 6
8,438
96 97 98 99 00
Net interest income (TEB) ($ millions)
Other income ($ millions)
Year-over-year revenue growth (%)
Measure
Revenue growth is defined as
the percentage change in year-
over-year total revenue on a
taxable equivalent basis (TEB).
Total revenue consists of net
interest income and other income.