Bank of Montreal 2015 Annual Report Download - page 29

MD&A
MANAGEMENT’S DISCUSSION AND ANALYSIS
Non-Interest Revenue
Non-interest revenue, which comprises all revenue other than net interest income, increased $908 million or 11% on a net revenue basis to
$9,165 million. Excluding the impact of the stronger U.S. dollar, net non-interest revenue increased 7% with the majority of the growth driven by
strong performance in Wealth Management, as well as growth in the P&C businesses.
Mutual fund revenue increased $312 million and investment management and custodial fees increased $254 million, both due to good organic
growth in client assets and the contribution from six additional months of revenue from the F&C business relative to a year ago and the impact of the
stronger U.S. dollar.
Deposit and payment service charges increased $75 million, due to the impact of the stronger U.S. dollar and growth in Canadian P&C.
Lending fees increased $57 million, due to the impact of the stronger U.S. dollar and growth in lending activity in BMO Capital Markets and in
the Canadian P&C loan portfolio.
Trading revenues increased $38 million and are discussed in the Trading-Related Revenues section that follows.
Securities commissions and fees increased $19 million. These revenues consist largely of brokerage commissions within Wealth Management,
which account for about three-quarters of the total, and institutional equity trading commissions within BMO Capital Markets. The increase is due to
the stronger U.S. dollar and higher client activity in BMO Capital Markets, partially offset by lower securities commissions in Wealth Management due
to softer equity markets.
Insurance revenue decreased $246 million from a year ago, when lower long-term interest rates increased the fair value of insurance
investments, partially offset by increased underlying business premium income in 2015. The decrease in insurance revenue was largely offset by
lower insurance claims, commissions and changes in policy benefit liabilities as discussed on page 41.
Underwriting and advisory fees decreased $38 million, due to more challenging market conditions, offset in part by the impact of the stronger
U.S. dollar.
Other non-interest revenue includes various sundry amounts and increased by $186 million from the prior year, primarily due to a gain on sale of
BMO’s U.S. retirement services business and a legal settlement.
Foreign exchange, other than trading, securities gains and card fees were largely consistent with the prior year.
Table 3 on page 120 provides further details on revenue and revenue growth.
Non-Interest Revenue (1)
(Canadian $ in millions)
Change
from 2014
For the year ended October 31 2015 2014 2013 (%)
Securities commissions and fees 953 934 846 2
Deposit and payment service charges 1,077 1,002 916 8
Trading revenues 987 949 849 4
Lending fees 737 680 603 8
Card fees 460 462 461 –
Investment management and custodial fees 1,500 1,246 971 20
Mutual fund revenues 1,385 1,073 832 29
Underwriting and advisory fees 706 744 659 (5)
Securities gains, other than trading 171 162 285 6
Foreign exchange, other than trading 172 179 172 (4)
Insurance revenue (1) 1,762 2,008 1,212 (12)
Other 509 323 347 58
Total BMO reported (1) 10,419 9,762 8,153 7
BMO reported, net of CCPB 9,165 8,257 7,386 11
Insurance revenue, net of CCPB 508 503 445 1
(1) Commencing in the first quarter of 2015, insurance claims, commissions and changes in policy benefit liabilities (CCPB) are reported separately. They were previously reported as a reduction in
insurance revenue in non-interest revenue. Prior period amounts and ratios have been reclassified.
40 BMO Financial Group 198th Annual Report 2015