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MANAGEMENT’S DISCUSSION AND ANALYSIS
MD&A
44 | BMO Financial Group 191st Annual Report 2008
2008 Review of Operating Groups Performance
This section includes an analysis of the financial results of our operating
groups and descriptions of their businesses, visions, strategies, strengths,
challenges, key value drivers, achievements and outlooks.
Personal and Commercial Banking (P&C) (pages 45 to 51)
Net income was $1,416 million in 2008, an increase of $33 million
or 2% from 2007.
Private Client Group (PCG) (pages 52 to 54)
Net income was $395 million in 2008, unchanged from 2007.
BMO Capital Markets (BMO CM) (pages 55 to 57)
Net income was $692 million in 2008, an increase of $275 million
or 66% from 2007.
Corporate Services, including Technology and Operations (page 58)
The net loss was $525 million in 2008, compared with a net loss of
$64 million in 2007.
The basis for the allocation of results geographically and among
operating groups is outlined in Note 27 on page 144 of the
financial statements. Certain prior-year data has been restated,
as explained on page 25.
Contributions to Revenue, Expenses, Net Income and Average Assets by Operating Group and by Location ($ millions, except as noted)
Personal and Commercial Private BMO Corporate Services, including Total
Banking Client Group Capital Markets Technology and Operations Consolidated
For the year ended
October 31 2008 2007 2006 2008 2007 2006 2008 2007 2006 2008 2007 2006 2008 2007 2006
Operating Groups Relative Contribution to BMO’s Performance (%)
Revenue 59.1 60.5 54.9 20.2 21.9 19.0 23.6 21.1 27.8 (2.9) (3.5) (1.7) 100 100 100
Expenses 52.1 50.6 51.1 21.4 21.9 21.5 25.4 23.8 25.4 1.1 3.7 2.0 100 100 100
Net income 71.6 64.9 48.0 20.0 18.5 12.8 35.0 19.6 32.0 (26.6) (3.0) 7.2 100 100 100
Average assets 38.4 39.6 44.1 2.1 2.0 2.1 58.8 57.4 52.3 0.7 1.0 1.5 100 100 100
Total Revenue
Canada 4,904 4,598 4,455 1,818 1,781 1,612 1,148 1,402 1,390 (257) (323) (143) 7,613 7,458 7,314
United States 990 908 905 219 264 276 1,217 492 1,309 (135) (152) (134) 2,291 1,512 2,356
Other countries 133 146 125 30 76 47 75 81 91 151 103 301 379 315
6,027 5,652 5,485 2,067 2,052 1,894 2,412 1,969 2,780 (301) (324) (174) 10,205 9,349 9,985
Total Expenses
Canada 2,769 2,637 2,560 1,224 1,180 1,088 884 740 780 134 231 98 5,011 4,788 4,526
United States 802 693 678 237 265 274 740 689 715 (69) 9281,710 1,656 1,695
Other countries 21 7916 11128 145 117 845173 157 132
3,592 3,337 3,247 1,477 1,446 1,363 1,752 1,574 1,612 73 244 131 6,894 6,601 6,353
Net Income
Canada 1,204 1,080 1,027 389 390 333 399 527 506 16 (54) 128 2,008 1,943 1,994
United States 96 116 117 (10) –2296 (71) 352 (566) (109) – (184) (64) 471
Other countries 116 187 133 16 56 (3) (39) (6) 25 99 65 154 252 198
1,416 1,383 1,277 395 395 341 692 417 852 (525) (64) 193 1,978 2,131 2,663
Average Assets
Canada 125,391 118,748 113,901 5,778 4,787 4,160 105,454 94,125 74,284 (128) (1,088) (416) 236,495
216,572
191,929
United States 26,924 23,477 21,890 2,385 2,299 2,379 97,054 80,580 61,220 2,897 4,794 4,828 129,260 111,150 90,317
Other countries 372 416 463 74 5631,365 32,379 26,307 43 53 109 31,854 32,853 26,885
152,687 142,641 136,254 8,237 7,091 6,545 233,873 207,084 161,811 2,812 3,759 4,521 397,609 360,575 309,131
Net Income
by Operating Group
Corporate
Services (26.6)%
BMO CM 35.0%
P&C 71.6%
PCG 20.0%
2008
Corporate
Services (3.0)%
BMO CM 19.6%
P&C 64.9%
PCG 18.5%
2007
Net Income
by Country
2008
2007
U.S. (9.3)%
Canada
101.5%
Other
countries
7. 8 %
U.S. (3.0)%
Canada
91.2%
Other
countries
11.8%
BMO CM results improved and
Corporate Services results reflect
higher provisions for credit losses.
Higher provisions for credit losses
reduced the contribution from
the United States in 2008.