Bank of Montreal 2003 Annual Report Download - page 32

BMO Financial Group 186th Annual Report 200328
Robert W. Pearce
President and Chief Executive Officer, Personal and Commercial Client Group – Canada
“SARS, West Nile, Mad Cow, Forest Fires, Blackouts, Hurricanes – what a year. I am particularly proud of
the role our employees have played in dealing with these challenges as both concerned members of their
local communities and compassionate bankers.”
average of our competition. This was a result of the significant change
initiatives during the year designed to improve our sales and service
capabilities over the long term. We believe these capabilities will help
drive the desired improvements in customer loyalty next year and beyond.
Leverage our position in Commercial and Business Banking to continue
to build momentum in balance sheet and market share growth.
▪ We increased our share of business banking loans under $5 million by
12 bps to 19.60% over the past 12 months, maintaining our second-place
ranking and closing the gap relative to the leader by more than 40 bps.
▪Commercial Banking’s loan growth was almost double the 6% forecasted
general market growth rate.
Extend the services offered through our online banking channel.
▪
Based on extensive customer testing and feedback, we completely
overhauled our online channel to provide simple, clear and intuitive
access to our 36 online function and service areas. This redesign was
supplemented by the introduction of e-mail money transfers, multiple
and post-dated bill payments, automated account openings and enhanced
U.S. dollar transaction functionality.
Personal and Commercial Client Group
▪ Increase our business banking market share at a higher rate than our
major competitors and reduce the gap relative to the market leader.
▪ Increase our personal banking market share relative to our major
competitors.
Group Description and Strategy in Canada
Personal and Commercial Client Group – Canada assists more than seven and a half million customers with their financial services needs. Our highly skilled
financial service providers offer a full range of products and services through 970 BMO Bank of Montreal traditional and instore branches, telephone banking,
online banking at bmo.com, and our network of more than 2,000 automated banking machines.
Our goal is to be the only financial services provider our personal and commercial banking customers ever need. We will reach this goal by providing our
customers with fully satisfying transactional sales and service and customized solutions that help them better manage all aspects of their financial affairs.
This will help us achieve our objective of delivering strong and sustainable financial performance.
2003 Group Objectives and Achievements in Canada
Drive revenue growth by improving customer retention and loyalty,
expanding existing customer relationships and acquiring new customers.
These objectives will be supported by sustaining continued improve-
ments in our distribution capabilities.
▪P&C achieved solid revenue growth of 6.6% in Canada, which represented
top-tier performance relative to our major competitors in an increasingly
competitive environment.
Continue to drive improvements in productivity.
▪
Our balanced focus on revenue growth and operational effectiveness
enabled us to improve our productivity ratio by 142 basis points (bps)
in the year to 60.3%. We had a 250 bps improvement in the last six
months relative to the same period a year ago, providing us with strong
momentum for 2004.
Continue to improve our customer loyalty scores and close the short-
fall relative to the competition in both the personal and business
banking segments.
▪ Our customer loyalty scores, as measured by an independent third party,
did not improve for personal banking; however, business banking scores
improved by 290 bps. Our loyalty scores did not improve relative to the
2004 Group Objectives in Canada
▪ Continue to focus on revenue growth and improving operational efficiency,
while building our distribution capabilities, in order to drive improvements
in productivity. We are targeting to improve our cash productivity ratio by
150 to 200 bps in 2004.
▪
Improve customer loyalty in both the personal and business banking
segments.
Business Environment and Outlook in Canada
In 2003, interest rates started to increase at the end of the second
quarter; however, these increases had been reversed by the end
of the year. As such, even the limited levels of relief from spread
compression on retail deposits in 2003 was short-lived. Low
rates, however, continued to drive exceptionally strong home
sales and high consumer demand for mortgages. Continued
weakness in equity markets over much of the year promoted
growth in interest bearing deposits; however, the increase was
significantly less than that experienced in 2002.
Looking ahead to 2004, we expect that short-term interest
rates will not rise from their current historic low levels until the
middle of the year. This will limit the expected benefits of spread
decompression on retail deposits in the year ahead. Market
growth in residential mortgages and consumer loans is expected
to moderate slightly from 2003 but remain relatively strong at
approximately 6%. Growth in retail and commercial deposits is
expected to be healthy, albeit lower than in 2003, as the economy
and equity markets improve. Growth in business investment is
expected to produce commercial loan growth of more than 4%.