BMO Financial Group Reports First Quarter 2019 Results (1)

TORONTO, February 26, 2019 /PRNewswire/ --

Financial Results Highlights

First Quarter 2019 Compared With First Quarter 2018:

-- Net income[1]of $1,510 million, up 55%; adjusted net income[2]of $1,538 million, up 8%

-- Net revenue[3],[4]of $5,591 million, up 6%

-- EPS[5]of $2.28, up 59%; adjusted EPS[2],[5]of $2.32, up 10%

-- ROE of 13.6%; adjusted ROE[2]of 13.9% unchanged from the prior year

-- Provision for credit losses (PCL) of $137 million, compared with $141 million in the prior year

-- Common Equity Tier 1 Ratio of 11.4%

For the first quarter ended January 31, 2019, BMO Financial Group recorded net income of $1,510million or $2.28per share on a reported basis, and net income of $1,538million or $2.32per share on an adjusted basis.

"BMO's good performance this quarter reflects the benefits of our diversified and attractive business mix which continues to deliver sustainable growth, with adjusted earnings per share up 10% from last year. Our North American P&C banking businesses performed very well, particularly across our U.S. platform and in commercial banking, reflecting strong performance against solid economic fundamentals in Canada and the United States and a credit environment that remains strong and stable, while our market-sensitive businesses were impacted by the challenging revenue environment earlier in the quarter," said Darryl White, Chief Executive Officer, BMO Financial Group.

"Across our businesses, we are accelerating growth on both sides of the balance sheet, by serving more customers, expanding relationships and delivering more value while maintaining our consistent and disciplined risk and underwriting practices. We continue to invest in our digital and innovation agenda for the benefit of our customers and to create sustainable efficiency and positive operating leverage, which we achieved once again this quarter. We are well-positioned to build on our performance through the year," concluded Mr. White.

Reported net income in the first quarter of 2018 included a $425 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.

Return on equity (ROE) was 13.6%, upfrom 9.4% in the prior year and adjusted ROE was 13.9%, unchanged from the prior year. Return on tangible common equity (ROTCE) was 16.5%, compared with 11.5% in the prior year and adjusted ROTCE was 16.6%, down from 16.7% in the prior year.

Concurrent with the release of results, BMO announced a second quarter 2019 dividend of $1.00 per common share, unchanged from the preceding quarter and up $0.07 per share or 8%from the prior year. The quarterly dividend of $1.00 per common share is equivalent to an annual dividend of $4.00 per common share.

Our complete First Quarter 2019 Report to Shareholders, including our unaudited interim consolidated financial statements for the period ended January 31, 2019, is available online athttp://www.bmo.com/investorrelation [http://www.bmo.com/investorrelations ]and athttp://www.sedar.com.

(1) Reportednetincomeinthefirstquarterof2018includeda$425 millionchargeduetotherevaluationofourU.S.netdeferredtax assetasaresultoftheenactmentoftheU.S.TaxCutsandJobs Act.

(2) ResultsandmeasuresinthisdocumentarepresentedonaGAAP basis.Theyarealsopresentedonanadjustedbasisthatexcludes theimpactofcertainitems.Adjustedresultsandmeasuresare non-GAAPandaredetailedforallreportedperiodsintheNon-GAAP Measuressection, wheresuchnon-GAAPmeasuresandtheirclosest GAAPcounterpartsaredisclosed.

(3) Netrevenueisreportedonabasisthatnetsinsuranceclaims, commissionsandchangesinpolicybenefitliabilities(CCPB) againstinsurancerevenue.

(4) Effectivethefirstquarterof2019,thebankadoptedIFRS15, RevenuefromContractswithCustomers(IFRS15)andelectedto retrospectivelypresentpriorperiodsasifIFRS15hadalways beenapplied.Asaresult, loyaltyrewardsandcashpromotion costsoncardspreviouslyrecordedinnon-interestexpenseare presentedasareductioninnon-interestrevenue.Inaddition, certainout-of-pocketexpensesreimbursedtoBMOfromcustomers havebeenreclassifiedfromareductioninnon-interestexpenseto non-interestrevenue.RefertotheChangesinAccountingPolicies sectiononpage23ofour FirstQuarter2019ReporttoShareholders.

(5) AllEarningsperShare(EPS)measuresinthisdocumentreferto dilutedEPS, unlessspecifiedotherwise.EPSiscalculatedusing netincomeafterdeductingtotalpreferredsharedividends.

Note:Allratiosandpercentagechangesinthisdocumentarebasedonunrounded numbers.

First Quarter Operating Segment Overview

Canadian P&C Reported net income of $647 million increased $1 million and adjusted net income of $648 million increased $2 million from the prior year. Adjusted net income excludes the amortization of acquisition-related intangible assets. Results reflect revenue growth, partially offset by higher expenses and higher provisions for credit losses. Prior year results benefited from a gain.

During the quarter, we received the Top Digital Innovation Award at the 2018 Banking Technology Awards for BMO QuickPay, a new and simple way for customers to pay their bills, utilizing optical character recognition and machine learning capabilities. BMO QuickPay is currently in pilot and is expected to be rolled out by the end of the year. It is designed to help customers avoid missing bill payments and make their day-to-day financial lives easier.

U.S. P&C Reported net income of $444 million increased $134 million or 43%, and adjusted net income of $454 million increased $133 million or 42% from the prior year. Adjusted net income excludes the amortization of acquisition-related intangible assets.

Reported net income of US$332 million increased US$85 million or 34%, and adjusted net income of US$340 million increased US$84 million or 33% from the prior year largely due to strong revenue growth, the full quarter benefit from U.S. tax reform and lower provisions for credit losses, partially offset by higher expenses.

During the quarter, BMO Harris Bank was featured on Forbes annual America's Best Employers for Diversity 2019 list, which is based on an independent survey from a sample of more than 50,000 U.S.-based employees. In addition, we enhanced our digital capabilities by launching our new digital banking online and mobile experience to a large portion of our U.S. customers. This new platform will play an important role as we adapt to the continuously evolving needs of our employees and customers.

BMO Wealth Management Reported net income of $239 million compared with $266 million in the prior year, and adjusted net income of $249 million compared with $276 million. Adjusted net income excludes the amortization of acquisition-related intangible assets. Traditional wealth reported net income of $174 million and adjusted net income of $184 million both decreased $10 million or 6%, reflecting weaker global market conditions. Insurance net income of $65 million was down from a higher level in the prior year.

BMO Global Asset Management was recognized at the 2018 Thomson Reuters Lipper Fund Awards with three BMO Exchange Traded Funds (ETFs) and three BMO Mutual Funds claiming top honours for providing consistently strong, risk-adjusted performance, relative to their peers.

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