Bank of Montreal 2004 Annual Report Download - page 96

BMO Financial Group Annual Report 200492
Notes to Consolidated Financial Statements
Notes
Impaired loans foreclosed during the year ended October 31, 2004
totalled $20 million, which resulted in the reversal of $4 million
of the allowance for credit losses.
Our average gross impaired loans and acceptances were
$1,530 million for the year ended October 31, 2004 ($2,202 million
in 2003; $2,150 million in 2002). Our average impaired loans,
net of the specific allowance, were $1,002 million for the year
ended October 31, 2004 ($1,442 million in 2003; $1,351 million
in 2002).
During the years ended October 31, 2004, 2003 and 2002,
we would have recorded additional interest income of $68 million,
$78 million and $172 million, respectively, if we had not classified
any loans as impaired. Cash interest income on impaired loans
of $1 million, $8 million and $2 million was recognized during the
years ended October 31, 2004, 2003 and 2002, respectively.
Change in Accounting Policy
Effective May 1, 2003, property or other assets that we have received
from borrowers to satisfy their loan commitments are recorded
at fair value and are classified as either held for use or held for
sale according to management’s intention. Fair value is determined
based on market prices where available. Otherwise they are
determined using other methods, such as analysis of discounted
cash flows or market prices for similar assets. Prior to May 1, 2003,
property or other assets that we received from borrowers to satisfy
their loan commitments were classified as impaired loans and
recorded at the lower of the amount we expected to recover and
the outstanding balance of the loan at the time of the transfer.
The impact of this change in accounting was not significant.
Impaired loans, including customers’ liability under acceptances and the related allowances, are as follows:
Gross impaired Specific Net of specific
(Canadian $ in millions) amount allowance allowance
2004 2003 2004 2003 2004 2003
Residential mortgages $ 125 $ 142 $ 5 $ 5 $ 120 $ 137
Consumer instalment and other personal loans 37 46 2 235 44
Business and government loans 957 1,730 291 598 666 1,132
Total $ 1,119 $ 1,918 $ 298 $ 605 $ 821 $ 1,313
By geographic region (1):
Canada $ 465 $ 602 $ 132 $ 207 $ 333 $ 395
United States 560 1,052 134 281 426 771
Other countries 94 264 32 117 62 147
Total $ 1,119 $ 1,918 $ 298 $ 605 $ 821 $ 1,313
Loans, including customers’ liability under acceptances and allowance for credit losses by category, are as follows:
Gross Specific General Net
(Canadian $ in millions) amount allowance allowance amount
2004 2003 2004 2003 2004 2003 2004 2003
Residential mortgages $ 56,444 $ 52,095 $ 5 $ 5 $ 13 $ 11 $ 56,426 $ 52,079
Credit card, consumer instalment and other personal loans 28,589 25,070 2 2360 329 28,227 24,739
Business and government loans 50,020 51,889 291 598 595 800 49,134 50,491
Securities purchased under resale agreements 17,148 13,276 – –– – 17,148 13,276
Subtotal 152,201 142,330 298 605 968 1,140 150,935 140,585
Customers’ liability under acceptances 5,355 5,611 – – 42 40 5,313 5,571
Total $ 157,556 $ 147,941 $ 298 $ 605 $ 1,010 $ 1,180 $ 156,248 $ 146,156
By geographic region (1):
Canada $ 116,867 $ 102,424 $ 132 $ 207 $ 630 $ 800 $ 116,105 $ 101,417
United States 38,934 43,533 134 281 380 380 38,420 42,872
Other countries 1,755 1,984 32 117 – – 1,723 1,867
Total $ 157,556 $ 147,941 $ 298 $ 605 $ 1,010 $ 1,180 $ 156,248 $ 146,156
(1) Geographic region is based upon the country of ultimate risk.
Loans are presented net of unearned income of $45 million and $56 million as at October 31, 2004
and 2003, respectively.
Restructured loans of $23 million were classified as performing during the year ended October 31, 2004
($14 million in 2003). No restructured loans were written off in the years ended October 31, 2004
and 2003.
Included in loans as at October 31, 2004 are $41,571 million ($46,220 million in 2003) of loans
denominated in U.S. dollars and $312 million ($337 million in 2003) of loans denominated
in other foreign currencies.
(1) Geographic region is based upon the country of ultimate risk. Fully secured loans with past due amounts between 90 and 180 days that we have not classified as
impaired totalled $95 million as at October 31, 2004 ($50 million in 2003).