Our Customers’ Success Defines Our Success

You must have the Flash 8 plugin or higher to view this video. Download the latest Flash plugin now, or read the video transcript using the link below.

View Transcript (new window)

Setting higher standards

The financial services industry has changed for the better. The establishment of new rules under which financial institutions will operate has not only been necessary, it is right – both for the overall stability of financial markets and for the customers we serve.

At BMO, we’re positioned for success in this environment. It’s not just a matter of meeting new regulations. Customers are changing the rules of the game as well. People’s relationship with money has evolved, so too has their relationship with their financial institution.

This is why the theme running through our annual report is: competing in a changing world. It’s changing because people are reassessing their idea of value. They want the freedom to do their banking everywhere. They expect a higher standard of social responsibility from companies than ever before. And in a marketplace where change itself has become so profound, a company’s vision is only as strong as its people.


Strong performance in 2010

BMO’s financial and operating results in 2010 reflect the success of our 38,000 employees in meeting our customers’ needs and striving for higher performance. Net income increased to $2.8 billion, driven in large part by strong revenue growth of 10.4%. BMO’s return on equity continued to improve, reaching 14.9%.

The year was characterized by significant achievement across each of our operating groups. This performance is demonstrated by our pre-tax pre-provision earnings, which reached $4.6 billion, the highest in the history of the bank. We achieved these results while maintaining financial strength and flexibility, managing impaired loans, capitalizing on unique expansion initiatives and investing in future growth.

BMO is a company deeply rooted in the economic advancement of North America

This was accomplished against a dramatic backdrop including G20 initiatives to stimulate growth; continued regulatory efforts to address systemic vulnerabilities and to develop new policies; the formulation of new Basel III capital rules; and active legislative agendas in both developed and emerging economies. At BMO, we view these changes to the operating environment as an opportunity – and source of advantage – as we move ahead with our strategic priorities.

Making money make sense

We have a brand promise common to every business – our commitment to customers and their success is tangible. BMO has a clear strategy and strong execution capabilities. Everything we’re undertaking – from customer offers to the 7,640 employees across North America who completed customer experience and sales training this year – lines up to support our brand: Making money make sense.

Our ability to stay ahead of our customers’ changing needs is reflected in BMO’s internal advocacy. It has never been higher: 95% of our employees said they personally recommend our products and services and 98% said they believe in the strategy.

Our strong balance sheet, liquidity, capital position, reputation and people reinforce our ability to react to opportunities.

The bank’s strong balance sheet, liquidity, capital position, reputation and people reinforce our ability to react to opportunities.

Creating opportunity

Customers’ preferences have shifted. None of us want to forget the lessons of the last three years. We’re all paying more attention to our finances. This re-emergence of clients’ appreciation of consistency and value is something that plays to our core strengths. And it is what BMO is delivering.

We are very proud of the performance of our personal and commercial bank in Canada. Even for a company as diversified as ours, it is a barometer of the health of our organization. We are building BMO Bank of Montreal through investments in front-line staff and the expansion of our branch network, online and customer contact capabilities. We intend to keep this business growing. In so doing, we not only create opportunities for our customers, but also for our other businesses.

Our intense focus on personal and commercial banking in North America reflects our commitment to leverage one of the bank’s greatest strengths: our brand and strong reputation. Making money make sense speaks directly to customers as individuals – whether they’re acting for themselves, or as entrepreneurs, or as the leaders of the companies and institutions with which we do business. Maintaining a balance when it comes to controlling spending, growing savings, borrowing smartly and investing wisely is important. Our role at BMO is to help customers make sense of these things. It is where customers most value the help of a bank and where we are most capable – combining our understanding of customers with our capital – to take full advantage of this unique market position.

A clear strategy rests on a strong foundation

2010 confirms we are on the right path. We are well positioned with a clear strategy, and a brand promise common to every business. As we reach important milestones our aspirations remain ambitious. There is much yet to be accomplished.

Dividends Declared ($ per share)

BMO Financial Group has the longest-running dividend payout record of any company in Canada, at 182 years. BMO common shares provided a dividend yield of 4.65% at October 31, 2010.

We invest with a view to meeting future demands – improving our processes and technology to provide our clients with the products, services and tools that will ensure their success.

Supporting our vision is a belief in the importance of both maintaining strong core capabilities and investing in the quality and knowledge of the people who are providing guidance and advice to our customers. We are maintaining a sharp focus on improving our processes and technology to provide our clients with the products, services and tools that will ensure their success in a fast-changing environment. We are intensifying collaboration North-South and across groups to provide meaningful efficiency and scale for the benefit of customers.

As the context in which we compete changes, strong core capabilities are critical to ensure reliability and resilience. And we are continuing to invest with a view to meeting future demands. This will ensure that BMO remains uniquely positioned to grow.

The progress of the bank relies on its employees and their ability and commitment to deliver against these different elements. Every member of the team – from senior management to investment professionals to front-line bankers – must be confident and capable. We continue to invest in the skills necessary to sustain successful long-term growth – and we are active in ensuring we have the best learning and development programs available.

Generating returns for shareholders

Our focus is entirely on the things that will define the next phase of our growth and translate our brand promise into a new set of capabilities – to support our customers in fulfilling their ambitions in new ways… ways, perhaps, they have yet to envisage.

I believe that the potential returns from investing in our businesses today are better than at any time in the past decade. In a changing world, it is likely that there will be consolidation in financial markets that will create opportunities for BMO. Equally important will be consistent investment in new distribution points, in finding new ways to reach customers, and in product and service innovation that empowers those customers to make informed decisions – always with the sure sense they’re in control.

BMO is a company deeply rooted in the economic success of North America, serving customers for 193 years. For our shareholders, we are committed to building the value of the bank and demonstrating consistent growth in common share dividends over time. Our strategic path is clear; we are focused on performance in the year ahead and confident in our plans to invest in future growth.

The opportunity to serve our customers is a privilege for me and for our entire team. I thank our employees for their contributions in 2010 and pass on to you, our shareholders, sincere thanks for your support.

signature: William A. Downe

William A. Downe
President and Chief Executive Officer