Bank of Montreal 2007 Annual Report Download - page 30

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Management’s Discussion and Analysis
26 BMO Financial Group 190th Annual Report 2007
MD&A
Cash and Securities-to-Total Assets
•The cash and securities-to-total assets ratio increased to 33.1%
from 27.2% in 2006, reflecting a strong liquidity position.
•Liquidity continues to be supported by broad diversification
of deposits and a strong capital base.
Capital Adequacy
•The Tier 1 Capital Ratio was strong at 9.51%, down from 10.22%
last year, but well above our minimum target of 8.0%.
•The Total Capital Ratio was 11.74%, down slightly from 11.76%
in 2006.
•BMO has $2.7 billion of excess capital relative to our targeted
minimum Tier 1 Capital Ratio.
Credit Rating (Moody’s)
•Our credit rating, as measured by Moody’s senior debt ratings,
was upgraded due to a change in its methodology. Our rating
was raised to Aa1 from Aa3 in the second quarter of 2007,
equal to or better than the rating of three other major
Canadian banks.
•Moody’s ratings outlook on BMO remains stable.
Credit Rating (Standard & Poor’s)
•Our credit rating, as measured by Standard and Poor’s (S&P)
senior debt ratings, was A+, equal to or better than the rating
of two other major Canadian banks.
•S&P’s ratings outlook on BMO remains stable.
Cash and Securities-to-Total Assets (%)
•The cash and securities-to-total assets ratio of
the Canadian peer group averaged 31.7%, down
from 33.5% in 2006.
•The cash and securities-to-total assets ratio of
the North American peer group averaged 31.5%,
up slightly from 31.2% last year.
Capital Adequacy
•The Canadian peer group average Tier 1 Capital
Ratio was 9.56% in 2007, down from 10.36%
in 2006.
Credit Rating (Moody’s)
•Moody’s median credit rating of the Canadian
peer group was Aa1 at the end of 2007, up from Aa3
at the end of 2006. The rating of each of the banks
in the peer group was upgraded as Moody’s revised
its rating methodology.
•The median rating of the North American peer
group was Aa2 at the end of 2007, up from Aa3
at the end of 2006 as the ratings of 10 of the
15 banks in the peer group were upgraded due
to the change in rating methodology.
Credit Rating (Standard & Poor’s)
•S&P’s median credit rating of the Canadian peer
group was unchanged from last year at AA–.
•The median credit rating of the North American
peer group was AA– at the end of 2007, up from A+
at the end of 2006 as the ratings of five of the
larger U.S. banks were upgraded.
20072006200520042003
27.2
33.1
26.4
25.8
29.1
20072006200520042003
10.22
9.51
10.30
9.84
9.55
Aa3 Aa3 Aa3 Aa3
Aa1
Aa2
20072006200520042003
AA– AA– AA–
A+ A+ A+ A+
AA– AA–
A+
20072006200520042003
Further details are provided on page 71.
Further details are provided on pages 57 and 58.
Further details are provided on page 58.
Further details are provided on page 58.
BMO Financial Group
Canadian peer group average
North American peer group average
Our Performance Peer Group Performance
The following Enterprise-Wide Strategy and Economic Developments sections of this Annual Report contain certain forward-looking statements. By their
nature, forward-looking statements require us to make assumptions and are subject to inherent risks and uncertainties. Please refer to the Caution
Regarding Forward-Looking Statements on page 28 of this Annual Report for a discussion of such risks and uncertainties and the material factors and
assumptions related to the statements set forth in such sections.