Bank of Montreal 2007 Annual Report Download - page 4

2007 Initiatives and Accomplishments Financial Targets
Our 2007 Results
•P&C Canada reported record net income of $1,250 million, up 9.4% due to
branch-driven sales strategy, systems and process improvements and high-impact
product offers.
•We introduced redesigned integrated branch and individual scorecards with a focus
on customer loyalty. We also reallocated resources to customer- facing positions.
•In Canada, our customer-focused operating model led to commercial revenue
growth of 6.1% and a 63 basis point increase in our market share of business
loans of $5 million and below, which increased to 19.2%.
•In the United States, we opened loan production offices in four new markets,
enhanced by our Indiana and pending Wisconsin acquisitions.
•Private Client Group reported record net income of $408 million, up 15%.
•Continued investments in our sales forces and businesses, including our
recent agreement, which is subject to regulatory approval, to purchase Pyrford
International plc, are positioning us for future growth.
• In BMO Capital Markets, excluding the $651 million after-tax impact of commodities
losses and charges related to deterioration in capital markets, earnings grew
by 25% to $1,076 million, driven by trading revenues, merger and acquisition fees
and equity underwriting.
•Increased sector focus and key hires in the U.S. market helped deepen our client
relationships, increasing revenue per sector coverage officer by 18%.
•P&C U.S. net income increased 3% to US$105 million. Excluding acquisition
integration expenses, P&C U.S. earnings increased in each quarter of 2007 relative
to the preceding quarter.
•In P&C U.S., we completed the purchase and integration of First National Bank
& Trust and entered into agreements to purchase Ozaukee Bank and Merchants
and Manufacturers Bancorporation, Inc., subject to approval of U.S. regulators and
Ozaukee Bank shareholders, increasing our presence in the Indiana market and
expanding into Wisconsin.
•Across the enterprise, we initiated efforts to improve productivity and shift
resources to the front line; captured approximately $140 million in run rate cost
reductions; and improved our cash productivity ratio, excluding significant items,
by 150 basis points.
•Increased our focus on improving our customer experience across the enterprise,
increasing front-line capacity and accessibility and improving response times in
our retail businesses, shifting to more planning-focused conversations in PCG and
creating integrated solutions for our capital market clients.
BMO Financial Group at a Glance
Earnings per Share (EPS) Growth (see page 32)
2007 Target: 5% to 10% EPS growth from a base of $5.11
2007 Performance: EPS of $4.38, down 14.3% from $5.11
a year ago. Excluding significant items2
, EPS of $5.66, up 10.8%
2008 Target3:
10%to 15% EPS growth from a base of $5.24
Return on Equity (ROE) (see page 33)
2007 Target: ROE of 18% to 20%
2007 Performance: ROE of 15.3%. Excluding significant items,
ROE of 19.8%
2008 Target: ROE of
18%to 20%
Provision for Credit Losses (see page 39)
2007 Target: Specificprovisionforcreditlossesof$400millionorless
2007 Performance: Specificprovisionforcreditlossesof$303million
2008 Target: Specific provision for credit losses of
$475 millionor less
Tier 1 Capital Ratio4(see page 57)
2007 Performance: Tier 1 Capital Ratio of 9.51%
2008 Target: Tier 1 Capital Ratio of at least
8.0%
Cash Productivity Ratio/Operating Leverage ( see page 40)
2007 Target: Improve cash productivity ratio by 100 to
150 basis points
2007 Performance: Cash productivity ratio deteriorated
473 basis points. Excluding significant items, cash productivity ratio
improved 150 basis points
2008 Operating Leverage5Target: Achieve operating leverage
of at least 2%
(1) Our 2007 targets and performance measured on a basis consistent with our targets
exclude the impact of changes in the general allowance for credit losses and
restructuring charges.
(2) Results in 2007 excluding significant items further adjusts results to exclude the
impact of commodities losses and charges related to deterioration in capital markets.
Significant items are itemized on page 32 of Management’s Discussion and Analysis.
(3) The base for our 2008 EPS and Operating Leverage targets exclude the impact of
changes in the general allowance, restructuring charges and commodities losses.
(4) Our policy was to maintain a Tier 1 Capital Ratio of at least 8.0%. It was not a financial
target in 2007.
(5) Operating leverage is the difference between the revenue and cash-based expense
growth rates.
The data above are non-GAAP measures. Please see the Non-GAAP Measures section on
page 34 of Management’s Discussion and Analysis.
We achieved one of our 2007 annual targets1. Excluding the
impact of significant items2, all annual financial targets would
have been achieved, reflecting the strength of our businesses.