BMO Financial Group Reports Fourth Quarter and Fiscal 2024 Results

Fourth Quarter 2024 Earnings Release

BMO's 2024 audited annual consolidated financial statements and accompanying Management Discussion and Analysis (MD&A) are available online at www.bmo.com/investorrelations and at www.sedarplus.ca.

Financial Results Highlights

Fourth Quarter 2024 compared with Fourth Quarter 2023:

• Net income1 of $2,304 million, compared with $1,710 million; adjusted net income1, 2 of $1,542 million, compared with $2,243 million
• Reported earnings per share (EPS)1, 3 of $2.94, compared with $2.19; adjusted EPS1, 2, 3 of $1.90, compared with $2.93
• Provision for credit losses (PCL) of $1,523 million, compared with $446 million; current quarter included PCL on performing loans of $416 million
• Return on equity (ROE)1 of 11.4%, compared with 9.3%; adjusted ROE1, 2 of 7.4%, compared with 12.4%
• Common Equity Tier 1 (CET1) Ratio4 of 13.6%, compared with 12.5%
• Declared a quarterly dividend of $1.59 per common share, an increase of $0.08 or 5% from the prior year, and $0.04 or 3% from the prior quarter
• Announced our intention to establish a normal course issuer bid (NCIB) for up to 20 million common shares5

Fiscal 2024 compared with Fiscal 2023:

• Net income1 of $7,327 million, compared with $4,437 million; adjusted net income1, 2 of $7,449 million, compared with $8,735 million
• Reported EPS1, 3 of $9.51, compared with $5.76; adjusted EPS1, 2, 3 of $9.68, compared with $11.81
• Reported and adjusted PCL of $3,761 million, compared with $2,178 million on a reported basis and $1,473 million on an adjusted basis1
• ROE1 of 9.7%, compared with 6.2%; adjusted ROE1, 2 of 9.8%, compared with 12.6%

TORONTO, Dec. 5, 2024 /PRNewswire/ - For the fourth quarter ended October 31, 2024, BMO Financial Group (TSX: BMO) (NYSE: BMO) recorded net income of $2,304 million or $2.94 per share on a reported basis, and net income of $1,542 million or $1.90 per share on an adjusted basis.

"In 2024, BMO delivered good pre-provision pre-tax earnings growth across all operating groups and we met our commitment to positive operating leverage in each of the last three quarters and for the full year. Our overall results were impacted by elevated provisions for credit losses, and we expect quarterly provisions to moderate through 2025 as the business environment improves," said Darryl White, Chief Executive Officer, BMO Financial Group.

"We're entering 2025 with a strong foundation and significant balance sheet capacity for growth. We grew customer deposits across our franchise by $61 billion, up 9% from last year. Our CET1 ratio strengthened meaningfully to 13.6%, creating capacity to support our clients and return excess capital to our shareholders. Our scale, investments in technology, talent and client solutions are driving strong loyalty and core customer growth, and we remain focused on helping customers navigate a complex economic and geopolitical environment. We are confident in the execution of our strategy to drive profitable growth and enhanced return on equity over the medium term."

"At BMO, employee engagement and winning culture are critical enablers to sustained business performance and advancing our Purpose, to Boldly Grow the Good in business and life, and we're proud to have been recognized as one of the Most Admired Corporate Cultures in Canada by Waterstone Human Capital in 2024, a testament to our focus on inclusiveness and empowerment," concluded Mr. White.

Concurrent with the release of results, BMO announced a first quarter 2025 dividend of $1.59 per common share, an increase of $0.08 or 5% from the prior year, and an increase of $0.04 or 3% from the prior quarter. The quarterly dividend of $1.59 per common share is equivalent to an annual dividend of $6.36 per common share.

On December 5, 2024, we announced our intention to establish a NCIB for up to 20 million common shares, subject to the approval of the Office of the Superintendent of Financial Institutions (OSFI) and the Toronto Stock Exchange. Once approvals are obtained, the NCIB will permit us to purchase common shares for the purpose of cancellation. The timing and amount of purchases under the NCIB are subject to regulatory approvals and to management discretion, based on factors such as market conditions and capital levels.

Fourth Quarter 2024 Performance Review

Adjusted results and ratios in this section are on a non-GAAP basis. Refer to the Non-GAAP and Other Financial Measures section for further information on adjusting items. The order in which the impact on net income is discussed in this section follows the order of revenue, expenses and provision for credit losses, regardless of their relative impact.

Canadian P&C

Reported net income was $750 million, a decrease of $172 million or 18% from the prior year, and adjusted net income was $765 million, a decrease of $161 million or 17%. Results reflected a 5% increase in revenue, driven by higher net interest income due to balance growth, with a 6% increase in average loans and 10% increase in average deposits, partially offset by lower non-interest revenue, higher expenses and higher provisions for credit losses.

U.S. P&C

Reported net income was $256 million, a decrease of $335 million or 57% from the prior year, and adjusted net income was $326 million, a decrease of $344 million or 51%.

On a U.S. dollar basis, reported net income was $191 million, a decrease of $242 million or 56% from the prior year, and adjusted net income, which excludes amortization of acquisition-related intangible assets, was $242 million, a decrease of $248 million or 51%. Results reflected a 1% decrease in revenue primarily due to lower net interest margins, lower expenses primarily reflecting realized cost synergies and higher provisions for credit losses, primarily in Commercial Banking.

BMO Wealth Management

Reported net income was $326 million, a decrease of $25 million or 7% from the prior year, and adjusted net income was $328 million, a decrease of $24 million or 7%. Wealth and Asset Management reported net income was $273 million, an increase of $71 million or 35%, reflecting higher revenue due to growth in client assets, including stronger global markets, higher expenses and higher provisions for credit losses. Insurance net income was $53 million, a decrease of $96 million from the prior year, primarily due to changes in portfolio positioning during the transition to IFRS 17.

BMO Capital Markets

Reported net income was $251 million, a decrease of $221 million or 47% from the prior year, and adjusted net income was $270 million, a decrease of $205 million or 43%. Results reflected lower revenue, primarily in Investment and Corporate Banking, higher expenses and higher provisions for credit losses.

Corporate Services

Reported net income was $721 million, compared with reported net loss of $626 million in the prior year, and adjusted net loss was $147 million, compared with adjusted net loss of $180 million. Reported net income increased, primarily due to the reversal of a fiscal 2022 legal provision related to a lawsuit associated with a predecessor bank, M&I Marshall and Ilsley Bank, and lower acquisition and integration costs. Adjusted net loss was lower due to lower revenue, more than offset by lower expenses.

Capital

BMO's Common Equity Tier 1 (CET1) Ratio was 13.6% as at October 31, 2024, an increase from 13.0% at the end of the third quarter of fiscal 2024, primarily due to the impact of the reversal of the fiscal 2022 legal provision associated with a predecessor bank, M&I Marshall and Ilsley Bank.

Regulatory Filings

BMO's continuous disclosure materials, including 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.sedarplus.ca, and on the EDGAR section of the U.S. Securities and Exchange Commission's website at www.sec.gov. Information contained in or otherwise accessible through our website ( www.bmo.com ), or any third-party websites mentioned herein, does not form part of this document.

Financial Review

Management's Discussion and Analysis (MD&A) commentary is as at December 4, 2024 for the year ended October 31, 2024. 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, 2024, included in this document, as well as the audited annual consolidated financial statements for the year ended October 31, 2024, and the 2024 annual MD&A, contained in BMO's 2024 Annual Report.

BMO's 2024 Annual Report includes a comprehensive discussion of its 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 Chief Executive Officer and the Chief Financial Officer, has evaluated the effectiveness, as at October 31, 2024, 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, 2024, 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.

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 2025 and beyond; our strategies or future actions; our targets and commitments (including with respect to net zero emissions); expectations for our financial condition, capital position, the regulatory environment in which we operate, the results of, or outlook for, our operations or the Canadian, U.S. and international economies; and include statements made by our management. Forward-looking statements are typically identified by words such as "will", "would", "should", "believe", "expect", "anticipate", "project", "intend", "estimate", "plan", "goal", "commit", "target", "may", "might", "schedule", "forecast", "outlook", "timeline", "suggest", "seek" and "could" or negative or grammatical variations thereof.

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, including labour challenges and changes in foreign exchange and interest rates; changes to our credit ratings; cyber and information 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; technology resilience, innovation and competition; failure of third parties to comply with their obligations to us; political conditions, including changes relating to, or affecting, economic or trade matters; disruptions of global supply chains; environmental and social risk, including climate change; the Canadian housing market and consumer leverage; inflationary pressures; changes in laws, including tax legislation and interpretation, or in supervisory expectations or requirements, including capital, interest rate and liquidity requirements and guidance, and the effect of such changes on funding costs and capital requirements; changes in monetary, fiscal or economic policy; weak, volatile or illiquid capital or credit markets; the level of competition in the geographic and business areas in which we operate; exposure to, and the resolution of, significant litigation or regulatory matters, the appeal of favourable outcomes and our ability to successfully appeal adverse outcomes of such matters and the timing, determination and recovery of amounts related to such matters; the accuracy and completeness of the information we obtain with respect to our customers and counterparties; our ability to execute our strategic plans, complete proposed acquisitions or dispositions and integrate acquisitions, including obtaining regulatory approvals, and realize any anticipated benefits from such plans and transactions; critical accounting estimates and judgments, and the effects of changes in accounting standards, rules and interpretations on these estimates; operational and infrastructure risks, including with respect to reliance on third parties; global capital markets activities; the emergence or continuation of widespread health emergencies or pandemics, and their impact on local, national or international economies, as well as their heightening of certain risks that may affect our future results; the possible effects on our business of war or terrorist activities; natural disasters, such as earthquakes or flooding, and disruptions to public infrastructure, such as transportation, communications, power or water supply; 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 non-financial, legal and regulatory, strategic, environmental and social, and reputation risk, in the Enterprise-Wide Risk Management section of BMO's 2024 Annual MD&A, and the Risk Management section in this document, 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 shareholders and analysts 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 include those set out in the Economic Developments and Outlook section of BMO's 2024 Annual MD&A, as well as in the Allowance for Credit Losses section of BMO's 2024 Annual MD&A. 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.

Financial Highlights

Non-GAAP and Other Financial Measures

Results and measures in this document are presented on a generally accepted accounting principles (GAAP) basis. Unless otherwise indicated, all amounts are in Canadian dollars and have been derived from our audited annual consolidated financial statements, prepared in accordance with International Financial Reporting Standards (IFRS), as issued by the International Accounting Standards Board. References to GAAP mean IFRS. We use a number of financial measures to assess our performance, as well as the performance of our operating segments, including amounts, measures and ratios that are presented on a non‑GAAP basis, as described below. We believe that these non‑GAAP amounts, measures and ratios, read together with our GAAP results, provide readers with a better understanding of how management assesses results.

Non-GAAP amounts, measures and ratios 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.

Certain information contained in BMO's 2024 Annual Management's Discussion and Analysis (MD&A) as at December 4, 2024 for the period ended October 31, 2024 is incorporated by reference into this document. For further information regarding the composition of our supplementary financial measures, refer to the Glossary of Financial Terms section of BMO's 2024 Annual MD&A, which is available online at www.bmo.com/investorrelations and at www.sedarplus.ca.

Our non‑GAAP measures broadly fall into the following categories:

Adjusted measures and ratios

Management considers both reported and adjusted results and measures to be useful in assessing underlying ongoing business performance. Adjusted results and measures remove certain specified items from revenue, non‑interest expense, provision for credit losses and income taxes, as detailed in the following table. Adjusted results and measures presented in this document are non‑GAAP. Presenting results on both a reported basis and an adjusted basis permits readers to assess the impact of certain items on results for the periods presented, and to better assess results excluding those items that may not be reflective of ongoing business performance. 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.

Tangible common equity and return on tangible common equity

Tangible common equity is calculated as common shareholders' equity, less goodwill and acquisition-related intangible assets, net of related deferred tax liabilities. Return on tangible common equity (ROTCE) is calculated as net income available to common shareholders, adjusted for the amortization of acquisition-related intangible assets, as a percentage of average tangible common equity. ROTCE is commonly used in the North American banking industry and is meaningful because it measures the performance of businesses consistently, whether they were acquired or developed organically.

Measures net of insurance claims, commissions and changes in policy benefit liabilities

For periods prior to November 1, 2022, we presented adjusted revenue on a basis net of insurance claims, commissions and changes in policy benefit liabilities (CCPB), and our efficiency ratio and operating leverage were calculated on a similar basis. Beginning the first quarter of fiscal 2023, we no longer report CCPB, given the adoption and retrospective application of IFRS 17, Insurance Contracts (IFRS 17). For periods prior to November 1, 2022, adjusted operating leverage was calculated based on revenue, net of CCPB. Measures and ratios presented on a basis net of CCPB are non-GAAP amounts. For more information, refer to the Insurance Claims, Commissions and Changes in Policy Benefit Liabilities section of the 2023 Annual MD&A.

Caution

This Non-GAAP and Other Financial Measures section contains forward-looking statements. Please refer to the Caution Regarding Forward-Looking Statements.

Non-GAAP and Other Financial Measures

Summary of Reported and Adjusted Results by Operating Segment

Return on Equity and Return on Tangible Common Equity

Return on Equity by Operating Segment (1)

Capital is allocated to the operating segments based on the amount of regulatory capital required to support business activities. Effective the first quarter of fiscal 2024, our capital allocation rate increased to 11.5% of risk weighted assets, compared with 11.0% in fiscal 2023, to reflect increased regulatory capital requirements. Unallocated capital is reported in Corporate Services. Capital allocation methodologies are reviewed at least annually.

Foreign Exchange

The table above indicates the relevant average Canadian/U.S. dollar exchange rates and the impact of changes in those rates on BMO's U.S. segment reported and adjusted results.

The Canadian dollar equivalents of BMO's U.S. segment results that are denominated in U.S. dollars decreased in the fourth quarter of fiscal 2024, relative to the third quarter of fiscal 2024 and the fourth quarter of fiscal 2023, due to changes in the Canadian/U.S. dollar exchange rate. References in this document to the impact of the U.S. dollar do not include U.S. dollar-denominated amounts recorded outside of BMO's U.S. segment.

Economically, our U.S. dollar income stream was not hedged against the risk of changes in foreign exchange rates during fiscal 2024 and fiscal 2023. 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 (or recoveries of) credit losses and income taxes arise.

Refer to the Enterprise-Wide Capital Management section of BMO's 2024 Annual MD&A for a discussion of the impact that changes in foreign exchange rates can have on BMO's capital position.

Net Income

Q4 2024 vs. Q4 2023

Reported net income was $2,304 million, an increase of $594 million or 35% from the prior year, and adjusted net income was $1,542 million, a decrease of $701 million or 31%. Reported earnings per share (EPS) was $2.94 an increase of $0.75 from the prior year, and adjusted EPS was $1.90, a decrease of $1.03.

Adjusted results in the current quarter, the prior year and prior quarter excluded the following items:

• The reversal of a fiscal 2022 legal provision (1), including accrued interest, associated with a predecessor bank, M&I Marshall and Ilsley Bank, of $870 million ($1,183 million pre-tax) in the current quarter, comprising a reversal of interest expense of $589 million and a reversal of non-interest expense of $594 million, compared with a provision of $12 million ($16 million pre-tax) in the prior year, comprising interest expense of $14 million and non-interest expense of $2 million, and a provision of $13 million ($18 million pre-tax) in the prior quarter, comprising interest expense of $14 million and non-interest expense of $4 million.
• Acquisition and integration costs of $27 million ($35 million pre-tax) recorded in non-interest expense in the current quarter, compared with $433 million ($582 million pre-tax) in the prior year and $19 million ($25 million pre-tax) in the prior quarter.
• Amortization of acquisition-related intangible assets of $92 million ($124 million pre-tax) recorded in non-interest expense in the current quarter, including a $14 million ($18 million pre-tax) write-down related to the acquisition of Radicle Group Inc. (Radicle) in BMO Capital Markets, compared with $88 million ($119 million pre-tax) in the prior year and $79 million ($107 million pre-tax) in the prior quarter.
• The impact of the U.S. Federal Deposit Insurance Corporate (FDIC) special assessment, including an $11 million ($14 million pre-tax) partial reversal of non-interest expense in the current quarter, compared with a $5 million ($6 million pre-tax) expense in the prior quarter.

Reported net income increased from the prior year, primarily due to the items noted above, which in aggregate increased net income by $762 million in the current year, compared with a reduction of $533 million in the prior year. The decrease in adjusted net income reflected a higher provision for credit losses, partially offset by lower expenses, with revenue relatively unchanged from the prior year. Reported and adjusted net income decreased across all operating segments. Corporate Services recorded net income on a reported basis, compared with a net loss in the prior year, and a lower net loss on an adjusted basis.

Q4 2024 vs. Q3 2024

Reported net income increased $439 million or 24% from the prior quarter, and adjusted net income decreased $439 million or 22%. Reported EPS increased $0.46 from the prior quarter, and adjusted EPS decreased $0.74, including the impact of higher dividends on preferred shares and distributions on other equity instruments.

Reported net income increased, primarily due to the adjusted items noted above. The decrease in adjusted net income reflected a higher provision for credit losses and higher expenses, partially offset by higher revenue. Reported and adjusted net income decreased across all operating segments. Corporate Services recorded net income on a reported basis, compared with a net loss in the prior quarter, and a lower net loss on an adjusted basis.

For further information on non-GAAP amounts, measures and ratios in this Net Income section, refer to the Non-GAAP and Other Financial Measures section.

Revenue

Effective the first quarter of fiscal 2024, the bank adopted IFRS 17, Insurance Contracts (IFRS 17) and retrospectively applied it to fiscal 2023 results. Insurance results are now presented in non-interest revenue under insurance service results and insurance investment results. Fiscal 2023 results may not be fully representative of our future earnings profile, as we were not managing our insurance portfolio under the new standard. For additional information, refer to Note 1 of the audited annual consolidated financial statements in BMO's 2024 Annual Report.

Q4 2024 vs. Q4 2023

Reported revenue was $8,957 million, an increase of $638 million or 8% from the prior year, due to the reversal of accrued interest on the fiscal 2022 legal provision in the current year. Adjusted revenue was $8,368 million, relatively unchanged from the prior year, with higher non-interest revenue partially offset by lower net interest income. Revenue increased in Canadian P&C and BMO Wealth Management, and decreased in Corporate Services, BMO Capital Markets and U.S. P&C.

Reported net interest income was $5,438 million, an increase of $497 million or 10% from the prior year, and adjusted net interest income was $4,849 million, a decrease of $106 million or 2% from the prior year. The increase in reported net interest income primarily reflected the reversal of accrued interest on the legal provision in the current year. Adjusted net interest income decreased, primarily due to lower trading-related net interest income and lower net interest income in Corporate Services due to lower net accretion of purchase accounting fair value marks, partially offset by higher net interest income in Canadian P&C and higher non-trading interest income in BMO Capital Markets. Trading-related net interest loss was $55 million, compared with net interest income of $213 million in the prior year, and was offset in trading non-interest revenue.

BMO's overall reported net interest margin of 1.70% increased 3 basis points from the prior year. Adjusted net interest margin, excluding trading-related net interest income, trading and insurance assets, was 1.90%, unchanged from the prior year, with higher margins in BMO Capital Markets and volume growth in Canadian P&C offset by lower net interest income in Corporate Services and lower margins in U.S. P&C and BMO Wealth Management. The impact of higher interest rates on deposit pricing and deposit mix was largely offset by the reinvestment of earning assets at higher yields.

Reported and adjusted non-interest revenue was $3,519 million, an increase of $141 million or 4% from the prior year, primarily driven by higher trading revenue, investment management and custodial fee revenue and mutual fund fee revenue, partially offset by lower insurance-related revenue reflecting changes in portfolio positioning during the transition to IFRS 17, the impact of mark-downs on the held-for-sale loan portfolio and lower lending fee revenue, largely offset in net interest income reflecting the transition of bankers' acceptances exposures to loans, and lower card fee revenue.

Q4 2024 vs. Q3 2024

Reported revenue increased $765 million or 9% from the prior quarter, and adjusted revenue increased $162 million or 2%.

Reported net interest income increased $644 million or 13% from the prior quarter, primarily driven by the reversal of accrued interest on the legal provision. On an adjusted basis, net interest income increased $41 million or 1%, driven by higher net interest income in Corporate Services and Canadian P&C, and higher non-trading interest income in BMO Capital Markets, partially offset by lower trading-related net interest income. Trading-related net interest income decreased $137 million from the prior quarter, largely offset in trading non-interest revenue.

BMO's overall reported net interest margin increased 19 basis points from the prior quarter. Adjusted net interest margin, excluding trading-related net interest income, and trading and insurance assets, increased 7 basis points, primarily due to higher net interest income and lower low-yielding assets in both Corporate Services and BMO Capital Markets.

Reported and adjusted non-interest revenue increased $121 million or 4% from the prior quarter. The increase was primarily driven by higher trading revenue and underwriting and advisory fee revenue, partially offset by lower card and lending fee revenue. Compared with the prior quarter, insurance investment results increased primarily due to changes in assumptions, with the increase largely offset in insurance service results.

For further information on non-GAAP amounts, measures and ratios, and results presented on a net revenue basis in this Revenue section, refer to the Non-GAAP and Other Financial Measures section. The foregoing sections contain forward-looking statements. Please refer to the Caution Regarding Forward-Looking Statements.

Change in Net Interest Income, Average Earning Assets and Net Interest Margin (1)

Total Provision for Credit Losses

Q4 2024 vs. Q4 2023

Total provision for credit losses was $1,523 million, compared with a provision of $446 million in the prior year. Total provision for credit losses as a percentage of average net loans and acceptances ratio was 91 basis points, compared with 27 basis points in the prior year. The provision for credit losses on impaired loans was $1,107 million, an increase of $699 million, due to higher provisions across all operating segments, primarily in the U.S. corporate and commercial portfolio, and in the Canadian unsecured segments of the consumer portfolio. The provision for credit losses on impaired loans as a percentage of average net loans and acceptances ratio was 66 basis points, compared with 25 basis points in the prior year. There was a $416 million provision for credit losses on performing loans, compared with a $38 million provision in the prior year, primarily driven by portfolio credit migration, as well as uncertainty in credit conditions.

Q4 2024 vs. Q3 2024

Total provision for credit losses increased $617 million from the prior quarter. The provision for credit losses on impaired loans increased $279 million, due to higher provisions in the corporate and commercial portfolio, primarily reflecting increases in the commercial real estate, financial and mining sectors. The provision for credit losses on impaired loans as a percentage of average net loans and acceptances ratio was 66 basis points, compared with 50 basis points in the prior quarter. There was a $416 million provision for credit losses on performing loans, compared with a $78 million provision in the prior quarter.

Impaired Loans

Total gross impaired loans and acceptances (GIL) were $5,843 million, a decrease from $6,041 million in the prior quarter. The decrease in impaired loans was primarily due to write-offs in business and government lending, within the service and manufacturing and wholesale trade sectors. GIL as a percentage of gross loans and acceptances decreased to 0.86% from 0.89% in the prior quarter.

Loans classified as impaired during the quarter were $2,218 million, an increase from $1,847 million in the prior quarter, reflecting higher impaired loan formations in both business and government lending, and consumer lending.

Non-Interest Expense

Q4 2024 vs. Q4 2023

Reported non‑interest expense was $4,427 million, a decrease of $1,252 million or 22% from the prior year, and adjusted non‑interest expense was $4,876 million, a decrease of $100 million or 2%.

Reported results reflected the reversal of the fiscal 2022 legal provision and the impact of lower acquisition and integration costs in the current year. Adjusted non-interest expense decreased, primarily due to our continued focus on operational efficiencies, including realized cost synergies related to Bank of the West, and lower premises costs, including the charge in the prior year related to the consolidation of BMO real estate, and other operating costs.

Reported efficiency ratio was 49.4%, compared with 68.3% in the prior year, and adjusted efficiency ratio was 58.3%, compared with 59.7%. Reported operating leverage was positive 29.8% and adjusted operating leverage was positive 2.4%.

Q4 2024 vs. Q3 2024

Reported non-interest expense decreased $412 million or 9% from the prior quarter, due to the reversal of the legal provision, and adjusted non-interest expense increased $179 million or 4%, primarily due to higher professional fees and higher association, clearing and annual regulator fees. In addition, other costs included $25 million associated with our proportionate share of Visa's litigation escrow related to their class B shares.

For further information on non-GAAP amounts, measures and ratios in this Non-Interest Expense section, refer to the Non-GAAP and Other Financial Measures section.

Provision for Income Taxes

The reported provision for income taxes was $703 million, an increase of $219 million from the fourth quarter of fiscal 2023, and an increase of $121 million from the third quarter of fiscal 2024. The reported effective tax rate for the current quarter was 23.4%, compared with 22.1% in the fourth quarter of fiscal 2023 and 23.8% in the third quarter of fiscal 2024. The adjusted provision for income taxes was $427 million, a decrease of $241 million from the fourth quarter of fiscal 2023 and a decrease of $195 million from the third quarter of fiscal 2024. The adjusted effective tax rate was 21.7% in the current quarter, compared with 22.9% in the fourth quarter of fiscal 2023 and 23.9% in the third quarter of fiscal 2024.

The change in the reported effective tax rate in the current quarter relative to the fourth quarter of fiscal 2023 was primarily due to the impact of higher income in the current quarter. The change in the adjusted effective tax rate in the current quarter relative to the fourth quarter of fiscal 2023 and the third quarter of fiscal 2024 was primarily due to earnings mix, including the impact of lower income in the current quarter.

For further information on non-GAAP amounts, measures and ratios in this Provision for Income Taxes section, refer to the Non-GAAP and Other Financial Measures section.

Capital Management

BMO's Common Equity Tier 1 (CET1) Ratio was 13.6% as at October 31, 2024, an increase from 13.0% at the end of the third quarter of fiscal 2024, primarily due to the impact of the reversal of the fiscal 2022 legal provision. CET1 Capital was $57.1 billion as at October 31, 2024, an increase from $55.6 billion as at July 31, 2024, primarily due to the reversal of the legal provision and the impact of foreign exchange movements. Risk weighted assets (RWA) were $420.8 billion as at October 31, 2024, a decrease from $428.9 billion as at July 31, 2024, primarily due to lower operational risk as a result of the reversal of the legal provision and lower credit risk RWA due to methodology changes. The bank's Tier 1 and Total Capital Ratios were 15.4% and 17.6%, respectively, as at October 31, 2024, compared with 14.8% and 17.1%, respectively, as at July 31, 2024. The Tier 1 Capital Ratio was higher, due to the same factors affecting the CET1 Ratio, partially offset by the impact of the announced preferred share redemption of $300 million. The Total Capital Ratio was higher due to the factors impacting the Tier 1 Capital Ratio, partially offset by the redemption of $1.0 billion subordinated notes.

Leverage Ratio was 4.4% as at October 31, 2024, an increase from 4.3% at the end of the third quarter of fiscal 2024, driven by higher Tier 1 Capital, partially offset by higher leverage exposures. The bank's risk-based Total Loss Absorbing Capacity (TLAC) Ratio and TLAC Leverage Ratio were 29.3% and 8.3%, respectively, as at October 31, 2024, compared with 28.5% and 8.2%, respectively, as at July 31, 2024.

Regulatory capital requirements for BMO are determined in accordance with guidelines issued by OSFI, which are based on the Basel III framework developed by the Basel Committee on Banking Supervision (BCBS), and include OSFI's CAR Guideline and the Leverage Requirements (LR) Guideline. TLAC requirements are determined in accordance with OSFI's TLAC Guideline. For more information refer to the Enterprise-Wide Capital Management section of BMO's 2024 Annual MD&A.

Review of Operating Groups' Performance

BMO reports financial results for its three operating groups, one of which comprises two operating segments, all of which are supported by Corporate Units and Technology and Operations (T&O) within Corporate Services. For further information on how BMO reports operating group results are outlined in the 2024 Operating Groups Performance Review section of BMO's 2024 Annual MD&A.

Personal and Commercial Banking (P&C) (1)

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 was $1,006 million, a decrease of $507 million or 33% from the prior year, and a decrease of $378 million or 27% from the prior quarter. These operating segments are reviewed separately in the sections that follow.

For further information on non-GAAP amounts, measures, and ratios in this Review of Operating Groups' Performance section, refer to the Non-GAAP and Other Financial Measures section.

Canadian Personal and Commercial Banking (Canadian P&C) (1)

Q4 2024 vs. Q4 2023

Canadian P&C reported net income was $750 million, a decrease of $172 million or 18% from the prior year.

Total revenue was $2,934 million, an increase of $138 million or 5% from the prior year. Net interest income increased $208 million or 10%, primarily due to higher balances. Non-interest revenue decreased $70 million or 10%, primarily due to lower lending fee and card-related revenue. Net interest margin of 2.74% was unchanged from the prior year. The impact of the transition of bankers' acceptances exposures to loans in our Commercial Bank resulted in lower non-interest revenue, offset in net interest income, with a modest reduction in the net interest margin.

Personal and Business Banking revenue increased $78 million or 4% and Commercial Banking revenue increased $60 million or 8%, both due to higher net interest income, partially offset by lower non-interest revenue.

Total provision for credit losses was $578 million, an increase of $313 million from the prior year. The provision for credit losses on impaired loans was $440 million, an increase of $208 million, due to higher provisions in Commercial Banking, primarily in the services sectors, and in Personal and Business Banking in the unsecured segments of the consumer portfolio. There was a $138 million provision for credit losses on performing loans in the current quarter, compared with a $33 million provision in the prior year.

Non-interest expense was $1,319 million, an increase of $59 million or 5% from the prior year, primarily driven by higher operating, employee-related and technology costs.

Average gross loans and acceptances increased $18.8 billion or 6% from the prior year to $333.0 billion. Personal and Business Banking loan balances increased 6%, primarily reflecting growth in residential mortgages. Commercial Banking loan balances increased 5% and credit card balances increased 15%. Average deposits increased $28.6 billion or 10% to $312.5 billion. Personal and Business Banking deposits increased 9%, primarily due to strong growth in term deposits. Commercial Banking deposits increased 13%.

Q4 2024 vs. Q3 2024

Reported net income decreased $164 million or 18% from the prior quarter.

Total revenue increased $26 million or 1% from the prior quarter. Net interest income increased $51 million or 2%, primarily due to higher balances, partially offset by lower net interest margins. Non-interest revenue decreased $25 million or 4%, primarily due to lower card-related revenue. Net interest margin decreased 3 basis points from the prior quarter, primarily due to loans growing faster than deposits, partially offset by higher deposit margins.

Personal and Business Banking revenue increased $36 million or 2%, primarily due to higher net interest income, partially offset by lower non-interest revenue. Commercial Banking revenue decreased $10 million or 1%, due to lower net interest income and lower non-interest revenue.

Total provision for credit losses increased $190 million from the prior quarter. The provision for credit losses on impaired loans increased $87 million, due to higher provisions in Commercial Banking. There was a $138 million provision for credit losses on performing loans in the current quarter, compared with a $35 million provision in the prior quarter.

Non-interest expense increased $59 million or 5% from the prior quarter, due to higher employee-related and operating costs.

Average gross loans and acceptances increased $6.9 billion or 2% from the prior quarter. Personal and Business Banking and Commercial Banking loan balances both increased 2%, and credit card balances increased 2%. Average deposits increased $6.1 billion or 2% from the prior quarter. Personal and Business Banking deposits increased 2% and Commercial Banking deposits increased 3%.

For further information on non-GAAP amounts, measures and ratios in this Review of Operating Groups' Performance section, refer to the Non-GAAP and Other Financial Measures section.

U.S. Personal and Commercial Banking (U.S. P&C) (1)

Q4 2024 vs. Q4 2023

U.S. P&C reported net income was $256 million, a decrease of $335 million or 57% from the prior year. All amounts in the remainder of this section are on a U.S. dollar basis.

Reported net income was $191 million, a decrease of $242 million or 56% from the prior year.

Total revenue was $1,810 million, a decrease of $12 million or 1% from the prior year. Net interest income decreased $15 million or 1%, primarily due to lower net interest margins, partially offset by higher deposit balances. Non-interest revenue increased $3 million or 1%, with higher lending fee revenue partially offset by lower card fee revenue. Net interest margin of 3.78% decreased 8 basis points, primarily due to lower deposit margins as customers migrated to higher cost deposits, partially offset by deposits growing faster than loans.

Personal and Business Banking revenue decreased $33 million or 5%, due to lower net interest income and non-interest revenue. Commercial Banking revenue increased $21 million or 2%, due to higher net interest income and non-interest revenue.

Total provision for credit losses was $509 million, an increase of $380 million from the prior year. The provision for credit losses on impaired loans was $320 million, an increase of $214 million, largely due to higher provisions in Commercial Banking across several sectors. There was a $189 million provision for credit losses on performing loans in the current quarter, compared with a $23 million provision in the prior year.

Non-interest expense was $1,098 million, a decrease of $40 million or 3% from the prior year, primarily driven by realized cost synergies related to the Bank of the West acquisition and our focus on operational efficiencies.

Average gross loans and acceptances decreased $2.4 billion or 2% from the prior year to $150.3 billion. Personal and Business Banking loan balances decreased 7%, primarily due to the sale of a portfolio of recreational vehicle loans, partially offset by higher mortgage balances. Commercial Banking loan balances were relatively unchanged from the prior year. Average total deposits increased $9.2 billion or 6% to $167.2 billion. Personal and Business Banking deposits increased 9% and Commercial Banking deposits increased 3%.

Q4 2024 vs. Q3 2024

Reported net income decreased $214 million or 45% from the prior quarter. All amounts in the remainder of this section are on a U.S. dollar basis.

Reported net income decreased $153 million or 44% from the prior quarter.

Total revenue increased $21 million or 1% from the prior quarter. Net interest income was relatively unchanged from the prior quarter, as growth in deposit balances was offset by lower deposit margins. Non-interest revenue increased $15 million or 5%, primarily due to higher deposit fee revenue, partially offset by lower lending fee revenue. Net interest margin of 3.78% increased 5 basis points from the prior quarter, primarily driven by deposits growing faster than loans.

Personal and Business Banking revenue was relatively unchanged. Commercial Banking revenue increased $22 million or 2%, due to higher net interest income and non-interest revenue.

Total provision for credit losses increased $223 million from the prior quarter. The provision for credit losses on impaired loans increased $53 million, largely due to higher provisions in Commercial Banking, including in the commercial real estate sector. There was a $189 million provision for credit losses on performing loans in the current quarter, compared with a $19 million provision in the prior quarter.

Non-interest expense increased $9 million or 1% from the prior quarter.

Average gross loans and acceptances decreased $1.0 billion or 1% from the prior quarter. Commercial Banking loan balances decreased 2%, reflecting higher pay-downs and lower utilization, partially offset by an increase in Personal and Business Banking loan balances of 4%. Average total deposits increased $3.4 billion or 2% from the prior quarter. Personal and Business Banking deposits increased 1% and Commercial Banking deposits increased 3%.

For further information on non-GAAP amounts, measures, and ratios in this Review of Operating Groups' Performance section, refer to the Non-GAAP and Other Financial Measures section.

BMO Wealth Management (1)

Q4 2024 vs. Q4 2023

BMO Wealth Management reported net income was $326 million, a decrease of $25 million or 7% from the prior year. Wealth and Asset Management reported net income was $273 million, an increase of $71 million or 35%, and Insurance net income was $53 million, a decrease of $96 million.

Total revenue was $1,486 million, an increase of $21 million or 1% from the prior year. Revenue in Wealth and Asset Management was $1,399 million, an increase of $152 million or 12%, primarily due to growth in client assets, including the impact of stronger global markets, partially offset by lower net interest income. Insurance revenue was $87 million, a decrease of $131 million from the prior year, primarily due to changes in portfolio positioning during the transition to IFRS 17.

Total provision for credit losses was $34 million, compared with $1 million in the prior year.

Non-interest expense was $1,024 million, an increase of $34 million or 3%, primarily due to higher employee-related compensation, partially offset by our focus on operational efficiencies.

Assets under management increased $89.8 billion or 27% from the prior year to $422.7 billion, driven by stronger global markets and higher net client assets. Assets under administration decreased $55.1 billion or 13% to $361.2 billion, primarily due to the exit of our Institutional Trust Services operations in the first quarter of fiscal 2024, partially offset by stronger global markets. Average gross loans increased 3% and average deposits increased 2%.

Q4 2024 vs. Q3 2024

Reported net income decreased $36 million or 10% from the prior quarter. Wealth and Asset Management reported net income decreased $27 million or 9%, and Insurance net income decreased $9 million or 14%.

Total revenue increased $47 million or 3% from the prior quarter. Wealth and Asset Management revenue increased $57 million or 4%, primarily due to growth in client assets, including the impact of stronger global markets, and higher net interest income. Insurance revenue decreased $10 million, primarily due to less favourable market movements compared with the prior quarter.

Total provision for credit losses was $34 million, compared with a recovery of the provision for credit losses of $9 million in the prior quarter.

Non-interest expense increased $55 million or 6%, primarily due to higher employee-related costs, including investment in talent and higher revenue-based costs.

Assets under management increased $13.1 billion or 3% from the prior quarter, reflecting stronger global markets, higher net client assets and favourable foreign exchange movements. Assets under administration increased $2.0 billion or 1%, primarily due to stronger global markets and favourable foreign exchange movements. Average gross loans increased 2% and average deposits increased 1%.

For further information on non-GAAP amounts, measures and ratios in this Review of Operating Groups' Performance section, refer to the Non-GAAP and Other Financial Measures section.

BMO Capital Markets (1)

Q4 2024 vs. Q4 2023

BMO Capital Markets reported net income was $251 million, a decrease of $221 million or 47% from the prior year.

Total revenue was $1,600 million, a decrease of $51 million or 3% from the prior year. Global Markets revenue decreased $7 million or 1%, due to lower equities trading revenue, partially offset by higher interest rate trading revenue. Investment and Corporate Banking revenue decreased $44 million or 6%, due to lower underwriting and advisory revenue and the impact of mark-downs on the held-for-sale loan portfolio, partially offset by higher corporate banking-related revenue.

Total provision for credit losses was $211 million, an increase of $210 million from the prior year. The provision for credit losses on impaired loans was $203 million, primarily driven by higher provisions in the financial, manufacturing and mining sectors, compared with an $11 million provision in the prior year. There was an $8 million provision for credit losses on performing loans, compared with a $10 million recovery in the prior year.

Non-interest expense was $1,087 million, an increase of $35 million or 3% from the prior year, primarily due to higher technology costs, partially offset by lower performance-based compensation.

Average gross loans and acceptances of $82.4 billion increased $1.9 billion or 2% from the prior year.

Q4 2024 vs. Q3 2024

Reported net income decreased $138 million or 35% from the prior quarter.

Total revenue decreased $66 million or 4% from the prior quarter. Global Markets revenue decreased $62 million or 6%, due to lower equities trading revenue reflecting reduced levels of client activity. Investment and Corporate Banking revenue decreased $4 million or 1%.

Total provision for credit losses increased $83 million from the prior quarter. The provision for credit losses on impaired loans increased $111 million from the prior quarter. There was an $8 million provision for credit losses on performing loans in the current quarter, compared with a $36 million provision in the prior quarter.

Non-interest expense increased $40 million or 4% from the prior quarter, due to higher amortization of acquisition-related intangible assets reflecting a write-down related to the acquisition of Radicle, and higher clearing fees, partially offset by lower performance-based compensation.

Average gross loans and acceptances decreased $2.2 billion or 3% from the prior quarter.

For further information on non-GAAP amounts, measures and ratios in this Review of Operating Groups' Performance section, refer to the Non-GAAP and Other Financial Measures section.

Corporate Services (1) (2) (3)