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Page Title

Our Performance / Peer Group Comparison

Our Performance

Total Shareholder Return (TSR)
  • BMO’s average annual five-year TSR of 13.8% declined from 18.9% a year ago, but is consistent with returns from the financial services industry and better than the broader market indices.
  • BMO’s one-year TSR of 3.7% in 2005 lowered our five-year TSR, but follows returns of 33% and 20% in the two prior years.

Further Details

Peer Group Comparison

Five-Year TSR (%)
  • BMO’s average annual five-year TSR of 13.8% was below the Canadian peer group average of 15.4% but substantially above the North American peer group average of 10.1%.
  • Performance declined from a year ago on this measure because of the exclusion of the strong returns in 2000.
Total Shareholder Return (TSR)
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Our Performance

Earnings per Share (EPS) Growth
  • EPS rose 5% to a record $4.64, after having grown strongly in 2003 and 2004. The increase was driven by business growth and a lower effective tax rate, partially offset by higher provisions for credit losses due to lower reversals and recoveries.
  • EPS grew 9% excluding changes in the general allowance for credit losses in 2005 and 2004, exceeding our 2005 target of 3% to 8% growth on this basis.

Further Details

Peer Group Comparison

EPS Growth (%)
  • BMO’s EPS growth of 5.0% in 2005 was above the Canadian peer group average of -8.2% but below the North American peer group average of 12.3%.
  • Litigation provisions recorded by some of our peers in 2004 and 2005 significantly reduced the Canadian peer group average in 2005 but increased the North American peer group average.
Earnings per Share (EPS) Growth
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Our Performance

Return on Equity (ROE)
  • ROE of 18.8% was down from 19.4% in 2004, but was the second highest in the past 20 years and above our 2005 target of 17% to 18%.

Further Details

Peer Group Comparison

ROE (%)
  • ROE of 18.8% in 2005 was well above the Canadian peer group average of 15.8% and the North American peer group average of 15.6%.
  • BMO has earned ROE of more than 13% in each of the past 16 years, the only major North American bank to do so.
Return on Equity (ROE)
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Our Performance

Net Economic Profit (NEP) Growth
  • NEP, a measure of added economic value, remained high in 2005, declining marginally because of increased capital after growing 92% in 2003 and 60% in 2004.
  • Each of the client operating groups generated higher NEP in 2005 but these increases were offset by lower NEP in Corporate Support primarily due to higher provisions for credit losses.

Further Details

Peer Group Comparison

NEP Growth (%)
  • NEP growth of -0.3% in 2005 was well above the Canadian peer group average of -27% but well below the North American peer group average of 16%, in large part due to the effect of litigation provisions of certain of our peers.
Net Economic Profit (NEP) Growth
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Our Performance

Revenue Growth
  • Revenue* increased $470 million or 5% in 2005. There was strong growth in Personal and Commercial Client Group and Private Client Group and in the fee-based businesses in Investment Banking Group.
  • The weaker U.S. dollar lowered revenue growth by 2.2 percentage points.

Further Details

Peer Group Comparison

Revenue Growth (%)
  • Revenue growth of 5.0% in 2005 was below the Canadian peer group average of 6.6% and the strong North American peer group average of 12.9%.
  • BMO’s revenue growth improved in 2005 and had outpaced the Canadian peer group average in 2003 and 2004.
Revenue Growth
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Our Performance

Expense-to-Revenue Ratio (Productivity Ratio)
  • The productivity ratio improved 140 basis points to 63.5% in 2005. The cash productivity ratio improved 120 basis points to 62.6%, following 420 basis points of total improvement in the two prior years. We had targeted an improvement of 150 to 200 basis points in the cash productivity ratio in 2005.

Further Details

Peer Group Comparison

Expense-to-Revenue Ratio (%)
  • BMO’s productivity ratio of 63.5% was better than the Canadian peer group average of 69.5% but above the North American peer group average of 60.5%. The impact of litigation provisions of certain peers increased our advantage over the average Canadian peer.
  • BMO’s productivity ratio remains second best of the Canadian peer group.
Expense-to-Revenue Ratio (Productivity Ratio)
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Our Performance

Credit Losses
  • The provision for credit losses increased $282 million. Specific provisions were $152 million higher, driven by lower reversals and recoveries, and the reduction in the general allowance was $130 million lower.
  • The provision represented 11 basis points of average net loans and acceptances, up from -7 basis points in 2004.

See Provision for Credit Losses and
Credit and Counterparty Risk sections.

Peer Group Comparison

Provision for Credit Losses as a % of Average Net Loans and Acceptances
  • BMO’s provision for credit losses of 0.11% of average net loans and acceptances was better than the Canadian peer group average of 0.17% and the North American peer group average of 0.56%.
  • BMO’s credit loss experience has been better than the Canadian peer group average in 14 of the past 15 years.
Credit Losses
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Our Performance

Impaired Loans
  • Gross impaired loans and acceptances totalled $804 million, compared with $1,119 million in 2004, representing 4.9% of equity and allowances for credit losses versus 7.5% a year ago.
  • Formations of new impaired loans and acceptances, a key driver of credit provisions, totalled $423 million, down from $607 million in 2004 and $1,303 million in 2003.

See Provision for Credit Losses and
Credit and Counterparty Risk sections.

Peer Group Comparison

Gross Impaired Loans and Acceptances as a % of Equity and Allowances for Credit Losses
  • BMO’s ratio of 4.9% was marginally better than the Canadian peer group average of 5.0% but worse than the North American peer group average of 3.0%.
  • BMO’s ratio has approximated the Canadian average but has been higher than the North American average in recent years.
Impaired Loans
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Our Performance

Liquidity Ratio
  • Cash and securities as a percentage of total assets was largely consistent with 2004 at 26.2%.
  • Liquidity remains sound and continues to be supported by broad diversification of deposits.

Further Details

Peer Group Comparison

Cash and Securities as a % of Total Assets
  • BMO’s liquidity ratio of 26.2% was below the Canadian peer group average of 32.0% and the North American peer group average of 30.8%.
  • Our liquidity ratio was higher than a year ago and remains at an acceptable level.
Cash and Securities-to-Total Assets
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Our Performance

Capital Adequacy
  • The Tier 1 Capital Ratio was 10.25%, up from 9.81% last year and above our minimum target of 8.0%.
  • The Total Capital Ratio was 11.76%, up from 11.31% in 2004.
  • BMO has $3.4 billion of excess capital relative to our targeted Tier 1 Capital Ratio.

Further Details

Peer Group Comparison

Tier 1 Capital Ratio (%)
  • Our Tier 1 Capital Ratio at 10.25% was the highest in recent years and above the Canadian peer group average of 9.95%.
  • On a U.S. regulatory basis, our Tier 1 Capital Ratio was 9.96% and was above the North American peer group average of 8.33%.
Capital Adequacy
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Our Performance

Credit Rating (Standard & Poor’s)
  • Our credit rating, as measured by Standard & Poor’s®3 (S&P) senior debt ratings, remained at AA-, matching two competitors and exceeding the rating of the three other major Canadian banks.
  • The S&P ratings outlook on BMO remains stable.

Further Details

Peer Group Comparison

Credit Rating (Standard & Poor’s)
  • BMO’s credit rating of AA-, as measured by S&P’s senior debt ratings, was in the upper half of the Canadian peer group, with two of the banks in our peer group rated as highly as BMO and three rated lower. BMO’s rating was consistent with the median rating of the North American peer group.
Credit Rating (Standard & Poor's)
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Our Performance

Credit Rating (Moody’s)
  • Our credit rating, as measured by Moody’s®4 senior debt ratings, remained at Aa3, slightly below the highest-rated Canadian bank and consistent with the highest-rated of the other major Canadian banks.
  • The Moody’s ratings outlook on BMO remains stable.

Further Details

Peer Group Comparison

Credit Rating (Moody’s)
  • BMO’s credit rating of Aa3, as measured by Moody’s senior debt ratings, was comparable to the median of the Canadian peer group but slightly higher than the North American peer group median.
Credit Rating (Moody's)
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* Revenue and income taxes in the MD&A are reported on a taxable equivalent basis. See 2005 Financial Performance Review section of the MD&A.
See Canadian and North American Peer Group Comparisons for further comments on peer group comparisons.
Certain prior year data has been restated. See Note 1 on Canadian and North American Peer Group Comparisons.


BMO Financial Group Annual Report 2005