Bank of Montreal 2015 Annual Report Download - page 28

MD&A
Net Interest Income
Net interest income for the year was $8,970 million, an increase of $509 million or 6% from 2014, due to the impact of the stronger U.S. dollar
and volume growth, partially offset by lower net interest margin and lower revenue from the purchased loan portfolio. The impact of the stronger
U.S. dollar increased net interest income by $409 million.
BMO’s average earning assets increased $51 billion or 10% in 2015, including a $32 billion increase as a result of the stronger U.S. dollar.
There was growth in all operating groups.
The main drivers of BMO’s overall net interest margin are the individual group margins, changes in the magnitude of each operating group’s
average earning assets and changes in net interest income in Corporate Services. Changes are discussed in the 2015 Operating Groups Performance
Review section starting on page 45.
Table 5 on page 122 and Table 6 on page 123 provide further details on net interest income and net interest margin.
Net interest income is comprised of earnings on assets, such as loans and securities, including interest and dividend income and BMO’s share of
income from investments accounted for using the equity method of accounting, less interest expense paid on liabilities, such as deposits.
Net interest margin is the ratio of net interest income to average earning assets, expressed as a percentage or in basis points.
Average earning assets
increased 10% and adjusted net
interest margin decreased in the
low-rate environment.
Average Earning Assets and
Net Interest Margin
Average earning assets ($ billions)
Net interest margin (%)
Adjusted net interest margin (%)
2013 20152014
579
1.55
1.55
529
1.60
1.60
485
1.65
1.79
2013 2014 2015
Net Interest Income
and Net Non-Interest Revenue
($ billions)
Net non-interest revenue
Net interest income
Adjusted net non-interest revenue
Adjusted net interest income
There was growth in adjusted
net non-interest revenue and
net interest income, reflecting
good underlying business
growth.
18.1
9.0
9.1
18.1
9.0
9.1
16.7
8.5
8.2
16.7
8.5
8.2
15.4
8.0
7.4
16.1
8.7
7.4
Net Revenue
Canadian P&C and Wealth
Management drove net revenue
growth.
Total net revenue
Total net adjusted revenue
($ billions)
20152013 2014
16.1 15.4 16.7 16.7 18.1 18.1
Net Revenue by Country (%)
Canada
United States
Other countries
The change in net revenue in
other countries is primarily due
to the F&C acquisition.
2014 20152013
62
64
33
356
30 32
65
Change in Net Interest Income, Average Earning Assets and Net Interest Margin
Net interest income (teb) Average earning assets Net interest margin
(Canadian $ in millions, except as noted)
For the year ended October 31
Change Change (in basis points)
2015 2014 % 2015 2014 % 2015 2014 Change
Canadian P&C 4,937 4,780 3 189,505 183,406 3 261 261 –
U.S. P&C 2,834 2,482 14 81,965 68,312 20 346 363 (17)
Personal and Commercial Banking (P&C) 7,771 7,262 7 271,470 251,718 8 286 289 (3)
Wealth Management 642 560 15 23,784 21,169 12 270 265 5
BMO Capital Markets 1,334 1,177 13 238,916 222,471 75653 3
Corporate Services (777) (538) 44 45,301 33,428 36 nm nm nm
Total BMO reported 8,970 8,461 6 579,471 528,786 10 155 160 (5)
U.S. P&C (US$ in millions) 2,259 2,269 – 65,319 62,443 5 346 363 (17)
nm – not meaningful
Adjusted results in this section are non-GAAP and are discussed in the Non-GAAP Measures section on page 33.
BMO Financial Group 198th Annual Report 2015 39