BMO Financial Group Reports First Quarter 2019 Results

Toronto (ots/PRNewswire) -

Financial Results Highlights

First Quarter 2019 Compared With First Quarter 2018:

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

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

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

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

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

- Common Equity Tier 1 Ratio of 11.4%

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

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

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

Reported net income in the first quarter of 2018 included a $425
million charge due to the revaluation of our U.S. net deferred tax
asset as a result of the enactment of the U.S. Tax Cuts and Jobs Act.

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

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

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

(1) Reported net income in the first quarter of 2018 included a
$425 million charge due to the revaluation of our U.S. net deferred
tax asset as a result of the enactment of the U.S. Tax Cuts and Jobs
Act.

(2) 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.

(3) Net revenue is reported on a basis that nets insurance claims,
commissions and changes in policy benefit liabilities (CCPB) against
insurance revenue.

(4) Effective the first quarter of 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. Refer to
the Changes in Accounting Policies section on page 23 of our First
Quarter 2019 Report to Shareholders.

(5) 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 preferred share dividends.

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

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

U.S. P&C

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

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

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

BMO Wealth Management

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

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

BMO Capital Markets

Reported net income of $255 million and adjusted net income of
$262 million compared with $271 million on both a reported and an
adjusted basis in the prior year. Adjusted net income excludes
amortization of acquisition-related intangible assets and acquisition
integration costs in the current quarter. Higher Investment and
Corporate Banking revenue was more than offset by higher expenses and
provisions for credit losses, and lower Trading Products revenue.

BMO Capital Markets was a lead manager in the largest-ever
Sovereign, Supranational Agency bond issue of $1.5 billion in the
Canadian market with the World Bank's Sustainable Development Bond,
which raised awareness for the benefits of investing in health and
nutrition of women, children and adolescents around the world.

Corporate Services

Corporate Services reported and adjusted net loss of $75 million
for the quarter compared with a reported net loss of $520 million and
an adjusted net loss of $92 million in the prior year. Adjusted
results in the prior year exclude a one-time non-cash charge due to
the revaluation of our U.S. net deferred tax asset of $425 million.

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

Capital

BMO's Common Equity Tier 1 (CET1) Ratio was 11.4% at January 31,
2019. The CET1 Ratio increased from 11.3% at the end of the fourth
quarter as retained earnings growth, higher accumulated other
comprehensive income from unrealized gains on securities and other
smaller items, more than offset strong business growth, impacts from
regulatory changes and share repurchases during the quarter.

Provision for Credit Losses

Total provision for credit losses was $137 million, a decrease of
$4 million from the prior year. The provision for credit losses on
impaired loans of $127 million decreased $47 million from $174
million in the prior year, primarily due to lower provisions in the
U.S. P&C business, in part due to a recovery in the current quarter.
There was a $10 million provision for credit losses on performing
loans in the quarter, compared with a recovery of credit losses of
$33 million in the prior year.

Caution

The foregoing sections contain forward-looking statements. Please
see the Caution Regarding Forward-Looking Statements.

Regulatory Filings

Our continuous disclosure materials, including our interim
filings, annual Management's Discussion and Analysis and audited
consolidated financial statements, Annual Information Form and Notice
of Annual Meeting of Shareholders and Proxy Circular are available on
our website at http://www.bmo.com/investorrelations, on the Canadian
Securities Administrators' website at http://www.sedar.com and on the
EDGAR section of the SEC's website at http://www.sec.gov.

Bank of Montreal uses a unified branding approach that links all
of the organization's member companies. Bank of Montreal, together
with its subsidiaries, is known as BMO Financial Group. As such, in
this document, the names BMO and BMO Financial Group mean Bank of
Montreal, together with its subsidiaries.

Non-GAAP Measures

Results and measures in this document are presented on a GAAP
basis. Unless otherwise indicated, all amounts are in Canadian
dollars, and have been derived from financial statements prepared in
accordance with International Financial Reporting Standards (IFRS).
References to GAAP mean IFRS. They are also presented on an adjusted
basis that excludes the impact of certain items as set out in the
table below. Results and measures that exclude the impact of
Canadian/U.S. dollar exchange rate movements on our U.S. segment are
non-GAAP measures (please see the Foreign Exchange section for a
discussion of the effects of changes in exchange rates on our
results). Management assesses performance on a reported basis and on
an adjusted basis and considers both to be useful in assessing
underlying ongoing business performance. 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 corresponding adjusted
results. Adjusted results and measures are non-GAAP and as such do
not have standardized meaning under GAAP. They are unlikely to be
comparable to similar measures presented by other companies and
should not be viewed in isolation from, or as a substitute for, GAAP
results.

Non-GAAP Measures

(Canadian $ in millions, except as noted) Q1-2019
Q4-2018 Q1-2018
Reported Results
Revenue 6,517
5,893 5,638
Insurance claims, commissions and changes in
policy benefit liabilities (CCPB) (926)
(390) (361)
Revenue, net of CCPB 5,591
5,503 5,277
Total provision for credit losses (137)
(175) (141)
Non-interest expense (3,557)
(3,193) (3,400)
Income before income taxes 1,897
2,135 1,736
Provision for income taxes (387)
(438) (763)
Net income 1,510
1,697 973
EPS ($) 2.28
2.58 1.43
Adjusting Items (Pre-tax) (1)
Acquisition integration costs (2) (6)
(18) (4)
Amortization of acquisition-related
intangible assets (3) (31)
(31) (28)
Benefit from the remeasurement of an
employee benefit liability (4) -
277 -
Adjusting items included in reported pre-tax
income (37)
228 (32)
Adjusting Items (After tax) (1)
Acquisition integration costs (2) (4)
(13) (3)
Amortization of acquisition-related
intangible assets (3) (24)
(24) (21)
Benefit from the remeasurement of an
employee benefit liability (4) -
203 -
U.S. net deferred tax asset revaluation (5) -
- (425)
Adjusting items included in reported net
income after tax (28)
166 (449)
Impact on EPS ($) (0.04)
0.26 (0.69)
Adjusted Results
Revenue 6,517
5,893 5,638
Insurance claims, commissions and changes in
policy benefit liabilities (CCPB) (926)
(390) (361)
Revenue, net of CCPB 5,591
5,503 5,277
Total provision for credit losses (137)
(175) (141)
Non-interest expense (3,520)
(3,421) (3,368)
Income before income taxes 1,934
1,907 1,768
Provision for income taxes (396)
(376) (346)
Net income 1,538
1,531 1,422
EPS ($) 2.32
2.32 2.12

(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.

(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 expenses 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 19 of our First
Quarter 2019 Report to Shareholders.

(4) Q4-2018 included a $277 million pre-tax benefit from the
remeasurement of an employee benefit liability as a result of an
amendment to our other employee future benefits plan for certain
employees. This amount has been included in non-interest expense.

(5) Charge related to the revaluation of our U.S. net deferred tax
asset as a result of the enactment of the U.S. Tax Cut and Jobs Act.
For more information see the Critical Accounting Estimates - Income
Taxes and Deferred 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 2019 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 and cyber security,
including the threat of 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 see the discussion in the Risks
That May Affect Future Results section on page 79 of BMO's 2018
Annual Report, and the sections related to credit and counterparty,
market, insurance, liquidity and funding, operational, model, legal
and regulatory, business, strategic, environmental and social, and
reputation risk, in the Enterprise-Wide Risk Management section on
page 78 of BMO's 2018 Annual Report, and the Risk Management section
on page 25 of the First Quarter 2019 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 2018 Annual
Report under the heading "Economic Developments and Outlook", as
updated by the Economic Review and Outlook section set forth in this
document. 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. See the Economic Review and
Outlook section on page 6 of our First Quarter 2019 Report to
Shareholders.

INVESTOR AND MEDIA PRESENTATION

Investor Presentation Materials

Interested parties are invited to visit our website at
http://www.bmo.com/investorrelations to review our 2018 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 26, 2019, at 8:30 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: 8641002#. A replay of the conference call can be accessed
until Tuesday, May 28, 2019, by calling 905-694-9451 (from within
Toronto) or 1-800-408-3053 (toll-free outside Toronto) and entering
Passcode: 6462367#.

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

Shareholder Dividend Reinvestment and Share Purchase Plan (the Plan)

Average market price as defined under the Plan

November 2018: $97.65

December 2018: $87.50

January 2019: $97.09

For dividend information, change in shareholder address or to advise
of duplicate mailings, please contact:

Computershare Trust Company of Canada

100 University Avenue, 8th Floor

Toronto, Ontario M5J 2Y1

Telephone: 1-800-340-5021 (Canada and the United States)

Telephone: (514) 982-7800 (International)

Fax: 1-888-453-0330

For other shareholder information, including the notice for our
normal course issuer bid, please contact:

Bank of Montreal

Shareholder Services

Corporate Secretary's Department

One First Canadian Place, 21st Floor

Toronto, Ontario M5X 1A1

Telephone: (416) 867-6785

Fax: (416) 867-6793

E-mail: corp.secretary@bmo.com

For further information on this document, please contact

Bank of Montreal

Investor Relations Department

P.O. Box 1, One First Canadian Place, 10th Floor

Toronto, Ontario M5X 1A1

To review financial results and regulatory filings and disclosures
online, please visit our website at
http://www.bmo.com/investorrelations .

Our 2018 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
http://www.bmo.com/investorrelations and at http://www.sedar.com.
Printed copies of the bank's complete 2018 audited financial
statements are available free of charge upon request at 416-867-6785
or corp.secretary@bmo.com.

® Registered trademark of Bank of Montreal

Annual Meeting 2019

The next Annual Meeting of Shareholders will be held on Tuesday,
April 2, 2019, in Toronto, Ontario.

Media Relations Contact: Paul Gammal, Toronto,
paul.gammal@bmo.com, 416-867-6543; Investor Relations Contacts: Jill
Homenuk, Head, Investor, Media & Government Relations,
jill.homenuk@bmo.com, 416-867-4770; Christine Viau, Director,
Investor Relations, christine.viau@bmo.com, 416-867-6956

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