SpeechesRemarks by Mr. Russel C. Robertson, Interim Chief Financial Officer, BMO Financial Group, at the Annual Meeting of Shareholders
St. John’s, Newfoundland and Labrador, March 3, 2009
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Slide – Title Slide
I echo the Chairman and CEO in saying what a pleasure it is to be here in St. John’s and to have the opportunity to meet so many shareholders, customers and colleagues.
This morning, I’m going to report on the financial performance of our company in fiscal 2008 and the first quarter of fiscal 2009.
Before I begin, as some of my comments may be forward-looking, I would like to draw your attention to the caution regarding forward-looking statements.
Slide – Non-GAAP Measures
Slide – Fiscal 2008 Strength and Stability
From a capital perspective, we ended the year with a strong Tier 1 Capital Ratio of 9.77%, a key measure of strength and stability.
Slide – Fiscal 2008 Income Statement
Slide – Fiscal 2008 Group Net Income
Slide – Operating Groups
Slide – Q1 2009 Financial Results
Our Tier 1 capital ratio at the end of Q1 was a very strong 10.21%, up from 9.77% at the end of last year. We were active in the market this quarter, with a $1B common share issue, $450 million innovative equity issue and a $150 million preferred share issue. The actions taken through the first quarter contributed to BMO’s strong capital and liquidity position; the majority of our estimated 2009 funding requirements have already been met.
Slide – Q1 2009 Income Statement
Our provisions for credit losses were $428 million this quarter and reflect the continued impact of the weak real estate market in the United States and global recessionary pressures. Our loan book is comprised largely of more stable consumer and commercial based loans. Our Risk Management team continues to actively monitor all of our lending portfolios during these challenging times.
Expenses for the quarter were $1.84 billion, up $227 million from the prior year. This increase primarily reflects a stronger U.S. dollar and the impact of acquisitions closed during 2008.
Slide – Focus on Managing Expenses in Current Environment
Slide – Q1 2009 Group Net Income
P&C Canada net income of $325 million was up 12% from a year ago. Year over year revenue was up in all 3 of our lines of business Personal, Commercial and Cards, our market share has continued to increase in priority areas and as Bill mentioned, our loyalty scores have improved. We continue to lend to qualified borrowers and have grown both personal and commercial loan portfolios.
Net income in P&C US was $27 million US up 3.4% over the prior year. Revenue and expenses were up reflecting the Wisconsin acquisitions. Deposits and loans grew, in part due to the acquisitions, but also due to Harris’ proven track record as a strong and stable bank.
Private Client Group net income was $57 million, down $39 million from a very strong first quarter last year. Results were affected by reduced levels of managed and administered assets due primarily to the significant decline in equity markets.
BMO Capital Markets reported net income of $179 million, compared to a loss in the first quarter of 2008. There was strong performance with strength in equity and foreign exchange trading, and in our corporate banking and interest-rate sensitive businesses. Equity underwriting performed well in the quarter as we participated in a number of new issuances.
Corporate Services incurred a net loss in the quarter of $370 million with approximately one-half due to provisions for credit losses allocated to the group and the remaining half due to lower revenues due to the cost of funding and hedging activities.
Slide – Strong Capital Base and Core Earnings Power
On a personal note, I would like to specifically thank Bill, Tom Flynn and the entire management committee for their support and perspective over the past year. It has been a privilege to work with such a professional management group.
Slide – Investor Relations