Bank of Montreal 2007 Annual Report Download - page 49

MD&A
2007 Group Objectives and Achievements
Improve the customer experience through business process
improvements and leveraging our previous investments in people
and technology.
•We continually improve branch processes to enhance the customer
experience and increase front-line capacity. Our technology platforms
have dramatically shortened the time needed to complete certain
branch processes and we are using the time saved to improve the
number and quality of our customer conversations.
•
With our re-energized, customer-centric approach, we have enhanced
several areas to provide easier multi-branch banking, more appropriate
debit and payment limits and improved service in our direct channels.
Continue expanding and upgrading our branch network
to better serve our customers in key markets.
•In 2007, we added 22 branches and instores in high-growth
areas, redeveloped 31 others and closed 8 due to amalgamations.
We are focused on opening branches in attractive growth
markets and maximizing benefits from recently opened branches.
Investing in branch infrastructure at a measured pace will ensure
that customer service and relationship-based customer experiences
can flourish.
Drive revenue growth and improve customer loyalty through
a robust performance management system.
•Our branch and commercial scorecards were redesigned in 2007 and
are at the heart of our enhanced performance management capabilities.
We set targets starting at the branch level for both revenue growth
and customer loyalty, and manage performance at every level of our
organization. This degree of focus and alignment has accelerated
progress toward our overall financial goals for 2007 and the future.
Improve performance in the small business segment.
•We restructured to create three new commercial districts in Toronto,
Montreal and Vancouver, each managed by experienced senior leaders.
Along with our improved performance management system, the
implementation of commercial scorecards will balance alignment with
overall goals and measures relevant to the commercial banking busi-
ness. Our expertise in mid-market banking, sound risk management
and historical strength in the commercial market will drive our growth.
We are beginning to see a turnaround in the small business banking
segment with market share in the $1 million and below category
having improved 45 bps to 18.73% at the end of 2007.
Canadian Business Environment and Outlook
Strengthening employment rates and sustained consumer confidence
had a positive impact on personal banking in 2007. Residential mortgage
balances continued to grow at a brisk pace, as the demand for housing
remained strong, supported by rising incomes and steady, relatively
low interest rates. Total personal deposits have reflected an upward trend
in personal savings rates. Personal loan and credit card balances have
also increased, benefiting from the strong employment market and
consumer confidence. In commercial banking, robust business activity
contributed to continued growth in business loans with some easing
in commercial deposit levels.
Looking forward to 2008, we anticipate some moderation in
growth. In personal banking, declining rates of growth in employment
and income are likely to dampen growth in personal deposits, personal
loans and credit card loans. Recent sharp increases in home prices
are likely to restrain demand and slow residential mortgage growth.
In commercial banking, non-residential mortgages and business
loans are expected to remain at levels similar to 2007 and business
deposit growth is expected to slow.
200720062005
42.6 44.0
3.4
7.0
4.5
46.0
Deposits * and Deposit Growth
Commercial ($ billions)
Total deposit growth (%)
Personal ($ billions)
Deposit growth was fuelled by
commercial deposits.
* Including PCG term balances, total deposits
were $84 billion, $80 billion and $78 billion
in 2007, 2006 and 2005.
200720062005
106.3 116.4
9.5
5.6
7.9 123.0
Loans* and Loan Growth
(includes acceptances and securitized loans)
Commercial ($ billions)
Total loan growth (%)
Personal and Cards ($ billions)
Growth moderated due to our focus
on branch-originated mortgages.
*Loans on balance sheet were $116 billion,
$111 billion and $103 billion in 2007,
2006 and 2005.
200720062005
57.2
7. 3
56.6
6.0
56.1
3.6
Cash Productivity Ratio
and Revenue Growth
Cash productivity ratio (%)
Revenue growth (%)
Productivity improved as a result
of both revenue growth and
expense containment.
200720062005
28.6
23.3
26.7
6.2
26.7
9.4
Net Income Growth
and Return on Equity (ROE)
ROE (%)
Net income growth (%)
Revenue growth and expense
containment drove higher net
income and high ROE.
BMO Financial Group 190th Annual Report 2007 45
2008 Group Objectives
•Continue to enhance the customer experience and create
a differentiated position in the Canadian market.
•
Launch attractive and compelling customer offers that drive results.
•
Further improve our performance management systems to deliver
stronger revenue growth and greater customer loyalty.
•Continue to invest in our sales and distribution network so we
have the best opportunities to attract more business.
•Redesign core processes and technologies to achieve a high-
quality customer experience, create capacity for customer-facing
employees and reduce costs.