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Strength in Commercial Banking and Credit Risk Management Stand Out: BMO CEO Tony Comper

BMO Financial Group President and Chief Executive Officer, Tony Comper, told shareholders, gathered in Calgary today for the Company's 188th Annual Meeting, that strength in commercial banking and credit risk management are leading BMO to top performance.

Strength in Commercial Banking

"Even in an increasingly competitive Canadian market where others are re-focusing on their personal and commercial business, our intense customer focus has enabled us to gain and maintain over time a market leadership position in commercial banking," he said.

Comper stressed that this strength exists on both sides of the Canada-U.S. border.  "We are a leading commercial player in our chosen markets in the United States, both through Harris's increasing business banking operations in the greater Chicago area and Harris Nesbitt's well-entrenched mid-market client base throughout the Midwest," said Mr. Comper.  "With the major emphasis we are placing on meeting more of our customers' needs, our commercial clients provide an excellent pipeline to expand our personal banking and wealth management businesses."

Credit Risk Management Advantage

Comper outlined BMO's strength in credit risk management.  "In a Boston Consulting Group study, BMO ranked second in the world among large-cap financial services companies for delivering risk-adjusted returns to shareholders.  This exceptionally strong showing speaks to BMO's enduring strength in delivering consistent and reliable returns at relatively low risk.”  

For 14 of the past 15 years, BMO has had the lowest specific provisions for credit losses as a percentage of net loans and acceptances in our Canadian peer group.  BMO's average credit loss has been 36% below the average of our Canadian competitors over the past 15 years.  This 'credit advantage' is derived from five key components that set BMO apart in assessing and managing credit risk:

                   A well-entrenched system of regional credit centres with large discretionary lending limits (up to $50 million), bucking the trend toward centralization of credit decisions.

                   BMO's ‘know your customer' approach to relationship management. The bank does not loosen - or tighten - its credit criteria as conditions change, which really sets it apart from the competition in the eyes of customers.

                   Consistent decision-making plus extra efforts on customers' behalf when times are tough.

                   Compensation policies that reward lenders based on the profitability or overall quality of a transaction, not simply the revenue generated.

                   Identifying deteriorating accounts early and working closely with the client to turn things around.

Advantaged in the U.S.

"We also see a new growth opportunity in providing seamless solutions for customers with financial interests in both Canada and the United States. Given BMO's unparalleled and fully integrated U.S. operations, which we have built up over decades, none of our competitors is as well positioned as we are to fill this need," he said.

“We are aiming to make Harris a ‘super-regional' player in the United States and no less than the leading personal and commercial bank in the Midwest. We have targeted up to 400 branches over the next five years, or about twice as many as we have up and running today."

Mr. Comper added, "We see ourselves as a very focused player in the U.S.   We are aiming to be #1 in the markets where we choose to compete – to be the most successful Canadian bank in the United States.”

BMO in China

Mr. Comper noted that, "While our strategic focus for the mid term is resolutely on North America, we are keeping a keen eye on the long-term potential of our ongoing investment in China.  While I want to emphasize that our expectations for revenue contributions from China are very modest in the near term, BMO now ranks among the largest foreign banking presences in China."

BMO's modern presence in China began in 1961 when it started forging deep relationships with major Chinese banks.  In 1996 Bank of Montreal became the first Canadian bank to open a branch in Beijing. Since then, BMO has established branches in Guangzhou and Hong Kong, plus a representative office in Shanghai.  BMO is also licensed to take deposits and make loans in local currency and, among all the foreign banks in China, has become the market maker in the yuan. BMO has a 28% interest in Fullgoal Fund Management Company, one of China's largest mutual fund companies – an investment with immense long-term potential.

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