BMO Financial Group Reports Third Quarter 2018 Results (2)

BMO Wealth Management  Reported net income of $291 million increased $22 million or 8% and adjusted net income of $301 million increased $17 million or 6% from the prior year. Adjusted net income excludes the amortization of acquisition-related intangible assets. Traditional wealth reported net income of $202 million increased $10 million or 6% and adjusted net income of $212 million increased $5 million or 3% from the prior year, due to growth across our diversified businesses and improved equity markets, partially offset by a legal provision and technology investments. Insurance net income of $89 million increased $12 million or 15% due to business growth and a benefit from more favourable market movements in the current quarter.

BMO Private Bank was named Best Private Bank, Canada by World Finance for the eighth consecutive year, recognizing our private banking expertise and industry leading best practices.

BMO Capital Markets  Reported net income of $301 million increased $20 million or 7% and adjusted net income of $303 million increased $21 million or 7% from the prior year. Adjusted net income excludes the amortization of acquisition-related intangible assets and acquisition integration costs. Results reflect stronger revenues across both Trading Products and Investment and Corporate Banking.

BMO Capital Markets was recognized as a 2018 Greenwich Quality Leader in Canadian equity sales trading and execution service. We were also named as best institutional forex provider in North America and China by Global Banking and Finance Review for the eighth consecutive year. On August 15, 2018, BMO Capital Markets launched a pilot fixed income issuance transaction with a franchise client using blockchain technology to mirror the transaction, a first of its kind in the Canadian marketplace.

Corporate Services  Corporate Services net loss for the quarter was $62 million compared with a net loss of $44 million in the prior year. Corporate Services adjusted net loss for the quarter was $57 million compared with an adjusted net loss of $85 million in the prior year. Adjusted results exclude acquisition integration costs in both periods, as well as a decrease in the collective allowance in the prior year.

Adjusted results in this 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, 2018. The CET1 Ratio increased from 11.3% in the second quarter, driven by the impact of higher retained earnings, partially offset by higher risk-weighted assets (RWA) from business growth and share repurchases during the quarter.

Provision for Credit Losses  The total provision for credit losses was $186 million, an increase of $60 million from the prior year. Adjusted provision for credit losses, which excludes a $76 million pre-tax decrease in the collective allowance in the prior year, decreased $16 million. The provision for credit losses on impaired loans of $177 million decreased $25 million from $202 million in the prior year, primarily reflecting lower provisions in U.S. P&C. There was a $9 million provision for credit losses on performing loans in the quarter.

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 http://www.bmo.com/investorrelations, on the Canadian Securities Administrators' website at http://www.sedar.com and on the EDGAR section of the SEC's website at http://www.sec.gov.

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. 

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 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, and providing readers with a better understanding of management's perspective on our performance. 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.

Non-GAAP Measures 

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