Bank of Montreal 2007 Annual Report Download - page 135

Analysis on a teb basis neutralizes the impact of investing in tax-
exempt or tax-advantaged securities rather than fully taxable securities
with higher yields. It reduces distortions in net interest income related
to the choice of tax-advantaged and taxable investments.
Provisions for Credit Losses
Provisions for credit losses are generally allocated to each group based
on expected losses for that group over an economic cycle. Differences
between expected loss provisions and provisions required under GAAP
are included in Corporate Services.
Inter-Group Allocations
Various estimates and allocation methodologies are used in the prep-
aration of the operating groups’ financial information. We allocate
expenses directly related to earning revenue to the groups that earned
the related revenue. Expenses not directly related to earning revenue,
such as overhead expenses, are allocated to operating groups using
allocation formulas applied on a consistent basis. Operating group net
interest income reflects internal funding charges and credits on the
groups’ assets, liabilities and capital, at market rates, taking into account
relevant terms and currency considerations. The offset of the net impact
of these charges and credits is reflected in Corporate Services.
Geographic Information
We operate primarily in Canada and the United States but also have
operations in the United Kingdom, Europe, the Caribbean and Asia,
which are grouped in Other countries. We allocate our results by
geographic region based on the location of the unit responsible for
managing the related assets, liabilities, revenues and expenses,
except for the consolidated provision for credit losses, which is allocated
based upon the country of ultimate risk.
BMO Financial Group 190th Annual Report 2007 131
Notes
Our results and average assets, grouped by operating segment and geographic region, are as follows:
P&C P&C Corporate Total Teb Total United Other
(Canadian $ in millions) Canada U.S. PCG BMO CM Services (1) (teb basis) adjustments (GAAP basis) Canada States countries
2007
Net interest income $ 3,065 $ 730 $ 613 $ 974 $ (359) $ 5,023 $(180) $ 4,843 $ 3,745 $ 973 $ 305
Non-interest revenue 1,678 178 1,441 995 214 4,506 – 4,506 3,836 582 88
Total Revenue 4,743 908 2,054 1,969 (145) 9,529 (180) 9,349 7,581 1,555 393
Provision for credit losses 323 35 3 77 (85) 353 – 353 257 99 (3)
Non-interest expense 2,670 696 1,427 1,565 243 6,601 – 6,601 4,785 1,653 163
Income before taxes and non-
controlling interest in subsidiaries 1,750 177 624 327 (303) 2,575 (180) 2,395 2,539 (197) 233
Income taxes 500 63 216 (98) (312) 369 (180) 189 546 (150) (27)
Non-controlling interest in subsidiaries ––– – 75 75 – 75 55 20 –
Net Income $ 1,250 $ 114 $ 408 $ 425 $ (66) $ 2,131 $ – $ 2,131 $ 1,938 $ (67) $ 260
Average Assets $119,164 $23,477 $ 7,091 $207,084 $3,759 $360,575 $ – $360,575 $216,572 $111,150 $32,853
Goodwill (As at) $ 106 $ 628 $ 313 $ 91 $ 2 $ 1,140 $ – $ 1,140 $ 423 $ 717 $ –
2006
Net interest income $ 2,941 $ 740 $ 569 $ 773 $ (152) $ 4,871 $ (127) $ 4,744 $ 3,709 $ 1,016 $ 146
Non-interest revenue 1,639 166 1,324 2,007 105 5,241 – 5,241 3,686 1,375 180
Total Revenue 4,580 906 1,893 2,780 (47) 10,112 (127) 9,985 7,395 2,391 326
Provision for credit losses 314 30 3 79 (250) 176
– 176 181 (3) (2)
Non-interest expense 2,597 681 1,342 1,602 131 6,353 – 6,353 4,520 1,695 138
Income before taxes and non-
controlling interest in subsidiaries 1,669 195 548 1,099 72 3,583 (127) 3,456 2,694 699 190
Income taxes 527 80 193 239 (195) 844 (127) 717 650 207 (13)
Non-controlling interest in subsidiaries ––– – 76 76 – 76 55 21 –
Net Income $ 1,142 $ 115 $ 355 $ 860 $ 191 $ 2,663 $ – $ 2,663 $ 1,989 $ 471 $ 203
Average Assets $ 114,364 $ 21,890 $ 6,545 $ 161,811 $ 4,521 $ 309,131 $ – $ 309,131 $ 191,929 $ 90,317 $ 26,885
Goodwill (As at) $ 93 $ 582 $ 323 $ 98 $ 2 $ 1,098 $ – $ 1,098 $ 410 $ 688 $ –
2005 (2)
Net interest income $ 2,829 $ 732 $ 578 $ 966 $ (199) $ 4,906 $ (119) $ 4,787 $ 3,584 $ 1,186 $ 136
Non-interest revenue 1,490 165 1,459 1,775 163 5,052 – 5,052 3,435 1,454 163
Total Revenue 4,319 897 2,037 2,741 (36) 9,958 (119) 9,839 7,019 2,640 299
Provision for credit losses 269 30 4 98 (222) 179
– 179 190 15 (26)
Non-interest expense 2,481 659 1,529 1,480 183 6,332 – 6,332 4,323 1,881 128
Income before taxes and non-
controlling interest in subsidiaries 1,569 208 504 1,163 3 3,447 (119) 3,328 2,506 744 197
Income taxes 493 84 190 313 (87) 993 (119) 874 800 246 (53)
Non-controlling interest in subsidiaries ––– – 58 58 – 58 36 22 –
Net Income $ 1,076 $ 124 $ 314 $ 850 $ 32 $ 2,396 $ – $ 2,396 $ 1,670 $ 476 $ 250
Average Assets $ 105,963 $ 21,055 $ 7,061 $ 157,234 $ 5,189 $ 296,502 $ – $ 296,502 $ 188,124 $ 82,789 $ 25,589
Goodwill (As at) $ 93 $ 568 $ 327 $ 100 $ 3 $ 1,091 $ – $ 1,091 $ 411 $ 680 $ –
(1) Corporate Services includes Technology and Operations.
(2) Amounts have been restated to reflect the change in accounting policy described
in Notes 3 and 22.
Prior years have been restated to give effect to the current year’s organization structure
and presentation changes.