Bank of Montreal 2007 Annual Report Download - page 26

Management’s Discussion and Analysis
Management’s Discussion and Analysis
22 BMO Financial Group 190th Annual Report 2007
MD&A
BMO’s President & Chief Executive Officer and Executive Vice-President Finance and Treasurer and Acting Chief Financial Officer have signed a
statement outlining management’s responsibility for financial information in this Annual Report. The statement, which can be found on page 90,
also explains the roles of the Audit Committee and Board of Directors in respect of financial information in the Annual Report.
Management’s Discussion and Analysis (MD&A) comments on BMO’s operations and financial condition for the years ended October 31, 2007
and 2006. The MD&A should be read in conjunction with our consolidated financial statements for the year ended October 31, 2007. The MD&A com-
mentary is as of November 27, 2007, except for peer group comparisons, which are as of December 6, 2007. Unless otherwise indicated, all amounts
are in Canadian dollars and have been derived from financial statements prepared in accordance with Canadian generally accepted accounting
principles (GAAP).
Certain prior year data has been reclassified to conform with the current year’s presentation, including reclassifications arising from transfers
of certain businesses between operating groups.
Regulatory Filings
Our continuous disclosure materials, including our interim filings, annual MD&A, audited consolidated financial statements, Annual Information Form and
Notice of Annual Meeting of Shareholders & Proxy Circular, are available on our web site at www.bmo.com, on the Canadian Securities Administrators’ web site
at www.sedar.com and on the EDGAR section of the SEC’s web site at www.sec.gov. BMO’s President and Chief Executive Officer and Executive Vice-President
Finance and Treasurer and Acting Chief Financial Officer each certify the appropriateness and fairness of BMO’s annual and interim consolidated financial state-
ments and MD&A and Annual Information Form, and the effectiveness of BMO’s disclosure controls and procedures and internal control over financial reporting.
Index
23 Who We Are provides an overview of BMO Financial Group, outlines
our 2007 and 2008 targets, explains the links between our annual
targets and our overall vision and presents key performance data to
help answer the question “Why invest in BMO?”
24 Financial Performance and Condition at a Glance provides a
snapshot of our results on 11 key financial performance and condition
measures used by management to monitor performance relative
to our peer groups.
27 Enterprise-Wide Strategy outlines our enterprise-wide strategy and
the context in which it is developed, as well as our progress in relation
to our strategic priorities.
28 Caution Regarding Forward-Looking Statements warns readers
about the limitations and inherent risks and uncertainties of forward-
looking information.
28 Factors That May Affect Future Results outlines certain industry and
company-specific factors that investors should consider when assessing
BMO’s earnings prospects.
30 Economic Developments includes commentary on the impact of
economic developments on our businesses in 2007 and expectations
for the Canadian and U.S. economies in 2008.
Value Measures reviews financial performance on the four key
measures that assess or most directly influence shareholder return.
31 Total Shareholder Return
32 Earnings per Share Growth
33 Return on Equity
33 Net Economic Profit Growth
34 2007 Financial Performance Review provides a detailed review
of BMO’s consolidated financial performance by major income state-
ment category. It also includes explanations of the use of non-GAAP
measures and the impacts of business acquisitions and sales and
changes in foreign exchange rates.
Operating Group Review outlines the visions and strategies of our
operating groups and the major business risks they face, along with
their strengths, competencies and key performance drivers. It also
includes a summary of their achievements in 2007, their priorities for
2008 and a review of their financial performance for the year.
42 Summary
43 Personal and Commercial Banking
44 Personal and Commercial Banking Canada
46 Personal and Commercial Banking U.S.
49 Private Client Group
52 BMO Capital Markets
55 Corporate Services, including Technology and Operations
Financial Condition Review discusses our assets and liabilities by
major balance sheet category. It reviews our capital adequacy and our
approach to ensuring we optimize our capital position to support our
business strategies and maximize returns to our shareholders. It also
discusses off-balance sheet arrangements and financial instruments.
55 Summary Balance Sheet
57 Enterprise-Wide Capital Management
59 Off-Balance Sheet Arrangements
60 Financial Instruments
Accounting Matters and Disclosure and Internal Control reviews
critical accounting estimates and changes in accounting policies
in 2007 and for future periods. It also discusses our evaluation of
disclosure controls and procedures and internal control over
financial reporting.
61 Critical Accounting Estimates
63 Changes in Accounting Policies in 2007
63 Future Changes in Accounting Policies
64 Disclosure Controls and Procedures and Internal Control
over Financial Reporting
64 Pre-Approval of Shareholders’ Auditors’ Services and Fees
65 Enterprise-Wide Risk Management outlines our approach to
managing the key financial risks and other related risks we face.
74 Review of Fourth Quarter Performance, Quarterly Earnings Trends
and 2006 Financial Performance Review provide commentary on
results for relevant periods other than fiscal 2007.
78 Supplemental Information presents many useful financial tables
and provides more historical detail.