Bank of Montreal 2004 Annual Report Download - page 41

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BMO Financial Group Annual Report 2004 37
MD&A
Continue to focus on revenue growth and improving operational
efficiency, while building our distribution capabilities, in order
to drive improvements in productivity. We set a target to
improve our cash productivity ratio by 150 to 200 bps in 2004.
•Revenue grew 1.5% and cash productivity improved by
90 bps. Revenue was reduced by a $65 million adjustment to
credit card fees associated with rising reward redemption
rates in our customer loyalty rewards program. Excluding
that adjustment, revenue would have increased 3.1%
and cash productivity would have improved by 190 bps.
•Revenue growth was affected by lower margins, driven by
the low interest rate environment and competitive pres-
sures. However, our focus on increasing revenues resulted
in strong balance sheet growth. Loans and acceptances,
after adding back the effects of securitizations, increased
$6.6 billion or 7.0% from 2003 and personal and com-
mercial deposits grew $3.4 billion or 9.1%.
Improve customer loyalty in both the personal and
commercial banking segments.
•Our customer loyalty scores, as measured by independent
research firms, improved in personal banking but were
unchanged in commercial banking in 2004 after improving
2004 Objectives and Achievements
steadily since 1999. Our service teams are now better able
to consistently address customer needs across all channels.
This was accomplished with the help of our customer
relationship management capabilities and Optimizer,
the leading-edge workflow management tool we released
to our personal banking sales and service staff in 2004.
Increase our business banking market share at a higher rate
than our major competitors and reduce the gap relative to the
market leader.(1)
•We continued to rank second in business banking market
share for business loans less than $5 million. However,
our business banking market share decreased 45 bps
to 19.15% and the gap relative to the leader increased.
This is an important business that we are focused on
continuing to develop.
Increase our personal banking market share relative to our
major competitors.(1)
•
Personal banking market share decreased 20 bps to 13.19%.
This was primarily due to a decline in market share in our
personal loan segment, despite 7.8% loan growth.*
(1) Year-over-year comparisons have been affected by competitor reclassifications in 2004.
*Includes securitized loans.
Deposits and Deposit Growth
in Canada
34.5
37.3
40.7
21.4
8.1 9.1
Growth (%)
Deposits ($ billions)
2002 2003 2004
Loans
and Loan Growth
in Canada*
87.7
93.6
100.2
7.6
6.7 7.0
Growth (%)
Loans ($ billions)
200420032002
P&C Canada Cash Productivity
Ratio and Revenue Growth
62.3
61.0
60.1
2.6
7.1
1.5
Revenue growth (%)
Cash productivity ratio (%)
200420032002
P&C Canada Net Income Growth
and Return on Equity (ROE)
26.8
29.1 28.4
3.4
17.3
5.9
Net income growth (%)
ROE (%)
200420032002
There was continued strong growth
in deposits.
Loan growth was solid and consistent.
*Includes acceptances and securitized loans
There were further productivity
improvements as revenue increased
and expenses were contained.
Net income growth was solid, with
consistently strong ROE.
What’s Next? Priorities for 2005
•Continue to focus on revenue growth while building our
distribution capabilities.
•Improve our cash productivity ratio by at least 150 bps.
•Improve customer loyalty in both the personal and
commercial banking segments.
During the year we created and enhanced various products:
•A number of simple and easy-to-purchase insurance
offerings, including accident and sickness, term life and
commercial loan life insurance.
•A new Canadian Tire
®
9
Commercial MasterCard for
commercial customers.
•Our Homeowner ReadiLine personal line of credit that
provides customers with easier access to credit.
•The attractiveness of our personal banking and credit card
offerings with the introduction of our Mosaik WestJet Air
Miles MasterCard. Gold card customers can deduct their
$70 annual fee from their personal banking service charges.
•A redesigned, fully integrated online banking web site to
make online banking easier and faster for our customers.
The new site provides a single point of entry and one
convenient menu that lets customers conduct transactions,
obtain product and rate information and access all our
other online services.
•
Maintain our personal banking market share and
increase our business banking market share relative
to our major competitors.
•Introduce further enhancements to our sales and service
delivery model to better meet the needs of our customers.
Other Achievements