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BMO Financial Group 190th Annual Report 2007 9
environment. Excluding these items, net income rose to $1,076 million, an
increase of 25% with favourable results in a number of our capital markets
businesses, including strong activity in mergers and acquisitions, equity
underwriting and lending fees and commissions.
Foreign Exchange
Net income in 2007 was minimally impacted by the significant Canadian and
U.S. foreign exchange rate fluctuations, reduced by $2 million in 2007, compared
to a $24 million reduction in 2006. The minimal impact in 2007 was in part
due to the hedging transactions we enter into at the beginning of each quarter.
Capital
We ended the year with a strong Tier 1 Capital Ratio of 9.51%, which remained
comfortably ahead of our policy of at least 8%. This strength in capital provides
BMO with the financial flexibility to invest in our businesses as opportuni-
ties arise.
Summary
The financial results in 2007 demonstrated the strength, diversity and continued
momentum of BMO’s businesses. We continued to deliver consistent returns,
with a reported return on equity above 13% for the 18th consecutive year, the
only bank in our North American peer group to achieve this, and we continue
to deliver to shareholders through a Canadian industry-leading dividend payout
ratio. We enter 2008 with significant momentum in our businesses, providing
us with confidence in achieving our targets.
Dividends and Total Return
BMO’s total dividends declared of $2.71 per
common share in 2007 increased 20% from
2006 and represents a Canadian industry-
leading payout ratio of 47%, excluding the
impact of 2007 significant items, which is
within our target 45% to 55% payout range.
By increasing our dividends declared for
15 consecutive years, BMO has demonstrated
our commitment to balancing returns to
shareholders while maintaining a strong
capital base that supports ongoing invest-
ments in growing our businesses.
20072006200520042003
1.34
1.59
1.85
2.26
2.71
Dividends Declared
per Share ($ Cdn)
Dividends declared have increased
at an average annual rate of 17.7%
over the past five years.
200720062005200420032002
100.00
133.43
160.06 166.02
206.02194.09
$100 Invested
As shown on the accompanying
graph, over the past five
years, BMO’s total return
to common shareholders has
reached $94.09 for every
$100 invested in 2002.