Bank of Montreal (BMO)

Q2 2012 Earnings Call

May 23, 2012 2:00 pm ET

Executives

Sharon Marie Haward-Laird

William A. Downe - Chief Executive Officer, President and Director

Thomas E. Flynn - Chief Financial Officer, Principal Accounting Officer and Executive Vice President

Surjit S. Rajpal - Chief Risk Officer and Executive Vice-President

Compare to:
Previous Statements by BMO
» Bank of Montreal's CEO Hosts 194th Annual Meeting (Transcript)
» Bank of Montreal's CEO Discusses Q1 2012 Results - Earnings Call Transcript
» Bank of Montreal's CEO Discusses Q4 2011 Results - Earnings Call Transcript

Franklin J. Techar - Chief Executive Officer of Personal & Commercial Banking for Canada Bmo and President of Personal & Commercial Banking for Canada Bmo

Mark F. Furlong - Chairman, Chief Executive Officer, President, Treasurer of M&I Capital Markets Group Llc, Vice President of M&I Capital Markets Group Llc, Chief Executive Officer of M&I Marshall & Ilsley Bank, Chairman of M&I Marshall & Ilsley Bank, Director of M&I Marshall & Ilsley Bank, Director of M&I Capital Markets Group Llc and Director of Marshall & Ilsley Trust Company

Thomas V. Milroy - Chief Executive Officer

Gilles G. Ouellette - Chief Executive Officer of Private Client Group and President of Private Client Group

Analysts

Peter D. Routledge - National Bank Financial, Inc., Research Division

Darko Mihelic - Cormark Securities Inc., Research Division

Andre-Philippe Hardy - RBC Capital Markets, LLC, Research Division

John Aiken - Barclays Capital, Research Division

Gabriel Dechaine - Crédit Suisse AG, Research Division

John Reucassel - BMO Capital Markets Canada

Michael Goldberg - Desjardins Securities Inc., Research Division

Robert Sedran - CIBC World Markets Inc., Research Division

Sumit Malhotra - Macquarie Research

Steve Theriault - BofA Merrill Lynch, Research Division

Mario Mendonca - Canaccord Genuity, Research Division

Presentation

Operator

Please be advised that this conference call is being recorded. Good afternoon, and welcome to BMO Financials Group Second Quarter 2012 Conference Call for May 23, 2012. Your host for today is Ms. Sharon Haward-Laird, Head - Investor Relations. Please go ahead.

Sharon Marie Haward-Laird

Thank you. Good afternoon, 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 Bill Downe, BMO's CEO; followed by presentations from Tom Flynn, the bank's Chief Financial Officer; and Surjit Rajpal, our Chief Risk Officer. After their presentations, we will have a short question-and-answer period where we will take questions from prequalified analysts. [Operator Instructions] Also, with us this afternoon to take questions are BMO's business unit heads: Tom Milroy from BMO Capital Markets; Gilles Ouellette from the Private Client Group; Frank Techar, Head of P&C Canada; and Mark Furlong, from P&C U.S.

At this time, I caution our listeners by stating the following on behalf of those speaking today. Forward-looking statements may be made during this call. They are subject to risks and uncertainties. Actual results could differ materially from forecasts, projections or conclusions in the forward-looking statements. Information about material factors that could cause results to differ and the material factors and assumptions underlying these forward-looking statements can be found in our annual MD&A and our second quarter report to shareholders.

With that said, I will hand things over to Bill.

William A. Downe

Okay. Thank you, Sharon, and good afternoon, everyone. Before I begin, I'd like to note that this is Sharon's first call as our new Head of Investor Relations. She's well known to all of us around the table and was most recently Vice President and Deputy General Counsel for our Capital Markets business. Sharon's taking over the IR function from Viki Lazaris, who's done an outstanding job for BMO, and I know Sharon's looking forward to working with all of you to continue in the same fashion. As noted, my comments may include forward-looking statements.

BMO produced another quarter of very strong results, bringing our U.S. -- bringing U.S. 2 point -- $2 billion, rather, of net income in the first half of the year. Our businesses are delivering strong operating performance, grounded in our consistent focus on customers and their success. We also have made a number of strategic investments in our wealth management business, which I'll touch on later.

Since 2011, with a clear line of sight around market adjustments and regulatory reform and the objective of continuing to set a new standard for our customers, business models in every part of the bank have been under review. So is the relationship between revenue and the expenses incurred to generate each dollar earned. And so, contributing to our performance is a long-term effort to increase the competitiveness of the bank and enhance our return on equity. It's work that's well underway.

We have been and continue to simplify structures and processes everywhere in the company, and we're encouraged by the improvements we're seeing. In fact, every month, we're becoming a more efficient bank as we simplify processes that deliver exceptional customer experience and generate high-quality earnings. This progress is consistent with our long-term productivity plans, which I've referenced in previous calls.

Let me take a moment to highlight some of our successes to date. For many months now in our P&C Canada business, the overall number of hours worked by customer service representatives have come down. By running better analytics, we've maintained service levels while managing the CSR schedule more proactively. Additional customer service representatives are in the branch when more customers are expected, and the reverse is the case in periods of low traffic.

In the U.S., we're establishing a new sales model to serve the mass affluent customer. It will deliver specialized investing and banking support for this important segment at a lower cost than traditional models, while improving the customer experience. Pilot results have shown high double-digit growth rates in investments and very strong loan and deposit balance growth.

We're also eliminating costs through a disciplined approach to simplification, de-layering and eliminating waste. For example, a year ago, we undertook an initiative to simplify our employee grade levels. Two legacy systems became one, simplifying the bank's grade structure while reducing costs and administration. Actions like these and many other multiyear productivity enhancements will favorably contribute to the bank's profitability and to our ability to distinguish ourselves in the minds of customers.

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