Bank of Montreal 2003 Annual Report Download - page 31

This section includes an analysis of our operating groups
financial results and descriptions of their businesses, objectives,
achievements, challenges and outlooks.
Personal and Commercial Client Group (P&C) (pages 28 to 32)
Net income was $946 million in 2003, an increase of $128 million
or 16% from 2002.
Private Client Group (PCG) (pages 33 to 35)
Net income was $136 million in 2003, an increase of $65 million
or 93% from 2002.
Investment Banking Group (IBG) (pages 36 to 39)
Net income was $722 million in 2003, an increase of $121 million
or 20% from 2002.
Corporate Support, including Technology and Solutions (page 40)
Net income was $21 million in 2003, compared with a net loss of
$73 million in 2002.
Review of Operating Groups Performance
Net Income
by Operating Group
PCG 7.5%
IBG 39.6%
Corporate
Support 1.1%
P&C 51.8%
2003
Corporate Support (5.1%)
PCG 5.0%
IBG 42.4%
P&C 57.7%
2002
Net Income
by Country
U.S. 18.9%
Canada
72.8%
2003
2002
Other
countries
11.4%
U.S. 30.8%
Canada
57.8%
Other
countries
8.3%
Net Income, Revenue and Average Assets by Operating Group ($ millions, except as noted)
Personal and Commercial Private Investment Corporate Support, including Total
Client Group Client Group Banking Group Technology and Solutions Consolidated
For the year ended
October 31 2003 2002 2001 2003 2002 2001 2003 2002 2001 2003 2002 2001 2003 2002 2001
Net income
Canada 781 671 636 172 133 109 363 154 155 14 (139) (101) 1,330 819 799
United States 98 92 53 (42) (60) (7) 270 343 233 18 61 (15) 344 436 264
Other countries 67 55 59 6(2) 5 89 104 70 (11) 5274 151 162 408
Total 946 818 748 136 71 107 722 601 458 21 (73) 158 1,825 1,417 1,471
Business mix (%) 51.8 57.7 50.8 7.5 5.0 7.3 39.6 42.4 31.1 1.1 (5.1) 10.8 100.0 100.0 100.0
Revenue
Canada 3,858 3,626 3,538 1,211 1,164 1,117 1,206 918 1,074 (61) (78) (47) 6,214 5,630 5,682
United States 828 831 722 576 499 361 1,290 1,413 1,483 89 186 8 2,783 2,929 2,574
Other countries 84 70 76 8 – 12 160 217 189 22 13 330 274 300 607
Total 4,770 4,527 4,336 1,795 1,663 1,490 2,656 2,548 2,746 50 121 291 9,271 8,859 8,863
Business mix (%) 51.5 51.1 48.9 19.4 18.8 16.8 28.6 28.8 31.0 0.5 1.3 3.3 100.0 100.0 100.0
Average assets
Canada 93,561 86,923 81,135 1,512 1,612 1,849 76,327 69,265 60,095 (4,126) (5,321) (5,119) 167,274 152,479 137,960
United States 16,067 14,893 11,363 3,741 3,756 3,394 48,551 51,425 59,273 8,399 9,154 11,427 76,758 79,228 85,457
Other countries 283 235 236 29 82 51 19,571 15,797 19,067 51 169 477 19,934 16,283 19,831
Total 109,911 102,051 92,734 5,282 5,450 5,294 144,449 136,487 138,435 4,324 4,002 6,785 263,966 247,990 243,248
Basis of presentation of operating results – Expenses are matched against the revenues to which
they relate. Indirect expenses, such as overhead expenses and any revenue that may be associated
thereto, are allocated to the operating groups using appropriate allocation formulas applied on a
consistent basis. For each currency, the net income effect of funds transferred from any group with
a surplus to any group with a shortfall is at market rates for the currency and appropriate term.
Segmentation of assets by geographic region is based upon the geographic location of the unit
responsible for managing the related assets, liabilities, revenues and expenses. Provisions for credit
losses allocated to the client operating groups are based on expected losses over an economic
cycle. Differences between expected loss provisions and required periodic provisions under GAAP
are allocated to Corporate Support. Periodically, certain lines of business and units within them are
transferred between operating groups to more closely align BMO’s organizational structure and its
strategic priorities. All comparative figures are restated to give effect to the transfers. During the
year, certain enhancements were reflected in transfer pricing related to our Harris Bank businesses.
Concurrently with these enhancements, certain portfolios were transferred from the operating groups
to Corporate Support. In addition, refinements to funding charging methods and cost allocations were
implemented. All of these enhancements were largely implemented retroactively and the results
of prior periods for the operating groups and Corporate Support have been restated accordingly.
BMO Financial Group 186th Annual Report 2003 27