Bank of Montreal (NYSE:BMO) Q4 2018 Earnings Conference Call Transcript

Dec 04, 2018 • 08:00 am ET


Bank of Montreal (NYSE:BMO) Q4 2018 Earnings Conference Call Transcript


Loading Event

Loading Transcript


All participants please stand by, your meeting is about to begin. Please be advised that this conference call is being recorded. Good morning and welcome to the BMO Financial Group's Q4 2018 Earnings Release and Conference Call for December 4, 2018. Your host for today is Ms. Jill Homenuk, Head of Investor Relations.

Ms. Homenuk, please go ahead.

Jill Homenuk

Thank you. Good morning, everyone, and thanks for joining us today. Our agenda for today's investor presentation is as follows. We will begin the call with remarks from Darryl White, BMO's CEO; followed by a presentation from Tom Flynn, the Bank's Chief Financial Officer; and Pat Cronin, our Chief Risk Officer. Following the formal remarks, a Group head for each of our businesses will provide comments on their outlook for 2019. We have with us today Cam Fowler from Canadian P&C; and Dave Casper from US P&C. Dan Barclay is here for BMO Capital Markets; and Joanna Rotenberg is representing BMO Wealth Management.

After their presentations, we will have a question-and-answer period, where we will take questions from pre-qualified analysts. To give everyone an opportunity to participate, please keep it to one or two questions.

(Forward-Looking Cautionary Statements)

With that said, I'll hand things over to Darryl.

Darryl White

Thank you, Jill, and good morning everyone. This morning, we announced earnings for the fourth quarter of CAD1.5 billion concluding a strong year in which net income increased 9% to CAD6 billion. Earnings per share for the year of CAD8.99 were up 10% benefiting from our diversified and competitively advantaged business mix. Return on equity for the year was 14.6%. When I think about the key takeaways for the year, we've made good progress against the areas we've been focused on, growing the contribution from our US operations, improving efficiency while at the same time investing in our digital innovation agenda and deepening customer loyalty.

In the US, our combined businesses delivered $1.3 billion in earnings and are positioned for continued growth. We've managed the overall rate of expense growth at a consistent rate of 4% in constant currency in each of the last four years, while at the same time increasing our technology spend at a double-digit rate over the last two years.

We're seeing the benefits of these investments in improved customer loyalty scores, increased digital engagement and a better employee experience through more simplified and automated processes. We've also made -- maintained a strong capital position, while at the same time growing our businesses and returning CAD3.4 billion of capital to our shareholders. During the year, we repurchased 10 million shares, and today, we announced an increase to our quarterly dividend of CAD0.04 per common share or 8%. This will bring our annual dividend to CAD4 even.

On slide five, we provide the results of our overall US segment. Consistent with our stated priorities, net income was up 26% and contributed 28% of the Bank's 2018 earnings compared to 24% in 2017. This was led by strong momentum in US P&C across our