News Releases
BMO Financial Group is focusing on productivity, revenue growth, and on improving the performance of all of its U.S. businesses, President and CEO, Tony Comper told an audience gathered at the National Bank Financial Canadian Financial Services Conference in Montreal today.
In his address, Mr. Comper commented on BMO's heightened focus on increasing revenues. "The key to higher revenues is a total customer orientation throughout the enterprise," he said.
Mr. Comper stated that BMO has undertaken a number of broad-based initiatives to build stronger and deeper relationships with customers, including investing hundreds of millions of dollars in leading-edge technology for its front-line sales staff and implementing incentive plans that reward a strong orientation toward sales and service.
"We are also starting to do a much better job of coordinating and intensifying our efforts to meet a larger share of our customers' needs through new Sales Councils in Canada and the One Harris initiative in the U.S., both of which promote a customer-focused dedication to cross-business referrals. In addition, I am personally spearheading a major drive to create a higher-performance work environment throughout the enterprise," he said.
"Given that our personal and commercial operations in Canada and the U.S. have a good track record for profitable growth and continue to demonstrate growth potential, we are allocating a large proportion of our capital to these core businesses."
Personal and Commercial Client Group - Building deeper and broader customer relationships
Mr. Comper noted that a key priority for BMO's Personal and Commercial Client Group is to increase profitable market share.
"Our efforts to date have already produced very good sales momentum. Our balance sheet has been growing at an increasing rate in both assets and liabilities, and margins have been more stable than our peers in recent years, which has really been driving our earnings.
"We are revving up the sales engine even further, undertaking a wide range of initiatives including: sales force expansion; increased marketing; and the introduction of innovative products such as the Homeowner ReadiLine, a mortgage and line of credit rolled into one. We are also undertaking selected pricing initiatives that balance profitability and market share considerations."
Harris Competing Very Successfully in an Affluent Market
Mr. Comper noted that Harris is one of the top three banks that together have about 30% retail deposit market share in the high-opportunity greater Chicago area and suggested that strong volumes plus high customer satisfaction and market share results show that Harris is, in fact, competing very successfully against the large and determined new competitors in this affluent market.
"In keeping with our priority to continue improving U.S. business performance, we are integrating some of Harris's back-office functions into our Canadian operations. Another initiative, which we expect to complete by June, is to provide more seamless customer service and achieve cost efficiencies through the consolidation of the Harris bank charter structure," said Mr. Comper.
"We are continuing to expand our 189-branch network, opening another three branches in prime locations in the Chicago area during the remainder of the year. And we are positioned to step up the pace of retail banking acquisitions in the Midwest.
"We are well positioned to absorb acquisitions profitably and at a faster pace as we expand our distribution network in the Midwest where, importantly, we already have brand recognition through our existing commercial banking presence," said Mr. Comper. "As we close in on our goal to increase our distribution network to 200 branches, the next step in our expansion is to use our infrastructure and integration capabilities to grow to 350 to 400 branches over the next couple of years."
Consistent Credit Performance Underpins Earnings and Sets BMO Apart from Competition
Mr. Comper noted that credit performance drove BMO's earnings power over the full economic cycle from 1990 through 2004. BMO's net interest margin averaged 2.32% over this period, just above the Canadian peer group average. However, when the provision for credit losses and non-earning assets are excluded, BMO's margin averaged 2.53% - a strong #1 ranking over 15 years. And in any individual year BMO never ranked lower than #3 on this measure.
"Excellence in managing credit enables us to provide more predictable and consistent returns for shareholders over time than many of our peers," said Mr. Comper. "Our provision for credit losses has consistently been below the Canadian industry average for the past 15 years, and the trend line continues to be favorable. BMO's superior asset quality results from the consistency of our lending practices throughout the credit cycle, our expertise and prudence in assessing credit risk, and the disciplined capabilities of our loan workout specialists in restructuring troubled transactions to preserve value and help viable enterprises recover."
Building on BMO's Record as High-Return, Low-Risk Bank
"As we step up the pace of progress toward our long-term goal of becoming the top-performing financial services organization in North America, we will continue to build on BMO's track record as a high-return, low-risk bank," said Mr. Comper.
"At a time when Canadian banks offer unprecedented value and opportunity for shareholders, I have never felt more confident about BMO's prospects for continued growth and success."
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