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BMO Financial Group Reports Third Quarter 2019 Results
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PR Newswire
TORONTO, Aug. 27, 2019
Financial Results Highlights
Third Quarter 2019 Compared With Third Quarter 2018:
- Reported net income of $1,557 million and adjusted net income1 of $1,582 million, both up 1%
- Reported EPS2 of $2.34 and adjusted EPS1, 2 of $2.38, both up 1%
- Net revenue3 of $5,779 million, up 5%
- Provision for credit losses (PCL) of $306 million compared with $186 million in the prior year; includes provision for performing loans of $63 million
- ROE of 13.2%, compared with 14.7%; adjusted ROE1 of 13.5%, compared with 15.0%
- Common Equity Tier 1 Ratio of 11.4%
- Dividend of $1.03 unchanged from the prior quarter, up 7% from the prior year
Year-to-Date 2019 Compared With Year-to-Date 2018:
- Reported net income of $4,564 million, up 22%; adjusted net income1,4,5 of $4,642 million, up 4%
- Reported EPS2 of $6.88, up 23%; adjusted EPS1,2 of $7.00, up 5%
- Net revenue3 of $17,022 million, up 6%
- Provision for credit losses of $619 million compared with $487 million in the prior year
- ROE of 13.5%, up from 12.3%; adjusted ROE1 of 13.7% compared with 14.6%
(All dollar amounts are stated in Canadian dollars unless otherwise indicated)
TORONTO, Aug. 27, 2019 /PRNewswire/ -- For the third quarter ended July 31, 2019, BMO Financial Group (TSX: BMO) (NYSE: BMO) recorded net income of $1,557 million or $2.34 per share on a reported basis, and net income of $1,582 million or $2.38 per share on an adjusted basis.
"BMO continued to deliver strong operating results this quarter demonstrating the resilience of our diversified North American platform, with adjusted earnings per share of $2.38, good revenue growth of 5% and positive operating leverage. Our Canadian and U.S. Personal and Commercial banking businesses together delivered 9% growth in pre-provision pre-tax profit contribution with good balance momentum. Capital Markets continues to perform well, with record revenue in Investment and Corporate Banking. While provisions for credit losses increased this quarter from very low levels, overall credit quality remains strong," said Darryl White, Chief Executive Officer, BMO Financial Group.
"We remain committed to our strategic priorities, including our focus on improving efficiency, which was below 60% on an adjusted basis this quarter, and growing our diversified U.S. businesses, which contributed 34% of the bank's year-to-date adjusted earnings. Our capital position remains strong at 11.4% and we are taking actions to continue to position our businesses for growth and sustainable long-term performance," concluded Mr. White.
Return on equity (ROE) was 13.2%, compared with 14.7% in the prior year, and adjusted ROE was 13.5% compared with 15.0% in the prior year. Return on tangible common equity (ROTCE) and adjusted ROTCE were both 15.8% in the current quarter, compared with 18.0% on both a reported and an adjusted basis in the prior year.
Concurrent with the release of results, BMO announced a fourth quarter 2019 dividend of $1.03 per common share, unchanged from the preceding quarter and up $0.07 per share or 7% from the prior year. The quarterly dividend of $1.03 per common share is equivalent to an annual dividend of $4.12 per common share.
| (1) | Results and measures in this document are presented on a GAAP basis. They are also presented on an adjusted basis that excludes the impact of certain items. Adjusted results and measures are non-GAAP and are detailed for all reported periods in the Non-GAAP Measures section, where such non-GAAP measures and their closest GAAP counterparts are disclosed. |
| (2) | All Earnings per Share (EPS) measures in this document refer to diluted EPS, unless specified otherwise. EPS is calculated using net income after deducting total dividends on preferred shares and distributions on other equity instruments. |
| (3) | Net revenue is reported on a basis that nets insurance claims, commissions and changes in policy benefit liabilities (CCPB) against insurance revenue. |
| (4) | Reported net income in the first quarter of 2018 included a $425 million (US$339 million) charge due to the revaluation of our U.S. net deferred tax asset as a result of the enactment of the U.S. Tax Cuts and Jobs Act. |
| (5) | Reported net income in the second quarter of 2018 included a $192 million after-tax ($260 million pre-tax) restructuring charge, primarily related to severance, as a result of an ongoing bank-wide initiative to simplify how we work, drive increased efficiency, and invest in technology to move our business forward. The restructuring charge is included in non-interest expense in Corporate Services. |
| Note: | All ratios and percentage changes in this document are based on unrounded numbers. |
Our complete Third Quarter 2019 Report to Shareholders, including our unaudited interim consolidated financial statements for the period ended July 31, 2019, is available online at www.bmo.com/investorrelations and at www.sedar.com.
Third Quarter Operating Segment Overview
Canadian P&C
Reported net income of $648 million increased $7 million or 1% and adjusted net income of $649 million increased $8 million or 1% from the prior year. Adjusted net income excludes the amortization of acquisition-related intangible assets. Results reflect good revenue growth, largely offset by higher provisions for credit losses and higher expenses.
During the quarter, we were named Best Commercial Bank in Canada by World Finance for the fifth consecutive year. The award celebrates innovation and a commitment to customer excellence, recognizing best-in-class organizations in a variety of sectors. Earning this award for five consecutive years is reflective of the work BMO has done to develop strong customer loyalty and deepen sector strength.
U.S. P&C
Reported net income of $368 million increased $4 million or 1% and adjusted net income of $379 million increased $3 million or 1% from the prior year. Adjusted net income excludes the amortization of acquisition-related intangible assets.
Reported net income was US$277 million compared with US$279 million and adjusted net income was US$285 million compared with US$288 million in the prior year, with good revenue performance offset by higher provisions for credit losses and higher expenses.
BMO Harris Bank was recognized by Forbes' Magazine as one of America's Best Employers for Women in 2019. This ranking results from an independent survey of 60,000 U.S. employees nationwide, including 40,000 women, in companies with at least 1,000 employees in their U.S. operations.
BMO Wealth Management
Reported net income was $249 million compared with $291 million and adjusted net income was $257 million compared with $301 million in the prior year. Adjusted net income excludes the amortization of acquisition-related intangible assets. Traditional wealth reported net income of $225 million increased $23 million or 11% and adjusted net income of $233 million increased $21 million or 10% driven by higher revenue, partially offset by select investments in the business. Insurance net income was $24 million compared with $89 million in the prior year, primarily due to lower reinsurance results and unfavourable market movements in the current year relative to favourable movements in the prior year.
BMO Private Banking was named Best Private Bank in Canada by World Finance for the ninth consecutive year. In addition, Money Observer named BMO's Sustainable Opportunities Global Equity Fund the Best Smaller Fund in the Global Growth category for 2019.
BMO Capital Markets
Reported net income of $313 million increased $12 million or 4% and adjusted net income of $318 million increased $15 million or 5% from the prior year. Adjusted net income excludes the amortization of acquisition-related intangible assets and acquisition integration costs. Net income reflects good revenue performance, net of higher expenses.
BMO Capital Markets has been a long-standing leader as an advisor and underwriter in the metals and mining space. In the current quarter, BMO Capital Markets acted as a financial advisor to Newmont Goldcorp Corporation in its joint venture with Barrick Gold Corporation to combine their respective operations in Nevada, resulting in the world's largest gold producing complex. This was in addition to acting as a financial advisor to Newmont Mining Corporation in the prior quarter, in connection with Newmont's acquisition of Goldcorp Inc., which created the world's leading gold company.
Corporate Services
Reported and adjusted net loss for the quarter was $21 million compared with a reported net loss of $60 million and an adjusted net loss of $55 million in the prior year. Adjusted results exclude acquisition integration costs in the prior year. Adjusted results reflect lower expenses and higher revenue excluding teb.
Adjusted results in this Third Quarter Operating Segment Overview section are non-GAAP amounts or non-GAAP measures. Please see the Non-GAAP Measures section.
Capital
BMO's Common Equity Tier 1 (CET1) Ratio was 11.4% at July 31, 2019. The CET1 Ratio increased from 11.3% at the end of the second quarter as retained earnings growth, lower deductions and other net positive changes more than offset business growth.
Provision for Credit Losses
Total provision for credit losses was $306 million compared with $186 million in the prior year. The provision for credit losses ratio was 28 basis points compared with 19 basis points in the prior year. The provision for credit losses on impaired loans of $243 million increased $66 million from $177 million in the prior year, primarily due to higher provisions in our Canadian P&C business. The provision for credit losses on impaired loans ratio was 22 basis points compared with 18 basis points in the prior year. There was a $63 million provision for credit losses on performing loans in the current quarter compared with a $9 million provision for credit losses on performing loans in the prior year.
Caution
The foregoing sections contain forward-looking statements. Please see the Caution Regarding Forward-Looking Statements.
Regulatory Filings
Our continuous disclosure materials, including our interim filings, annual Management's Discussion and Analysis and audited consolidated financial statements, Annual Information Form and Notice of Annual Meeting of Shareholders and Proxy Circular, are available on our website at www.bmo.com/investorrelations, on the Canadian Securities Administrators' website at www.sedar.com, and on the EDGAR section of the U.S. Securities and Exchange Commission's website at www.sec.gov.
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| Bank of Montreal uses a unified branding approach that links all of the organization's member companies. Bank of Montreal, together with its subsidiaries, is known as BMO Financial Group. As such, in this document, the names BMO and BMO Financial Group mean Bank of Montreal, together with its subsidiaries. |
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Non-GAAP Measures
Results and measures in this document are presented on a GAAP basis. Unless otherwise indicated, all amounts are in Canadian dollars and have been derived from financial statements prepared in accordance with International Financial Reporting Standards (IFRS). References to GAAP mean IFRS. They are also presented on an adjusted basis that excludes the impact of certain items as set out in the table below. Results and measures that exclude the impact of Canadian/U.S. dollar exchange rate movements on our U.S. segment are non-GAAP measures (please see the Foreign Exchange section of our Third Quarter 2019 Report to Shareholders for a discussion of the effects of changes in exchange rates on our results). Management assesses performance on a reported basis and on an adjusted basis and considers both to be useful in assessing underlying ongoing business performance. Presenting results on both bases provides readers with a better understanding of how management assesses results. It also permits readers to assess the impact of certain specified items on results for the periods presented, and to better assess results excluding those items that may not be reflective of ongoing results. As such, the presentation may facilitate readers' analysis of trends. Except as otherwise noted, management's discussion of changes in reported results in this document applies equally to changes in corresponding adjusted results. Adjusted results and measures are non-GAAP and as such do not have standardized meaning under GAAP. They are unlikely to be comparable to similar measures presented by other companies and should not be viewed in isolation from, or as a substitute for, GAAP results.
Non-GAAP Measures
| (Canadian $ in millions, except as noted) | Q3-2019 | Q2-2019 | Q3-2018 | YTD-2019 | YTD-2018 |
| Reported Results | | | | | |
| Revenue | 6,666 | 6,213 | 5,794 | 19,396 | 17,012 |
| Insurance claims, commissions and changes | (887) | (561) | (269) | (2,374) | (962) |
| Revenue, net of CCPB | 5,779 | 5,652 | 5,525 | 17,022 | 16,050 |
| Total provision for credit losses | (306) | (176) | (186) | (619) | (487) |
| Non-interest expense | (3,491) | (3,595) | (3,359) | (10,643) | (10,284) |
| Income before income taxes | 1,982 | 1,881 | 1,980 | 5,760 | 5,279 |
| Provision for income taxes | (425) | (384) | (443) | (1,196) | (1,523) |
| Net income | 1,557 | 1,497 | 1,537 | 4,564 | 3,756 Werbung Mehr Nachrichten zur Bank Of Montreal CD 2 Aktie kostenlos abonnieren
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