BMO Financial Group Reports First Quarter 2020 Results

Toronto (ots/PRNewswire) - Financial Results Highlights

First Quarter 2020 Compared With First Quarter 2019:

- Net income of $1,592 million and adjusted net income1 of $1,617
million, both up 5%
- Reported EPS2 of $2.37 and adjusted EPS1 of $2.41, both up 4%
- Revenue, net of CCPB3, of $6,031 million, up 8%
- Provision for credit losses (PCL) of $349 million; includes PCL on
performing loans of $25 million
- ROE of 13.3%, compared with 13.6%; adjusted ROE1 of 13.5%, compared
with 13.9%
- Common Equity Tier 1 Ratio of 11.4%

- For the first quarter ended January 31, 2020, BMO Financial Group (TSX:BMO)
(NYSE:BMO) recorded net income of $1,592 million or $2.37 per share on a
reported basis, and net income of $1,617 million or $2.41 per share on an
adjusted basis.

"We had a strong quarter, delivering adjusted earnings per share of $2.41, with
8% year-over-year revenue growth, 16% pre-provision, pre-tax earnings growth and
5% net income growth. All our businesses performed well, each delivering
operating leverage over 2% with total bank operating leverage of 4.6% driving a
270 basis point improvement in efficiency. Canadian P&C had another good
quarter, with net income growth of 8% and continued robust loan and deposit
growth in both personal and commercial. Capital Markets had a strong quarter in
all businesses, demonstrating its earnings potential, with an increased
contribution from our U.S. segment resulting in 38% total net income growth.
Wealth Management and U.S. P&C also performed well, delivering positive
operating leverage with both revenue growth and disciplined expense management.
Overall portfolio credit quality remains stable, even as credit provisions this
quarter were elevated, largely as a result of activity in two specific sectors,"
said Darryl White, Chief Executive Officer, BMO Financial Group.

"We have significant momentum, with businesses increasing market share. Our
segments are winning on the strength of our customer value proposition and our
ability to compete effectively. Our commitment to growing our business,
improving efficiency and building a stronger BMO for our customers, employees
and communities will continue to drive our focus on delivering consistently
strong relative performance and long-term shareholder value," concluded Mr.
White.

Return on equity (ROE) was 13.3%, compared with 13.6% in the prior year, and
adjusted ROE was 13.5%, compared with 13.9% in the prior year. Return on
tangible common equity (ROTCE) was 15.7%, compared with 16.5% in the prior year,
and adjusted ROTCE was 15.8%, compared with 16.6% in the prior year.

Concurrent with the release of results, BMO announced a second quarter 2020
dividend of $1.06 per common share, unchanged 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.

Our complete First Quarter 2020 Report to Shareholders, including our unaudited
interim consolidated financial statements for the period ended January 31, 2020,
is 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
payable on
other equity
instruments.
(3) On a basis
that nets
insurance
claims,
commissions
and changes
in policy
benefit
liabilities
(CCPB)
against
insurance
revenue.
Note: All
ratios and
percentage
changes in
this
document
are based
on
unrounded
numbers.

First Quarter Operating Segment Overview

Canadian P&C

Reported net income was $700 million, an increase of $52 million or 8% and
adjusted net income was $700 million, an increase of $51 million or 8% from the
prior year. Adjusted net income excludes the amortization of acquisition-related
intangible assets. Strong revenue growth was partially offset by higher
provisions for credit losses and higher expenses.

During the quarter, we extended our partnership with Canadian Forces Morale and
Welfare Services, as we continue to be the official bank and exclusive provider
of unique banking services and financial products to members of the Canadian
Defence Community, supporting current and former troops, Department of National
Defence personnel, RCMP and Canadian Coast Guard members and their families, to
help make their financial goals a reality. We also introduced a new personal
financial management solution, BMO Insights, to help customers gain better
control of their financial lives. The solution leverages artificial intelligence
to deliver personalized, automated and actionable insights for everyday banking
customers to help them manage their day-to-day finances and cash flow.

U.S. P&C

Reported net income was $351 million, compared with $444 million in the prior
year, and adjusted net income was $361 million, compared with $454 million in
the prior year. Adjusted net income excludes the amortization of
acquisition-related intangible assets.

Reported net income was US$267 million, compared with US$332 million, and
adjusted net income was US$275 million, compared with US$340 million in the
prior year, due to higher provisions for credit losses, in part due to a
recovery in the prior year, partially offset by higher revenue.

During the quarter, BMO opened a new commercial banking office in Los Angeles,
California, providing businesses in Southern California with access to BMO's
full array of industry expertise, financial solutions and capabilities,
complemented by local market knowledge.

BMO Wealth Management

Reported net income was $291 million, an increase of $53 million or 22%, and
adjusted net income was $300 million, an increase of $52 million or 21% from the
prior year. Adjusted net income excludes the amortization of acquisition-related
intangible assets. Traditional Wealth reported net income was $209 million, an
increase of $36 million or 21%, and adjusted net income was $218 million, an
increase of $35 million or 19%, primarily driven by higher revenue from a higher
level of client assets and lower expenses. Insurance reported and adjusted net
income was $82 million, an increase of $17 million or 26%, primarily due to a
benefit from market movements in the current quarter, relative to the
unfavourable impact of market movements in the prior year, partially offset by
lower underlying business results.

In support of responsible investing and customers' increasing preference to
align financial and social goals, BMO Asset Management launched a suite of
indexed Environmental, Social and Governance (ESG) ETFs. BMO was also recognized
by Investment Week's Sustainable and ESG Investment Awards 2019, winning Best
ESG Research Team for the second consecutive year and Best ESG Investment Fund
for our BMO Responsible Global Equity Fund.

BMO Capital Markets

Reported net income was $356 million, an increase of $100 million or 39%, and
adjusted net income was $362 million, an increase of $99 million or 38% from the
prior year. Adjusted net income excludes the amortization of acquisition-related
intangible assets and acquisition integration costs. Strong revenue growth in
both Global Markets and Investment and Corporate Banking was partially offset by
higher expenses and higher oil and gas provisions.

On January 21, 2020, we entered into an agreement to acquire Clearpool Group
Inc. (Clearpool), a New York-based provider of electronic trading solutions,
operating in the United States and Canada. This acquisition delivers powerful
new capabilities to BMO's electronic trading platform and demonstrates our
commitment to providing leading edge trading technology to our global client
base. The transaction is subject to regulatory approvals and other customary
closing conditions, and is expected to close in the calendar second quarter of
2020.

Corporate Services

Reported and adjusted net loss was $106 million, compared with a reported and
adjusted net loss of $76 million in the prior year. Results decreased, primarily
due to lower treasury related revenue, in part due to a stronger prior year
level, and higher expenses.

Adjusted results in this First 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 January 31, 2020. The
CET1 Ratio was unchanged from the prior quarter, as retained earnings growth was
offset by impacts from business growth, regulatory changes, and the adoption of
IFRS 16, Leases.

Provision for Credit Losses

Total provision for credit losses was $349 million, an increase of $212 million
from the prior year. The provision for credit losses ratio was 31 basis points,
compared with a below trend level of 13 basis points in the prior year. The
provision for credit losses on impaired loans of $324 million increased $197
million from $127 million in the prior year, primarily due to higher provisions
in our P&C businesses and BMO Capital Markets. The prior year's provision for
credit losses included the benefit of a recovery on U.S. consumer loans. The
provision for credit losses on impaired loans ratio was 29 basis points,
compared with 12 basis points in the prior year. There was a $25 million
provision for credit losses on performing loans in the current quarter, compared
with a $10 million provision for credit losses on performing loans in the prior
year. The $25 million provision for credit losses on performing loans in the
current quarter was due to credit migration and portfolio growth.

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 annual 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.

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 on page 7 of our First
Quarter 2020 Report to Shareholders 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 Q1-2020 Q4-2019 Q1-2019
millions, except as
noted)
Reported Results
Revenue 6,747 6,087 6,517
Insurance claims, (716) (335) (926)
commissions and
changes in policy
benefit liabilities
(CCPB)
Revenue, net of 6,031 5,752 5,591
CCPB
Total provision for (349) (253) (137)
credit losses
Non-interest (3,669) (3,987) (3,557)
expense
Income before 2,013 1,512 1,897
income taxes
Provision for (421) (318) (387)
income taxes
Net income 1,592 1,194 1,510
EPS ($) 2.37 1.78 2.28
Adjusting Items
(Pre-tax) (1)
Acquisition (3) (2) (6)
integration costs
(2)
Amortization of (29) (38) (31)
acquisition-related
intangible assets
(3)
Restructuring costs - (484) -
(4)
Reinsurance - (25) -
adjustment (5)
Adjusting items (32) (549) (37)
included in
reported pre-tax
income
Adjusting Items
(After tax) (1)
Acquisition (2) (2) (4)
integration costs
(2)
Amortization of (23) (29) (24)
acquisition-related
intangible assets
(3)
Restructuring costs - (357) -
(4)
Reinsurance - (25) -
adjustment (5)
Adjusting items (25) (413) (28)
included in
reported net income
after tax
Impact on EPS ($) (0.04) (0.65) (0.04)
Adjusted Results
Revenue 6,747 6,087 6,517
Insurance claims, (716) (310) (926)
commissions and
changes in policy
benefit liabilities
(CCPB)
Revenue, net of 6,031 5,777 5,591
CCPB
Total provision for (349) (253) (137)
credit losses
Non-interest (3,637) (3,463) (3,520)
expense
Income before 2,045 2,061 1,934
income taxes
Provision for (428) (454) (396)
income taxes
Net income 1,617 1,607 1,538
EPS ($) 2.41 2.43 2.32

(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
CCPB, in BMO Wealth
Management.
(2) KGS-Alpha and
Clearpool
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
on pages 14, 15,
16, 18 and 20 of
our First Quarter
2020 Report to
Shareholders.
(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.
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
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 in
BMO Wealth
Management.
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 and
consumer leverage; 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, and
the Risk Management section of our First Quarter 2020 Report to Shareholders,
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 and updated in the Economic
Review and Outlook section of our First Quarter 2020 Report to Shareholders.
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, we primarily consider historical economic data, past
relationships between economic and financial variables, changes in government
policies, and the risks to the domestic and global economy. Please refer to the
Economic Review and Outlook section in our First Quarter 2020 Report to
Shareholders.

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, February 25, 2020, at 8:15 a.m. (ET). The call may be accessed by
telephone at 416-340-2217 (from within Toronto) or 1-800-806-5484 (toll-free
outside Toronto), entering Passcode: 3048334#. A replay of the conference call
can be accessed until Tuesday, May 26, 2020, by calling 905-694-9451 (from
within Toronto) or 1-800-408-3053 (toll-free outside Toronto) and entering
Passcode: 4224755#.

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 website.

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 contact
defined under the Bank of MontrealShareholder
PlanNovember 2019: ServicesCorporate Secretary's
$101.35December 2019: DepartmentOne First Canadian
$100.82January 2020: Place, 21st FloorToronto,
$103.67 For dividend Ontario M5X 1A1Telephone:
information, change in [phone]Fax: (416)
shareholder address or to 867-6793E-mail:
advise of duplicate [e-mail] For
mailings, please contact further information on this
Computershare Trust document, please contactBank
Company of Canada100 of MontrealInvestor Relations
University Avenue, 8th DepartmentP.O. Box 1, One
FloorToronto, Ontario M5J First Canadian Place, 10th
2Y1Telephone: FloorToronto, Ontario M5X 1A1
1-800-340-5021 (Canada To review financial results
and the United and regulatory filings and
States)Telephone: (514) disclosures online, please
982-7800 visit our website at
(international)Fax: www.bmo.com/investorrelations
1-888-453-0330 (Canada .
and the United
States)Fax: (416)
263-9394
(international)E-mail:
[e-mail]

Our 2019 Annual MD&A, audited annual consolidated financial statements, annual
information form 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, Media &
Government Relations, [e-mail], 416-867-4770; Tom Little, Director,
Investor Relations, [e-mail], 416-867-7834

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OTS: BMO Financial Group