BMO Financial Group Reports Fourth Quarter and Fiscal 2018 Results (1)

TORONTO, Dec. 4, 2018 /PRNewswire/ --

Fourth Quarter 2018

Financial Results Highlights

Fourth Quarter 2018 Compared with Fourth Quarter 2017:

-- Net income of $1,695 million, up 38%, including a benefit from the remeasurement of an employee benefit liability(2) in the current quarter; adjusted net income(1) of $1,529 million, up 17% -- EPS(3) of $2.57, up 42%; adjusted EPS(1,3 )of $2.32, up 19% -- ROE of 16.1%, up from 12.1%; adjusted ROE(1) of 14.5%, up from 12.9% -- Provision for credit losses(4) (PCL) of $175 million, compared with $202 million in the prior year -- Common Equity Tier 1 Ratio of 11.3% -- Dividend increased by $0.04 from the prior quarter to $1.00, up 8% from the prior year

Fiscal 2018 Compared with Fiscal 2017:

-- Net income of $5,450 million, up 2% including the impact of the revaluation of our U.S. net deferred tax asset in the current year(5); adjusted net income(1) of $5,979 million, up 9% -- EPS(3) of $8.17, up 3%; adjusted EPS(1,3) of $8.99, up 10% -- ROE of 13.2%, compared with 13.3%; adjusted ROE(1) of 14.6%, up from 13.7% -- PCL of $662 million(4), including a $38 million recovery on performing loans, compared with $822 million on an adjusted basis and $746 million on a reported basis

For the fourth quarter ended October 31, 2018, BMO Financial Group recorded net income of $1,695 million or $2.57 per share on a reported basis, and net income of $1,529 million or $2.32 per share on an adjusted basis.

"BMO's fourth quarter results demonstrated continued positive momentum and ended a successful year in which the bank delivered $6 billion in adjusted earnings and growth in adjusted earnings per share of 10%, led by strong performance in our Personal and Commercial banking businesses," said Darryl White, Chief Executive Officer, BMO Financial Group.

"This year, we continued to make good progress against our strategic objectives. We grew our U.S. segment at an accelerated pace, increased momentum in our Commercial banking business, adding relationships, loans and deposits, and delivered real value to our personal customers with new and enhanced digital capabilities. We've invested in and grown our businesses, and at the same time, improved efficiency, returned capital to our shareholders through increased dividends and share buybacks, and maintained a strong CET 1 ratio of 11.3%.

"Looking ahead to 2019, we will continue to build on this strong foundation and our differentiating strengths, including an integrated North American platform and deep relationships in our wealth, capital markets and P&C businesses, to deliver sustainable and competitive long-term performance," concluded Mr. White.

Reported net income in the current quarter included a benefit of $203 million after-tax ($277 million pre-tax) from the remeasurement of an employee benefit liability, which was excluded from adjusted earnings. Reported net income in the current year also includes a $425 million charge related to the revaluation of our U.S. net deferred tax asset(5) which was also excluded from adjusted earnings. Other adjusting items are included in the Non-GAAP Measures table on page 5.

(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) The current quarter included a benefit from the remeasurement of an employee benefit liability as a result of an amendment to our other employee future benefits plan for certain employees that was announced in the fourth quarter of 2018. This amount has been included in Corporate Services in non-interest expense. (3) All Earnings per Share (EPS) measures in this document refer to diluted EPS, unless specified otherwise. EPS is calculated using net income after deductions for net income attributable to non-controlling interest in subsidiaries and preferred share dividends. (4) Effective the first quarter of 2018, the bank prospectively adopted IFRS 9, Financial Instruments (IFRS 9). Under IFRS 9, we refer to the provision for credit losses on impaired loans and the provision for credit losses on performing loans. Prior periods have not been restated. Refer to the Changes in Accounting Policies section on page 121 of BMO's 2018 Annual MD&A for further details. In prior periods, changes to the collective allowance were an adjusting item. Refer to the Non-GAAP measures on page 5. (5) Reported net income in the first quarter of 2018 included a $425 million (US$339 million) charge related 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. See the Critical Accounting Estimates - Income Taxes and Deferred Tax Assets section on page 119 of BMO's 2018 Annual MD&A. Note: All ratios and percentage changes in this document are based on unrounded numbers

Return on equity (ROE) was 16.1%, up from 12.1% in the prior year and adjusted ROE was 14.5%, up from 12.9%. Return on tangible common equity (ROTCE) was 19.5%, compared with 14.8% in the prior year and adjusted ROTCE was 17.3%, compared with 15.5%.

Concurrent with the release of results, BMO announced a first quarter 2019 dividend of $1.00 per common share, up $0.04 or 4% from the prior 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.

BMO's 2018 audited annual consolidated financial statements and accompanying management discussion & analysis (MD&A), is available online at www.bmo.com/investorrelations [http://www.bmo.com/investorrelations] and at www.sedar.com [http://www.sedar.com/].

Fourth Quarter Operating Segment Overview

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