BMO Financial Group CEO Bill Downe said: "BMO continued to deliver good operating results this quarter with $1.2 billion in adjusted net income and adjusted earnings per share of $1.75, up 14% from last year. Good revenue growth and disciplined expense management led to positive net operating leverage for the third consecutive quarter.

"These results underline the benefits of our business mix, which is well diversified by geography and customer segment. Our combined Personal and Commercial banking business grew by 12% from last year, driven by strong adjusted results in U.S. Personal and Commercial Banking which was up 29% and Canadian banking which was up 5%. BMO Capital Markets performed well this quarter, with earnings up 18% year over year, while results in BMO Wealth Management reflect market conditions.

"We have a strong capital position and a clear and consistent set of priorities that recognize the potential for technology to transform the business of banking. Our results this quarter reinforce our confidence that successfully executing on our strategy will enable us to meet customers’ changing expectations and continue to perform well in an unsettled environment," concluded Mr. Downe.

Concurrent with the release of results, BMO announced a second quarter 2016 dividend of $0.84 per common share, unchanged from the preceding quarter and up $0.04 per share or 5% from a year ago, equivalent to an annual dividend of $3.36 per common share.

Our complete First Quarter 2016 Report to Shareholders, including our unaudited interim consolidated financial statements for the period ended January 31, 2016, 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 deductions for net income attributable to non-controlling interest in subsidiaries and preferred share dividends.

Note: All ratios and percentage changes in this document are based on unrounded numbers.

Total Bank Overview

Net income was $1,068 million for the first quarter of 2016, up $68 million or 7% from the prior year.

Adjusted net income was $1,178 million, up $137 million or 13% from the prior year, reflecting strong results in U.S. P&C, which benefited from the acquired BMO Transportation Finance business (BMO TF) and higher results in Canadian P&C and BMO Capital Markets. Traditional Wealth net income was consistent with the prior year as business growth was offset by the impact of weaker equity markets. Insurance income reflects the combined negative impact of interest rates and equity markets in both periods.

Reported EPS was up 8% and adjusted EPS was up 14% year over year. Return on equity was 10.9% and adjusted return on equity was 12.1%. Book value per share increased 13% from the prior year to $59.61 per share. The Basel III Common Equity Tier 1 Ratio was strong at 10.1%.

Operating Segment Overview

Canadian P&C

Net income was $529 million up $26 million or 5% from a year ago. Revenue was up $97 million or 6% from the prior year due to higher balances across most products, increased non-interest revenue and higher net interest margin.

Expenses increased $37 million or 4% driven by higher employee-related costs. Operating leverage was positive 1.5%. Year-over-year loan growth was 5% and deposit growth was 6%.

In our personal banking business, year-over-year loan and deposit growth was 3% and 5%, respectively. During the quarter, we began deploying upgraded automated banking machines (ABMs) to provide customers with enhanced options including intelligent touch screens and envelope-free deposits. We expect to roll out 2,200 upgraded ABMs by the end of fiscal 2016.

In our commercial banking business, loans and deposits grew 9% and 8% year over year, respectively. We are focused on increasing capacity for our sales force and developing new products and services that meet our customers’ needs. This quarter, BMO expanded our partnership with FreshBooks offering a simple cloud accounting solution designed exclusively for microbusiness customers.

U.S. P&C

Net income of $251 million increased $59 million or 31% from a year ago and adjusted net income of $264 million increased $59 million or 29%. All amounts in the remainder of this section are on a U.S. dollar basis.

Net income of $182 million increased $21 million or 13% from a year ago and adjusted net income of $191 million increased $19 million or 11%, including the acquisition of BMO TF.

Revenue of $828 million increased $106 million or 15%, reflecting the benefit of BMO TF, higher deposit volumes and spreads and organic loan growth, partially offset by loan spread compression. Adjusted non-interest expense of $518 million increased $61 million or 13%, largely due to the acquisition of BMO TF.

Year-over-year loan growth was $5.9 billion or 10%, with commercial loan growth (excluding BMO TF) of $3.1 billion or 9%.

On December 1, 2015, we completed the acquisition of General Electric Capital Corporation’s Transportation Finance business and rebranded it as BMO Transportation Finance. BMO TF enhances BMO’s commercial banking franchise with the addition of the largest provider of financing for the truck and trailer segment in North America.

During the quarter, we launched a new suite of consumer and small business MasterCard® products for BMO Harris Bank customers, that is highly competitive and responsive to our customers’ needs.

BMO Wealth Management

Net income was $148 million compared to $159 million a year ago. Adjusted net income was $176 million compared to $186 million a year ago. Adjusted net income in traditional wealth was $154 million, relatively unchanged from the prior year largely as a result of business growth being offset by the impact of weaker equity markets.

Adjusted net income in insurance was $22 million compared to $31 million a year ago, due to the combined negative impact of interest rates and equity markets in both periods, which reduced adjusted net income by $33 million in the current quarter.

Assets under management and administration grew by $12 billion or 1% from a year ago to $864 billion, driven by favourable foreign exchange movements, partially offset by market declines.

In January, BMO Wealth Management introduced BMO SmartFolio, an easy and affordable digital portfolio management service that aligns to individual investment objectives and provides clients with online access when and where they need it. With the introduction of SmartFolio™, BMO now has one of the most comprehensive suites of investing services in the industry.

In November 2015, at the 21st annual Morningstar Awards, BMO InvestorLine was named for the third year in a row the Best Online Brokerage based on its exceptional customer service, online tools and resources, range of investment products and website functionality.

BMO Capital Markets

Net income of $260 million increased $40 million or 18% from a year ago. Revenue increased $100 million or 11%. Excluding the impact of the stronger U.S. dollar, revenue increased $55 million or 6% due to better performance in Investment and Corporate Banking from higher corporate banking related revenue and higher investment banking advisory fees, partially offset by lower debt and equity underwriting.

Despite market conditions, revenues from Trading Products declined only slightly as a result of prudent management and decreased flow in certain client businesses. Excluding the impact of the stronger U.S. dollar, non-interest expenses were largely unchanged from the prior year.

Corporate Services

Corporate Services reported net loss for the quarter was $120 million compared with a reported net loss of $74 million a year ago. The adjusted net loss for the quarter was $52 million, compared with an adjusted net loss of $74 million a year ago.

Adjusted results in these Total Bank Overview and Operating Segment Overview sections are non-GAAP amounts or non-GAAP measures. Please see the Non-GAAP Measures section.

Capital

BMO’s Basel III Common Equity Tier 1 (CET1) Ratio was 10.1% at January 31, 2016. The CET1 Ratio decreased by approximately 60 basis points from 10.7% at the end of the fourth quarter due to the acquisition of BMO TF. Return on equity was negatively impacted by increased shareholders’ equity resulting in part from foreign currency gains on our foreign operations.

Provision for Credit Losses

The total provision for credit losses (PCL) was $183 million, an increase of $20 million from the prior year primarily due to higher provisions in Canadian and U.S. P&C partially offset by higher loan recoveries in Corporate Services.