3 T H I R D Q U A R T E R R E P O R T 2 0 0 3 I am pleased to - PDF document

F O R T H E P E R I O D E N D E D J U L Y 3 1 , 2 0 0 3 3 T H I R D Q U A R T E R R E P O R T 2 0 0 3 I am pleased to present BMO Financial Group’s Third Quarter 2003 Report to Shareholders. T O N Y C O M P E R , C H A I R M A N A N D C H I E F E X E C U T I V E O F F I C E R A U G U S T 2 6 , 2 0 0 3 Annual Meeting 2004 The next Annual Meeting of Shareholders will be held on Tuesday, February 24, 2004 in Toronto, Ontario.

F I N A N C I A L H I G H L I G H T S (Canadian $ in millions except as noted) For the three months ended For the nine months ended July 31, April 30, January 31, October 31, July 31, Change from July 31, July 31, Change from 2003 2003 2003 2002 2002 July 31, 2002 2003 2002 July 31, 2002 Income Statement Highlights Total revenue (teb) (a) $ 2,334 $ 2,208 $ 2,318 $ 2,289 $ 2,143 8.9% $ 6,860 $ 6,570 4.4% Provision for credit losses 90 120 150 160 160 (43.8) 360 660 (45.5) Non-interest expense 1,485 1,484 1,573 1,604 1,488 (0.2) 4,542 4,426 2.6 Net income 504 409 399 398 346 45.6 1,312 1,019 28.7 Common Share Data ($) Diluted earnings per share $ 0.95 $ 0.77 $ 0.75 $ 0.75 $ 0.65 $ 0.30 $ 2.47 $ 1.93 $ 0.54 Diluted cash earnings per share (b) 0.99 0.81 0.79 0.79 0.70 0.29 2.59 2.04 0.55 Dividends declared per share 0.33 0.33 0.33 0.30 0.30 0.03 0.99 0.90 0.09 Book value per share 21.91 21.34 21.32 21.07 20.74 1.17 21.91 20.74 1.17 Closing share price 44.65 40.10 41.30 38.10 35.26 9.39 44.65 35.26 9.39 Total market value of common shares ($ billions) 22.2 19.9 20.4 18.8 17.3 4.9 22.2 17.3 4.9 As at July 31, April 30, January 31, October 31, July 31, Change from 2003 2003 2003 2002 2002 July 31, 2002 Balance Sheet Highlights Assets $ 257,685 $ 257,928 $ 254,606 $ 252,864 $ 250,113 3.0% Net loans and acceptances 147,275 150,724 148,770 149,596 145,763 1.0 Deposits 170,902 165,435 162,655 161,838 159,200 7.4 Common shareholders’ equity 10,918 10,580 10,552 10,377 10,199 7.0 For the three months ended For the nine months ended July 31, April 30, January 31, October 31, July 31, July 31, July 31, 2003 2003 2003 2002 2002 2003 2002 Primary Financial Measures (%) (c) Average annual five year total shareholder return 7.3 3.8 7.5 7.9 7.4 7.3 7.4 Diluted earnings per share growth 46.2 35.1 5.6 +100 (21.7) 28.0 (27.4) Diluted cash earnings per share growth (b) 41.4 37.3 5.3 +100 (20.5) 27.0 (27.1) Return on equity 18.0 15.2 14.3 14.6 12.9 15.8 13.0 Cash return on equity (b) 18.8 15.9 15.1 15.4 13.8 16.6 13.7 Net economic profit (NEP) growth (b) +100 +100 6.7 +100 (54.6) +100 (64.8) Revenue growth 8.9 (0.6) 5.1 17.3 (4.1) 4.4 (4.9) Non-interest expense-to-revenue ratio 63.7 67.2 67.9 70.1 69.4 66.2 67.4 Cash non-interest expense-to-revenue ratio (b) 62.6 66.0 66.6 68.8 68.1 65.0 66.5 Provision for credit losses-to-average loans and acceptances (annualized) 0.24 0.32 0.39 0.43 0.44 0.32 0.60 Gross impaired loans and acceptances-to-equity and allowance for credit losses 12.91 14.88 14.66 15.16 13.55 12.91 13.55 Cash and securities-to-total assets ratio 28.6 26.3 25.4 24.9 24.2 28.6 24.2 Tier 1 capital ratio 9.21 9.10 9.05 8.80 8.72 9.21 8.72 Credit rating AA– AA– AA– AA– AA– AA– AA– Other Financial Ratios (% except as noted) (c) Twelve month total shareholder return 30.6 9.8 18.4 16.2 (11.0) 30.6 (11.0) Dividend yield 3.0 3.3 3.2 3.1 3.4 3.0 3.4 Price-to-earnings ratio (times) 13.6 13.5 14.9 14.0 18.0 13.6 18.0 Market-to-book value (times) 2.04 1.88 1.94 1.81 1.70 2.04 1.70 Net economic profit ($ millions) (b) 220 140 122 127 84 482 241 Return on average assets 0.74 0.64 0.61 0.62 0.55 0.67 0.55 Net interest margin 1.84 1.96 1.94 1.92 1.95 1.91 2.01 Non-interest revenue-to-total revenue 46.5 43.3 45.2 46.3 43.2 45.0 43.6 Non-interest expense growth (0.2) 0.5 7.5 10.7 4.7 2.6 4.9 Total capital ratio 12.09 12.02 12.49 12.23 12.25 12.09 12.25 Tier 1 capital ratio – U.S. basis 8.79 8.62 8.57 8.32 8.30 8.79 8.30 Equity-to-assets ratio 5.4 5.3 5.4 5.3 5.3 5.4 5.3 All ratios in this report are based on unrounded numbers. standardized meanings under generally accepted accounting principles and are unlikely to be (a) Reported on a taxable equivalent basis (teb) as explained in the Revenue section on page 5. comparable to similar measures used by other companies. (b) Refer to footnote 2 on page 1 for an explanation of cash results. Securities regulators require (c) For the period ended, or as at, as appropriate. that corporations caution readers that earnings as adjusted for such items do not have