Bank of Montreal 2015 Annual Report Download - page 35

MD&A
MANAGEMENT’S DISCUSSION AND ANALYSIS
Contributions to Revenue, Expenses, Net Income and Average Assets by Operating Group and by Location
(Canadian $ in
millions, except as
noted)
For the year ended
October 31
Personal and
Commercial Banking
Wealth
Management
BMO
Capital Markets
Corporate
Services
Total
Consolidated
2015 2014 2013 2015 2014 2013 2015 2014 2013 2015 2014 2013 2015 2014 2013
Operating Groups Relative Contribution to BMO’s Performance (%)
Revenue 52.9 52.4 53.6 29.7 29.3 25.1 20.0 20.4 20.1 (2.6) (2.1) 1.2 100 100 100
Expenses 47.0 48.2 48.8 27.6 26.0 23.0 20.4 21.5 20.4 5.0 4.3 7.8 100 100 100
Net income 66.5 61.6 57.3 19.3 18.0 19.7 23.4 24.9 24.8 (9.2) (4.5) (1.8) 100 100 100
Adjusted net
income 63.8 61.2 58.3 20.4 18.9 20.2 22.1 24.2 24.7 (6.3) (4.3) (3.2) 100 100 100
Average assets 43.0 44.5 43.7 4.4 4.2 4.0 43.7 43.7 44.4 8.9 7.6 7.9 100 100 100
Total Revenue
Canada 6,639 6,403 6,019 3,279 3,739 2,795 2,298 2,249 2,167 (447) (374) (262) 11,769 12,017 10,719
United States 3,609 3,151 3,000 1,016 788 910 1,379 1,261 1,064 (108) (39) 467 5,896 5,161 5,441
Other countries 1211,468 811 511 196 210 152 59 22 6 1,724 1,045 670
10,249 9,556 9,020 5,763 5,338 4,216 3,873 3,720 3,383 (496) (391) 211 19,389 18,223 16,830
Total Expenses
Canada 3,340 3,188 3,051 1,969 1,824 1,651 1,171 1,186 1,084 252 97 194 6,732 6,295 5,980
United States 2,386 2,071 1,940 818 721 599 1,116 970 842 336 326 575 4,656 4,088 3,956
Other countries –––570 295 101 199 195 156 25 48 33 794 538 290
5,726 5,259 4,991 3,357 2,840 2,351 2,486 2,351 2,082 613 471 802 12,182 10,921 10,226
Net Income
Canada 2,103 2,011 1,813 497 498 425 851 815 832 (249) (45) (173) 3,202 3,279 2,897
United States 827 658 588 127 58 206 178 235 207 (184) (120) 117 948 831 1,118
Other countries 111226 224 196 327 1 25 (29) (18) 255 223 180
2,931 2,670 2,402 850 780 827 1,032 1,077 1,040 (408) (194) (74) 4,405 4,333 4,195
Adjusted Net Income
Canada 2,107 2,015 1,818 534 516 426 851 814 832 (143) (45) (88) 3,349 3,300 2,988
United States 880 710 643 150 80 228 180 237 209 (186) (120) (26) 1,024 907 1,054
Other countries 111271 247 200 327 1 33 (29) (21) 308 246 181
2,988 2,726 2,462 955 843 854 1,034 1,078 1,042 (296) (194) (135) 4,681 4,453 4,223
Average Assets
Canada 196,739 190,053 177,015 19,907 18,368 17,438 160,547 142,859 133,513 24,973 19,407 17,737 402,166 370,687 345,703
United States 88,905 74,371 65,764 4,888 4,055 3,527 106,540 97,228 94,840 34,175 25,261 25,345 234,508 200,915 189,476
Other countries 49 39 18 4,352 2,557 1,178 23,238 19,659 18,349 78 71 707 27,717 22,326 20,252
285,693 264,463 242,797 29,147 24,980 22,143 290,325 259,746 246,702 59,226 44,739 43,789 664,391 593,928 555,431
How BMO Reports Operating Group Results
Periodically, certain business lines and units within the business lines are transferred between client and corporate support groups to more closely
align BMO’s organizational structure with its strategic priorities. In addition, revenue and expense allocations are updated to more accurately align
with current experience. Results for prior periods are restated to conform to the current presentation.
Corporate Services results reflect certain items in respect of the purchased loan portfolio, including the recognition of a portion of the credit mark
that is reflected in net interest income over the term of the purchased loans and provisions and recoveries of credit losses on the purchased portfolio.
Restructuring costs are also included in Corporate Services. Amounts excluded from adjusted results in prior years included credit-related items in
respect of the purchased performing loan portfolio, acquisition integration costs and run-off structured credit activities.
Starting 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.
Effective November 1, 2014, we adopted several new and amended accounting pronouncements issued by the International Accounting
Standards Board (IASB), which are outlined in Note 1 on page 140 of the financial statements.
BMO analyzes revenue at the consolidated level based on GAAP revenue reflected in the consolidated financial statements rather than on a
taxable equivalent basis (teb), which is consistent with our Canadian peer group. Like many banks, we analyze revenue on a teb basis at the
operating group level. This basis includes an adjustment that increases GAAP revenue and the GAAP provision for income taxes by an amount that
would raise revenue on certain tax-exempt items to a level equivalent to amounts that would incur tax at the statutory rate. The offset to the group
teb adjustments is reflected in Corporate Services revenue and income tax provisions.
Adjusted results in this section are non-GAAP and are discussed in the Non-GAAP Measures section on page 33.
46 BMO Financial Group 198th Annual Report 2015