Bank of Montreal 2000 Annual Report Download - page 60

36 ■Bank of Montreal Group of Companies Annual Report 2000
Review of Client Groups Performance
Assets under Management 
& Administration and 
Term Deposits ($ billions)
91
93
91
106
111
123
98 99 00
Canada United States

Normal Operating Revenue*
($ millions)
1,186 1,189
1,565
98 99 00
Financial Results
Net income of the Private Client Group was $192 million in 2000, compared with $130 million
in 1999, an increase of $62 million or 48.0%. Net income reflected growth in full-service and
direct investing businesses driven by higher client trading volumes, and increased sales of term
investments in retail investment products. The inclusion of an additional month’s results from
BMO Nesbitt Burns increased net income in 1999 by $1.5 million. The group’s net income from
normal operations increased 49.8% from the prior year.
Revenues of $1,565 million increased $320 million or 25.7%. The additional month’s results
from BMO Nesbitt Burns increased revenues in 1999 by $56 million and had the effect of reducing
reported revenue growth in 2000 by 6.0%. Revenues from normal operations increased $376 mil-
lion or 31.7%, driven by higher client-trading volumes in both full-service and direct investing,
particularly in the first half of the year. Increased term investment volumes also contributed to
higher revenues, while lower trading returns on managed futures limited revenue growth.
Non-interest expenses increased $207 million or 20.7% to $1,211 million. The additional month’s
results from BMO Nesbitt Burns increased non-interest expenses in 1999 by $53 million and
had the effect of reducing reported expense growth in 2000 by 6.7%. Expenses from normal
operations increased $260 million or 27.4%, driven by higher revenue-driven compensation,
expenses associated with business growth, including growth from acquired operations in the
United States, and strategic initiatives spending.
Assets under management and administration and term deposits grew by $37 billion or 18.8%
to $234 billion, reflecting strong growth in our client businesses and the effects of acquisitions.
1999 Compared with 1998
Net income of $130 million in 1999 decreased $7 million from 1998. Results for 1999 relative to
the prior year were adversely affected by market volatility and investor uncertainty as a result
of the rising interest rate environment in the United States. Revenues from normal operations
increased marginally as clients moved to relatively lower commission generating products.
Additional expenses were incurred to dedicate resources to the alignment of PCG’s wealth
management business.
Private Client Group ($ millions except as noted)
As at or for the year ended October 31 2000 1999* 1998*
Net interest income 504 395 407
Other income 1,061 850 779
Total Revenue 1,565 1,245 1,186
Provision for credit losses 1 ––
Non-interest expense 1,211 1,004 943
Income before provision for income taxes and goodwill 353 241 243
Income taxes 153 102 98
Amortization of goodwill, net of applicable income tax 898
Net Income 192 130 137
Average assets 4,115 3,258 3,761
Risk-weighted assets 4,704 2,776 NA
Average current loans (including securities purchased under resale agreements) 2,761 2,237 1,982
Average deposits 38,331 33,829 31,723
Assets under administration 130,937 101,953 95,218
Assets under management 69,353 60,820 57,040
Full-time equivalent staff 4,719 4,221 3,688
Basic return on equity (%) 37.4 31.9 35.7
Expense-to-revenue ratio (%) 77.4 80.6 79.5
*Restated to give effect to the current year’s organization structure and presentation changes as outlined on page 29.
NA – Not available
Outlook
While the North American economy is expected to grow at a more modest pace over the next few years,
the demographic trends continue to point to a strong and growing demand for wealth management services.
The Private Client Group is well positioned to continue to capitalize on this trend by leveraging its North
American capabilities, which are built on strong foundations in both Canada and the United States. PCG expects
to achieve growth in targeted U.S. markets by integrating recent acquisitions and exploring further opportunities.
In Canada and the United States, growth will also be achieved through placement of specialized investment
professionals in traditional retail banking locations. Providing an integrated approach to meeting clients’ needs
for wealth accumulation, growth and preservation will continue to be a strategic focus for the coming year.
*Excludes impact of additional month of BMO
Nesbitt Burns revenues in 1999.