BMO Financial Group Reports Fourth Quarter and Fiscal 2019 Results

Toronto (ots/PRNewswire) - Financial Results Highlights

Fourth Quarter 2019 Compared With Fourth Quarter 2018:

- Net income4,5 of $1,194 million, down 30%, reflecting a
restructuring charge in the current quarter and a benefit from the
remeasurement of an employee benefit liability in the prior year;
adjusted net income1 of $1,607 million, up 5%
- EPS2 of $1.78, down 31%; adjusted EPS1 of $2.43, up 5%
- Revenue, net of CCPB3,4, of $5,752 million, up 5%; revenue, net of
adjusted CCPB1, of $5,777 million, up 5%
- Provision for credit losses (PCL) of $253 million compared with
$175 million in the prior year; includes PCL on performing loans of
$22 million
- ROE of 9.9%, compared with 16.1%; adjusted ROE1 of 13.5%, compared
with 14.5%
- Common Equity Tier 1 Ratio of 11.4%
- Dividend increased $0.03 to $1.06, up 6% from the prior year

Fiscal 2019 Compared With Fiscal 2018:

- Net income4,5 of $5,758 million, up 6%; adjusted net income1 of
$6,249 million, up 4%
- EPS2 of $8.66, up 6%; adjusted EPS1 of $9.43, up 5%
- Revenue, net of CCPB3,4, of $22,774 million, up 6%
- PCL of $872 million compared with $662 million in the prior year;
includes PCL on performing loans of $121 million
- ROE of 12.6% compared with 13.3%; adjusted ROE1 of 13.7% compared
with 14.6%

- For the fourth quarter ended October 31, 2019, BMO Financial Group (TSX:BMO)
(NYSE:BMO) recorded net income of $1,194 million or $1.78 per share on a
reported basis, and net income of $1,607 million or $2.43 per share on an
adjusted basis.

"BMO finished the year with very strong performance, delivering $1.6 billion in
adjusted earnings and adjusted earnings per share of $2.43 in the fourth
quarter, up 5% year-over-year, with pre-provision pre-tax earnings growth of
11%, driven by positive operating leverage in all businesses and particularly
strong operating performance in Personal and Commercial banking in both Canada
and the U.S.," said Darryl White, Chief Executive Officer, BMO Financial Group.

"Our results for the year reflect the strength and quality of our diversified
businesses. Adjusted earnings per share were $9.43, up 5% from last year. We
continued to make significant progress on our strategic priorities and delivered
annual earnings growth of 23% in our U.S. business. With a clear bank-wide focus
on disciplined expense management, we continued to improve our overall
efficiency ratio with 130 basis points of improvement in the past two years and
good momentum throughout the year. We have a number of initiatives underway,
including today's announcement of a restructuring charge, that will serve to
accelerate our momentum and help us meet our efficiency objectives over the
long-term. In addition, we gained market share in key areas, including
commercial lending and retail deposits, in Canada and the U.S. Our credit
performance remains good and we ended the year with a strong CET1 capital ratio
of 11.4%."

"Looking ahead to 2020, we will continue to execute on our clearly articulated
strategic priorities and objectives. We remain focused on building on the
foundation of our integrated North American platform to grow our customer base
and broaden our customer relationships. I am confident that we are
well-positioned to deliver sustainable and resilient profitability through an
evolving economic environment," concluded Mr. White.

Reported net income in the current quarter included a restructuring charge of
$357 million after-tax ($484 million pre-tax), related to severance and a small
amount of real estate-related costs, to continue to improve our efficiency,
including accelerating delivery against key bank-wide initiatives focused on
digitization, organizational redesign and simplification of the way we do
business. Reported net income also included a $25 million pre-tax and after-tax
reinsurance adjustment for the net impact of major reinsurance claims from
Japanese typhoons that were incurred after our announced decision to wind down
our reinsurance business.

Return on equity (ROE) was 9.9%, compared with 16.1% in the prior year and
adjusted ROE was 13.5%, compared with 14.5% in the prior year. Return on
tangible common equity (ROTCE) was 11.9%, compared with 19.5% in the prior year
and adjusted ROTCE was 15.7%, compared with 17.3% in the prior year.

Concurrent with the release of results, BMO announced a first quarter 2020
dividend of $1.06 per common share, up $0.03 per share or 3% from the prior
quarter and up $0.06 per share or 6%from the prior year. The quarterly dividend
of $1.06 per common share is equivalent to an annual dividend of $4.24 per
common share.

BMO's 2019 audited annual consolidated financial statements and accompanying
Management Discussion and Analysis (MD&A) are available online at
www.bmo.com/investorrelations and at www.sedar.com.

(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) All Earnings
per Share
(EPS) measures
in this
document refer
to diluted
EPS, unless
specified
otherwise. EPS
is calculated
using net
income after
deducting
total
dividends on
preferred
shares and
distributions
on other
equity
instruments.
(3) On a basis
that nets
insurance
claims,
commissions
and changes in
policy benefit
liabilities
(CCPB) against
insurance
revenue.
(4) Q4-2019
reported net
income
included a
$357 million
after-tax
($484 million
pre-tax)
restructuring
charge,
related to
severance and
a small amount
of real
estate-related
costs, to
continue to
improve our
efficiency,
including
accelerating
delivery
against key
bank-wide
initiatives
focused on
digitization,
organizational
redesign and
simplification
of the way we
do business.
The current
quarter
reported net
income also
included a $25
million
(pre-tax and
after-tax) net
impact of
major
reinsurance
claims from
Japanese
typhoons that
were incurred
after our
announced
decision to
wind down our
reinsurance
business. The
restructuring
charge was
included in
non-interest
expense in
Corporate
Services and
the
reinsurance
adjustment was
included in
CCPB in BMO
Wealth
Management.
(5) In fiscal
2018, we
recorded 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 in the
first quarter;
a $192 million
after-tax
($260 million
pre-tax)
restructuring
charge,
primarily
related to
severance, in
the second
quarter; and a
benefit of
$203 million
after-tax
($277 million
pre-tax) from
the
remeasurement
of an employee
benefit
liability, as
a result of an
amendment to
our other
employee
future
benefits plan
for certain
employees, in
the fourth
quarter. The
second quarter
charge and
fourth quarter
benefit were
included in
non-interest
expense in
Corporate
Services. For
more
information on
the tax
charge, refer
to the
Critical
Accounting
Estimates -
Income Taxes
and Deferred
Tax Assets
section on
page 119 of
BMO's 2018
Annual Report.
Note: All
ratios and
percentage
changes in
this
document
are based
on
unrounded
numbers.

Fourth Quarter Operating Segment Overview

Canadian P&C

Reported net income was $716 million, an increase of $42 million or 6% and
adjusted net income was $716 million, an increase of $41 million or 6% from the
prior year. Adjusted net income excludes the amortization of acquisition-related
intangible assets. Results reflect strong revenue growth, partially offset by
higher provisions for credit losses and higher expenses.

During the quarter, we launched a new digital lending solution, the first of its
kind from a major Canadian financial institution. Customers are now able to
apply for a personal line of credit by completing a short, user-friendly digital
application and receive a decision on their loan application in minutes. We also
became the first Canadian financial institution to offer retail credit card
customers the option to report a lost or stolen card through online banking.
These new digital services and innovations reflect BMO's commitment to creating
digital solutions that better support our customers.

U.S. P&C

Reported net income was $393 million, an increase of $21 million or 6% and
adjusted net income was $404 million, an increase of $21 million or 5% from the
prior year. Adjusted net income excludes the amortization of acquisition-related
intangible assets.

Reported net income was US$297 million, an increase of US$12 million or 4% and
adjusted net income was US$305 million, an increase of US$11 million or 4%,
primarily due to higher revenue and lower provisions for credit losses,
partially offset by a favourable U.S. tax item in the prior year and higher
expenses.

During the quarter, the Federal Deposit Insurance Corporation released its
annual deposit market share report. We improved our market share ranking within
our core footprint, which includes Illinois, Kansas, Wisconsin, Missouri,
Indiana and Minnesota, from fourth to third place and maintained our strong
ranking of second place in the Chicago and Milwaukee markets.

BMO Wealth Management

Reported net income was $267 million, an increase of $48 million or 22% and
adjusted net income was $301 million, an increase of $72 million or 31% from the
prior year. Adjusted net income in the current quarter excludes the net impact
of major reinsurance claims and the amortization of acquisition-related
intangible assets in both the current and prior year. Traditional Wealth
reported net income was $237 million, an increase of $45 million or 24% and
adjusted net income was $246 million, an increase of $44 million or 22%, due to
the impact of a legal provision in the prior year, higher deposit and loan
revenue and higher fee-based revenue. Insurance reported net income was $30
million, an increase of $3 million or 9%, and adjusted net income of $55 million
increased $28 million, primarily due to benefits from changes in investments to
improve asset liability management.

For the second consecutive year, BMO Global Asset Management was named the best
manager in liability-driven investment by Financial News.

BMO Capital Markets

Reported net income was $269 million, compared with $298 million and adjusted
net income was $280 million, compared with $309 million in the prior year.
Adjusted net income excludes the amortization of acquisition-related intangible
assets and acquisition integration costs. Higher revenue was more than offset by
higher provisions for credit losses and higher expenses.

On September 25, 2019, BMO Capital Markets celebrated the 15th anniversary of
the Equity Through Education Trading Day, a BMO Capital Markets initiative that
donates all institutional equity trading commissions earned that day across
North America and Europe to charities helping underprivileged students through
scholarships, bursaries and other academic programs. This year, we raised $1.6
million, bringing the total amount raised since the introduction of the program
in 2005 to more than $21 million, and helping over 5,000 students. This is one
of the many initiatives that continue to highlight BMO's Purpose to Boldly Grow
the Good in business and life.

Corporate Services

Reported net loss was $451 million, compared with a reported net income of $134
million in the prior year. Adjusted net loss was $94 million, compared with an
adjusted net loss of $65 million in the prior year. Adjusted results in the
current quarter exclude a restructuring charge of $357 million after-tax.
Adjusted results in the prior year exclude a $203 million after-tax benefit from
the remeasurement of an employee benefit liability and acquisition integration
costs. Adjusted results decreased, primarily due to lower revenue excluding
taxable equivalent basis (teb) adjustments, partially offset by lower expenses.

Adjusted results in this Fourth Quarter Operating Segment Overview section are
non-GAAP amounts or non-GAAP measures. Please refer to the Non-GAAP Measures
section.

Capital

BMO's Common Equity Tier 1 (CET1) Ratio was 11.4% as at October 31, 2019. The
CET1 Ratio was unchanged from the prior quarter as retained earnings growth,
which absorbed the restructuring charge, was offset by higher risk-weighted
assets from business growth.

Provision for Credit Losses

Total provision for credit losses was $253 million, an increase of $78 million
from the prior year. The provision for credit losses ratio was 23 basis points,
compared with 18 basis points in the prior year. The provision for credit losses
on impaired loans of $231 million increased $54 million from $177 million in the
prior year, primarily due to higher provisions in BMO Capital Markets and our
P&C businesses. The provision for credit losses on impaired loans ratio was 21
basis points, compared with 18 basis points in the prior year. There was a $22
million provision for credit losses on performing loans in the current quarter,
compared with a $2 million recovery of credit losses on performing loans in the
prior year. The year-over-year increase in the provision for credit losses on
performing loans was as a result of negative migration in the current quarter,
compared with positive migration in the prior year, and higher provisions in the
current quarter from changes in scenario weights, partially offset by lower
provisions in the current quarter from changes in the economic outlook.

Caution

The foregoing sections contain forward-looking statements. Please refer to 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
www.bmo.com/investorrelations, on the Canadian Securities Administrators'
website at www.sedar.com, and on the EDGAR section of the U.S. Securities and
Exchange Commission's website at 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.

Financial Review

Management's Discussion and Analysis (MD&A) commentary is as at December 3,
2019. The material that precedes this section comprises part of this MD&A. The
MD&A should be read in conjunction with the unaudited interim consolidated
financial statements for the period ended October 31, 2019, included in this
document, as well as the audited consolidated financial statements for the year
ended October 31, 2019, and the MD&A for fiscal 2019, contained in our 2019
Annual Report.

BMO's 2019 Annual Report includes a comprehensive discussion of our businesses,
strategies and objectives, and can be accessed on our website at
www.bmo.com/investorrelations. Readers are also encouraged to visit the site to
view other quarterly financial information.

Bank of Montreal's management, under the supervision of the CEO and CFO, has
evaluated the effectiveness, as at October 31, 2019, of Bank of Montreal's
disclosure controls and procedures (as defined in the rules of the U.S.
Securities and Exchange Commission and the Canadian Securities Administrators)
and has concluded that such disclosure controls and procedures are effective.

There were no changes in our internal control over financial reporting during
the quarter ended October 31, 2019, which materially affected, or are reasonably
likely to materially affect, our internal control over financial reporting.

Because of inherent limitations, disclosure controls and procedures and internal
control over financial reporting can provide only reasonable assurance and may
not prevent or detect misstatements.

As in prior quarters, Bank of Montreal's Audit and Conduct Review Committee
reviewed this document and Bank of Montreal's Board of Directors approved the
document prior to its release.

Financial Highlights

(Canadian $ in Q4-2019 Q3-2019 Q4-2018 Fiscal Fiscal
millions, except as 2019 2018
noted)
Summary Income
Statement
Net interest income 3,364 3,217 3,015 12,888 11,438
(1)
Non-interest 2,723 3,449 2,878 12,595 11,467
revenue (1)(2)
Revenue (2) 6,087 6,666 5,893 25,483 22,905
Insurance claims, 335 887 390 2,709 1,352
commissions and
changes in policy
benefit liabilities
(CCPB)
Revenue, net of 5,752 5,779 5,503 22,774 21,553
CCPB
Provision for 231 243 177 751 700
(recovery of)
credit losses on
impaired loans
Provision for 22 63 (2) 121 (38)
(recovery of)
credit losses on
performing loans
Total provision for 253 306 175 872 662
credit losses
Non-interest 3,987 3,491 3,193 14,630 13,477
expense (2)
Provision for 318 425 438 1,514 1,961
income taxes (3)
Net income 1,194 1,557 1,697 5,758 5,453
attributable to
equity holders of
the bank
Adjusted net income 1,607 1,582 1,531 6,249 5,982
Common Share Data
($, except as
noted)
Earnings per share 1.78 2.34 2.58 8.66 8.17
Adjusted earnings 2.43 2.38 2.32 9.43 8.99
per share
Earnings per share (30.7) 1.0 42.4 6.0 3.3
growth (%)
Adjusted earnings 4.8 0.8 19.7 4.9 10.3
per share growth
(%)
Dividends declared 1.03 1.03 0.96 4.06 3.78
per share
Book value per 71.54 70.88 64.73 71.54 64.73
share
Closing share price 97.50 98.80 98.43 97.50 98.43
Number of common
shares outstanding
(in millions)
End of period 639.2 639.0 639.3 639.2 639.3
Average diluted 640.4 640.4 641.8 640.4 644.9
Total market value 62.3 63.1 62.9 62.3 62.9
of common shares ($
billions)
Dividend yield (%) 4.2 4.2 3.9 4.2 3.8
Dividend payout 57.6 43.9 37.2 46.8 46.1
ratio (%)
Adjusted dividend 42.3 43.2 41.3 43.0 41.9
payout ratio (%)
Financial Measures
and Ratios (%)
Return on equity 9.9 13.2 16.1 12.6 13.3
Adjusted return on 13.5 13.5 14.5 13.7 14.6
equity
Return on tangible 11.9 15.8 19.5 15.1 16.2
common equity
Adjusted return on 15.7 15.8 17.3 16.1 17.5
tangible common
equity
Net income growth (29.6) 1.3 38.6 5.6 2.1
Adjusted net income 5.0 1.1 17.1 4.5 8.8
growth
Revenue growth 3.3 15.1 5.0 11.3 3.6
Revenue growth, net 4.5 4.6 9.1 5.7 4.8
of CCPB
Non-interest 24.9 3.9 (4.4) 8.6 2.2
expense growth
Adjusted 1.2 4.1 6.2 5.0 3.5
non-interest
expense growth
Efficiency ratio, 69.3 60.4 58.0 64.2 62.5
net of CCPB
Adjusted efficiency 60.0 59.9 62.2 61.4 61.9
ratio, net of CCPB
Operating leverage, (20.4) 0.7 13.5 (2.9) 2.6
net of CCPB
Adjusted operating 3.8 0.5 2.9 0.8 1.3
leverage, net of
CCPB
Net interest margin 1.71 1.67 1.68 1.70 1.67
on average earning
assets
Effective tax rate 21.0 21.5 20.6 20.8 26.5
(3)
Adjusted effective 22.0 21.5 19.7 21.1 20.7
tax rate
Total 0.23 0.28 0.18 0.20 0.17
PCL-to-average net
loans and
acceptances
(annualized)
PCL on impaired 0.21 0.22 0.18 0.17 0.18
loans-to-average
net loans and
acceptances
(annualized)
Balance Sheet (as
at, $ millions,
except as noted)
Assets 852,195 839,180 773,293 852,195 773,293
Gross loans and 451,537 444,390 404,215 451,537 404,215
acceptances
Net loans and 449,687 442,588 402,576 449,687 402,576
acceptances
Deposits 568,143 553,383 520,928 568,143 520,928
Common 45,728 45,295 41,381 45,728 41,381
shareholders'
equity
Cash and 28.9 28.3 29.9 28.9 29.9
securities-to-total
assets ratio (%)
Capital Ratios (%)
CET1 Ratio 11.4 11.4 11.3 11.4 11.3
Tier 1 Capital 13.0 13.0 12.9 13.0 12.9
Ratio
Total Capital Ratio 15.2 15.3 15.2 15.2 15.2
Leverage Ratio 4.3 4.3 4.2 4.3 4.2
Foreign Exchange
Rates ($)
As at Canadian/U.S. 1.3165 1.3198 1.3169 1.3165 1.3169
dollar
Average 1.3240 1.3270 1.3047 1.3290 1.2878
Canadian/U.S.
dollar

(1) Effective
Q1-2019,
certain
dividend income
in our Global
Markets
business has
been
reclassified
from
non-interest
revenue to net
interest
income. Results
for prior
periods and
related ratios
have been
reclassified to
conform with
the current
period's
presentation.
(2) Effective
Q1-2019, the
bank adopted
IFRS 15,
Revenue from
Contracts with
Customers (IFRS
15) and elected
to
retrospectively
present prior
periods as if
IFRS 15 had
always been
applied. As a
result, loyalty
rewards and
cash promotion
costs on cards
previously
recorded in
non-interest
expense are
presented as a
reduction in
non-interest
revenue. In
addition,
certain
out-of-pocket
expenses
reimbursed to
BMO from
customers have
been
reclassified
from a
reduction in
non-interest
expense to
non-interest
revenue.
(3) Q1-2018
reported net
income 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. For more
information,
refer to the
Critical
Accounting
Estimates -
Income Taxes
and Deferred
Tax Assets
section on page
119 of BMO's
2018 Annual
Report.
Certain
comparative
figures have
been
reclassified
to conform
with the
current
period's
presentation.
Adjusted
results are
non-GAAP
amounts or
non-GAAP
measures.
Please refer
to the
Non-GAAP
Measures
section.

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 refer to 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. Presenting
results on both bases provides readers with a better understanding of how
management assesses results. It also permits readers to assess the impact of
certain specified items on results for the periods presented, and to better
assess results excluding those items that may not be reflective of ongoing
results. As such, the presentation may facilitate readers' analysis of trends.
Except as otherwise noted, management's discussion of changes in reported
results in this document applies equally to changes in the corresponding
adjusted results. Adjusted results and measures are non-GAAP and as such do not
have standardized meanings under GAAP. They are unlikely to be comparable to
similar measures presented by other companies and should not be viewed in
isolation from, or as a substitute for, GAAP results.

Non-GAAP Measures

(Canadian $ in Q4-2019 Q3-2019 Q4-2018 Fiscal Fiscal
millions, except as 2019 2018
noted)
Reported Results
Revenue 6,087 6,666 5,893 25,483 22,905
Insurance claims, (335) (887) (390) (2,709) (1,352)
commissions and
changes in policy
benefit liabilities
(CCPB)
Revenue, net of 5,752 5,779 5,503 22,774 21,553
CCPB
Total provision for (253) (306) (175) (872) (662)
credit losses
Non-interest (3,987) (3,491) (3,193) (14,630) (13,477)
expense
Income before 1,512 1,982 2,135 7,272 7,414
income taxes
Provision for (318) (425) (438) (1,514) (1,961)
income taxes
Net income 1,194 1,557 1,697 5,758 5,453
EPS ($) 1.78 2.34 2.58 8.66 8.17
Adjusting Items
(Pre-tax) (1)
Acquisition (2) (3) (18) (13) (34)
integration costs
(2)
Amortization of (38) (29) (31) (128) (116)
acquisition-related
intangible assets
(3)
Restructuring costs (484) - - (484) (260)
(4)
Reinsurance (25) - - (25) -
adjustment (5)
Benefit from the - - 277 - 277
remeasurement of an
employee benefit
liability (6)
Adjusting items (549) (32) 228 (650) (133)
included in
reported pre-tax
income
Adjusting Items
(After tax)(1)
Acquisition (2) (2) (13) (10) (25)
integration costs
(2)
Amortization of (29) (23) (24) (99) (90)
acquisition-related
intangible assets
(3)
Restructuring costs (357) - - (357) (192)
(4)
Reinsurance (25) - - (25) -
adjustment (5)
Benefit from the - - 203 - 203
remeasurement of an
employee benefit
liability (6)
U.S. net deferred - - - - (425)
tax asset
revaluation (7)
Adjusting items (413) (25) 166 (491) (529)
included in
reported net income
after tax
Impact on EPS ($) (0.65) (0.04) 0.26 (0.77) (0.82)
Adjusted Results
Revenue 6,087 6,666 5,893 25,483 22,905
Insurance claims, (310) (887) (390) (2,684) (1,352)
commissions and
changes in policy
benefit liabilities
(CCPB)
Revenue, net of 5,777 5,779 5,503 22,799 21,553
CCPB
Total provision for (253) (306) (175) (872) (662)
credit losses
Non-interest (3,463) (3,459) (3,421) (14,005) (13,344)
expense
Income before 2,061 2,014 1,907 7,922 7,547
income taxes
Provision for (454) (432) (376) (1,673) (1,565)
income taxes
Net income 1,607 1,582 1,531 6,249 5,982
EPS ($) 2.43 2.38 2.32 9.43 8.99

(1) Adjusting items are
generally included
in Corporate
Services, with the
exception of the
amortization of
acquisition-related
intangible assets
and certain
acquisition
integration costs,
which are charged
to the operating
groups, and the
reinsurance
adjustment, which
is included in BMO
Wealth Management.
(2) Acquisition
integration costs
related to the
acquired BMO
Transportation
Finance business
are charged to
Corporate Services,
since the
acquisition impacts
both Canadian and
U.S. P&C
businesses.
KGS-Alpha
acquisition
integration costs
are reported in BMO
Capital Markets.
Acquisition
integration costs
are recorded in
non-interest
expense.
(3) These amounts were
charged to the
non-interest
expense of the
operating groups.
Before-tax and
after-tax amounts
for each operating
group are provided
in the Review of
Operating Group's
Performance
section.
(4) Q4-2019 reported
net income included
a restructuring
charge of $357
million after-tax
($484 million
pre-tax), related
to severance and a
small amount of
real estate-related
costs, to continue
to improve our
efficiency,
including
accelerating
delivery against
key bank-wide
initiatives focused
on digitization,
organizational
redesign and
simplification of
the way we do
business. The
restructuring
charge in 2018 was
also a result of a
similar bank-wide
program.
Restructuring costs
are included in
non-interest
expense in
Corporate Services.
(5) Q4-2019 reported
net income included
a reinsurance
adjustment of $25
million (pre-tax
and after-tax) in
claims, commissions
and changes in
policy benefit
liabilities for the
net impact of major
reinsurance claims
from Japanese
typhoons that were
incurred after our
announced decision
to wind down our
reinsurance
business. This
reinsurance
adjustment is
included in BMO
Wealth Management.
(6) Q4-2018 reported
net income included
a benefit of $203
million after-tax
($277 million
pre-tax) from the
remeasurement of an
employee benefit
liability, as a
result of an
amendment to our
other employee
future benefits
plan for certain
employees. This
amount was included
in non-interest
expense in
Corporate Services.
(7) Q1-2018 reported
net income 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. For more
information, refer
to the Critical
Accounting
Estimates - Income
Taxes and Deferred
Tax Assets section
on page 119 of
BMO's 2018 Annual
Report.
Certain
comparative
figures have
been
reclassified
to conform
with the
current
period's
presentation.
Adjusted
results and
measures in
this table
are non-GAAP
amounts or
non-GAAP
measures.

Caution Regarding Forward-Looking Statements

Bank of Montreal's public communications often include written or oral
forward-looking statements. Statements of this type are included in this
document, and may be included in other filings with Canadian securities
regulators or the U.S. Securities and Exchange Commission, or in other
communications. All such statements are made pursuant to the "safe harbor"
provisions of, and are intended to be forward-looking statements under, the
United States Private Securities Litigation Reform Act of 1995 and any
applicable Canadian securities legislation. Forward-looking statements in this
document may include, but are not limited to, statements with respect to our
objectives and priorities for fiscal 2020 and beyond, our strategies or future
actions, our targets, expectations for our financial condition or share price,
the regulatory environment in which we operate and the results of or outlook for
our operations or for the Canadian, U.S. and international economies, and
include statements of our management. Forward-looking statements are typically
identified by words such as "will", "would", "should", "believe", "expect",
"anticipate", "project", "intend", "estimate", "plan", "goal", "target", "may"
and "could".

By their nature, forward-looking statements require us to make assumptions and
are subject to inherent risks and uncertainties, both general and specific in
nature. There is significant risk that predictions, forecasts, conclusions or
projections will not prove to be accurate, that our assumptions may not be
correct, and that actual results may differ materially from such predictions,
forecasts, conclusions or projections. We caution readers of this document not
to place undue reliance on our forward-looking statements, as a number of
factors - many of which are beyond our control and the effects of which can be
difficult to predict - could cause actual future results, conditions, actions or
events to differ materially from the targets, expectations, estimates or
intentions 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: general economic and market
conditions in the countries in which we operate; the Canadian housing market;
weak, volatile or illiquid capital and/or credit markets; interest rate and
currency value fluctuations; changes in monetary, fiscal, or economic policy and
tax legislation and interpretation; the level of competition in the geographic
and business areas in which we operate; changes in laws or in supervisory
expectations or requirements, including capital, interest rate and liquidity
requirements and guidance, and the effect of such changes on funding costs;
judicial or regulatory proceedings; the accuracy and completeness of the
information we obtain with respect to our customers and counterparties; failure
of third parties to comply with their obligations to us; our ability to execute
our strategic plans and to complete and integrate acquisitions, including
obtaining regulatory approvals; critical accounting estimates and the effect of
changes to accounting standards, rules and interpretations on these estimates;
operational and infrastructure risks, including with respect to reliance on
third parties; changes to our credit ratings; political conditions, including
changes relating to or affecting economic or trade matters; global capital
markets activities; the possible effects on our business of war or terrorist
activities; outbreaks of disease or illness that affect local, national or
international economies; natural disasters and disruptions to public
infrastructure, such as transportation, communications, power or water supply;
technological changes; information, privacy and cyber security, including the
threat of data breaches, hacking, identity theft and corporate espionage, as
well as the possibility of denial of service resulting from efforts targeted at
causing system failure and service disruption; and our ability to anticipate and
effectively manage risks arising from all of the foregoing factors.

We caution that the foregoing list is not exhaustive of all possible factors.
Other factors and risks could adversely affect our results. For more
information, please refer to the discussion in the Risks That May Affect Future
Results section, and the sections related to credit and counterparty, market,
insurance, liquidity and funding, operational, legal and regulatory, business,
strategic, environmental and social, and reputation risk, in the Enterprise-Wide
Risk Management section that begins on page 68 of BMO's 2019 Annual Report, all
of which outline certain key factors and risks that may affect our future
results. Investors and others should carefully consider these factors and risks,
as well as other uncertainties and potential events, and the inherent
uncertainty of forward-looking statements. We do not undertake to update any
forward-looking statements, whether written or oral, that may be made from time
to time by the organization or on its behalf, except as required by law. The
forward-looking information contained in this document is presented for the
purpose of assisting our shareholders in understanding our financial position as
at and for the periods ended on the dates presented, as well as our strategic
priorities and objectives, and may not be appropriate for other purposes.

Material economic assumptions underlying the forward-looking statements
contained in this document are set out in the Economic Developments and Outlook
section on page 18 of BMO's 2019 Annual Report. Assumptions about the
performance of the Canadian and U.S. economies, as well as overall market
conditions and their combined effect on our business, are material factors we
consider when determining our strategic priorities, objectives and expectations
for our business. In determining our expectations for economic growth, both
broadly and in the financial services sector, we primarily consider historical
economic data provided by governments, historical relationships between economic
and financial variables, and the risks to the domestic and global economy.

Foreign Exchange

The Canadian dollar equivalents of BMO's U.S. results that are denominated in
U.S. dollars decreased relative to the third quarter of 2019 and increased
relative to the fourth quarter of 2018 due to changes in the U.S. dollar. The
table below indicates the relevant average Canadian/U.S. dollar exchange rates
and the impact of changes in those rates on our U.S. segment results. References
in this document to the impact of the U.S. dollar do not include U.S.
dollar-denominated amounts recorded outside BMO's U.S. segment.

Changes in exchange rates will affect future results measured in Canadian
dollars, and the impact on those results is a function of the periods in which
revenue, expenses and provisions for (recoveries of) credit losses arise.

Economically, our U.S. dollar income stream was unhedged to changes in foreign
exchange rates during the current and prior year. We regularly determine whether
to enter into hedging transactions in order to mitigate the impact of foreign
exchange rate movements on net income.

Refer to the Enterprise-Wide Capital Management section on page 59 of the 2019
Annual Report for a discussion of the impact that changes in foreign exchange
rates can have on our capital position. Changes in foreign exchange rates will
also affect accumulated other comprehensive income, primarily as a result of the
translation of our investment in foreign operations.

This Foreign Exchange section contains forward-looking statements. Please refer
to the Caution Regarding Forward-Looking Statements.

Effects of Changes in Exchange Rates on BMO's U.S. Segment Reported and Adjusted
Results

Q4-2019
(Canadian $ vs. vs.
in millions, Q4-2018 Q3-2019
except as
noted)
Canadian/U.S.
dollar
exchange rate
(average)
Current 1.3240 1.3240
period
Prior period 1.3047 1.3270
Effects on
U.S. segment
reported
results
Increased 17 (3)
(decreased)
net interest
income
Increased 11 (2)
(decreased)
non-interest
revenue
Increased 28 (5)
(decreased)
revenues
Decreased (1) -
(increased)
provision for
credit losses
Decreased (20) 3
(increased)
expenses
Decreased (1) 1
(increased)
income taxes
Increased 6 (1)
(decreased)
reported net
income
Impact on 0.01 -
earnings per
share ($)
Effects on
U.S. segment
adjusted
results
Increased 17 (3)
(decreased)
net interest
income
Increased 11 (2)
(decreased)
non-interest
revenue
Increased 28 (5)
(decreased)
revenues
Decreased (1) -
(increased)
provision for
credit losses
Decreased (20) 3
(increased)
expenses
Decreased (1) 1
(increased)
income taxes
Increased 6 (1)
(decreased)
adjusted net
income
Impact on 0.01 -
adjusted
earnings per
share ($)

Adjusted
results
in this
section
are
non-GAAP
amounts
or
non-GAAP
measures.
Please
refer to
the
Non-GAAP
Measures
section.

Net Income

Q4 2019 vs. Q4 2018

Reported net income was $1,194 million, compared with $1,697 million in the
prior year, and adjusted net income was $1,607 million, an increase of $76
million or 5% from the prior year. Adjusted net income excludes a $357 million
restructuring charge, related to severance and a small amount of real
estate-related costs, to continue to improve our efficiency, including
accelerating delivery against key bank-wide initiatives focused on digitization,
organizational redesign and simplification of the way we do business, as well as
a $25 million reinsurance adjustment for the net impact of major reinsurance
claims from Japanese typhoons that were incurred after our announced decision to
wind down our reinsurance business in the current quarter, the amortization of
acquisition-related intangible assets and acquisition integration costs in both
periods, and a $203 million benefit from the remeasurement of an employee
benefit liability in the prior year. Reported EPS of $1.78 decreased $0.80 or
31% and adjusted EPS of $2.43 increased $0.11 or 5% from the prior year.

Results reflect good performance in our P&C businesses and higher net income in
BMO Wealth Management, partially offset by a decrease in BMO Capital Markets and
a higher net loss in Corporate Services. Prior year results included a
favourable tax item in our U.S. segment.

Q4 2019 vs. Q3 2019

Reported net income decreased $363 million or 23% from the prior quarter and
adjusted net income increased $25 million or 2%. Adjusted net income excludes
the restructuring charge and reinsurance adjustment in the current quarter, and
the amortization of acquisition-related intangible assets and acquisition
integration costs in both the current and prior quarter. Reported EPS decreased
$0.56 or 24% and adjusted EPS increased $0.05 or 2% from the prior quarter.

Results reflect higher net income in our P&C businesses, with particularly
strong performance in Canadian P&C, and in BMO Wealth Management, partially
offset by a higher net loss in Corporate Services and a decrease in BMO Capital
Markets.

Adjusted results in this Net Income section are non-GAAP amounts or non-GAAP
measures. Please refer to the Non-GAAP Measures Section.

Revenue (1)(2)

Q4 2019 vs. Q4 2018

Revenue was $6,087 million, an increase of $194 million or 3% from the prior
year and revenue, net of insurance claims, commissions and changes in policy
benefit liabilities (CCPB), was $5,752 million, an increase of $249 million or
5%.

Results reflect good performance in our P&C businesses and increases in BMO
Wealth Management and BMO Capital Markets, partially offset by a decrease in
Corporate Services.

Net interest income was $3,364 million, an increase of $349 million or 12%, or
11% excluding the impact of the stronger U.S. dollar. On an excluding trading
basis, net interest income was $2,979 million, an increase of $210 million or
8%, or 7% excluding the impact of the stronger U.S. dollar, largely due to
higher loan and deposit balances across all operating groups, partially offset
by lower loan margins.

Average earning assets were $778.4 billion, an increase of $66.7 billion or 9%,
or $62.7 billion or 9% excluding the impact of the stronger U.S. dollar, due to
loan growth, higher securities and higher securities borrowed or purchased under
resale agreements. BMO's overall net interest margin increased 3 basis points,
primarily due to higher net interest income from trading activities and a higher
margin in Canadian P&C, partially offset by a higher volume of assets in BMO
Capital Markets and Corporate Services, which have a lower spread than the bank,
as well as a lower margin in U.S. P&C. On an excluding trading basis, net
interest margin decreased 5 basis points, primarily due to a higher volume of
assets in BMO Capital Markets and Corporate Services, which have a lower spread
than the bank, and a lower margin in U.S. P&C, partially offset by a higher
margin in Canadian P&C.

Non-interest revenue, net of CCPB, was $2,388 million, a decrease of $100
million or 4%, and also 4% excluding the impact of the stronger U.S. dollar, due
to lower trading non-interest revenue, partially offset by higher lending and
deposit revenue. Non-interest revenue, net of adjusted CCPB, was $2,413 million,
a decrease of $75 million or 3%, and also 3% excluding the impact of the
stronger U.S. dollar. On an excluding trading basis, net of adjusted CCPB,
non-interest revenue was $2,434 million, an increase of $77 million or 3%, and
also 3% excluding the impact of the stronger U.S. dollar.

Gross insurance revenue decreased $50 million from the prior year, due to lower
annuity sales, offset by relatively unchanged long-term interest rates in the
current quarter, compared with increases in long-term interest rates that
decreased the fair value of investments in the prior year and stronger equity
markets in the current quarter. These changes relate to annuity sales and fair
value investments, which are largely offset by changes in policy benefit
liabilities, which is reflected in CCPB, as discussed in the Insurance Claims,
Commissions and Changes in Policy Benefit Liabilities. We generally focus on
analyzing revenue, net of CCPB, given the extent to which insurance revenue can
vary and that this variability is largely offset in CCPB.

Q4 2019 vs. Q3 2019

Revenue decreased $579 million or 9% from the prior quarter. Revenue net of CCPB
was relatively unchanged from the prior quarter.

Higher revenue in Canadian P&C and BMO Wealth Management were offset by lower
revenue in BMO Capital Markets, while U.S. P&C revenue was relatively unchanged
and Corporate Services revenue decreased from the prior quarter.

Net interest income increased $147 million or 5% from the prior quarter. On an
excluding trading basis, net interest income of $2,979 million was relatively
unchanged from the prior quarter, with higher deposit and loan volumes across
all operating groups, offset by lower deposit spreads in U.S. P&C, due to rate
decreases by the Federal Reserve, and lower net interest income in Corporate
Services.

Average earning assets were $778.4 billion, an increase of $15.1 billion or 2%,
primarily due to loan growth and increased cash resources. BMO's overall net
interest margin increased 4 basis points, primarily due to a higher net interest
income from trading activities and a higher margin in Canadian P&C, partially
offset by higher assets in Corporate Services, which have a lower spread than
the bank, and a lower margin in U.S. P&C. On an excluding trading basis, net
interest margin decreased 6 basis points, primarily due to a higher volume of
assets in Corporate Services and BMO Capital Markets, which have a lower spread
than the bank, and a lower margin in U.S. P&C, partially offset by a higher
margin in Canadian P&C.

Non-interest revenue, net of CCPB, decreased $174 million or 7%, primarily due
to lower trading non-interest revenue and underwriting and advisory fee revenue.
Non-interest revenue, net of adjusted CCPB, decreased $149 million or 6%. On an
excluding trading basis, net of adjusted CCPB, non-interest revenue decreased
$13 million or 1%.

Gross insurance revenue decreased $554 million from the prior quarter, primarily
due to relatively unchanged long-term interest rates in the current quarter,
compared with decreases in long-term interest rates that increased the fair
value of investments in the prior quarter and lower annuity sales. The decrease
in insurance revenue was largely offset by lower CCPB, as discussed in the
Insurance Claims, Commissions and Changes in Policy Benefit Liabilities.

Net interest income and non-interest revenue are detailed in the unaudited
interim consolidated financial statements.

Adjusted results in this Revenue section are non-GAAP amounts or non-GAAP
measures. Please refer to the Non-GAAP Measures Section.

(1) Effective
Q1-2019,
certain
dividend income
in our Global
Markets
business has
been
reclassified
from
non-interest
revenue to net
interest
income. Results
for prior
periods and
related ratios
have been
reclassified to
conform to the
current
period's
presentation.
(2) Effective
Q1-2019, the
bank adopted
IFRS 15,
Revenue from
Contracts with
Customers (IFRS
15) and elected
to
retrospectively
present prior
periods as if
IFRS 15 had
always been
applied. As a
result, loyalty
rewards and
cash promotion
costs on cards
previously
recorded in
non-interest
expense are
presented as a
reduction in
non-interest
revenue. In
addition,
certain
out-of-pocket
expenses
reimbursed to
BMO from
customers have
been
reclassified
from a
reduction in
non-interest
expense to
non-interest
revenue.

Provision for Credit Losses

Q4 2019 vs. Q4 2018

Total provision for credit losses was $253 million, an increase of $78 million
from the prior year. The provision for credit losses ratio was 23 basis points,
compared with 18 basis points in the prior year. The provision for credit losses
on impaired loans of $231 million increased $54 million from $177 million in the
prior year, primarily due to higher provisions in BMO Capital Markets and our
P&C businesses. The provision for credit losses on impaired loans ratio was 21
basis points, compared with 18 basis points in the prior year. There was a $22
million provision for credit losses on performing loans in the current quarter,
compared with a $2 million recovery of credit losses on performing loans in the
prior year. The $22 million provision for credit losses on performing loans in
the current quarter was due to portfolio growth, negative migration and scenario
weight change, partially offset by changes in economic outlook. The
year-over-year increase in the provision for credit losses on performing loans
was as a result of negative migration in the current quarter, compared with
positive migration in the prior year, and higher provisions in the current
quarter from changes in scenario weights, partially offset by lower provisions
in the current quarter from changes in the economic outlook.

Q4 2019 vs. Q3 2019

Total provision for credit losses decreased $53 million from the prior quarter.
The provision for credit losses ratio was 23 basis points, compared with 28
basis points in the prior quarter. The provision for credit losses on impaired
loans decreased $12 million to $231 million, due to lower impaired loan
provisions in Canadian P&C, partially offset by higher loan losses in BMO
Capital Markets and U.S. P&C. The provision for credit losses on impaired loans
ratio was 21 basis points, compared with 22 basis points in the prior quarter.
There was a $22 million provision for credit losses on performing loans in the
current quarter, compared with a $63 million provision for credit losses on
performing loans in the prior quarter. The majority of the quarter-over-quarter
decrease was due to a more favourable impact on credit losses on performing
loans in the current quarter, resulting from changes in economic outlook, as
well as a smaller impact from both balance growth and negative migration.

Provision for Credit Losses by Operating Group

BMO Wealth BMO Corporate
Capital
(Canadian Canadian U.S. Total Management Markets Services Total
$ in P&C P&C P&C Bank
millions)
Q4-2019
Provision 134 66 200 1 32 (2) 231
for
(recovery
of) credit
losses on
impaired
loans
Provision 11 4 15 (1) 8 - 22
for
(recovery
of) credit
losses on
performing
loans
Total 145 70 215 - 40 (2) 253
provision
for
(recovery
of) credit
losses
Q3-2019
Provision 174 61 235 - 7 1 243
for
(recovery
of) credit
losses on
impaired
loans
Provision 30 37 67 (2) 3 (5) 63
for
(recovery
of) credit
losses on
performing
loans
Total 204 98 302 (2) 10 (4) 306
provision
for
(recovery
of) credit
losses
Q4-2018
Provision 118 61 179 2 (3) (1) 177
for
(recovery
of) credit
losses on
impaired
loans
Provision (15) 18 3 1 (4) (2) (2)
for
(recovery
of) credit
losses on
performing
loans
Total 103 79 182 3 (7) (3) 175
provision
for
(recovery
of) credit
losses
Fiscal
2019
Provision 544 160 704 2 52 (7) 751
for
(recovery
of) credit
losses on
impaired
loans
Provision 63 37 100 (2) 28 (5) 121
for
(recovery
of) credit
losses on
performing
loans
Total 607 197 804 - 80 (12) 872
provision
for
(recovery
of) credit
losses
Fiscal
2018
Provision 466 258 724 6 (17) (13) 700
for
(recovery
of) credit
losses on
impaired
loans
Provision 3 (38) (35) - (1) (2) (38)
for
(recovery
of) credit
losses on
performing
loans
Total 469 220 689 6 (18) (15) 662
provision
for
(recovery
of) credit
losses

Provision for Credit Losses Performance Ratios

Q4-2019 Q3-2019 Q4-2018 Fiscal Fiscal
2019 2018
Total 0.23 0.28 0.18 0.20 0.17
PCL-to-average
net loans and
acceptances
(annualized) (%)
PCL on impaired 0.21 0.22 0.18 0.17 0.18
loans-to-average
net loans and
acceptances
(annualized) (%)

Impaired Loans

Total gross impaired loans (GIL) were $2,629 million at the end of the current
quarter, up from $1,936 million in the prior year, with the largest increase in
impaired loans in oil and gas. GIL increased $197 million from $2,432 million in
the prior quarter.

Factors contributing to the change in GIL are outlined in the table below. Loans
classified as impaired during the quarter totalled $799 million, up from $443
million in the prior year, and up from $679 million in the prior quarter.

Changes in Gross Impaired Loans (GIL) (1) and Acceptances

(Canadian $ Q4-2019 Q3-2019 Q4-2018 Fiscal Fiscal
in 2019 2018
millions,
except as
noted)
GIL, 2,432 2,335 2,076 1,936 2,220
beginning
of period
Classified 799 679 443 2,686 2,078
as impaired
during the
period
Transferred (220) (132) (188) (604) (708)
to not
impaired
during the
period
Net (219) (232) (214) (800) (1,051)
repayments
Amounts (159) (138) (194) (528) (618)
written-off
Recoveries - - - - -
of loans
and
advances
previously
written-off
Disposals - (57) (5) (57) (11)
of loans
Foreign (4) (23) 18 (4) 26
exchange
and other
movements
GIL, end of 2,629 2,432 1,936 2,629 1,936
period
GIL to 0.58 0.55 0.48 0.58 0.48
gross loans
and
acceptances
(%)

(1) GIL excludes purchased credit impaired loans.

Insurance Claims, Commissions and Changes in Policy Benefit Liabilities

Reported insurance claims, commissions and changes in policy benefit liabilities
(CCPB) were $335 million in the current quarter, a decrease of $55 million from
$390 million in the prior year, and adjusted CCPB, which excludes a $25 million
net impact of major reinsurance claims from Japanese typhoons that were incurred
after our announced decision to wind down our reinsurance business, was $310
million, a decrease of $80 million from the prior year.

Adjusted CCPB decreased, due to the impact of lower annuity sales, offset by
relatively unchanged long-term interest rates in the current year, compared with
increases in long-term interest rates that decreased the fair value of policy
benefit liabilities in the prior year and the impact of stronger equity markets
in the current year. CCPB decreased $552 million from $887 million in the prior
quarter, and adjusted CCPB decreased $577 million from the prior quarter, due to
relatively unchanged long-term interest rates in the current quarter, compared
with decreases in long-term interest rates that increased the fair value of
policy benefit liabilities in the prior quarter, and the impact of lower annuity
sales. The changes related to the fair value of policy benefit liabilities and
annuity sales were largely offset in revenue.

Adjusted results in this CCPB section are non-GAAP amounts or non-GAAP measures.
Please refer to the Non-GAAP Measures Section.

Non-Interest Expense

Reported non-interest expense of $3,987 million increased $794 million or 25%
from the prior year. Adjusted non-interest expense of $3,463 million increased
$42 million or 1%, and also 1%, excluding the impact of the stronger U.S.
dollar, from the prior year. Adjusted non-interest expense excludes the
restructuring charge in the current quarter, the amortization of
acquisition-related intangible assets and acquisition integration costs in both
periods, as well as the benefit from the remeasurement of an employee benefit
liability in the prior year. The increase largely reflected higher technology
and employee-related costs, including the impact of the acquisition of
KGS-Alpha, partially offset by lower premises costs.

Reported non-interest expense increased $496 million from the prior quarter and
adjusted non-interest expense, which excludes the restructuring charge in the
current quarter, the amortization of acquisition-related intangible assets and
acquisition integration costs in both periods, was relatively unchanged.

Reported operating leverage on a net revenue basis was negative 20.4%, compared
with positive 13.5% in the prior year. Adjusted operating leverage on a net
revenue basis was positive 3.8%, compared with positive 2.9% in the prior year.

The reported efficiency ratio was 65.5%, compared with 54.2% in the prior year
and was 69.3% on a net revenue basis, compared with 58.0% in the prior year. The
adjusted efficiency ratio was 56.9%, compared with 58.1% in the prior year and
60.0% on a net revenue basis, compared with 62.2% in the prior year.

Non-interest expense is detailed in the condensed consolidated financial
statements.

Adjusted results in this Non-Interest Expense section are non-GAAP amounts or
non-GAAP measures. Please refer to the Non-GAAP Measures Section.

Income Taxes

The provision for income taxes was $318 million, a decrease of $120 million from
the fourth quarter of 2018 and a decrease of $107 million from the third quarter
of 2019. The effective tax rate for the current quarter was 21.0%, compared with
20.6% in the fourth quarter of 2018, and 21.5% in the third quarter of 2019.

The adjusted provision for income taxes was $454 million, an increase of $78
million from the fourth quarter of 2018, and an increase of $22 million from the
third quarter of 2019. The adjusted effective tax rate was 22.0% in the current
quarter, compared with 19.7% in the fourth quarter of 2018 and 21.5% in the
third quarter of 2019. The higher reported and adjusted effective tax rate in
the current quarter relative to the fourth quarter of 2018 was primarily due to
a favourable U.S. tax item in the prior year.

Adjusted results in this Income Taxes section are non-GAAP amounts or non-GAAP
measures. Please refer to the Non-GAAP Measures section.

Capital Management

BMO manages its capital within the capital management framework described in the
Enterprise-Wide Capital Management section of BMO's 2019 Annual Report.

Fourth Quarter 2019 Regulatory Capital Review

BMO's Common Equity Tier 1 (CET1) Ratio was 11.4% as at October 31, 2019.

The CET1 Ratio was consistent with the prior quarter as retained earnings
growth, which absorbed the restructuring charge, was offset by higher
Risk-Weighted Assets (RWA).

CET1 Capital was $36.1 billion as at October 31, 2019, an increase from $35.7
billion as at July 31, 2019, driven by retained earnings growth and a lower
deduction for deferred tax assets, partially offset by the net impact from
higher pension and other post-employment benefit obligations due to lower
discount rates. CET1 capital increased from $32.7 billion as at October 31,
2018, due to retained earnings growth, and to a lesser degree, a lower deduction
for deferred tax assets and higher unrealized gains from securities fair valued
through accumulated other comprehensive income, partially offset by an increase
in the deduction for shortfall of provisions to expected losses and the net
impact from higher pension and other post-employment benefit obligations due to
lower discount rates.

RWA was $317.0 billion as at October 31, 2019, up from $313.0 billion as at July
31, 2019 and $289.2 billion as at October 31, 2018, mostly from business growth.

The Tier 1 Capital Ratio was 13.0% as at October 31, 2019, compared with 13.0%
as at July 31, 2019, and 12.9% as at October 31, 2018. The Total Capital Ratio
was 15.2% as at October 31, 2019, compared with 15.3% as at July 31, 2019, and
15.2% as at October 31, 2018. The Tier 1 and Total Capital ratios were
relatively unchanged from prior periods, as higher capital, primarily from
retained earnings growth, was offset by higher RWA.

The impact of foreign exchange movements on capital ratios was largely offset.
BMO's investments in foreign operations are primarily denominated in U.S.
dollars, and the foreign exchange impact of U.S.-dollar-denominated RWA and
capital deductions may result in variability in the bank's capital ratios. BMO
may manage the impact of foreign exchange movements on its capital ratios and
did so during the fourth quarter. Any such activities could also impact our book
value and return on equity.

BMO's Leverage Ratio was 4.3% as at October 31, 2019, compared with 4.3% as at
July 31, 2019, and 4.2% as at October 31, 2018, as higher Tier 1 Capital, mainly
from retained earnings growth, was generally offset by higher leverage exposures
from business growth.

Regulatory Capital

Regulatory capital requirements for BMO are determined in accordance with
guidelines issued by the Office of the Superintendent Financial Institutions
Canada (OSFI), which is based on the capital standards developed by the Basel
Committee on Banking Supervision (BCBS). For more information, refer to the
Enterprise-Wide Capital Management section of BMO's 2019 Annual Report.

OSFI's capital requirements are summarized in the following table.

(% of Minimum Total Domestic OSFI capital BMO
risk-weighted capitalrequirements Pillar StabilityBuffer requirements Capital
assets) 1Capital (2) including and
Buffer capital Leverage
(1) buffers Ratios
as at
October
31, 2019
Common Equity 4.5% 3.5% 2.0% 10.0% 11.4%
Tier 1 Ratio
Tier 1 6.0% 3.5% 2.0% 11.5% 13.0%
Capital Ratio
Total Capital 8.0% 3.5% 2.0% 13.5% 15.2%
Ratio
Leverage 3.0% na na 3.0% 4.3%
Ratio (3)

(1) The minimum
risk-based
capital ratios
set out in
OSFI's Capital
Adequacy
Requirements
(CAR) Guideline
are augmented by
3.5% in Pillar 1
Capital Buffers,
which can absorb
losses during
periods of
stress. The
Pillar 1 Capital
Buffers include
a 2.5% Capital
Conservation
Buffer, a 1.0%
Common Equity
Tier 1 Surcharge
for domestic
systematically
important banks
(D-SIBs) and a
Countercyclical
Buffer as
prescribed by
OSFI (immaterial
for the fourth
quarter of
2019). If a
bank's capital
ratios fall
within the range
of this combined
buffer,
restrictions on
discretionary
distributions of
earnings (such
as dividends,
share
repurchases and
discretionary
compensation)
would ensue,
with the degree
of such
restrictions
varying
according to the
position of the
bank's ratios
within the
buffer range.
(2) OSFI requires
all D-SIBs to
maintain a
Domestic
Stability Buffer
(DSB) against
Pillar 2 risks
associated with
systemic
vulnerabilities.
The DSB can
range from 0% to
2.5% of total
RWA and is set
at 2.0%
effective
October 31,
2019. Breaches
of the DSB will
not result in a
bank being
subject to
automatic
constraints on
capital
distributions.
(3) Minimum leverage
ratio
requirement as
set out in
OSFI's Leverage
Requirements
Guideline.
na - not
applicable

Regulatory Capital Position

(Canadian $ Q4-2019 Q3-2019 Q4-2018
in millions,
except as
noted)
Gross common 45,728 45,295 41,387
equity (1)
Regulatory (9,657) (9,632) (8,666)
adjustments
applied to
common equity
Common Equity 36,071 35,663 32,721
Tier 1
Capital
(CET1)
Additional 5,348 5,348 4,790
Tier 1
eligible
capital (2)
Regulatory (218) (217) (291)
adjustments
applied to
Tier 1
Additional 5,130 5,131 4,499
Tier 1
Capital (AT1)
Tier 1 41,201 40,794 37,220
Capital (T1 =
CET1 + AT1)
Tier 2 7,189 7,070 7,017
eligible
capital (3)
Regulatory (50) (75) (121)
adjustments
applied to
Tier 2
Tier 2 7,139 6,995 6,896
Capital (T2)
Total Capital 48,340 47,789 44,116
(TC = T1 +
T2)
Risk-Weighted
Assets and
Leverage
Ratio
Exposures
(4)(5)
CET1 Capital 317,029 313,003 289,237
Risk-Weighted
Assets
Tier 1 317,029 313,003 289,420
Capital
Risk-Weighted
Assets
Total Capital 317,029 313,003 289,604
Risk-Weighted
Assets
Leverage 956,493 943,275 876,106
Ratio
Exposures
Capital
Ratios (%)
CET1 Ratio 11.4 11.4 11.3
Tier 1 13.0 13.0 12.9
Capital Ratio
Total Capital 15.2 15.3 15.2
Ratio
Leverage 4.3 4.3 4.2
Ratio

(1) Gross common
equity
includes
issued
qualifying
common
shares,
retained
earnings,
accumulated
other
comprehensive
income and
eligible
common share
capital
issued by
subsidiaries.
(2) Additional
Tier 1
eligible
capital
includes
directly and
indirectly
issued
qualifying
Additional
Tier 1
instruments.
(3) Tier 2
eligible
capital
includes
subordinated
debentures
and may
include
certain loan
loss
allowances.
(4) For
institutions
using
advanced
approaches
for credit
risk or
operational
risk, there
is a capital
floor as
prescribed in
OSFI's CAR
Guideline.
(5) The Credit
Valuation
Adjustment
(CVA) was
fully phased
in starting
Q1-2019. The
applicable
scalars for
CET1, Tier 1
Capital and
Total Capital
were 80%, 83%
and 86%,
respectively,
in fiscal
2018.

Capital Developments

We expect a combined impact of approximately 15 to 20 basis points on our CET1
Ratio in the first quarter of fiscal 2020, from the adoption of IFRS 16, Leases,
and the expiry of transitional arrangements for standardized approach for
counterparty credit risk and the revised securitization framework. For
information on these and other regulatory developments, refer to the
Enterprise-Wide Capital Management section of BMO's 2019 Annual Report.

During the quarter, 196,539 common shares were issued through the exercise of
stock options.

On November 14, 2019, we announced the conversion results of our Non-Cumulative
5-Year Rate Reset Class B Preferred Shares, Series 31 (Preferred Shares Series
31). During the conversion period, which ran from October 28, 2019 to November
12, 2019, 69,570 Preferred Shares Series 31 were tendered for conversion into
Non-Cumulative 5-Year Rate Reset Class B Preferred Shares, Series 32 (Preferred
Shares Series 32), which is less than the minimum 1,000,000 required to give
effect to the conversion, as described in the Preferred Shares Series 31
prospectus supplement dated July 23, 2014. As a result, no Preferred Shares
Series 32 shares were issued and holders of Preferred Shares Series 31 retained
their shares. The dividend rate for the Preferred Shares Series 31 is 3.851% for
the five-year period commencing on November 25, 2019, and ending on November 24,
2024.

On September 19, 2019, we redeemed all of our outstanding $1,000 million
subordinate debentures, Series H Medium-Term Notes First Tranche at a redemption
price of 100 percent of the principal amount plus unpaid accrued interest to,
but excluding, the redemption date.

On September 16, 2019, we issued $1,000 million subordinated notes, Series J
Medium-Term Notes First Tranche through our Canadian Medium-Term Note Program.

On August 14, 2019, we announced the conversion results of our Non-Cumulative
5-Year Rate Reset Class B Preferred Shares, Series 29 (Preferred Shares Series
29). During the conversion period, which ran from July 26, 2019 to August 12,
2019, 223,098 Preferred Shares Series 29 were tendered for conversion into
Non-Cumulative 5-Year Rate Reset Class B Preferred Shares Series 30 (Preferred
Shares Series 30), which is less than the minimum 1,000,000 required to give
effect to the conversion, as described in the Preferred Shares Series 29
prospectus supplement dated May 30, 2014. As a result, no Preferred Shares
Series 30 shares were issued and holders of Preferred Shares Series 29 retained
their shares. The dividend rate for the Preferred Shares Series 29 is 3.624% for
the five-year period commencing on August 25, 2019, and ending on August 24,
2024.

Dividends

On December 3, 2019, BMO announced that the Board of Directors had declared a
quarterly dividend on common shares of $1.06 per share, up $0.03 per share or 3%
from the prior quarter and up $0.06 per share or 6% from the prior year. The
dividend is payable on February 26, 2020, to shareholders of record on February
3, 2020. Common shareholders may elect to have their cash dividends reinvested
in common shares of BMO, in accordance with the Shareholder Dividend
Reinvestment and Share Purchase Plan.

For the purposes of the Income Tax Act (Canada) and any similar provincial and
territorial legislation, BMO designates all dividends paid or deemed to be paid
on both its common and preferred shares as "eligible dividends", unless
indicated otherwise.

Caution

This Capital Management section contains forward-looking statements. Please
refer to the Caution Regarding Forward-Looking Statements.

Review of Operating Groups' Performance

How BMO Reports Operating Group Results

The following sections review the financial results of each of our operating
groups and operating segments for the fourth quarter of 2019.

Periodically, certain business lines and units within the business lines are
transferred between client and corporate support groups to more closely align
BMO's organizational structure with its strategic priorities. In addition,
allocations of revenue, provisions for credit losses and expenses are updated to
better align with current experience. Results for prior periods are reclassified
to conform with the current period's presentation.

Effective the first quarter of 2019, certain dividend income in our Global
Markets business has been reclassified from non-interest revenue to net interest
income. Results for prior periods and related ratios have been reclassified to
conform with the current period's presentation.

The bank adopted IFRS 15, Revenue from Contracts with Customers (IFRS 15),
effective the first quarter of 2019, and we elected to retrospectively present
prior periods as if IFRS 15 had always been applied. As a result, loyalty
rewards and cash promotion costs on cards previously recorded in non-interest
expense are presented as a reduction in non-interest revenue. In addition, when
customers reimburse us for certain out-of-pocket expenses incurred on their
behalf, we record the reimbursement in revenue. Previously, these reimbursements
were recorded as a reduction in the related expense.

BMO analyzes revenue at the consolidated level based on GAAP revenue as reported
in the consolidated financial statements rather than on a taxable equivalent
basis (teb), which is consistent with our Canadian peer group. Like many banks,
we analyze revenue on a teb basis at the operating group level. Revenue and the
provision for income taxes are increased on tax-exempt securities to an
equivalent before-tax basis to facilitate comparisons of income between taxable
and tax-exempt sources. The offset to the group teb adjustments is reflected in
Corporate Services revenue and provision for income taxes.

Personal and Commercial Banking (P&C)

(Canadian $ in Q4-2019 Q3-2019 Q4-2018 Fiscal Fiscal
millions, except as 2019 2018
noted)
Net interest income 2,597 2,565 2,431 10,096 9,384
(teb)
Non-interest 847 848 801 3,290 3,165
revenue (1)
Total revenue (teb) 3,444 3,413 3,232 13,386 12,549
(1)
Provision for 200 235 179 704 724
(recovery of)
credit losses on
impaired loans
Provision for 15 67 3 100 (35)
(recovery of)
credit losses on
performing loans
Total provision for 215 302 182 804 689
credit losses
Non-interest 1,763 1,774 1,707 6,993 6,678
expense (1)
Income before 1,466 1,337 1,343 5,589 5,182
income taxes
Provision for 357 321 297 1,352 1,239
income taxes (teb)
Reported net income 1,109 1,016 1,046 4,237 3,943
Amortization of 11 12 12 45 47
acquisition-related
intangible assets
(2)
Adjusted net income 1,120 1,028 1,058 4,282 3,990
Net income growth 6.0 1.1 17.6 7.5 12.1
(%)
Adjusted net income 5.9 1.1 17.3 7.3 11.9
growth (%)
Revenue growth (%) 6.5 6.4 7.5 6.7 5.5
Non-interest 3.3 4.1 6.2 4.7 3.9
expense growth (%)
Adjusted 3.4 4.2 6.3 4.8 4.0
non-interest
expense growth (%)
Return on equity 17.8 16.4 19.0 17.5 18.5
(%)
Adjusted return on 18.0 16.6 19.2 17.7 18.8
equity (%)
Operating leverage 3.2 2.3 1.3 2.0 1.6
(teb) (%)
Adjusted operating 3.1 2.2 1.2 1.9 1.5
leverage (teb) (%)
Efficiency ratio 51.2 52.0 52.8 52.2 53.2
(teb) (%)
Adjusted efficiency 50.8 51.5 52.3 51.8 52.7
ratio (teb) (%)
Net interest margin 2.92 2.94 2.98 2.95 2.97
on average earning
assets (teb) (%)
Average earning 352,731 346,301 324,014 342,153 316,359
assets
Average gross loans 362,865 355,478 330,502 350,762 321,537
and acceptances
Average net loans 361,186 353,873 328,923 349,157 320,019
and acceptances
Average deposits 293,977 283,924 258,602 281,858 250,221

(1) Effective
Q1-2019, the
bank adopted
IFRS 15,
Revenue from
Contracts with
Customers (IFRS
15) and elected
to
retrospectively
present prior
periods as if
IFRS 15 had
always been
applied. As a
result, loyalty
rewards and
cash promotion
costs on cards
previously
recorded in
non-interest
expense are
presented as a
reduction in
non-interest
revenue.
(2) Total P&C
before tax
amounts of $15
million in both
Q4-2019 and
Q3-2019, $16
million in
Q4-2018; $59
million for
fiscal 2019 and
$61 million for
fiscal 2018 are
included in
non-interest
expense.
Adjusted
results
in this
table are
non-GAAP
amounts
or
non-GAAP
measures.
Please
refer to
the
Non-GAAP
Measures
section.

The Personal and Commercial Banking (P&C) operating group represents the sum of
our two retail and commercial operating segments, Canadian Personal and
Commercial Banking (Canadian P&C) and U.S. Personal and Commercial Banking (U.S.
P&C). The P&C banking business reported net income of $1,109 million and
adjusted net income of $1,120 million both increased 6% from the prior year, or
5% excluding the impact of the stronger U.S. dollar. Adjusted net income
excludes the amortization of acquisition-related intangible assets. These
operating segments are reviewed separately in the sections that follow.

Adjusted results in this P&C section are non-GAAP amounts or non-GAAP measures.
Please refer to the Non-GAAP Measures section.

Canadian Personal and Commercial Banking (Canadian P&C)

(Canadian $ in Q4-2019 Q3-2019 Q4-2018 Fiscal Fiscal
millions, except as 2019 2018
noted)
Net interest income 1,540 1,498 1,421 5,878 5,541
Non-interest 543 550 522 2,128 2,069
revenue (1)
Total revenue (1) 2,083 2,048 1,943 8,006 7,610
Provision for 134 174 118 544 466
(recovery of)
credit losses on
impaired loans
Provision for 11 30 (15) 63 3
(recovery of)
credit losses on
performing loans
Total provision for 145 204 103 607 469
credit losses
Non-interest 971 970 931 3,854 3,710
expense (1)
Income before 967 874 909 3,545 3,431
income taxes
Provision for 251 226 235 919 882
income taxes
Reported net income 716 648 674 2,626 2,549
Amortization of - 1 1 2 2
acquisition-related
intangible assets
(2)
Adjusted net income 716 649 675 2,628 2,551
Personal revenue 1,294 1,273 1,244 4,998 4,921
Commercial revenue 789 775 699 3,008 2,689
Net income growth 6.3 1.1 8.9 3.0 2.0
(%)
Revenue growth (%) 7.1 5.9 4.8 5.2 3.7
Non-interest 4.4 4.0 4.1 3.9 5.0
expense growth (%)
Adjusted 4.4 4.0 4.1 3.9 5.0
non-interest
expense growth (%)
Return on equity 28.6 26.3 31.2 27.3 30.5
(%)
Adjusted return on 28.6 26.3 31.2 27.3 30.6
equity (%)
Operating leverage 2.7 1.9 0.7 1.3 (1.3)
(%)
Adjusted operating 2.7 1.9 0.7 1.3 (1.3)
leverage (%)
Efficiency ratio 46.7 47.3 47.9 48.1 48.7
(%)
Net interest margin 2.69 2.65 2.62 2.64 2.60
on average earning
assets (%)
Average earning 227,377 224,073 215,290 222,513 212,965
assets
Average gross loans 243,648 239,310 226,953 237,142 223,536
and acceptances
Average net loans 242,710 238,434 226,070 236,253 222,673
and acceptances
Average deposits 183,975 177,093 162,480 175,125 159,483

(1) Effective
Q1-2019, the
bank adopted
IFRS 15,
Revenue from
Contracts with
Customers (IFRS
15) and elected
to
retrospectively
present prior
periods as if
IFRS 15 had
always been
applied. As a
result, loyalty
rewards and
cash promotion
costs on cards
previously
recorded in
non-interest
expense are
presented as a
reduction in
non-interest
revenue.
(2) Before tax
amounts of $nil
in Q4-2019, $1
million in both
Q3-2019 and
Q4-2018; $2
million in both
fiscal 2019 and
fiscal 2018 are
included in
non-interest
expense.
Adjusted
results
in this
table are
non-GAAP
amounts
or
non-GAAP
measures.
Please
refer to
the
Non-GAAP
Measures
section.

Q4 2019 vs. Q4 2018

Canadian P&C reported net income was $716 million, an increase of $42 million
and adjusted net income was $716 million, an increase of $41 million or 6% from
the prior year. Adjusted net income excludes the amortization of
acquisition-related intangible assets. Results reflect strong revenue growth,
partially offset by higher provisions for credit losses and higher expenses.

Revenue was $2,083 million, an increase of $140 million or 7% from the prior
year, due to higher balances across all products, higher margins and increased
non-interest revenue. Net interest margin of 2.69% increased 7 basis points due
to higher long-term rates, a favourable product mix and the benefit of a
widening Prime rate to the Banker's Acceptances (BA) rate.

Personal revenue increased $50 million or 4%, due to higher balances across all
products and higher margins, partially offset by lower non-interest revenue.
Commercial revenue increased $90 million or 13%, due to higher balances across
products, higher non-interest revenue and higher margins.

Total provision for credit losses was $145 million, an increase of $42 million
from the prior year. The provision for credit losses on impaired loans increased
$16 million, due to higher consumer and commercial provisions. There was an $11
million provision for credit losses on performing loans in the current quarter
compared with a $15 million recovery of credit losses on performing loans in the
prior year.

Non-interest expense was $971 million, an increase of $40 million or 4%,
primarily due to investment in the business, including technology and sales
force investments.

Average gross loans and acceptances of $243.6 billion increased $16.7 billion or
7% from the prior year. Total personal lending balances (excluding retail cards)
increased 3%, including 5% growth in proprietary mortgages and amortizing home
equity line of credit loans. Commercial loan balances (excluding corporate
cards) increased 16%. Average deposits of $184.0 billion increased $21.5 billion
or 13%. Personal deposit balances increased 14% and commercial deposit balances
increased 12%.

Q4 2019 vs. Q3 2019

Reported net income increased $68 million and adjusted net income increased $67
million or 10% from the prior quarter.

Revenue increased $35 million or 2%, due to higher balances across all products
and higher margins, partially offset by lower non-interest revenue. Net interest
margin of 2.69% increased 4 basis points, due to a favourable product mix and
the benefit of higher long-term rates.

Personal revenue increased $21 million or 2%, due to higher balances across all
products, higher margins and increased non-interest revenue. Commercial revenue
increased $14 million or 2%, due to higher margins and higher balances across
all products, partially offset by lower non-interest revenue.

Total provision for credit losses decreased $59 million. The provision for
credit losses on impaired loans decreased $40 million with lower consumer and
commercial provisions in the current quarter. There was a $11 million provision
for credit losses on performing loans in the current quarter, compared with a
$30 million provision for credit losses on performing loans in the prior
quarter.

Non-interest expense increased $1 million.

Average gross loans and acceptances increased $4.3 billion or 2% and average
deposits increased $6.9 billion or 4%.

Adjusted results in this Canadian P&C section are non-GAAP amounts or non-GAAP
measures. Please refer to the Non-GAAP Measures section.

U.S. Personal and Commercial Banking (U.S. P&C)

(US$ in millions, Q4-2019 Q3-2019 Q4-2018 Fiscal Fiscal
except as noted) 2019 2018
Net interest income 798 804 774 3,174 2,983
(teb)
Non-interest 230 225 214 875 851
revenue (1)
Total revenue (teb) 1,028 1,029 988 4,049 3,834
(1)
Provision for 51 45 46 121 201
(recovery of)
credit losses on
impaired loans
Provision for 3 28 14 28 (31)
(recovery of)
credit losses on
performing loans
Total provision for 54 73 60 149 170
credit losses
Non-interest 598 606 594 2,362 2,303
expense (1)
Income before 376 350 334 1,538 1,361
income taxes
Provision for 79 73 49 326 279
income taxes (teb)
Reported net income 297 277 285 1,212 1,082
Amortization of 8 8 9 32 35
acquisition-related
intangible assets
(2)
Adjusted net income 305 285 294 1,244 1,117
Personal revenue 337 348 327 1,362 1,257
Commercial revenue 691 681 661 2,687 2,577
Net income growth 4.1 (0.6) 32.9 12.0 38.7
(%)
Adjusted net income 3.8 (0.8) 31.5 11.4 36.9
growth (%)
Revenue growth (%) 4.1 5.3 8.1 5.6 9.9
Non-interest 0.6 2.3 5.4 2.6 4.1
expense growth (%)
Adjusted 0.7 2.5 5.6 2.7 4.3
non-interest
expense growth (%)
Return on equity 10.5 9.8 11.1 11.0 10.8
(%)
Adjusted return on 10.8 10.1 11.5 11.3 11.1
equity (%)
Operating leverage 3.5 3.0 2.7 3.0 5.8
(teb) (%)
Adjusted operating 3.4 2.8 2.5 2.9 5.6
leverage (teb) (%)
Efficiency ratio 58.1 59.0 60.2 58.3 60.1
(teb) (%)
Adjusted efficiency 57.1 57.9 59.0 57.3 58.9
ratio (teb) (%)
Net interest margin 3.35 3.46 3.69 3.53 3.72
on average earning
assets (teb) (%)
Average earning 94,682 92,116 83,336 90,035 80,255
assets
Average gross loans 90,047 87,549 79,369 85,505 76,067
and acceptances
Average net loans 89,488 87,000 78,835 84,966 75,558
and acceptances
Average deposits 83,085 80,520 73,668 80,316 70,431
(Canadian $
equivalent in
millions)
Net interest income 1,057 1,067 1,010 4,218 3,843
(teb)
Non-interest 304 298 279 1,162 1,096
revenue (1)
Total revenue (teb) 1,361 1,365 1,289 5,380 4,939
(1)
Provision for 66 61 61 160 258
credit losses on
impaired loans
Provision for 4 37 18 37 (38)
(recovery of)
credit losses on
performing loans
Total provision for 70 98 79 197 220
credit losses
Non-interest 792 804 776 3,139 2,968
expense (1)
Income before 499 463 434 2,044 1,751
income taxes
Provision for 106 95 62 433 357
income taxes (teb)
Reported net income 393 368 372 1,611 1,394
Adjusted net income 404 379 383 1,654 1,439
Net income growth 5.6 1.2 37.4 15.6 36.9
(%)
Adjusted net income 5.2 1.0 35.9 15.0 35.1
growth (%)
Revenue growth (%) 5.6 7.2 11.8 8.9 8.4
Non-interest 2.1 4.2 9.0 5.8 2.7
expense growth (%)
Adjusted 2.2 4.3 9.2 5.9 2.9
non-interest
expense growth (%)
Average earning 125,354 122,228 108,724 119,640 103,394
assets
Average gross loans 119,217 116,168 103,549 113,620 98,001
and acceptances
Average net loans 118,476 115,439 102,853 112,904 97,346
and acceptances
Average deposits 110,002 106,831 96,122 106,733 90,738

(1) Effective
Q1-2019, the
bank adopted
IFRS 15,
Revenue from
Contracts with
Customers (IFRS
15) and elected
to
retrospectively
present prior
periods as if
IFRS 15 had
always been
applied. As a
result, loyalty
rewards and
cash promotion
costs on cards
previously
recorded in
non-interest
expense are
presented as a
reduction in
non-interest
revenue.
(2) Before tax
amounts of
US$11 million
in each of
Q4-2019,
Q3-2019 and
Q4-2018; US$43
million for
fiscal 2019 and
US$45 million
for fiscal 2018
are included in
non-interest
expense.
Adjusted
results
in this
table are
non-GAAP
amounts
or
non-GAAP
measures.
Please
refer to
the
Non-GAAP
Measures
section.

Q4 2019 vs. Q4 2018

U.S. P&C reported net income was $393 million, an increase of $21 million or 6%
and adjusted net income was $404 million, an increase of $21 million or 5% from
the prior year. Adjusted net income excludes the amortization of
acquisition-related intangible assets. All amounts in the remainder of this
section are on a U.S. dollar basis.

Reported net income was $297 million, an increase of $12 million or 4% and
adjusted net income was $305 million, an increase of $11 million or 4%,
primarily due to higher revenue and lower provisions for credit losses,
partially offset by a favourable U.S. tax item in the prior year and higher
expenses.

Revenue was $1,028 million, an increase of $40 million or 4% from the prior
year, with higher loan and deposit balances, partially offset by a lower net
interest margin. Net interest margin of 3.35% decreased 34 basis points, due to
loan margin compression, changes in deposit product mix, lower deposit product
margins, the impact of loans growing faster than deposits and lower interest
recoveries.

Personal revenue increased $10 million or 3%, due to higher loan revenue.
Commercial revenue increased $30 million or 5%, primarily due to higher loan
balances and deposit revenue, partially offset by loan margin compression.

Total provision for credit losses was $54 million, a decrease of $6 million from
the prior year. The provision for credit losses on impaired loans increased $5
million, due to higher consumer provisions. There was a $3 million provision for
credit losses on performing loans in the current quarter, compared with a $14
million provision for credit losses on performing loans in the prior year.

Non-interest expense was $598 million and adjusted non-interest expense was $587
million, both reflecting an increase of $4 million or 1% from the prior year, as
higher technology and employee-related costs, were largely offset by lower
premises costs.

Average gross loans and acceptances of $90.0 billion increased $10.7 billion or
13% from the prior year, driven by growth in commercial loans of 15% and
personal loans of 6%. Average deposits of $83.1 billion increased $9.4 billion
or 13%, with 18% growth in commercial deposit balances and 9% growth in personal
deposit balances.

Q4 2019 vs. Q3 2019

Reported net income and adjusted net income both increased $25 million or 7%
from the prior quarter. All amounts in the remainder of this section are on a
U.S. dollar basis.

Reported net income and adjusted net income both increased $20 million or 7%,
reflecting lower provisions for credit losses and lower expenses.

Revenue was unchanged from the prior quarter, as the impact of lower interest
rates offset higher loan and deposit balances and fee income. Net interest
margin of 3.35% decreased 11 basis points, due to lower deposit margins.

Personal revenue decreased $11 million or 3%, due to lower deposit revenue.
Commercial revenue increased $10 million or 2%, due to higher loan and fee
income.

Total provision for credit losses decreased $19 million. The provision for
credit losses on impaired loans increased $6 million, due to higher consumer
provisions, partially offset by lower commercial provisions. There was a $3
million provision for credit losses on performing loans in the current quarter,
compared with a $28 million provision for credit losses on performing loans in
the prior quarter.

Non-interest expense and adjusted non-interest expense decreased $8 million or
1%, as higher technology investment and other costs were more than offset by
lower premises costs and good expense management discipline.

Average gross loans and acceptances increased $2.5 billion or 3%, with growth in
both commercial and personal loans. Average deposits increased $2.6 billion or
3%, with growth in both commercial and personal deposit balances.

Adjusted results in this U.S. P&C section are non-GAAP amounts or non-GAAP
measures. Please refer to the Non-GAAP Measures section.

BMO Wealth Management

(Canadian $ in Q4-2019 Q3-2019 Q4-2018 Fiscal Fiscal
millions, except as 2019 2018
noted)
Net interest income 236 237 210 935 826
Non-interest 1,331 1,876 1,361 6,727 5,475
revenue (1)
Total revenue (1) 1,567 2,113 1,571 7,662 6,301
Insurance claims, 335 887 390 2,709 1,352
commissions and
changes in policy
benefit liabilities
(CCPB)
Revenue, net of 1,232 1,226 1,181 4,953 4,949
CCPB
Provision for 1 - 2 2 6
(recovery of)
credit losses on
impaired loans
Provision for (1) (2) 1 (2) -
(recovery of)
credit losses on
performing loans
Total provision for - (2) 3 - 6
(recovery of)
credit losses
Non-interest 860 885 882 3,522 3,515
expense (1)
Income before 372 343 296 1,431 1,428
income taxes
Provision for 105 94 77 371 356
income taxes
Reported net income 267 249 219 1,060 1,072
Amortization of 9 8 10 37 41
acquisition-related
intangible assets
(2)
Reinsurance 25 - - 25 -
adjustment (3)
Adjusted net income 301 257 229 1,122 1,113
Traditional Wealth 237 225 192 862 805
businesses reported
net income
Traditional Wealth 246 233 202 899 846
businesses adjusted
net income
Insurance reported 30 24 27 198 267
net income
Insurance adjusted 55 24 27 223 267
net income
Net income growth 22.0 (14.3) 25.3 (1.1) 11.0
(%)
Adjusted net income 31.3 (14.4) 21.2 0.8 8.0
growth (%)
Revenue growth (%) (0.2) 37.2 (6.8) 21.6 1.3
Revenue growth, net 4.4 (3.6) 6.1 0.1 5.7
of CCPB (%)
Adjusted CCPB 310 887 390 2,684 1,352
Revenue growth, net 6.5 (3.6) 6.1 0.6 5.7
of adjusted CCPB
(%)
Non-interest (2.6) 1.0 4.9 0.2 4.8
expense growth (%)
Adjusted (2.4) 1.2 5.6 0.3 5.8
non-interest
expense growth (%)
Return on equity 16.6 15.3 14.1 16.7 17.8
(%)
Adjusted return on 18.7 15.9 14.7 17.7 18.5
equity (%)
Operating leverage, 7.0 (4.6) 1.2 (0.1) 0.9
net of CCPB (%)
Adjusted operating 8.9 (4.8) 0.5 0.3 (0.1)
leverage, net of
CCPB (%)
Reported efficiency 54.9 41.9 56.2 46.0 55.8
ratio (%)
Reported efficiency 69.8 72.2 74.8 71.1 71.0
ratio, net of CCPB
(%)
Adjusted efficiency 54.1 41.3 55.4 45.3 55.0
ratio (%)
Adjusted efficiency 67.5 71.2 73.7 69.8 70.0
ratio, net of CCPB
(%)
Assets under 471,160 464,711 438,274 471,160 438,274
management
Assets under 393,576 391,622 382,839 393,576 382,839
administration (4)
Average assets 42,750 41,891 37,510 40,951 35,913
Average gross loans 24,660 24,068 21,559 23,519 20,290
and acceptances
Average net loans 24,628 24,036 21,531 23,487 20,260
and acceptances
Average deposits 38,123 36,190 33,968 36,419 34,251

(1) Effective
Q1-2019, the
bank adopted
IFRS 15,
Revenue from
Contracts with
Customers (IFRS
15) and elected
to
retrospectively
present prior
periods as if
IFRS 15 had
always been
applied. As a
result, certain
out-of-pocket
expenses
reimbursed to
BMO from
customers have
been
reclassified
from a
reduction in
non-interest
expense to
non-interest
revenue.
(2) Before tax
amounts of $11
million in both
Q4-2019 and
Q3-2019, $13
million in
Q4-2018; $47
million in
fiscal 2019 and
$52 million in
fiscal 2018 are
included in
non-interest
expense.
(3) Q4-2019
reported net
income included
a reinsurance
adjustment of
$25 million
(pre-tax and
after-tax) in
CCPB for the
net impact of
major
reinsurance
claims from
Japanese
typhoons that
were incurred
after our
announced
decision to
wind down our
reinsurance
business. This
reinsurance
adjustment is
included in
CCPB.
(4) We have certain
assets under
management that
are also
administered by
us and are
included in
assets under
administration.
Adjusted
results
in this
table are
non-GAAP
amounts
or
non-GAAP
measures.
Please
refer to
the
Non-GAAP
Measures
section.

Q4 2019 vs. Q4 2018

BMO Wealth Management reported net income was $267 million, an increase of $48
million or 22% and adjusted net income was $301 million, an increase of $72
million or 31% from the prior year. Adjusted net income in the current quarter
excludes the net impact of major reinsurance claims from Japanese typhoons that
were incurred after our announced decision to wind down our reinsurance business
and the amortization of acquisition-related intangible assets in both the
current and prior year. Traditional Wealth reported net income was $237 million,
an increase of $45 million or 24% and adjusted net income was $246 million, an
increase of $44 million or 22%, due to the impact of a legal provision in the
prior yearand higher deposit and loan revenue and higher fee-based revenue.
Insurance reported net income was $30 million, an increase of $3 million or 9%
and adjusted net income was $55 million, an increase of $28 million, primarily
due to benefits from changes in investments to improve asset liability
management.

Revenue of $1,567 million was relatively unchanged, compared with the prior
year. Revenue, net of reported CCPB, was $1,232 million, an increase of $51
million or 4%. Revenue in Traditional Wealth was $1,155 million, an increase of
$53 million or 5%, due to the impact of a legal provision in the prior year,
higher deposit and loan, and fee-based revenue. Insurance revenue, net of
reported CCPB, was relatively unchanged compared with the prior year and
Insurance revenue, net of adjusted CCPB, increased $24 million, due to benefits
from changes in investments to improve asset-liability management.

Reported non-interest expense was $860 million, a decrease of $22 million or 3%,
and adjusted non-interest expense was $849 million, a decrease of $20 million or
2%, primarily due to below trend expenses in the current quarter and the impact
of the legal provision in the prior year.

Assets under management of $471.2 billion increased $32.9 billion or 8% from the
prior year, primarily driven by stronger equity markets. Assets under
administration of $393.6 billion increased $10.7 billion or 3% from the prior
year, primarily driven by stronger equity markets and underlying growth. Average
gross loans and average deposits increased 14% and 12%, respectively, as we
continue to diversify our product mix.

Q4 2019 vs. Q3 2019

Reported net income increased $18 million or 7%, and adjusted net income
increased $44 million or 17% from the prior quarter. Traditional Wealth reported
net income increased $12 million or 5%, and adjusted net income increased $13
million or 5% from the prior quarter, primarily due to lower expenses. Insurance
reported net income increased $6 million or 27%, and adjusted net income
increased $31 million, primarily due to benefits from changes in investments to
improve asset-liability management.

Revenue was $1,567 million, compared with $2,113 million in the prior quarter.
Revenue, net of CCPB, increased $6 million or 1%. Revenue, net of adjusted CCPB,
increased $31 million or 3%. Revenue in Traditional Wealth was relatively
unchanged. Insurance revenue, net of CCPB, increased $4 million and Insurance
revenue, net of adjusted CCPB, increased $29 million, due to benefits from
changes in investments to improve asset-liability management.

Reported and adjusted non-interest expense both decreased $25 million or 3%,
primarily due to the benefit of below trend expenses in the current quarter and
continued good expense management discipline.

Assets under management increased $6.4 billion or 1% and assets under
administration increased $2.0 billion, relatively unchanged from the prior
quarter, primarily driven by stronger equity markets. Average gross loans
increased 2% and average deposits increased 5% from the prior quarter.

Adjusted results in this BMO Wealth Management section are non-GAAP amounts or
non-GAAP measures. Please refer to the Non-GAAP Measures section.

BMO Capital Markets

(Canadian $ in Q4-2019 Q3-2019 Q4-2018 Fiscal Fiscal
millions, except as 2019 2018
noted)
Net interest income 696 538 493 2,394 1,784
(teb) (1)
Non-interest 477 662 639 2,340 2,579
revenue (1)(2)
Total revenue (teb) 1,173 1,200 1,132 4,734 4,363
(1)(2)
Provision for 32 7 (3) 52 (17)
(recovery of)
credit losses on
impaired loans
Provision for 8 3 (4) 28 (1)
(recovery of)
credit losses on
performing loans
Total provision for 40 10 (7) 80 (18)
(recovery of)
credit losses
Non-interest 788 794 765 3,261 2,859
expense (2)
Income before 345 396 374 1,393 1,522
income taxes
Provision for 76 83 76 307 366
income taxes (teb)
Reported net income 269 313 298 1,086 1,156
Acquisition 2 2 9 10 11
integration costs
(3)
Amortization of 9 3 2 17 2
acquisition-related
intangible assets
(4)
Adjusted net income 280 318 309 1,113 1,169
Global Markets 688 665 630 2,704 2,541
revenue (5)
Investment and 485 535 502 2,030 1,822
Corporate Banking
revenue
Net income growth (9.6) 4.0 (5.6) (6.0) (9.4)
(%)
Adjusted net income (9.4) 5.0 (2.3) (4.8) (8.5)
growth (%)
Revenue growth (%) 3.6 8.6 1.5 8.5 (4.7)
Non-interest 3.0 13.3 12.4 14.1 2.6
expense growth (%)
Adjusted 3.1 12.8 10.5 13.5 2.1
non-interest
expense growth (%)
Return on equity 9.7 11.3 12.2 9.8 12.8
(%)
Adjusted return on 10.1 11.5 12.6 10.1 13.0
equity (%)
Operating leverage 0.6 (4.7) (10.9) (5.6) (7.3)
(teb) (%)
Adjusted operating 0.5 (4.2) (9.0) (5.0) (6.8)
leverage (teb) (%)
Efficiency ratio 67.2 66.1 67.6 68.9 65.5
(teb) (%)
Adjusted efficiency 66.0 65.6 66.4 68.2 65.1
ratio (teb) (%)
Average assets 341,745 343,009 317,655 342,347 307,087
Average gross loans 62,752 60,870 47,972 60,034 46,724
and acceptances
Average net loans 62,642 60,771 47,909 59,946 46,658
and acceptances

(1) Effective
Q1-2019,
certain
dividend income
in our Global
Markets
business has
been
reclassified
from
non-interest
revenue to net
interest
income. Results
for prior
periods and
related ratios
have been
reclassified to
conform with
the current
period's
presentation.
(2) Effective
Q1-2019, the
bank adopted
IFRS 15,
Revenue from
Contracts with
Customers (IFRS
15) and elected
to
retrospectively
present prior
periods as if
IFRS 15 had
always been
applied. As a
result, certain
out-of-pocket
expenses
reimbursed to
BMO from
customers have
been
reclassified
from a
reduction in
non-interest
expense to
non-interest
revenue.
(3) KGS-Alpha
acquisition
integration
costs before
tax amounts of
$2 million in
Q4-2019, $3
million in
Q3-2019 and $12
million in
Q4-2018; $13
million in
fiscal 2019 and
$14 million in
fiscal 2018 are
included in
non-interest
expense.
(4) Before tax
amounts of $12
million in
Q4-2019, $3
million in
Q3-2019 and $2
million in
Q4-2018; $22
million for
fiscal 2019 and
$3 million for
fiscal 2018 are
included in
non-interest
expense.
(5) Global Markets
was previously
known as
Trading
Products.
Adjusted
results
in this
table are
non-GAAP
amounts
or
non-GAAP
measures.
Please
refer to
the
Non-GAAP
Measures
section.

Q4 2019 vs. Q4 2018

BMO Capital Markets reported net income was $269 million, compared with $298
million in the prior year, and adjusted net income was $280 million, compared
with $309 million in the prior year. Adjusted net income excludes the
amortization of acquisition-related intangible assets and acquisition
integration costs. Higher revenue was more than offset by higher provisions for
credit losses and higher expenses.

Revenue was $1,173 million, an increase of $41 million or 4%. Global Markets
revenue increased, driven by higher interest rate trading revenue, primarily due
to the impact of the acquisition of KGS-Alpha, higher commodities and foreign
exchange trading, partially offset by lower equities trading. Investment and
Corporate Banking revenue decreased slightly from the prior year, driven by
lower underwriting and advisory revenue, partially offset by higher corporate
banking-related revenue.

Total provision for credit losses was $40 million, an increase of $47 million
from a $7 million recovery of credit losses in the prior year. The provision for
credit losses on impaired loans was $32 million in the current quarter, compared
with a $3 million recovery of credit losses on impaired loans in the prior year.
There was a $8 million provision for credit losses on performing loans in the
current quarter, compared with a $4 million recovery of credit losses on
performing loans in the prior year.

Non-interest expense was $788 million, an increase of $23 million or 3% and
adjusted non-interest expense was $774 million, an increase of $23 million or
3%, or 2% excluding the impact of the stronger U.S. dollar. The increase was due
to higher other operating expenses and the impact of the acquisition of
KGS-Alpha, partially offset by lower other employee-related costs.

Q4 2019 vs. Q3 2019

Reported net income was $269 million, compared with $313 million in the prior
quarter, and adjusted net income was $280 million, compared with $318 million in
the prior quarter.

Revenue decreased $27 million or 2%. Global Markets revenue increased, primarily
due to higher interest rate and commodities trading revenue, partially offset by
lower equities trading revenue. Investment and Corporate Banking revenue
decreased from the prior quarter, primarily due to lower debt underwriting and
advisory revenue.

Total provision for credit losses increased $30 million. The provision for
credit losses on impaired loans increased $25 million in the current quarter.
There was a $8 million provision for credit losses on performing loans in the
current quarter, compared with a $3 million provision for credit losses on
performing loans in the prior quarter.

Non-interest expense decreased $6 million or 1% and adjusted non-interest
expense decreased $14 million or 2%, primarily due to lower employee-related
expenses.

Adjusted results in this BMO Capital Markets section are non-GAAP amounts or
non-GAAP measures. Please refer to the Non-GAAP Measures section.

Corporate Services

(Canadian $ Q4-2019 Q3-2019 Q4-2018 Fiscal Fiscal
in millions, 2019 2018
except as
noted)
Net interest (88) (49) (52) (241) (243)
income before
group teb
offset
Group teb (77) (74) (67) (296) (313)
offset
Net interest (165) (123) (119) (537) (556)
income (teb)
Non-interest 68 63 77 238 248
revenue
Total revenue (97) (60) (42) (299) (308)
(teb)
Provision for (2) 1 (1) (7) (13)
(recovery of)
credit losses
on impaired
loans
Provision for - (5) (2) (5) (2)
(recovery of)
credit losses
on performing
loans
Total (2) (4) (3) (12) (15)
provision for
(recovery of)
credit losses
Non-interest 576 38 (161) 854 425
expense (1)
Income (loss) (671) (94) 122 (1,141) (718)
before income
taxes
Provision for (220) (73) (12) (516) -
(recovery of)
income taxes
(teb)
Reported net (451) (21) 134 (625) (718)
income (loss)
Acquisition - - 4 - 14
integration
costs (1)
Restructuring 357 - - 357 192
costs (2)
U.S. net - - - - 425
deferred tax
asset
revaluation
(3)
Benefit from - - (203) - (203)
the
remeasurement
of an
employee
benefit
liability (4)
Adjusted net (94) (21) (65) (268) (290)
loss
Adjusted 92 38 110 370 422
non-interest
expense

(1) Acquisition
integration
costs related
to the
acquired BMO
Transportation
Finance
business are
included in
non-interest
expense.
(2) Q4-2019
reported net
income
included a
$357 million
after-tax
($484 million
pre-tax)
restructuring
charge,
related to
severance and
a small amount
of real
estate-related
costs, to
continue to
improve our
efficiency,
including
accelerating
delivery
against key
bank-wide
initiatives
focused on
digitization,
organizational
redesign and
simplification
of the way we
do business,
and Q2-2018
included a
$192 million
after-tax
($260 million
pre-tax)
restructuring
charge.
Restructuring
charges are
included in
non-interest
expense.
(3) Q1-2018 net
income
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. For more
information,
refer to the
Critical
Accounting
Estimates -
Income Taxes
and Deferred
Tax Assets
section on
page 119 of
BMO's 2018
Annual Report.
(4) Q4-2018 net
income
included a
benefit of
$203 million
after-tax
($277 million
pre-tax) from
the
remeasurement
of an employee
benefit
liability, as
a result of an
amendment to
our employee
future
benefits plan
for certain
employees.
This amount
was included
in Corporate
Services in
non-interest
expense.
Adjusted
results
in this
table are
non-GAAP
amounts
or
non-GAAP
measures.
Please
refer to
the
Non-GAAP
Measures
section.

Corporate Services consists of Corporate Units and Technology and Operations
(T&O). Corporate Units provide enterprise-wide expertise, governance and support
in a variety of areas, including strategic planning, risk management, finance,
legal and regulatory compliance, human resources, communications, marketing,
real estate, procurement, data and analytics, and innovation. T&O develops,
monitors, manages and maintains governance of information technology, and also
provides cyber security and operations services.

The costs of these Corporate Units and T&O services are largely transferred to
the three operating groups (Personal and Commercial Banking, BMO Wealth
Management and BMO Capital Markets), with any remaining amounts retained in
Corporate Services results. As such, Corporate Services results largely reflect
the impact of residual treasury-related activities, the elimination of taxable
equivalent adjustments, and residual unallocated expenses. Reported results in
the current quarter include a restructuring charge and the prior year included a
benefit from the remeasurement of an employee benefit liability, as well as
certain acquisition integration costs.

Q4 2019 vs. Q4 2018

Corporate Services reported net loss was $451 million, compared with a reported
net income of $134 million in the prior year. Adjusted net loss was $94 million,
compared with an adjusted net loss of $65 million in the prior year. Adjusted
results in the current quarter exclude the restructuring charge. Adjusted
results in the prior year exclude the benefit from the remeasurement of an
employee benefit liability and acquisition integration costs. Adjusted results
decreased, primarily due to below trend revenue excluding taxable equivalent
basis (teb) adjustments, partially offset by lower expenses.

Q4 2019 vs. Q3 2019

Reported net loss for the quarter was $451 million, compared with a reported net
loss of $21 million in the prior quarter. Adjusted net loss was $94 million
compared with $21 million in the prior quarter. Adjusted results exclude the
restructuring charge in the current quarter and decreased, primarily due to an
increase in expenses from a below trend level recorded in the prior quarter,
which included the impact of a gain on the sale of an office building, and below
trend revenue excluding teb adjustments.

Adjusted results in this Corporate Services section are non-GAAP amounts or
non-GAAP measures. Please refer to the Non-GAAP Measures section.

Risk Management

Our risk management policies and processes to measure, monitor and control
credit and counterparty, market, insurance, liquidity and funding, operational,
legal and regulatory, business, strategic, environmental and social and
reputation risk are outlined in the Enterprise-Wide Risk Management section on
pages 68 to 106 of BMO's 2019 Annual Report.

Condensed Consolidated Financial Statements

Consolidated Statement of Income

(Unaudited) For the For
(Canadian $ in three the
millions, months twelve
except as ended months
noted) ended
October July October October October
31, 31, 31, 31, 31,
2019 2019 2018 2019 2018
Interest,
Dividend and
Fee Income
Loans $ 5,072 $ 5,120 $ 4,486 $ 19,824 $ 16,275
Securities 1,415 1,407 1,186 5,541 4,119
Deposits with 195 187 206 787 641
banks
6,682 6,714 5,878 26,152 21,035
Interest
Expense
Deposits 2,203 2,224 1,881 8,616 6,080
Subordinated 71 69 61 279 226
debt
Other 1,044 1,204 921 4,369 3,291
liabilities
3,318 3,497 2,863 13,264 9,597
Net Interest 3,364 3,217 3,015 12,888 11,438
Income
Non-Interest
Revenue
Securities 262 259 256 1,023 1,025
commissions
and fees
Deposit and 314 309 290 1,204 1,134
payment
service
charges
Trading (21) 115 131 298 705
revenues
Lending fees 313 314 266 1,181 997
Card fees 107 109 111 437 428
Investment 449 444 441 1,747 1,749
management and
custodial fees
Mutual fund 359 357 359 1,419 1,473
revenues
Underwriting 221 260 244 986 943
and advisory
fees
Securities 68 90 83 249 239
gains, other
than trading
Foreign 29 48 42 166 182
exchange
gains, other
than trading
Insurance 435 989 485 3,183 1,879
revenue
Investments in 39 31 38 151 167
associates and
joint ventures
Other 148 124 132 551 546
2,723 3,449 2,878 12,595 11,467
Total Revenue 6,087 6,666 5,893 25,483 22,905
Provision for 253 306 175 872 662
Credit Losses
Insurance 335 887 390 2,709 1,352
Claims,
Commissions
and Changes in
Policy Benefit
Liabilities
Non-Interest
Expense
Employee 2,381 1,960 1,613 8,423 7,461
compensation
Premises and 759 734 745 2,988 2,753
equipment
Amortization 148 135 125 554 503
of intangible
assets
Travel and 134 142 150 545 519
business
development
Communications 72 72 70 296 282
Professional 165 141 160 568 572
fees
Other 328 307 330 1,256 1,387
3,987 3,491 3,193 14,630 13,477
Income Before 1,512 1,982 2,135 7,272 7,414
Provision for
Income Taxes
Provision for 318 425 438 1,514 1,961
income taxes
Net Income $ 1,194 $ 1,557 $ 1,697 $ 5,758 $ 5,453
attributable
to Equity
Holders of the
Bank
Earnings Per
Share
(Canadian $)
Basic $ 1.79 $ 2.34 $ 2.58 $ 8.68 $ 8.19
Diluted 1.78 2.34 2.58 8.66 8.17
Dividends per 1.03 1.03 0.96 4.06 3.78
common share

Certain
comparative
figures have
been
reclassified
to conform
with the
current
period's
presentation
and for
changes in
accounting
policy.

Condensed Consolidated Financial Statements

Consolidated Statement of Comprehensive Income

(Unaudited) For the For
(Canadian $ in three the
millions) months twelve
ended months
ended
October July October October October
31, 31, 31, 31, 31,
2019 2019 2018 2019 2018
Net Income $ 1,194 $ 1,557 $ 1,697 $ 5,758 $ 5,453
Other
Comprehensive
Income (Loss),
net of taxes
Items that may
subsequently be
reclassified to
net income
Net change in
unrealized gains
(losses) on fair
value through
OCI securities
Unrealized gains
(losses) on fair
value through
OCI debt
securities
arising
during the 67 112 (49) 412 (251)
period (1)
Reclassification (29) (14) (22) (72) (65)
to earnings of
(gains) in the
period (2)
38 98 (71) 340 (316)
Net change in
unrealized gains
(losses) on cash
flow hedges
Gains (losses) (36) 290 (309) 1,444 (1,228)
on derivatives
designated as
cash flow hedges
arising during
the period (3)
Reclassification
to earnings of
losses on
derivatives
designated as
cash flow hedges 21 36 120 143 336
in the period
(4)
(15) 326 (189) 1,587 (892)
Net gains
(losses) on
translation of
net foreign
operations
Unrealized gains 35 (577) 303 (11) 417
(losses) on
translation of
net foreign
operations
Unrealized gains (17) 94 (62) (13) (155)
(losses) on
hedges of net
foreign
operations (5)
18 (483) 241 (24) 262
Items that will
not be
reclassified to
net income
Gains (losses)
on remeasurement
of pension and
other employee
future benefit (169) (233) (42) (552) 261
plans (6)
Gains (losses)
on remeasurement
of own credit
risk on
financial
liabilities 63 31 (18) 75 (24)
designed at fair
value (7)
Unrealized gains
on fair value
through OCI
equity
securities
during the 1 - - 1 -
period (8)
(105) (202) (60) (476) 237
Other (64) (261) (79) 1,427 (709)
Comprehensive
Income (Loss),
net of taxes
Total $ 1,130 $ 1,296 $ 1,618 $ 7,185 $ 4,744
Comprehensive
Income
attributable to
Equity Holders
of the Bank

(1) Net of income
tax
(provision)
recovery of
$(23)
million,
$(39)
million, $22
million for
the three
months ended,
and $(140)
million, $69
million for
the twelve
months ended,
respectively.
(2) Net of income
tax provision
of $11
million, $5
million, $8
million for
the three
months ended,
and $26
million, $23
million for
the twelve
months ended,
respectively.
(3) Net of income
tax
(provision)
recovery of
$15 million,
$(106)
million, $114
million for
the three
months ended,
and $(521)
million, $432
million for
the twelve
months ended,
respectively.
(4) Net of income
tax
(recovery) of
$(7) million,
$(13)
million,
$(43) million
for the three
months ended,
and $(51)
million,
$(121)
million for
the twelve
months ended,
respectively.
(5) Net of income
tax
(provision)
recovery of
$6 million,
$(35)
million, $22
million for
the three
months ended,
and $4
million, $56
million for
the twelve
months ended,
respectively.
(6) Net of income
tax
(provision)
recovery of
$58 million,
$83 million,
$23 million
for the three
months ended,
and $196
million,
$(111)
million for
the twelve
months ended,
respectively.
(7) Net of income
tax
(provision)
recovery of
$(23)
million,
$(11)
million, $7
million for
the three
months ended,
and $(27)
million, $6
million for
the twelve
months ended,
respectively.
(8) Net of income
tax
(provision)
of $(1)
million, $nil
and $nil for
the three
months ended,
and $(1)
million, $nil
for the
twelve months
ended,
respectively.
Certain
comparative
figures have
been
reclassified
to conform
with the
current
period's
presentation
and for
changes in
accounting
policy.

Condensed Consolidated Financial Statements

Consolidated Balance Sheet

(Unaudited) As at
(Canadian $ in
millions)
October July October
31, 31, 31,
2019 2019 2018
Assets
Cash and Cash $ 48,803 $ 38,938 $ 42,142
Equivalents
Interest 7,987 6,899 8,305
Bearing
Deposits with
Banks
Securities
Trading 85,903 94,906 99,697
Fair value 13,704 13,548 11,611
through profit
or loss
Fair value 64,515 67,434 62,440
through other
comprehensive
income
Debt 24,472 15,024 6,485
securities at
amortized cost
Other 844 813 702
189,438 191,725 180,935
Securities 104,004 106,612 85,051
Borrowed or
Purchased
Under Resale
Agreements
Loans
Residential 123,740 122,054 119,620
mortgages
Consumer 67,736 65,989 63,225
instalment and
other personal
Credit cards 8,859 8,749 8,329
Business and 227,609 222,857 194,456
government
427,944 419,649 385,630
Allowance for (1,850) (1,802) (1,639)
credit losses
426,094 417,847 383,991
Other Assets
Derivative 22,144 22,200 25,422
instruments
Customers? 23,593 24,741 18,585
liability
under
acceptances
Premises and 2,055 1,989 1,986
equipment
Goodwill 6,340 6,329 6,373
Intangible 2,424 2,319 2,272
assets
Current tax 1,165 1,257 1,515
assets
Deferred tax 1,568 1,662 2,039
assets
Other 16,580 16,662 14,677
75,869 77,159 72,869
Total Assets $ 852,195 $ 839,180 $ 773,293
Liabilities
and Equity
Deposits $ 568,143 $ 553,383 $ 520,928
Other
Liabilities
Derivative 23,598 23,613 23,629
instruments
Acceptances 23,593 24,741 18,585
Securities 26,253 27,375 28,804
sold but not
yet purchased
Securities 86,656 89,829 66,684
lent or sold
under
repurchase
agreements
Securitization 27,159 25,544 25,051
and structured
entities'
liabilities
Current tax 55 32 50
liabilities
Deferred tax 60 74 74
liabilities
Other 38,607 37,070 36,985
225,981 228,278 199,862
Subordinated 6,995 6,876 6,782
Debt
Equity
Preferred 5,348 5,348 4,340
shares and
other equity
instruments
Common shares 12,971 12,958 12,929
Contributed 303 303 300
surplus
Retained 28,725 28,241 25,850
earnings
Accumulated 3,729 3,793 2,302
other
comprehensive
income
Total Equity 51,076 50,643 45,721
Total $ 852,195 $ 839,180 $ 773,293
Liabilities
and Equity

Certain
comparative
figures have
been
reclassified
to conform
with the
current
period's
presentation
and for
changes in
accounting
policy.

Condensed Consolidated Financial Statements

Consolidated Statement of Changes in Equity

(Unaudited) For the For the
(Canadian $ in three twelve
millions) months months
ended ended
October October October October
31, 31, 31, 31,
2019 2018 2019 2018
Preferred Shares
and Other Equity
Instruments
Balance at $ 5,348 $ 4,240 $ 4,340 $ 4,240
beginning of
period
Issued during - 400 1,008 400
the period
Redeemed during - (300) - (300)
the period
Balance at End 5,348 4,340 5,348 4,340
of Period
Common Shares
Balance at 12,958 12,924 12,929 13,032
beginning of
period
Issued under the 13 26 62 99
Stock Option
Plan
Repurchased for - (21) (20) (202)
cancellation
Balance at End 12,971 12,929 12,971 12,929
of Period
Contributed
Surplus
Balance at 303 302 300 307
beginning of
period
Stock option (1) (2) - (12)
expense, net of
options
exercised
Other 1 - 3 5
Balance at End 303 300 303 300
of Period
Retained
Earnings
Balance at 28,241 24,901 25,850 23,700
beginning of
period
Impact from - - - 99
adopting IFRS 9
Net income 1,194 1,697 5,758 5,453
attributable to
equity holders
of the bank
Dividends - (52) (43) (211) (184)
Preferred shares
- Common (658) (614) (2,594) (2,424)
shares
Equity issue - (5) (8) (5)
expense
Common shares - (86) (70) (789)
repurchased for
cancellation
Balance at End 28,725 25,850 28,725 25,850
of Period
Accumulated
Other
Comprehensive
Income (Loss) on
Fair Value
through OCI
Securities, net
of taxes
Balance at (13) (244) (315) 56
beginning of
period
Impact from - - - (55)
adopting IFRS 9
Unrealized gains 67 (49) 412 (251)
(losses) on fair
value through
OCI debt
securities
arising during
the period
Unrealized gains 1 - 1 -
on fair value
through OCI
equity
securities
arising during
the period
Reclassification (29) (22) (72) (65)
to earnings of
(gains) on fair
value through
OCI debt
securities
during the
period
Balance at End 26 (315) 26 (315)
of Period
Accumulated
Other
Comprehensive
Income (Loss) on
Cash Flow
Hedges, net of
taxes
Balance at 528 (885) (1,074) (182)
beginning of
period
Gains (losses) (36) (309) 1,444 (1,228)
on derivatives
designated as
cash flow hedges
arising during
the period
Reclassification 21 120 143 336
to earnings of
losses on
derivatives
designated as
cash flow hedges
in the period
Balance at End 513 (1,074) 513 (1,074)
of Period
Accumulated
Other
Comprehensive
Income on
Translation
of Net Foreign
Operations, net
of taxes
Balance at 3,685 3,486 3,727 3,465
beginning of
period
Unrealized gains 35 303 (11) 417
(losses) on
translation of
net foreign
operations
Unrealized (17) (62) (13) (155)
(losses) on
hedges of net
foreign
operations
Balance at End 3,703 3,727 3,703 3,727
of Period
Accumulated
Other
Comprehensive
Income (Loss) on
Pension and
Other Employee
Future Benefit
Plans, net of
taxes
Balance at (214) 211 169 (92)
beginning of
period
Gains (losses) (169) (42) (552) 261
on remeasurement
of pension and
other employee
future benefit
plans
Balance at End (383) 169 (383) 169
of Period
Accumulated
Other
Comprehensive
(Loss) on Own
Credit Risk on
Financial
Liabilities
Designated at
Fair Value, net
of taxes
Balance at (193) (187) (205) (181)
beginning of
period
Gains (losses) 63 (18) 75 (24)
on remeasurement
of own credit
risk on
financial
liabilities
designated at
fair value
Balance at End (130) (205) (130) (205)
of Period
Total 3,729 2,302 3,729 2,302
Accumulated
Other
Comprehensive
Income
Total Equity $ 51,076 $ 45,721 $ 51,076 $ 45,721

Certain
comparative
figures have
been
reclassified
to conform
with the
current
period's
presentation
and for
changes in
accounting
policy.

INVESTOR AND MEDIA PRESENTATION

Investor Presentation Materials

Interested parties are invited to visit our website at
www.bmo.com/investorrelations to review our 2019 annual MD&A and audited annual
consolidated financial statements, quarterly presentation materials and
supplementary financial information package.

Quarterly Conference Call and Webcast Presentations

Interested parties are also invited to listen to our quarterly conference call
on Tuesday, December 3, 2019, at 8:00 a.m. (ET). The call may be accessed by
telephone at 416-641-2144 (from within Toronto) or 1-888-789-9572 (toll-free
outside Toronto), entering Passcode: 7865067#. A replay of the conference call
can be accessed until Monday, February 24, 2020, by calling 905-694-9451 (from
within Toronto) or 1-800-408-3053 (toll-free outside Toronto) and entering
Passcode: 2812262#.

A live webcast of the call can be accessed on our website at
www.bmo.com/investorrelations. A replay can also be accessed on the site.

Shareholder Dividend For other shareholder
Reinvestment and Share information, including the
Purchase Plan (the Plan) notice for our normal course
Average market price as issuer bid, please
defined under the contactBank of Montreal
PlanAugust 2019: Shareholder ServicesCorporate
$93.12September 2019: Secretary's DepartmentOne
$96.93October 2019: First Canadian Place, 21st
$98.58 For dividend FloorToronto, Ontario M5X
information, change in 1A1Telephone: (416)
shareholder address or to 867-6785Fax: (416)
advise of duplicate 867-6793E-mail:
mailings, please contact [e-mail] For
Computershare Trust further information on this
Company of Canada100 document, please contactBank
University Avenue, 8th of MontrealInvestor Relations
FloorToronto, Ontario M5J DepartmentP.O. Box 1, One
2Y1Telephone: First Canadian Place, 10th
1-800-340-5021 (Canada FloorToronto, Ontario M5X 1A1
and the United To review financial results
States)Telephone: (514) and regulatory filings and
982-7800 disclosures online, please
(international)Fax: visit our website at
1-888-453-0330 (Canada www.bmo.com/investorrelations
and the United .
States)Fax: (416)
263-9394
(international)E-mail:
[e-mail]

Our 2019 Annual MD&A, audited annual consolidated financial statements and
annual report on Form 40-F (filed with the U.S. Securities and Exchange
Commission) are available online at www.bmo.com/investorrelations and at
www.sedar.com. Printed copies of the bank's complete 2019 audited financial
statements are available free of charge upon request at 416-867-6785 or
[e-mail].

Annual
Meeting 2020
The next
Annual
Meeting of
Shareholders
will be held
on Tuesday,
March 31,
2020, in
Toronto,
Ontario.

® Registered trademark of Bank of Montreal

Media Relations Contacts: Paul Gammal, Toronto, [e-mail],
416-867-6543; Investor Relations Contacts: Jill Homenuk, Head, Investor
Relations, [e-mail], 416-867-4770; Tom Little, Director, Investor
Relations, [e-mail], 416-867-7834

Additional content: https://www.presseportal.de/pm/56914/4457493
OTS: BMO Financial Group