What s Next? SMITH BARNEY CITIGROUP 2005 FINANCIAL S ERVICES - PowerPoint PPT Presentation

What’ s Next? SMITH BARNEY CITIGROUP 2005 FINANCIAL S ERVICES CONFERENCE KAREN MAIDMENT S enior Execut ive Vice-President and Chief Financial Officer JANUARY 27 • 05 0

1 I N V E S T O R C O M M U N I T Y P R E S E N T A T I O N – J A N U A R Y 2 0 0 5 FORWARD-LOOKING S TATEMENTS CAUTION REGARDING FORWARD-LOOKING STATEMENTS Bank of Montreal's public communications often include written or oral forward-looking statements. S tatements of this type are included in this present ation, and may be included in filings with Canadian securities regulat ors or the U.S . S ecurities and Exchange Commission, or in other communications. All such statement s are made pursuant to the 'safe harbor' provisions of the United S tates Private S ecurities Lit igation Reform Act of 1995. Forward-looking st atements may involve, but are not limited to, comment s with respect to our obj ectives for 2005 and beyond, our strat egies or future actions, our targets, expectat ions for our financial condition or share price, and the results of or outlook for our operations or for the Canadian and U.S . economies. By their nat ure, forward-looking st atements require us to make assumptions and are subj ect t o inherent risks and uncertainties. There is significant risk that predictions and ot her forward-looking statements will not prove to be accurate. We caution readers of this document not to place undue reliance on our forward-looking st atements as a number of factors could cause actual future result s, conditions, actions or event s to differ materially from the targets, expect ations, estimates or int entions expressed in the forward-looking statements. The future outcomes that relate to forward-looking statements may be influenced by many factors, including but not limited to: global capit al market activities; int erest rate and currency value fluct uations; t he effect s of war or terrorist activities; the effect s of disease or illness that impact on local, national or international economies; the effects of disrupt ions to public infrastructure, such as t ransportation, communications, power or water supply disruptions; industry and worldwide economic and political conditions; regulatory and statutory developments; the effect s of competition in the geographic and business areas in which we operate; management actions; and t echnological changes. We caution that the foregoing list of factors is not exhaustive and that when relying on forward-looking statements to make decisions with respect to Bank of Montreal, investors and others should carefully consider these factors, as well as other uncertainties and potential event s, and the inherent uncertainty of forward-looking statements. Bank of Montreal does not undertake t o update any forward-looking statement, whether written or oral, that may be made, from time to time, by the organization or on its behalf. Investor Relations Susan Payne 416-867-6656 susan.payne@bmo.com Steven Bonin 416-867-5452 steven.bonin@bmo.com Fax 416-867-3367 Email: investor.relations@bmo.com

2 I N V E S T O R C O M M U N I T Y P R E S E N T A T I O N – J A N U A R Y 2 0 0 5 Personal & Commercial Client Group WHO IS BMO? � Over 8.5 million customers across Canada & the U.S . � 4 th largest bank in Canada � Over 1,000 branches in Canada & the U.S . $24 1 billion) � Market Cap: C$29 billion (US � Close to 2,000 automated banking machines in Canada � Assets: C$265 billion (US $216 billion) � F2004 Net Income: C$2.35 billion Investment Banking Group � Financial solutions across the entire balance sheet � M&A and restructuring advisory F2004 Net Income by LOB 2 services C$MM � Industry leading research, sales, and trading capability Investment Banking $856 Private Client Group (Wealth) Wealth � Full service and direct $231 investing, Private Banking, Investment products $1,003 � C$80 billion in AUM and Personal & C$157 billion in AUA Commercial 1 Exchange rate: 1.2252 2 Residual due to corporate areas

3 I N V E S T O R C O M M U N I T Y P R E S E N T A T I O N – J A N U A R Y 2 0 0 5 U.S. BUSINESSES ACCOUNT FOR 28% of Revenue and 19% of Net Income Personal & Commercial Client C$MM Group (U.S.) U.S. U.S. � 32% of U.S . revenue in F2004 Revenue Net Income � 9% of Total Bank revenue in F2004 $436 $2,650 Investment Banking Group (U.S.) � 49% of U.S . revenue in F2004 $6,962 $1,915 � 14% of Total Bank revenue in F2004 Private Client Group (U.S.) Canada/Other Canada/Other � 21% of U.S . revenue in F2004 � 6% of Total Bank revenue in F2004

4 I N V E S T O R C O M M U N I T Y P R E S E N T A T I O N – J A N U A R Y 2 0 0 5 BMO’S GROWTH STRATEGY Grow profits in our Canadian franchise AND Improve and selectively expand our U.S . franchise

5 I N V E S T O R C O M M U N I T Y P R E S E N T A T I O N – J A N U A R Y 2 0 0 5 FISCAL 2004 TARGETS All Targets Met or Exceeded Performance Measure F2004 Target F2004 Actual EPS Growth 10-15% 29% C$67MM C$500MM or less Provision for Credit Losses (before C$170MM reduction (revised to C$100MM or less) to General Allowance) 150-200 bps 155 bps Cash Productivity Ratio improvement improvement Return On Equity 16-18% 19.4% Tier 1 Capital Minimum 8% 9.81%

6 I N V E S T O R C O M M U N I T Y P R E S E N T A T I O N – J A N U A R Y 2 0 0 5 PERFORMANCE SCORECARD Canadian North American Reported basis (i.e. including non-recurring items) Peer Group Peer Group Primary Performance Fiscal Fiscal Fiscal Fiscal Measure B/W Average 2004 2003 2004 2003 Diluted EPS Growth T 2 W 5 T 2 B 8 Return on Equity T 2 B 5 B 5 B 9 Net Economic Profit Growth W 3 B 7 T 2 T 2 Revenue Growth B 3 B 9 B 3 B 10 Cash Productivity T 2 T 2 W 8 W 12 Provisions / (Loans+Acceptances) T 2 T 2 T 2 T 2 Total S hareholder Return (5 year) W 6 B 6 W 4 T 3 Number of Banks Included 6 15 17 T = Top Tier; B = Better than Average; W = Worse than Average

7 I N V E S T O R C O M M U N I T Y P R E S E N T A T I O N – J A N U A R Y 2 0 0 5 STRONG RETURNS TO SHAREHOLDERS S hare Price (C$) 5 year TSR 57.55 CAGR = 15% 49.33 18.9% 38.10 12.9% 35.25 33.86 28.33 99 00 01 02 03 04 Year-end Year-end F2003 F2004 BMO:TSX

8 I N V E S T O R C O M M U N I T Y P R E S E N T A T I O N – J A N U A R Y 2 0 0 5 BMO IS A HIGH-RETURN, LOW-RISK BANK RR TSR* (% ) 1999 – 2003 2003 Lehman Bros. 11.7 HSBC Holding 21.1 HSBC Holding 10.1 Fleet Boston 13.4 Citigroup 10.1 Hang Seng 9.2 BNS 8.6 BMO 9.1 Barclays 8.5 Westpac 6.9 BMO 8.5 Wells Fargo 6.7 Royal Bank of Scot. 8.3 U.S. Bancorp 5.3 Sociètè Gènèrale 7.8 Bank One 4.1 ANZ Banking Group 7.4 Banca Intesa 3.9 Merrill Lynch 7.3 Sun Trust 3.4 * Risk-adjusted Relative Total S hareholder Return (RR TSR) adjusts for risk and the impact of national markets S ources: TF Datastream; Boston Consulting Group Analysis

9 I N V E S T O R C O M M U N I T Y P R E S E N T A T I O N – J A N U A R Y 2 0 0 5 ECONOMIC AND FINANCIAL SERVICES TRENDS Canada � Firm consumer spending and business investment, but weak exports due to strong C$ � S hort-term interest rates, though up modestly in 2005, will continue to stimulate the economy � S table-to-higher rates will flatten the yield curve U.S. � Interest rates will continue to increase at a modest pace, flattening the yield curve � Housing market will cool as rates rise, but strong capital spending will support business loans � Consolidation will continue in response to deregulation

10 I N V E S T O R C O M M U N I T Y P R E S E N T A T I O N – J A N U A R Y 2 0 0 5 FISCAL 2005 TARGETS Performance Measure F2005 Target F2004 Actual EPS Growth 3-8% * 29% C$67 MM C$400 MM or less (before C$170 MM Provision for Credit Losses reduction to General Allowance) 150-200 bps 155 bps Cash Productivity Ratio improvement improvement Return On Equity 17-18% 19.4% Tier 1 Capital Minimum 8% 9.81% * 2004 EPS Base of $4.21

11 I N V E S T O R C O M M U N I T Y P R E S E N T A T I O N – J A N U A R Y 2 0 0 5 2005 STRATEGIC PRIORITIES 1. Achieve Financial Targets with a particular focus on productivity 2. Drive revenue growth by providing a superior client experience, earning a larger share of customers’ business 3. Continue to improve U.S. performance 4. Accelerate growth in the U.S. both organically and through acquisitions 5. Grow Net Income in Canada through operational efficiency and improved market share, accelerating our growth in commercial banking and wealth management 6. Build a high-performance organization by developing our people, living our values and being an employer of choice 7. Maintain our world-class foundation of leading governance, sound risk management, productive systems and excellent after sales service