BMO Financial Group Reports Good Results for the Third Quarter of 2013

BMO Financial Group Reports Good Results for the Third Quarter of 2013 
TORONTO, ONTARIO -- (Marketwired) -- 08/27/13 -- BMO Financial Group
(TSX:BMO)(NYSE:BMO) and Bank of Montreal -  
Financial Results Highlights:  
Third Quarter 2013 Compared with Third Quarter 2012: 


 
--  Net income of $1,137 million, up 17%; adjusted net income(1) of $1,136
    million, up 12% 
    
--  EPS(2) of $1.68, up $0.26 or 18%; adjusted EPS(1,2) of $1.68, up $0.19
    or 13% 
    
--  ROE of 15.6%, compared with 14.5%; adjusted ROE(1) of 15.6%, compared
    with 15.2% 
    
--  Provisions for credit losses of $77 million, compared with $237 million;
    adjusted provisions for credit losses(1) of $13 million, compared with
    $116 million 
    
--  Basel III Common Equity Ratio is strong at 9.6% 

 
Year-to-Date 2013 Compared with Year-to-Date 2012: 


 
--  Net income of $3,160 million, up 2%; adjusted net income(1) of $3,174
    million, up 7% 
    
--  EPS(2) of $4.63, up 2%; adjusted EPS(1,2) of $4.65, up 7% 
    
--  ROE of 14.9%, compared with 15.9%; adjusted ROE(1) of 15.0%, compared
    with 15.2% 
    
--  Provisions for credit losses of $400 million, compared with $573
    million; adjusted provisions for credit losses(1) of $219 million,
    compared with $358 million 

 
For the third quarter ended July 31, 2013, BMO Financial Group
reported net income of $1,137 million or $1.68 per share on a
reported basis and net income of $1,136 million or $1.68 per share on
an adjusted basis.   
"BMO's third quarter results confirm the strength of the bank's
performance to date in 2013 and reflect the benefits of our
disciplined growth strategy, which is well diversified by geography
and business mix," said Bill Downe, President and Chief Executive
Officer, BMO Financial Group. "Operating results are underpinned by
the successful execution of well-established strategies across all
our businesses. 
"Canadian retail businesses were particularly strong in the quarter
with both Personal & Commercial Banking Canada and traditional wealth
earnings reaching new highs.  Our focus on deepening customer
relationships and maintaining industry-leading loyalty continues to
boost our ability to attract new customers and expand share in
personal banking.  
"Similarly, building on BMO's advantaged market share positions, our
large commercial businesses are doing well on both sides of the
border.  In Canada, there was strong growth in commercial loans and
deposits again this quarter.  The U.S. commercial portfolio saw good
sequential growth with continued strength in core commercial and
industrial.  
"Private Client Group posted record earnings in traditional wealth,
up 37% year over year.  Insurance results, where interest rate
declines have affected financial performance over a number of
quarters, benefited from changes in long-term rates.  
"Good earnings performance in Capital Markets reflects the benefits
of our diversified client-centric business model.  
"Good credit performance continues to highlight our prudent approach
to risk management and our focus on attracting high-quality earning
assets.  We repurchased 4 million shares under our normal course
issuer bid during the quarter and maintained strong capital ratios,
while providing an attractive dividend.  
"Looking forward, we see opportunities for growth in each of our
businesses in an improving North American economy led by the United
States, and this gives us confidence we're well positioned heading
into 2014," concluded Mr. Downe. 


 
(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 in the Adjusted Net Income section, and (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.  
Concurrent with the release of results, BMO announced a fourth
quarter 2013 dividend of $0.74 per common share, unchanged from the
preceding quarter and up $0.02 per share from a year ago, equivalent
to an annual dividend of $2.96 per common share.  
Our complete Third Quarter 2013 Report to Shareholders, including our
unaudited interim consolidated financial statements for the period
ended July 31, 2013, is available online at
www.bmo.com/investorrelations and at www.sedar.com. 
Operating Segment Overview  
P&C Canada  
Net income was $497 million, up $38 million or 9% from a year ago.
Adjusted net income was $500 million, up $38 million or 8% from the
prior year. Revenue increased $58 million or 4% year over year to
$1,620 million, driven by higher balance and fee volumes across most
products, partially offset by the impact of lower net interest
margin. Provisions for credit losses fell $21 million or 14% mainly
due to lower provisions in the consumer portfolio. Expenses were up
$31 million or 4% to $821 million, as we continue to invest in the
business, including adding front-line resources across a number of
roles. So far this year, we expanded our branch network by opening or
upgrading 49 locations across the country.  
We are executing on our strategy resulting in strong balance sheet
growth and increasing revenues. This momentum, combined with our
focus on process simplification, is expected to drive future net
income growth.  
In personal banking, there was strong loan growth of 10% and
consistent deposit growth. We are focused on attracting new customers
and deepening relationships with existing customers through our
recent Spring Home Financing Campaign and our 'Make the BMOst of
Summer' Campaign. We continue to have top-tier performance in
customer loyalty, as measured by the net promoter score.  
In commercial banking, momentum continues with strong year-over-year
growth in commercial loans of 12% and deposits of 15%. Our focus on
meeting the needs of our customers, at every stage of their business
cycle, with the products, services and advice they value continues to
generate positive results. We remain second in Canadian business
banking loan market share for small and medium-sized loans. In April
we tied for first place among the big banks in the Canadian
Federation of Independent Business report Battle of the Banks, based
on a 2012 survey of almost 13,000 small and medium-sized enterprise
(SME) owners to assess how well banks are serving their SME
customers.  
P&C U.S. (all amounts in US$)  
Net income of $147 million increased $10 million or 7% from $137
million in the third quarter a year ago. Adjusted net income was $160
million, an increase of $7 million or 4% from a year ago due to lower
provisions for credit losses and reduced expenses. Revenue was 5%
lower as the effect of loan growth was more than offset by the
effects of lower net interest margin, reductions in certain loan
portfolios and lower deposit fees.  
Total loans continued to grow, with year-over-year and sequential
increases in average loans, led by continued strong growth in the
core commercial and industrial (C&I) loan portfolio. The core C&I
portfolio increased by $3.9 billion from a year ago to $23.0 billion. 
Deposits grew from the prior year in our commercial business and
personal chequing and savings accounts, despite our planned
reductions in higher cost deposit products. 
The annual American Banker/Reputation Institute Survey of Bank
Reputations showed the confidence customers have in BMO Harris Bank.
BMO Harris Bank ranked number one out of 30 major U.S. banks in
long-term trust, outscoring the field when consumers were asked
whether they would give their bank the benefit of the doubt when the
next financial crisis hit. We also ranked number five in overall bank
reputation.   
For the third year in a row, BMO Harris Bank received the Community
Service Leadership Award from The Financial Services Roundtable in
recognition of our dedication and service to the communities in which
we operate. We were specifically recognized for our implementation of
financial literacy projects, collective volunteer efforts from our
employees and monetary contributions - all which helped to improve
the vitality of our communities.  
Private Client Group  
Private Client Group (PCG) produced strong results for the quarter.
Net income of $218 million doubled from a year ago. Adjusted net
income of $225 million increased $111 million or 97% from a year ago.
Adjusted net income in our traditional wealth businesses was a record
$131 million, up $35 million or 37% from a year ago. Results reflect
growth in client assets, increased transaction volumes and a
continued focus on productivity. Adjusted net income in Insurance was
$94 million, up $76 million from a year ago. The increase was due to
a $42 million after-tax benefit from increases in long-term interest
rates in the current quarter relative to a $45 million after-tax
charge a year ago, partially offset by benefits from changes in our
investment portfolio to improve asset-liability management in the
prior year. The underlying Insurance business continues to perform
well.  
Assets under management and administration grew by $63 billion or 13%
from a year ago to $527 billion, with assets under management up 11%
year over year, driven mainly by growth in new client assets coupled
with market appreciation.  
In June, BMO Global Asset Management announced the intended expansion
of its international footprint through the opening of a new office in
Australia. Once open, the office will focus on sales and serving the
needs of Australia's institutional investors.   
BMO Global Asset Management was named one of Pensions & Investments
Top 100 Money Managers based on worldwide assets under management,
ranking 75th internationally on this prestigious list. In 2012, the
firm ranked 85th.  
BMO Capital Markets  
Net income was $280 million, up $30 million or 12% from the prior
year, driven by good performance across our diversified businesses in
general, with increases in trading revenue and equity underwriting.   
We were recognized during the quarter with a number of awards,
reflecting our ongoing commitment to our clients. BMO Capital Markets
was selected as a 2013 Greenwich Quality and Share Leader in Canadian
equities by Greenwich Associates, reflecting client recognition for
providing the industry's best coverage in equity research/advisory
vote and trading share and high service quality for equity sales and
trading. In the Global Custodian Magazine 2013 Prime Brokerage
Survey, BMO Capital Markets ranked Best in Class for our Prime
Brokerage business in 9 of 12 categories, and was the recipient of
Trade Finance Magazine's Best Trade Bank in Canada award for the
fourth consecutive year.  
BMO Capital Markets participated in 136 new issues in the quarter
including 55 corporate debt deals, 45 government debt deals, 28
common equity transactions and eight issues of preferred shares,
raising $56 billion.  
Corporate Services  
Corporate Services net loss for the quarter was $11 million, compared
with net income of $13 million a year ago. On an adjusted basis, the
net loss was $35 million, compared with net income of $32 million a
year ago. The decrease in reported results was smaller than the
decrease in adjusted results primarily due to lower integration costs
in the reported results in the current year. Adjusting items are
detailed in the Adjusted Net Income section and in the Non-GAAP
Measures section. Adjusted revenues were lower primarily due to a
higher group taxable equivalent basis (teb) offset. Adjusted
non-interest expenses were higher primarily due to higher technology
costs. Adjusted recoveries of credit losses increased, primarily due
to higher recoveries on the Marshall & Ilsley (M&I) purchased credit
impaired loan portfolio.  
Adjusted Net Income  
Adjusted net income was $1,136 million for the third quarter of 2013,
up $123 million or 12% from a year ago. Adjusted earnings per share
were $1.68, up 13% from $1.49 a year ago.  
Management has designated certain amounts as adjusting items and has
adjusted GAAP results so that we can discuss and present financial
results without the effects of adjusting items to facilitate
understanding of business performance and related trends. Management
assesses performance on a GAAP basis and on an adjusted basis and
considers both to be useful in the assessment of underlying business
performance. Presenting results on both bases provides readers with a
better understanding of how management assesses results. Adjusted
results and measures are non-GAAP and, together with items excluded
in determining adjusted results, are disclosed in more detail in the
Non-GAAP Measures section, along with comments on the uses and
limitations of such measures. Items excluded from third quarter 2013
results in the determination of adjusted results totalled $1 million
of net income and had no impact on EPS, and were comprised of: 


 
--  the $68 million after-tax net benefit for credit-related items in
    respect of the M&I purchased performing loan portfolio, consisting of
    $154 million for the recognition in net interest income of a portion of
    the credit mark on the portfolio (including $55 million for the release
    of the credit mark related to early repayment of loans), net of a $44
    million specific provision for credit losses and related income taxes of
    $42 million. These credit-related items in respect of the acquired M&I
    performing loan portfolio can significantly impact both net interest
    income and the provision for credit losses in different periods over the
    life of the M&I purchased performing loan portfolio; 
--  costs of $49 million ($30 million after tax) for the integration of M&I
    including amounts related to system conversions, restructuring and other
    employee-related charges, consulting fees and marketing costs related to
    rebranding activities; 
--  an increase in the collective allowance for credit losses of $20 million
    ($15 million after tax) on loans other than the M&I purchased loan
    portfolio; 
--  the $1 million before and after-tax benefit from run-off structured
    credit activities; and 
--  the amortization of acquisition-related intangible assets of $32 million
    ($23 million after tax). 

 
All of the above adjusting items were recorded in Corporate Services
except the amortization of acquisition-related intangible assets,
which is charged to the operating groups.   
The impact of adjusting items for comparative periods is summarized
in the Non-GAAP Measures section.  
Caution  
This Operating Segment Overview section contains forward-looking
statements. Please see the Caution Regarding Forward-Looking
Statements that follows. 
This Operating Segment Overview section contains adjusted results and
measures, which are non-GAAP. Please see the Non-GAAP Measures
section.  
Management's Discussion and Analysis 
Management's Discussion and Analysis (MD&A) commentary is as of
August 27, 2013. Unless otherwise indicated, all amounts are in
Canadian dollars and have been derived from financial statements
prepared in accordance with International Financial Reporting
Standards (IFRS). References to GAAP mean IFRS. The MD&A should be
read in conjunction with the unaudited interim consolidated financial
statements for the period ended July 31, 2013, as well as the audited
consolidated financial statements for the year ended October 31,
2012, and Management's Discussion and Analysis for fiscal 2012. The
material that precedes this section comprises part of this MD&A.   
The annual MD&A includes a comprehensive discussion of our
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. 


 
                                                                            
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Bank of Montreal's management, under the supervision of the CEO and CFO, has
evaluated the effectiveness, as at July 31, 2013, of Bank of Montreal's     
disclosure controls and procedures (as defined in the rules of the          
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 July 31, 2013, that 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.                    
                                                                            
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Regulatory Filings                                                          
                                                                            
Our continuous disclosure materials, including our interim filings, annual  
MD&A and audited 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.sedar.com and on the EDGAR section
of the SEC's website at www.sec.gov.                                        
                                                                            
                                                                            
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Bank of Montreal uses a unified branding approach that links all of the     
organization's member companies. Bank of Montreal, together with its        
subsidiaries, is known as BMO Financial Group. As such, in this document,   
the names BMO and BMO Financial Group mean Bank of Montreal, together with  
its subsidiaries.                                                           
                                                                            
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Summary Data - Reported                                              Table 1
                                                                            
----------------------------------------------------------------------------
                                                                            
                                                                            
(Canadian $                                 % Increase           % Increase 
 in millions,                 Q3-      Q3-  (Decrease)      Q2-  (Decrease) 
 except as noted)            2013     2012  vs Q3-2012     2013  vs Q2-2013 
----------------------------------------------------------------------------
Summary Income Statement                                                    
Net interest income         2,146    2,225          (3)   2,098           2 
Non-interest revenue        1,904    1,653          15    1,846           3 
----------------------------------------------------------------------------
Revenue                     4,050    3,878           4    3,944           3 
----------------------------------------------------------------------------
Specific provision for                                                      
 credit losses                 57      229         (75)     175         (67)
Collective provision for                                                    
 (recovery of) credit                                                       
 losses                        20        8        +100      (30)       +100 
----------------------------------------------------------------------------
Total provision for                                                         
 credit losses                 77      237         (68)     145         (47)
Non-interest expense        2,542    2,484           2    2,568          (1)
Provision for income                                                        
 taxes                        294      187          58      256          15 
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Net income                  1,137      970          17      975          17 
============================================================================
  Attributable to bank                                                      
   shareholders             1,121      951          18      957          17 
  Attributable to non-                                                      
   controlling interest                                                     
   in subsidiaries             16       19         (18)      18         (17)
----------------------------------------------------------------------------
Net income                  1,137      970          17      975          17 
============================================================================
Common Share Data ($                                                        
 except as noted)                                                           
Earnings per share           1.68     1.42          18     1.42          18 
Dividends declared per                                                      
 share                       0.74     0.70           6     0.74           - 
Book value per share        42.38    39.43           7    41.73           2 
Closing share price         63.87    57.44          11    63.19           1 
Total market value of                                                       
 common shares ($                                                           
 billions)                   41.3     37.2          11     41.0           1 
Dividend yield (%)            4.6      4.9          nm      4.7          nm 
Price-to-earnings ratio                                                     
 (times)                     10.3     10.1          nm     10.6          nm 
Market-to-book value                                                        
 (times)                      1.5      1.5          nm      1.5          nm 
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Financial Measures and                                                      
 Ratios (%)                                                                 
Return on equity             15.6     14.5         1.1     14.2         1.4 
Revenue growth                  4       17          nm        -          nm 
Non-interest expense                                                        
 growth                         2       12          nm        3          nm 
Efficiency ratio             62.8     64.1        (1.3)    65.1        (2.3)
Operating leverage            2.2      4.9          nm     (3.2)         nm 
Net interest margin on                                                      
 earning assets              1.75     1.88       (0.13)    1.79       (0.04)
Effective tax rate           20.6     16.2         4.4     20.8        (0.2)
Return on average assets     0.80     0.68        0.12     0.71        0.09 
Provision for credit                                                        
 losses-to-average loans                                                    
 and acceptances                                                            
 (annualized)                0.11     0.38       (0.27)    0.22       (0.11)
Gross impaired loans and                                                    
 acceptances-to-equity                                                      
 and allowance for credit                                                   
 losses                      8.14     9.15       (1.01)    8.80       (0.66)
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Value Measures (% except                                                    
 as noted)                                                                  
Average annual three year                                                   
 total shareholder return     5.4      7.1        (1.7)     4.9         0.5 
Twelve month total                                                          
 shareholder return          16.5      0.5        16.0     13.0         3.5 
Net economic profit ($                                                      
 millions)                    382      278          38      263          45 
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Balance Sheet (as at $                                                      
 billions)                                                                  
Assets                        549      542           1      555          (1)
Net loans and acceptances     272      251           8      264           3 
Deposits                      358      329           9      358           - 
Common shareholders'                                                        
 equity                      27.4     25.5           7     27.1           1 
Cash and securities-to-                                                     
 total assets ratio (%)      30.8     31.3        (0.5)    30.1         0.7 
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                            Basel    Basel                Basel             
Capital Ratios (%)            III       II                  III             
Common Equity Tier 1                                                        
 Capital Ratio                9.6     10.3          nm      9.7        (0.1)
Tier 1 Capital Ratio         11.2     12.4          nm     11.3        (0.1)
Total Capital Ratio          13.5     14.8          nm     13.7        (0.2)
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Net Income by Operating                                                     
 Group                                                                      
  P&C Canada                  497      459           9      430          16 
  P&C U.S.                    153      139          10      155          (1)
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Personal and Commercial                                                     
 Banking                      650      598           9      585          11 
Private Client Group          218      109         100      141          54 
BMO Capital Markets           280      250          12      275           2 
Corporate Services,                                                         
 including Technology and                                                   
 Operations (T&O)             (11)      13       (+100)     (26)         53 
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BMO Financial Group net                                                     
 income                     1,137      970          17      975          17 
============================================================================
                                                                            
 
                                                       
(Canadian $                                 % Increase 
 in millions,                YTD-     YTD-  (Decrease) 
 except as noted)            2013     2012 vs YTD-2012 
-------------------------------------------------------
Summary Income Statement                               
Net interest income         6,460    6,663          (3)
Non-interest revenue        5,615    5,291           6 
-------------------------------------------------------
Revenue                    12,075   11,954           1 
-------------------------------------------------------
Specific provision for                                 
 credit losses                410      546         (25)
Collective provision for                               
 (recovery of) credit                                  
 losses                       (10)      27       (+100)
-------------------------------------------------------
Total provision for                                    
 credit losses                400      573         (30)
Non-interest expense        7,700    7,537           2 
Provision for income                                   
 taxes                        815      737          11 
-------------------------------------------------------
Net income                  3,160    3,107           2 
=======================================================
  Attributable to bank                                 
   shareholders             3,108    3,051           2 
  Attributable to non-                                 
   controlling interest                                
   in subsidiaries             52       56          (7)
-------------------------------------------------------
Net income                  3,160    3,107           2 
=======================================================
Common Share Data ($                                   
 except as noted)                                      
Earnings per share           4.63     4.56           2 
Dividends declared per                                 
 share                       2.20     2.10           5 
Book value per share        42.38    39.43           7 
Closing share price         63.87    57.44          11 
Total market value of                                  
 common shares ($                                      
 billions)                   41.3     37.2          11 
Dividend yield (%)            4.6      4.9          nm 
Price-to-earnings ratio                                
 (times)                     10.3     10.1          nm 
Market-to-book value                                   
 (times)                      1.5      1.5          nm 
-------------------------------------------------------
Financial Measures and                                 
 Ratios (%)                                            
Return on equity             14.9     15.9        (1.0)
Revenue growth                  1       18          nm 
Non-interest expense                                   
 growth                         2       19          nm 
Efficiency ratio             63.8     63.1         0.7 
Operating leverage           (1.2)    (1.4)         nm 
Net interest margin on                                 
 earning assets              1.80     1.94       (0.14)
Effective tax rate           20.5     19.2         1.3 
Return on average assets     0.75     0.75           - 
Provision for credit                                   
 losses-to-average loans                               
 and acceptances                                       
 (annualized)                0.20     0.31       (0.11)
Gross impaired loans and                               
 acceptances-to-equity                                 
 and allowance for credit                              
 losses                      8.14     9.15       (1.01)
-------------------------------------------------------
Value Measures (% except                               
 as noted)                                             
Average annual three year                              
 total shareholder return     5.4      7.1        (1.7)
Twelve month total                                     
 shareholder return          16.5      0.5        16.0 
Net economic profit ($                                 
 millions)                    963    1,078         (11)
-------------------------------------------------------
Balance Sheet (as at $                                 
 billions)                                             
Assets                        549      542           1 
Net loans and acceptances     272      251           8 
Deposits                      358      329           9 
Common shareholders'                                   
 equity                      27.4     25.5           7 
Cash and securities-to-                                
 total assets ratio (%)      30.8     31.3        (0.5)
-------------------------------------------------------
                            Basel    Basel             
Capital Ratios (%)            III       II             
Common Equity Tier 1                                   
 Capital Ratio                9.6     10.3          nm 
Tier 1 Capital Ratio         11.2     12.4          nm 
Total Capital Ratio          13.5     14.8          nm 
-------------------------------------------------------
Net Income by Operating                                
 Group                                                 
  P&C Canada                1,385    1,333           4 
  P&C U.S.                    490      440          11 
-------------------------------------------------------
Personal and Commercial                                
 Banking                    1,875    1,773           6 
Private Client Group          522      360          45 
BMO Capital Markets           865      707          22 
Corporate Services,                                    
 including Technology and                              
 Operations (T&O)            (102)     267       (+100)
-------------------------------------------------------
BMO Financial Group net                                
 income                     3,160    3,107           2 
=======================================================
                                                       
nm - not meaningful                                                         
                                                                            
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Summary Data - Adjusted (1)                                          Table 2
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(Canadian $                                 % Increase           % Increase 
 in millions,                               (Decrease)           (Decrease) 
 except as noted)         Q3-2013  Q3-2012  vs Q3-2012  Q2-2013  vs Q2-2013 
----------------------------------------------------------------------------
Adjusted Summary Income                                                     
 Statement                                                                  
Net interest income         1,993    2,012          (1)   1,923           4 
Non-interest revenue        1,899    1,665          14    1,836           3 
----------------------------------------------------------------------------
Revenue                     3,892    3,677           6    3,759           4 
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Specific provision and                                                      
 total provision for                                                        
 credit losses                 13      116         (89)     110         (88)
Non-interest expense        2,458    2,342           5    2,402           2 
Provision for income                                                        
 taxes                        285      206          39      250          14 
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Net income                  1,136    1,013          12      997          14 
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  Attributable to bank                                                      
   shareholders             1,120      994          13      979          15 
  Attributable to non-                                                      
   controlling interest                                                     
   in subsidiaries             16       19         (18)      18         (17)
----------------------------------------------------------------------------
Net income                  1,136    1,013          12      997          14 
============================================================================
                                                                            
Adjusted Common Share                                                       
 Data ($)                                                                   
Earnings per share           1.68     1.49          13     1.46          15 
Adjusted Financial                                                          
 Measures and Ratios (%)                                                    
Return on equity             15.6     15.2         0.4     14.5         1.1 
Revenue growth                  6        9          nm        1          nm 
Non-interest expense                                                        
 growth                         5       13          nm        2          nm 
Efficiency ratio             63.2     63.7        (0.5)    63.9        (0.7)
Operating leverage            0.9     (4.4)         nm     (1.0)         nm 
Net interest margin on                                                      
 earning assets              1.63     1.70       (0.07)    1.64       (0.01)
Effective tax rate           20.1     16.9         3.2     20.0         0.1 
Provision for credit                                                        
 losses-to-average loans                                                    
 and acceptances                                                            
 (annualized)                0.02     0.20       (0.18)    0.18       (0.16)
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Adjusted Net Income By                                                      
 Operating Group                                                            
  P&C Canada                  500      462           8      431          16 
  P&C U.S.                    165      155           6      168          (1)
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Personal and Commercial                                                     
 Banking                      665      617           8      599          11 
Private Client Group          225      114          97      148          52 
BMO Capital Markets           281      250          13      276           2 
Corporate Services,                                                         
 including T&O                (35)      32       (+100)     (26)        (40)
----------------------------------------------------------------------------
BMO Financial Group net                                                     
 income                     1,136    1,013          12      997          14 
============================================================================
 
(Canadian $                                 % Increase 
 in millions,                               (Decrease) 
 except as noted)        YTD-2013 YTD-2012 vs YTD-2012 
-------------------------------------------------------
Adjusted Summary Income                                
 Statement                                             
Net interest income         5,920    6,073          (3)
Non-interest revenue        5,592    5,074          10 
-------------------------------------------------------
Revenue                    11,512   11,147           3 
-------------------------------------------------------
Specific provision and                                 
 total provision for                                   
 credit losses                219      358         (39)
Non-interest expense        7,324    7,077           3 
Provision for income                                   
 taxes                        795      745           7 
-------------------------------------------------------
Net income                  3,174    2,967           7 
-------------------------------------------------------
  Attributable to bank                                 
   shareholders             3,122    2,911           7 
  Attributable to non-                                 
   controlling interest                                
   in subsidiaries             52       56          (7)
-------------------------------------------------------
Net income                  3,174    2,967           7 
=======================================================
                                                       
Adjusted Common Share                                  
 Data ($)                                              
Earnings per share           4.65     4.35           7 
Adjusted Financial                                     
 Measures and Ratios (%)                               
Return on equity             15.0     15.2        (0.2)
Revenue growth                  3       11          nm 
Non-interest expense                                   
 growth                         3       16          nm 
Efficiency ratio             63.6     63.5         0.1 
Operating leverage           (0.2)    (5.1)         nm 
Net interest margin on                                 
 earning assets              1.65     1.77       (0.12)
Effective tax rate           20.0     20.1        (0.1)
Provision for credit                                   
 losses-to-average loans                               
 and acceptances                                       
 (annualized)                0.12     0.22       (0.10)
-------------------------------------------------------
Adjusted Net Income By                                 
 Operating Group                                       
  P&C Canada                1,392    1,341           4 
  P&C U.S.                    528      488           8 
-------------------------------------------------------
Personal and Commercial                                
 Banking                    1,920    1,829           5 
Private Client Group          542      376          44 
BMO Capital Markets           867      707          23 
Corporate Services,                                    
 including T&O               (155)      55       (+100)
-------------------------------------------------------
BMO Financial Group net                                
 income                     3,174    2,967           7 
=======================================================
(1)  The above results and statistics are presented on an adjusted basis.   
     These are non-GAAP amounts or non-GAAP measures. Please see the Non-   
     GAAP Measures section.                                                 
nm - not meaningful                                                         

 
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 may involve, but
are not limited to, comments with respect to our objectives and
priorities for 2013 and beyond, our strategies or future actions, our
targets, expectations for our financial condition or share price, and
the results of or outlook for our operations or for the Canadian,
U.S. and international economies.  
By their nature, forward-looking statements require us to make
assumptions and are subject to inherent risks and uncertainties.
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 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;
weak, volatile or illiquid capital and/or credit markets; interest
rate and currency value fluctuations; changes in monetary, fiscal or
economic policy; the degree of competition in the geographic and
business areas in which we operate; changes in laws or in supervisory
expectations or requirements, including capital, interest rate and
liquidity requirements and guidance; judicial or regulatory
proceedings; the accuracy and completeness of the information we
obtain with respect to our customers and counterparties; our ability
to execute our strategic plans and to complete and integrate
acquisitions; critical accounting estimates and the effect of changes
to accounting standards, rules and interpretations on these
estimates; operational and infrastructure risks; changes to our
credit ratings; general political conditions; global capital markets
activities; the possible effects on our business of war or terrorist
activities; disease or illness that affects local, national or
internationa
l economies; natural disasters and disruptions to public
infrastructure, such as transportation, communications, power or
water supply; technological changes; and our ability to anticipate
and effectively manage risks associated with all of the foregoing
factors.  
We caution that the foregoing list is not exhaustive of all possible
factors. Other factors could adversely affect our results. For more
information, please see the discussion below, which outlines in
detail certain key factors that may affect Bank of Montreal's future
results. When relying on forward-looking statements to make decisions
with respect to Bank of Montreal, investors and others should
carefully consider these factors, as well as other uncertainties and
potential events, and the inherent uncertainty of forward-looking
statements. Bank of Montreal does 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 our shareholders
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.  
Effective the first quarter of 2013, our regulatory capital,
risk-weighted assets and regulatory capital ratios have been
calculated pursuant to the Capital Adequacy Requirement (CAR)
Guideline released by the Office of the Superintendent of Financial
Institutions (OSFI) in December 2012 to implement the Basel III
Accord in Canada. When calculating the pro-forma impact of Basel III
on our regulatory capital (including capital deductions and
qualifying and grandfathered ineligible capital), risk-weighted
assets and regulatory capital ratios in prior periods, we assumed
that our interpretation of OSFI's draft implementation guideline of
rules and amendments announced by the Basel Committee on Banking
Supervision (BCBS), and our models used to assess those requirements,
were consistent with the final requirements that would be promulgated
by OSFI. We have not recalculated our pro-forma Basel III regulatory
capital, risk-weighted assets or capital ratios based on the CAR
Guideline and references to Basel III pro-forma items refer to these
items as previously estimated.  
Assumptions about the level of default and losses on default were
material factors we considered when establishing our expectations
regarding the future performance of the transactions into which our
credit protection vehicle has entered. Among the key assumptions were
that the level of default and losses on default will be consistent
with historical experience. Material factors that were taken into
account when establishing our expectations regarding the future risk
of credit losses in our credit protection vehicle and risk of loss to
Bank of Montreal included industry diversification in the portfolio,
initial credit quality by portfolio, the first-loss protection
incorporated into the structure and the hedges into which Bank of
Montreal has entered.  
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, both broadly and
in the financial services sector, we primarily consider historical
economic data provided by the Canadian and U.S. governments and their
agencies. See the Economic Review and Outlook section of this interim
MD&A. 
Economic Review and Outlook  
The Canadian economy is growing modestly, held back by slower
household borrowing, a moderation in housing market activity and
tighter fiscal policies. Weak global demand and a strong currency
continue to impact exports. The Eurozone economy is showing some
signs of emerging from its lengthy recession, while China's economy
has weakened in response to government policies to restrain credit
growth and reduce the risk of financial imbalances. In the year
ahead, Canadian consumer spending is projected to grow moderately,
while residential construction should decline somewhat further.
However, exports are expected to increase as U.S. demand improves,
while business investment should strengthen in response to low
commercial real estate vacancy rates and ongoing development of
energy resources. Buoyant business loan growth should partly offset
slowing consumer credit and residential mortgages. GDP growth is
expected to increase from 1.6% in 2013 to 2.3% in 2014. The
unemployment rate is projected to decline to 6.8% next year, below
the average of the past decade. The Canadian dollar will likely trade
below parity with the U.S. dollar this year, held back by the
sizeable trade deficit. Modest growth and low inflation should
encourage the Bank of Canada to keep overnight lending rates at 1%
until the second half of 2014.  
The U.S. economy has been restrained by restrictive fiscal policies.
However, private domestic demand is improving, with automobile and
home sales at a five-year high and job growth firming. Improved
household finances, easier credit conditions and pent-up replacement
demand for motor vehicles should lead to stronger economic growth in
the second half of 2013. Increased shale-energy output will continue
to support activity in several states, including Texas and North
Dakota, while the impact of fiscal restraint should diminish as the
federal budget deficit declines. GDP growth is projected to increase
from 1.8% in 2013 to 3.0% in 2014. The unemployment rate is expected
to decline from 7.5% this year to 6.8% next year. The Federal Reserve
will likely maintain its low interest-rate policy until mid-2015,
while continuing to purchase fixed-income securities, albeit at a
slower pace, into next year to supress long-term interest rates.   
Similar to the national economy, the U.S. Midwest economy is growing
modestly. It is expected to strengthen in response to rising
automotive production, a rebound in agricultural output following
last year's drought, and, indirectly, a resurgent energy sector.   
This Economic Review and Outlook section contains forward-looking
statements. Please see the Caution Regarding Forward-Looking
Statements. 
Other Value Measures  
BMO's average annual total shareholder returns for the one-year,
three-year and five-year periods ending July 31, 2013, were 16.5%,
5.4% and 11.7%, respectively.   
Foreign Exchange  
The Canadian dollar equivalents of BMO's U.S.-dollar-denominated net
income, revenues, expenses, recoveries of credit losses and income
taxes were increased relative to the second quarter of 2013, the
third quarter of 2012 and the prior year to date by the strengthening
of the U.S. dollar. The average Canadian/U.S. dollar exchange rate
for the quarter, expressed in terms of the Canadian dollar cost of a
U.S. dollar, increased by 2.0% from a year ago and from the average
of the second quarter. The average rate for the year to date
increased by 0.9% from a year ago. The following table indicates the
relevant average Canadian/U.S. dollar exchange rates and the impact
of changes in the rates.  


 
----------------------------------------------------------------------------
Effects of U.S. Dollar Exchange Rate Fluctuations on BMO's                  
Results                                                              Table 3
----------------------------------------------------------------------------
                                                                            
                                           Q3-2013                 YTD-2013 
(Canadian $ in millions,                                                    
 except as noted)                   vs Q3-2012    vs Q2-2013    vs YTD-2012 
------------------------------------------------------------- -----
---------
Canadian/U.S. dollar exchange                                               
 rate (average)                                                             
  Current period                        1.0385        1.0385         1.0172 
  Prior period                          1.0180        1.0180         1.0078 
                                                                            
Effects on reported results                                                 
Increased (decreased) net                                                   
 interest income                            16            16             22 
Increased (decreased) non-                                                  
 interest revenue                           12            12             13 
----------------------------------------------------------------------------
Increased (decreased) revenues              28            28             35 
Decreased (increased) expenses             (18)          (18)           (24)
Decreased (increased) provision                                             
 for credit losses                           2             2              - 
Decreased (increased) income                                                
 taxes                                      (1)           (1)            (2)
----------------------------------------------------------------------------
Increased (decreased) net income                                            
 before hedging impact                      11            11              9 
Hedging losses                              (9)           (5)           (15)
Income taxes thereon                         2             1              4 
----------------------------------------------------------------------------
Increased (decreased) net income             4             7             (2)
----------------------------------------------------------------------------
                                                                            
Effects on adjusted results                                                 
Increased (decreased) net                                                   
 interest income                            13            13             18 
Increased (decreased) non-                                                  
 interest revenues                          12            12             13 
----------------------------------------------------------------------------
Increased (decreased) revenues              25            25             31 
Decreased (increased) expenses             (16)          (16)           (23)
Decreased (increased) provision                                             
 for credit losses                           3             3              2 
Decreased (increased) income                                                
 taxes                                      (1)           (1)            (1)
----------------------------------------------------------------------------
Increased (decreased) adjusted                                              
 net income before hedging impact           11            11              9 
Hedging losses                              (9)           (5)            15 
Income taxes thereon                         2             1              4 
----------------------------------------------------------------------------
Increased (decreased) adjusted                                              
 net income                                  4             7             (2)
============================================================================
                                                                            
Adjusted results in this section are non-GAAP amounts or non-GAAP measures. 
Please see the Non-GAAP Measures section.                                   

 
At the start of each quarter, BMO assesses whether to enter into
hedging transactions that are designed to partially offset the
pre-tax effects of exchange rate fluctuations in the quarter on our
expected U.S.-dollar-denominated net income for that quarter. As
such, these activities partially mitigate the impact of exchange rate
fluctuations, but only within that quarter. 
The gain or loss from hedging transactions in future periods will be
determined by both future currency fluctuations and the amount of any
underlying future hedging transactions. 
Net Income  
Q3 2013 vs Q3 2012  
Net income was $1,137 million for the third quarter of 2013, up $167
million or 17% from a year ago. Earnings per share were $1.68, up 18%
from $1.42 a year ago.   
Adjusted net income was $1,136 million, up $123 million or 12% from a
year ago. Adjusted earnings per share were $1.68, up 13% from $1.49 a
year ago. Adjusted results and items excluded in determining adjusted
results are disclosed in detail in the preceding Adjusted Net Income
section and in the Non-GAAP Measures section, together with comments
on the uses and limitations of such measures.   
On an adjusted basis, revenues increased by more than expenses, with
particularly strong growth in non-interest revenue, and provisions
for credit losses declined. P&C Canada had good results, driven by
higher balance and fee volumes across most products and lower
provisions for credit losses, partially offset by the impact of lower
net interest margin and increased expenses. PCG produced strong
results, benefiting from higher Insurance net income as well as a 37%
increase from the traditional wealth businesses due to growth in
client assets and increased transaction volumes. BMO Capital Markets
adjusted net income improved from a year ago, driven by good
performance across our diversified businesses. Increases in trading
revenue and equity underwriting, more than offset a decline in
mergers and acquisitions and in interest-rate-sensitive businesses
and higher employee costs. P&C U.S. results also increased due to the
benefits of lower provisions for credit losses and reduced expenses,
partially offset by lower revenues. Corporate Services adjusted
results declined due to lower revenues and higher expenses and low
taxes a year ago, partially offset by higher recoveries of credit
losses.  
Q3 2013 vs Q2 2013  
Net income increased $162 million or 17% and earnings per share
increased $0.26 or 18%. Adjusted net income increased $139 million or
14%, and adjusted earnings per share increased $0.22 or 15%.   
Adjusted net income grew due to higher revenues and lower provisions
for credit losses, partially offset by increased expenses. Net income
growth was driven by strong growth in P&C Canada and PCG. P&C Canada
adjusted net income increased due to higher revenues as a result of
higher balance and fee volumes across most products and three extra
days, and lower provisions for credit losses, partially offset by
increased expenses. PCG overall results were significantly higher due
to improved results in its Insurance business as well as 16% growth
in its traditional wealth businesses. BMO Capital Markets results
grew, as higher revenues more than offset higher expenses and
increased provisions for credit losses. P&C U.S. adjusted net income
declined due to reduced revenue, primarily due to a decline in net
interest margin, partially offset by lower provisions for credit
losses. Corporate Services adjusted results declined due to lower
revenues and higher expenses and taxes, partially offset by higher
recoveries of credit losses.   
Q3 YTD 2013 vs Q3 YTD 2012  
Net income increased $53 million or 2% to $3,160 million and earnings
per share were $4.63, up $0.07 or 2% from a year ago.  
Adjusted net income increased $207 million or 7% to $3,174 million.
Adjusted earnings per share were $4.65, up $0.30 or 7% from a year
ago. On an adjusted basis, there was strong growth in PCG and BMO
Capital Markets and good growth in P&C Canada and P&C U.S. Adjusted
net income in Corporate Services was lower relative to the same
period a year ago.   
The foregoing Net Income section contains adjusted results an
d
measures, which are non-GAAP. Please see the Non-GAAP Measures
section.  
Revenue  
Total revenue of $4,050 million increased $172 million from the third
quarter last year. Adjusted revenue increased $215 million or 6% to
$3,892 million. P&C Canada had good results, driven by higher balance
and fee volumes across most products, partially offset by the impact
of lower net interest margin. Revenue significantly increased in PCG
due to higher Insurance revenue and a 12% increase in its traditional
wealth businesses. Revenue was higher in BMO Capital Markets as
increases in trading revenue and equity underwriting more than offset
a decline in mergers and acquisitions and in interest-rate-sensitive
businesses. P&C U.S. revenues decreased as the effect of loan growth
was more than offset by the effects of lower net interest margin,
reductions in certain loan portfolios and lower deposit fees.
Corporate Services' adjusted revenues decreased primarily due to a
higher group taxable equivalent basis (teb) offset in the current
quarter. The stronger U.S. dollar increased adjusted revenue growth
by less than 1%, net of hedging impacts.  
Revenue increased $106 million or 3% from the second quarter.
Adjusted revenue increased $133 million or 4%. P&C Canada had strong
revenue growth, due to the effects of higher balance and fee volumes
across most products and three extra days. PCG revenue increased
significantly, with higher Insurance revenue and record results in
the traditional wealth businesses. Revenue grew in BMO Capital
Markets, driven by strong client-driven trading performance and
better equity and debt underwriting, which more than offset a
reduction in merger and acquisition revenues and lower investment
securities gains. P&C U.S. revenues decreased on a U.S. dollar basis
primarily due to a decline in net interest margin. Adjusted revenues
decreased in Corporate Services primarily due to a higher group teb
offset in the current quarter. The stronger U.S. dollar increased
adjusted revenue growth by less than 1%, net of hedging impacts.   
Revenue for the year to date increased $121 million or 1% and
adjusted revenue increased $365 million or 3%. P&C Canada revenues
increased modestly due to the effects of higher balance and fee
volumes across most products, partially offset by the impact of lower
net interest margin. PCG revenue increased significantly due to
higher Insurance results and increased traditional wealth revenue
from growth across most businesses. There was growth in BMO Capital
Markets, driven by higher trading revenue and investment banking
fees. There was a reduction in P&C U.S. revenues as the benefits of
increased commercial loans and fees and higher gains on the sales of
newly originated mortgages were more than offset by the effects of
lower net interest margin and reductions in deposit fees and
securities gains. Corporate Services adjusted revenues declined with
half of the decrease due to a higher group teb offset and the
remaining half due to lower revenue from a variety of items, none of
which were individually significant. The stronger U.S. dollar
increased adjusted revenue growth by less than 1%, net of hedging
impacts.  
Changes in net interest income and non-interest revenue are reviewed
in the sections that follow.   
This section contains adjusted results and measures, which are
non-GAAP. Please see the Non-GAAP Measures section. 
Net Interest Income  
Net interest income decreased $79 million or 3% from a year ago to
$2,146 million in the third quarter of 2013. Adjusted net interest
income excludes amounts for the recognition of a portion of the
credit mark on the M&I purchased performing loan portfolio. Adjusted
net interest income decreased $19 million or 1% to $1,993 million.   
BMO's overall net interest margin decreased on a reported basis by 13
basis points from a year ago to 1.75%. Adjusted net interest margin
decreased by 7 basis points to 1.63%. Changes are discussed in the
Review of Operating Groups' Performance section.   
Average earning assets in the third quarter of 2013 increased $15
billion or 3% relative to a year ago, including a $4 billion increase
as a result of the stronger U.S. dollar. There was strong growth in
P&C Canada and PCG and good growth in P&C U.S., with modest growth in
BMO Capital Markets and a reduction in Corporate Services.   
Relative to the second quarter, net interest income increased $48
million or 2%. Adjusted net interest income increased $70 million or
4%, in part due to three more days in the current quarter.   
BMO's overall net interest margin decreased by 4 basis points from
the second quarter. Adjusted net interest margin decreased by just 1
basis point.  
Average earning assets increased $6 billion or 1% from the second
quarter, of which $4 billion related to the stronger U.S. dollar.
There was good growth in P&C Canada, with moderate increases in the
other operating groups and a reduction in Corporate Services.   
Year to date, net interest income decreased $203 million or 3%.
Adjusted net interest income decreased $153 million or 3% to $5,920
million, due to lower net interest margin.   
BMO's overall net interest margin decreased by 14 basis points to
1.80%. On an adjusted basis, net interest margin decreased by 12
basis points to 1.65%.   
Average earning assets for the year to date increased $22 billion or
5%, including a $2 billion increase as a result of the stronger U.S.
dollar. There was strong growth in P&C Canada, PCG and BMO Capital
Markets, good growth in P&C U.S., and a reduction in Corporate
Services.   
Adjusted results in this section are non-GAAP amounts or non-GAAP
measures. Please see the Non-GAAP Measures.  


 
----------------------------------------------------------------------------
Adjusted Net Interest Margin on Earning Assets (teb)(i)              Table 4
----------------------------------------------------------------------------
                                                                            
                                            % Increase           % Increase 
                               Q3-      Q3- (Decrease)           (Decrease) 
(In basis points)             2013     2012 vs Q3-2012  Q2-2013  vs Q2-2013 
----------------------------------------------------------------------------
  P&C Canada                   258      276        (18)     259          (1)
  P&C U.S.                     401      442        (41)     417         (16)
----------------------------------------------------------------------------
Personal and Commercial                                                     
 Banking                       294      318        (24)     301          (7)
Private Client Group           294      291          3      286           8 
BMO Capital Markets             69       63          6       61           8 
Corporate Services,                                                         
 including T&O(ii)              nm       nm         nm       nm          nm 
----------------------------------------------------------------------------
Total BMO adjusted net                                                      
 interest margin (1)           163      170         (7)     164          (1)
============================================================================
Total BMO reported net                                                      
 interest margin               175      188        (13)     179          (4)
----------------------------------------------------------------------------
Total Canadian Retail                                                       
 (reported and                                                              
 adjusted)(iii)                259      275        (16)     258           1 
----------------------------------------------------------------------------
                                                                            
 
                                                       
                                        
    % Increase 
                             YTD-     YTD-  (Decrease) 
(In basis points)            2013     2012 vs YTD-2012 
-------------------------------------------------------
  P&C Canada                  261      283         (22)
  P&C U.S.                    413      443         (30)
-------------------------------------------------------
Personal and Commercial                                
 Banking                      300      326         (26)
Private Client Group          290      324         (34)
BMO Capital Markets            63       64          (1)
Corporate Services,                                    
 including T&O(ii)             nm       nm          nm 
-------------------------------------------------------
Total BMO adjusted net                                 
 interest margin (1)          165      177         (12)
=======================================================
Total BMO reported net                                 
 interest margin              180      194         (14)
-------------------------------------------------------
Total Canadian Retail                                  
 (reported and                                         
 adjusted)(iii)               260      283         (23)
-------------------------------------------------------
                                                       
(i)   Net interest margin is disclosed and computed with reference to       
      average earning assets, rather than total assets. This basis provides 
      a more relevant measure of margins and changes in margins. Operating  
      group margins are stated on a taxable equivalent basis (teb) while    
      total BMO margin is stated on a GAAP basis.                           
(ii)  Corporate Services adjusted net interest income is negative in all    
      periods and its variability affects changes in net interest margin.   
(iii) Total Canadian retail margin represents the net interest margin of the
      combined Canadian businesses of P&C Canada and Private Client Group.  
(1)   These are non-GAAP amounts or non-GAAP measures. Please see the Non-  
      GAAP Measures section.                                                
nm - not meaningful                                                         

 
Non-Interest Revenue  
Non-interest revenue increased $251 million or 15% from the third
quarter a year ago to $1,904 million. Adjusted non-interest revenue
increased $234 million or 14% to $1,899 million. Adjusting items in
non-interest revenue relate to the run-off of structured credit
activities, which are reflected in trading revenues recorded in
Corporate Services. There were significant increases in insurance
revenues, due to favourable movements in long-term interest rates and
increases in trading and mutual fund revenues. Most other types of
non-interest revenue were also up, with the exception of underwriting
fees, and there were no securities gains in the current quarter.  
Relative to the second quarter, non-interest revenue increased $58
million or 3%, and adjusted non-interest revenue increased $63
million or 3%. Insurance revenues were up $79 million, primarily due
to favourable movements in long-term interest rates. There were also
increases in most other types of non-interest revenue. Non-interest
trading revenues were lower, despite higher overall trading revenues,
and there were no securities gains in the current quarter.  
Year to date, non-interest revenue increased $324 million or 6% to
$5,615 million. Adjusted non-interest revenue increased $518 million
or 10% to $5,592 million. There were significant increases in trading
revenues, insurance revenues, mutual fund revenues and lending fees.
Most other categories of non-interest revenue were also up, with the
exception of deposit and payment service charges and securities
gains.  
Non-interest revenue is detailed in the unaudited interim
consolidated financial statements.   
Adjusted results in this section are non-GAAP amounts or non-GAAP
measures. Please see the Non-GAAP Measures section.  
Non-Interest Expense  
Non-interest expense increased $58 million or 2% from the third
quarter a year ago to $2,542 million. Adjusted non-interest expense
increased $116 million or 5% to $2,458 million primarily due to
higher employee-related costs, including continued investment in the
business with increases in front-line roles, higher revenue-based
costs in line with revenue growth, and higher severance and
technology costs. The stronger U.S. dollar increased adjusted
non-interest expense growth by less than 1%.   
Relative to the second quarter, non-interest expense decreased $26
million or 1%. Adjusted non-interest expense increased $56 million or
2%, primarily due to three more days and higher employee-related
costs, including continued investment in the business and growth in
revenue-based costs. The stronger U.S. dollar increased adjusted
non-interest expense growth by less than 1%.  
Year-over-year operating leverage on a reported basis was 2.2% and
adjusted operating leverage was 0.9%. Quarter-over-quarter operating
leverage on a reported basis was 3.7% and adjusted operating leverage
was 1.2%.  
Non-interest expense for the year to date increased $163 million or
2% to $7,700 million. Adjusted non-interest expense increased $247
million or 3% to $7,324 million, primarily due to higher
employee-related costs, including higher revenue-based costs in line
with revenue growth, and higher benefit and pension costs. We
continued to invest in the business, including increased technology
costs. These factors were partially offset by benefits from a
continued focus on productivity. The stronger U.S. dollar increased
adjusted non-interest expense growth by less than 1%.   
Non-interest expense is detailed in the unaudited interim
consolidated financial statements.   
Adjusted results in this section are non-GAAP amounts or non-GAAP
measures. Please see the Non-GAAP Measures section.  
Income Taxes  
The provision for income taxes of $294 million increased $107 million
from the third quarter of 2012 and increased $38 million from the
second quarter of 2013. The effective tax rate for the quarter was
20.6%, compared with 16.2% a year ago and 20.8% in the second
quarter.   
The adjusted provision for income taxes of $285 million increased $79
million from a year ago and increased $35 million from the second
quarter. The adjusted effective tax rate was 20.1% in the current
quarter, compared with 16.9% in the third quarter of 2012 and 20.0%
in the second quarter of 2013. The higher adjusted tax rate in the
current quarter relative to the third quarter of 2012 was primarily
due to lower recoveries of prior periods' income taxes and a change
in Ontario statutory tax rates that resulted in a positive
revaluation of deferred tax assets in 2012. The adjusted tax rate is
computed using adjusted net income rather than net income in the
determination of income subject to tax.  
Adjusted results in this section are non-GAAP amounts or non-GAAP
measures. Please see the Non-GAAP Measures section. 
Risk Management  
Our risk management practices and key measures have not changed
significantly from those outlined on pages 75 to 92 of BMO's 2012
annual MD&A.   
Provisions for Credit Losses  
Q3 2013 vs Q3 2012  
The provision for credit losses (PCL) was $77 million, a decrease of
$160 million from the prior year. Adjusted PCL was $13 million, a
decrease of $103 million. Adjusting items this quarter included a $44
million specific provision on the M&I purchased performing loan
portfolio and a $20 million increase in the collective allowance
related to the Canadian loan portfolios. The decrease in adjusted PCL
was mainly due to lower provisions in P&C Canada and P&C U.S.,
coupled with higher recoveries of credit losses on the M&I purchased
credit impaired loan portfolio in Corporate Services.   
P&C Canada provisions of $126 million decreased by $21 million mainly
due to lower provisions in the consu
mer portfolio. PCG provisions
decreased by $6 million due to higher recoveries of previously
written-off amounts. BMO Capital Markets provisions were relatively
stable year over year. P&C U.S. provisions of $40 million decreased
by $36 million, due to lower provisions in the commercial portfolio
resulting from lower new reservations and higher recoveries of
previously written-off amounts. Corporate Services adjusted
recoveries of credit losses increased $42 million, including higher
recoveries on the M&I purchased credit impaired loan portfolio.  
Q3 2013 vs Q2 2013  
The PCL decreased $68 million from the prior quarter. Adjusted PCL
was down $97 million from the prior quarter mainly due to lower
provisions in P&C Canada and P&C U.S., coupled with higher recoveries
of credit losses on the M&I purchased credit impaired loan portfolio
in Corporate Services.   
P&C Canada provisions decreased by $28 million, with lower provisions
in both the consumer and commercial portfolios. PCG provisions were
relatively stable quarter over quarter. BMO Capital Markets
provisions increased by $8 million. P&C U.S. provisions decreased by
$15 million, primarily due to lower provisions in the commercial
portfolio, driven by lower new reservations and higher recoveries
from previously written-off amounts. Corporate Services adjusted
recoveries of credit losses increased $60 million including higher
recoveries on the M&I purchased credit impaired loan portfolio. 


 
----------------------------------------------------------------------------
Provision for Credit Losses                                          Table 5
----------------------------------------------------------------------------
                                                                            
 

 
----------------------------------------------------------------------------
(Canadian $ in millions,                                                    
 except as noted)           Q3-2013   Q2-2013   Q3-2012  YTD-2013  YTD-2012 
----------------------------------------------------------------------------
New specific provisions         358       407       484     1,183     1,354 
Reversals of previously                                                     
 established allowances         (72)      (49)      (59)     (203)     (192)
Recoveries of loans                                                         
 previously written-off        (229)     (183)     (196)     (570)     (616)
----------------------------------------------------------------------------
Specific provision for                                                      
 credit losses                   57       175       229       410       546 
Increase (decrease) in                                                      
 collective allowance            20       (30)        8       (10)       27 
----------------------------------------------------------------------------
Provision for credit                                                        
 losses (PCL)                    77       145       237       400       573 
============================================================================
Adjusted provision for                                                      
 credit losses (1)               13       110       116       219       358 
PCL as a % of average net                                                   
 loans and acceptances                                                      
 (annualized) (2)              0.11      0.22      0.38      0.20      0.31 
PCL as a % of average net                                                   
 loans and acceptances                                                      
 excluding purchased                                                        
 portfolios (annualized)                                                    
 (2) (3)                       0.30      0.31      0.39      0.29      0.43 
Specific PCL as a % of                                                      
 average net loans and                                                      
 acceptances (annualized)      0.08      0.27      0.37      0.21      0.30 
Adjusted specific PCL as a                                                  
 % of average net loans                                                     
 and acceptances                                                            
 (annualized) (1)              0.02      0.18      0.20      0.12      0.22 
============================================================================
                                                                            
(1)  Adjusted provision for credit losses excludes provisions related to the
     M&I purchased performing loan portfolio and changes in the collective  
     allowance.                                                             
(2)  Certain ratios for 2012 were restated in the first quarter of 2013 to  
     conform to the reclassified balance sheet presentation.                
(3)  Ratio is presented excluding purchased portfolios, to provide for      
     better historical comparisons.                                         
This table contains adjusted results and measures, which are Non-GAAP.      
Please see the Non-GAAP Measures section.                                   
                                                                            
----------------------------------------------------------------------------
Provision for Credit Losses by Operating Group (1)                   Table 6
----------------------------------------------------------------------------
                                                                            
----------------------------------------------------------------------------
(Canadian $ in millions,                                                    
 except as noted)           Q3-2013   Q2-2013   Q3-2012  YTD-2013  YTD-2012 
----------------------------------------------------------------------------
                                                                            
  P&C Canada                    126       154       147       408       469 
  P&C U.S.                       40        55        76       127       199 
============================================================================
Personal and Commercial                                                     
 Banking                        166       209       223       535       668 
Private Client Group             (1)        1         5         2        11 
BMO Capital Markets               2        (6)        -       (19)       10 
Corporate Services,                                                         
 including T&O (2) (3)                                                      
  Impaired real estate                                                      
   loan portfolio               (14)       13         6         7        46 
  Purchased credit                                                          
   impaired loans              (140)     (107)     (118)     (306)     (377)
----------------------------------------------------------------------------
Adjusted provision for                                                      
 credit losses                   13       110       116       219       358 
Specific provisions on                                                      
 purchased performing                                                       
 loans (3)                       44        65       113       191       188 
Change in collective                                                        
 allowance                       20       (30)        8       (10)       27 
----------------------------------------------------------------------------
Provision for credit                                                        
 losses                          77       145       237       400       573 
============================================================================
                                                
                            
(1)  Effective Q1-2013, provisions in the operating groups are reported on  
     an actual loss basis and interest on impaired loans are allocated to   
     the operating groups. Prior periods have been restated accordingly.    
(2)  Corporate Services includes the provision for credit losses in respect 
     of loans transferred from P&C U.S. to Corporate Services in Q3-2011.   
(3)  Provisions for the purchased performing and credit impaired loan       
     portfolios are reported under Corporate Services.                      
This table contains adjusted results or measures, which are Non-GAAP. Please
see the Non-GAAP Measures section.                                          

 
Impaired Loans  
Total gross impaired loans were $2,650 million at the end of the
current quarter, down from $2,848 million in the second quarter of
2013 and from $2,867 million a year ago. The stronger U.S. dollar
raised gross impaired loans by $35 million relative to the second
quarter of 2013 and $43 million relative to a year ago. Included in
the amount above at the end of the quarter was $1,020 million of
gross impaired loans related to acquired portfolios, of which $151
million is subject to a loss-sharing agreement with the Federal
Deposit Insurance Corporation that expires in 2015 for commercial
loans and in 2020 for retail loans.   
Impaired loan formations (excluding the M&I purchased performing loan
portfolio) totalled $399 million in the current quarter, up from $347
million in the second quarter of 2013 and down from $405 million a
year ago. Impaired loan formations related to the M&I purchased
performing loan portfolio were $211 million in the current quarter,
compared with $248 million in the second quarter of 2013 and $386
million a year ago.  


 
----------------------------------------------------------------------------
Changes in Gross Impaired Loans and Acceptances (GIL) (1)            Table 7
----------------------------------------------------------------------------
                                                                            
----------------------------------------------------------------------------
(Canadian $ in millions,                                                    
 except as noted)           Q3-2013   Q2-2013   Q3-2012  YTD-2013  YTD-2012 
----------------------------------------------------------------------------
                                                                            
GIL, beginning of period      2,848     2,912     2,837     2,976     2,685 
Additions to impaired                                                       
 loans and acceptances          610       595       791     1,835     2,314 
Reductions in impaired                                                      
 loans and acceptances (2)     (589)     (443)     (458)   (1,491)   (1,264)
Write-offs (3)                 (219)     (216)     (303)     (670)     (868)
----------------------------------------------------------------------------
GIL, end of period            2,650     2,848     2,867     2,650     2,867 
----------------------------------------------------------------------------
GIL as a % of gross loans                                                   
 and acceptances (4)           0.97      1.08      1.14      0.97      1.14 
GIL as a % of gross loans                                                   
 and acceptances excluding                                                  
 purchased portfolios (4)                                                   
 (5)                           0.64      0.73      0.85      0.64      0.85 
GIL as a % of equity and                                                    
 allowances for credit                                                      
 losses                        8.14      8.80      9.15      8.14      9.15 
GIL as a % of equity and                                                    
 allowances for credit                                                      
 losses excluding                                                           
 purchased portfolios (5)      5.04      5.56      6.24      5.04      6.24 
============================================================================
                                                                            
(1)  GIL excludes purchased credit impaired loans.                          
(2)  Includes impaired amounts returned to performing status, loan sales,   
     repayments, the impact of foreign exchange fluctuations and effects for
     consumer write-offs which have not been recognized in formations.      
(3)  Excludes certain loans that are written-off directly and not classified
     as new formations ($91 million in Q3-2013; $92 million in Q2-2013; and 
     $106 million in Q3-2012).                                              
(4)  Certain ratios for 2012 were restated in the first quarter of 2013 to  
     conform to the reclassified balance sheet presentation.                
(5)  Ratio is presented excluding purchased portfolios, to provide for      
     better historical comparisons.                                         
This table contains adjusted results and measures, which are non-GAAP.      
Please see the Non-GAAP Measures section.                                   

 
Real Estate Secured Lending  
Residential mortgage and home equity line of credit (HELOC) exposures
are areas of interest in the current environment. BMO regularly
performs stress testing on its mortgage and HELOC portfolios to
evaluate the potential impact of tail events. These stress tests
incorporate moderate to severe adverse scenarios. The resulting
credit losses vary depending on the severity of the scenario and are
considered to be manageable.  
In 2012, new residential real estate lending rules were introduced
for federally regulated lenders in Canada including restrictions on
loan-to-value (LTV) for revolving HELOCs, waiver of confirmation of
income, debt service ratio maximums, as well as maximum amortization
of 25 years and maximum home value of $1 million for high ratio
insured mortgages (LTV greater than 80%). The regulatory changes
resulted in some adjustments to loan underwriting practices including
reducing the maximum LTV on revolving HELOCs to 65% from 80%
previously. 
Market Risk  
Total Trading Value at Risk (VaR) increased over the quarter largely
because of less diversification benefit, increased market volatility
and moderately higher exposures in equity and credit. The
available-for-sale (AFS) VaR increase is the result of additional
asset holdings and the impact of higher interest rates.  
Total Trading Stressed VaR increased with additional commodity and
credit exposures partly offset by reduced interest rate risk, broadly
reflecting the changes in Total Trading VaR for the quarter.  
There were no significant changes in our structural market risk
management practices during the quarter. Structural Market Value
Exposure (MVE) is driven by rising interest rates and primarily
reflects a lower market value for fixed-rate loans. Structural
Earnings Volatility (EV) is driven by falling interest rates and
primarily reflects the risk of prime-based loans repricing at lower
rates. MVE and economic value exposures under rising interest rate
scenarios decreased from the prior quarter primarily due to higher
short term asset sensitivity and lower seasonal mortgage commitment
volume. EV and earnings exposures under falling interest rate
scenarios increased from the prior quarter due to higher short term
asset sensitivity. 
BMO's market risk management practices and key measures are outlined
on pages 82 to 86 of BMO's 2012 Annual Report. 


 
----------------------------------------------------------------------------
Total Trading Value at Risk (VaR) Summary ($in millions)(i)                 
(ii)                                                                 Table 8
----------------------------------------------------------------------
------
                                                                            
----------------------------------------------------------------------------
                                              For the      As at      As at 
                                        quarter ended      April    October 
                                        July 31, 2013   30, 2013   31, 2012 
----------------------------------------------------------------------------
(Pre-tax                                                                    
 Canadian       Quarter-                                Quarter-   Quarter- 
 equivalent)         end   Average      High      Low        end        end 
----------------------------------------------------------------------------
                                                                            
Commodity VaR       (0.6)     (0.5)     (1.0)    (0.2)      (0.3)      (0.6)
Equity VaR          (7.3)     (6.6)     (8.5)    (5.3)      (5.9)      (6.6)
Foreign                                                                     
 Exchange VaR       (0.7)     (1.1)     (2.2)    (0.5)      (1.0)      (0.2)
Interest Rate                                                               
 VaR                (3.7)     (4.3)     (9.4)    (2.3)      (5.4)      (4.5)
Credit VaR          (5.1)     (4.8)     (5.6)    (4.1)      (4.4)      (5.5)
Diversification      7.6       7.6        nm       nm        9.7        6.7 
-----------------------------------                    ---------------------
Total Trading                                                               
 VaR                (9.8)     (9.7)    (15.8)    (6.7)      (7.3)     (10.7)
============================================================================
Total AFS VaR      (11.5)    (10.4)    (13.8)    (7.4)      (7.4)      (8.9)
============================================================================
(i)  Total Trading VaR and AFS VaR above are subject to BMO Capital Markets 
     trading management framework.                                          
(ii) One-day measure using a 99% confidence interval. Losses are in brackets
     and benefits are presented as positive numbers.                        
nm - not meaningful                                                         
                                                                            
----------------------------------------------------------------------------
Total Trading Stressed Value at Risk (VaR) summary ($in                     
millions)(i) (ii)                                                    Table 9
----------------------------------------------------------------------------
                                                                            
----------------------------------------------------------------------------
(Pre-tax                                      For the      As at      As at 
 Canadian                               quarter ended      April    October 
 equivalent)                            July 31, 2013   30, 2013   31, 2012 
                Quarter-                                Quarter-   Quarter- 
                     end   Average      High      Low        end        end 
------------------------------------------------------ ---------- ----------
Commodity                                                                   
 Stressed VaR       (4.5)     (3.1)     (5.2)    (1.1)      (1.9)      (2.1)
Equity Stressed                                                             
 VaR               (10.1)    (10.1)    (16.0)    (6.7)     (10.0)     (10.5)
Foreign                                                                     
 Exchange                                                                   
 Stressed VaR       (0.9)     (2.8)     (6.3)    (0.9)      (2.0)      (0.3)
Interest Rate                                                               
 Stressed VaR       (8.4)     (8.6)    (13.5)    (4.9)     (10.2)     (11.4)
Credit Stressed                 
                                            
 VaR               (11.1)    (11.0)    (12.4)    (9.6)      (9.4)      (9.3)
Diversification     19.3      18.9        nm       nm       20.2       18.9 
-----------------------------------                   ----------------------
Trading                                                                     
 Stressed VaR      (15.7)    (16.7)    (24.1)   (10.6)     (13.3)     (14.7)
============================================================================
(i)  Stressed VaR is produced weekly.                                       
(ii) One-day measure using a 99% confidence interval. Losses are in brackets
     and benefits are presented as positive numbers.                        
nm - not meaningful                                                         
                                                                            
----------------------------------------------------------------------------
Structural Balance Sheet Market Value Exposure (MVE) and                    
Earnings Volatility (EV) ($in millions)(i)                          Table 10
----------------------------------------------------------------------------
                                                                            
                                           July         April       October 
(Canadian equivalent)                  31, 2013      30, 2013      31, 2012 
----------------------------------------------------------------------------
Market value exposure (MVE) (pre-                                           
 tax)                                    (507.6)       (634.8)       (590.6)
12-month earnings volatility (EV)                                           
 (after tax)                              (83.6)        (64.7)        (74.0)
============================================================================
(i)  Losses are in brackets. Measured at a 99% confidence interval.         
                                                                            
----------------------------------------------------------------------------
Structural Balance Sheet Earnings and Value Sensitivity to                  
Changes in Interest Rates ($in millions)(i) (ii)                    Table 11
----------------------------------------------------------------------------
                                                                            
----------------------------------------------------------------------------
                 Economic value sensitivity   Earnings sensitivity over the 
                                  (Pre-tax)      next 12 months (After tax) 
-------------------------------------------- -------------------------------
(Canadian         July      April   October       July      April   October 
 equivalent)  31, 2013   30, 2013  31, 2012   31, 2013   30, 2013  31, 2012 
-------------------------------------------- -------------------------------
100 basis                                                                   
 point                                                                      
 increase       (464.6)    (633.7)   (537.6)      83.3       57.5      20.1 
100 basis                                                                   
 point                                                                      
 decrease        239.2      404.0     402.9      (84.0)     (42.4)    (74.6)
                                                                            
200 basis                                                                   
 point                                                                      
 increase     (1,003.2)  (1,403.8) (1,223.1)     139.3       90.2      27.2 
200 basis                                                                   
 point                                                                      
 decrease        345.9      594.1     783.6      (82.1)     (56.4)    (75.1)
============================================================================
(i)  Losses are in brackets and benefits are presented as positive numbers. 
(ii) For BMO's Insurance businesses, a 100 basis point increase in interest 
     rates at July 31, 2013, results in an increase in earnings after tax of
     $83 million and an increase in before tax economic value of $387       
     million ($102 million and $528 million, respectively, at April 30,     
     2013; and $94 million and $560 million, respectively, at October 31,   
     2012). A 100 basis point decrease in interest rates at July 31, 2013,  
     results in a decrease in earnings after tax of $72 million and a       
     decrease in before tax economic value of $468 million ($83 million and 
     $616 million, respectively, at April 30, 2013; and $74 million and $634
     million, respectively, at October 31, 2012). These impacts are not     
     reflected in the table above.                                          

 
Liquidity and Funding Risk   
Liquidity and funding risk is managed under a robust management
framework. There were no material changes in the framework during the
quarter.  
BMO's liquid assets are primarily held in our trading businesses and
in supplemental liquidity pools that are maintained for contingency
purposes. Liquid assets include high-quality assets that are
marketable, can be pledged as security for borrowings and can be
converted to cash in a time frame that meets our liquidity and
funding requirements. As at July 31, 2013, BMO owned liquid assets
were $178 billion, compared with $176 billion as at April 30, 2013.
The slight increase in liquid assets from April 30, 2013, was
primarily attributable to higher security balances offset by lower
cash balances. BMO's cash and securities as a percentage of total
assets was 30.8% as at July 31, 2013, compared with 30.1% as at April
30, 2013.  
Liquid assets are primarily held at the parent bank level, in our
U.S. legal entity BMO Harris Bank and in BMO's broker/dealer
operations in Canada and internationally. In some cases, a portion of
those liquid assets have been pledged by certain entities to others
in exchange for funding.   
In the ordinary course of the bank's day-to-day business activities,
BMO may pledge certain cash and security holdings as collateral to
support its trading activities and participation in clearing and
payment systems. In addition, BMO may receive highly liquid assets as
collateral and may re-pledge these assets in exchange for cash or as
collateral for trading activities. Net unencumbered liquid assets,
defined as BMO owned cash and securities plus eligible collateral
received less collateral encumbered, totalled $153 billion at July
31, 2013, compared with $161 billion at April 30, 2013. BMO may also
pledge mortgage and loan assets to raise secured long-term funding.  
Our funding philosophy requires that secured and unsecured wholesale
funding used to support loans and less liquid assets be longer term
(typically maturing in two to ten years) to better match the term to
maturity for these assets. Wholesale secured and unsecured funding
for liquid trading assets is generally shorter term (maturing in less
than one year), and is aligned with the liquidity of the assets being
funded. Trading assets are subject to haircuts in order to reflect
the potential for lower market values during times of market stress.
Supplemental liquidity pools are funded with a mix of wholesale term
funding to prudently balance the benefits of holding supplemental
liquid assets against the cost of funding.  
Diversification of our wholesale funding sources is an important part
of our overall liquidity management strategy. During the third
quarter, BMO issued $7.0 billion of wholesale term funding in Canada
and internationally. Total wholesale term funding outstanding was
$81.6 billion at July 31, 2013, compared with $77.0 billion at April
30, 2013. The increase was used to refinance upcoming wholesale term
funding maturities and fund net asset growth. The bank expects to
continue accessing the wholesale term funding markets in 2013,
primarily to refinance wholesale term funding maturities and net
asset growth that may occur over the course of the year.  
BMO's liquidity and funding management practices and key measures are
outlined on pages 86 to 88 of BMO's 2012 Annual Report. 


 
----------------------------------------------------------------------------
Asset Liquidity                                                     Table 12
----------------------------------------------------------------------------
                                                                            
----------------------------------------------------------------------------
(Canadian $ in millions,                                                    
 except as noted)                             July 31, 2013                 
----------------------------------------------------------------------------
                                             Cash &                         
                              BMO Owned  Securities  Encumbered          Net
                                 Assets    Received         (1) Unencumbered
----------------------------------------------------------------------------
Liquid Assets                                                               
----------------------------------------------------------------------------
Cash and securities                                                         
  Cash and cash equivalents      33,079           -       2,157       30,922
  Interest bearing deposits                                                 
   with banks                     7,531           -           -        7,531
Securities                                                                  
  Government debt                59,275      54,845      70,650       43,470
  Mortgage-backed securities                                                
   and collateralized                                                       
   mortgage obligations           8,599       1,262       1,141        8,720
  Corporate debt                 21,423       1,685       2,658       20,450
  Corporate equity (2)           39,550      27,416      33,679       33,287
----------------------------------------------------------------------------
Total securities                128,847      85,208     108,128      105,927
----------------------------------------------------------------------------
Total cash and securities                                                   
 (3)                            169,457      85,208     110,285      144,380
----------------------------------------------------------------------------
                                                                            
NHA mortgage-backed                                                         
 securities (reported as                                                    
 loans at amortized cost)                                                   
 (4)                              8,545           -           -        8,545
----------------------------------------------------------------------------
Total Liquid Assets             178,002      85,208     110,285      152,925
----------------------------------------------------------------------------
                                                                            
Bank-Owned Liquid Assets by Legal Entity                                    
----------------------------------------------------------------------------
                                                           July        April
(Canadian $ in millions)                               31, 2013     30, 2013
----------------------------------------------------------------------------
BMO                                                     113,268      102,543
BMO Harris Bank                                          27,532       36,510
Broker dealers                                           37,202       36,628
----------------------------------------------------------------------------
Total Bank-Owned Liquid Assets                          178,002      175,681
----------------------------------------------------------------------------
                                                                            
                                                                            
----------------------------------------------------------------------------
(Canadian $ in millions,                                                    
 except as noted)                            April 30, 2013                 
----------------------------------------------------------------------------
                                             Cash &                         
                              BMO Owned  Securities  Encumbered          Net
                                 Assets    Received         (1) Unencumbered
----------------------------------------------------------------------------
Liquid Assets                                                               
----------------------------------------------------------------------------
Cash and securities                                                         
  Cash and cash equivalents      38,446           -       2,257       36,189
  Interest bearing deposits                                                 
   with banks                     6,230           -           -        6,230
Securities                                                                  
  Government debt                56,673      61,588      67,412       50,849
  Mortgage-backed securities                                                
   and collateralized                                                       
   mortgage obligations           7,787       1,827       2,111        7,503
  Corporate debt                 21,341       2,198       3,309       20,230
  Corporate equity (2)           36,655      28,732      33,977       31,410
----------------------------------------------------------------------------
Total securities                122,456      94,345     106,809      109,992
----------------------------------------------------------------------------
Total cash and securities                                                   
 (3)                            167,132      94,345     109,066      152,411
----------------------------------------------------------------------------
                                                                            
NHA mortgage-backed                                                         
 securities (reported as                                                    
 loans at amortized cost)                                                   
 (4)                              8,549           -           -        8,549
----------------------------------------------------------------------------
Total Liquid Assets             175,681      94,345     109,066      160,960
----------------------------------------------------------------------------
                                                                            
The bank also pledged mortgages and loans totalling $40.7 billion as at July
31, 2013 ($42.6 billion as April 30, 2013), in support of raising long-term 
secured funding. Total on- and off-balance sheet pledged and encumbered     
assets total $150.9 billion as at July 31, 2013 ($151.6 billion as at April 
30, 2013).                                                                  
                                                                            
(1)  Encumbrance refers to the portion of BMO owned assets and cash and     
     securities received that is pledged or encumbered through repurchase   
     agreements, securities lent, derivative contracts, minimum required    
     deposits at central banks, requirements associated with participation  
     in clearing houses and payment systems and short sales.                
(2)  Corporate equity balances are largely hedged.                          
(3)  Total cash and securities also includes select holdings management     
     believes are not readily available to support the liquidity            
     requirements of the bank.  These holdings total $9.2 billion, which    
     includes securities held in BMO's insurance subsidiary, structured     
     investment vehicle, credit protection vehicle and certain investments  
     held in our merchant banking business.                                 
(4)  Under IFRS, NHA MBS that include BMO originated mortgages as the       
     underlying collateral are classified as loans.  Unencumbered NHA MBS   
     securities have liquidity value and are included as liquid assets under
     the bank's liquidity and funding management framework.                 

 
Credit Rating  
The credit ratings assigned to BMO's short-term and senior long-term
debt securities by external rating agencies are important in the
raising of both capital and funding to support our business
operations. Maintaining strong credit ratings allows us to access the
capital markets at competitive pricing levels. Should our credit
ratings experience a material downgrade, our cost of funds would
likely increase significantly and our access to funding and capital
through capital markets could be reduced. A material downgrade of our
ratings could have other consequences, including those set out in
Note 10 to the audited consolidated financial statements on page 143
of BMO's 2012 Annual Report.  
The credit ratings assigned to BMO's senior debt by the rating
agencies are indicative of high-grade, high-quality issues. The
ratings are as follows: DBRS (AA); Fitch (AA-); Moody's (Aa3); and
Standard & Poor's (S&P) (A+).  
We are required to deliver collateral to certain counterparties in
the event of a downgrade to our current credit rating. The
incremental collateral required is based on mark-to-market exposure,
collateral valuations and collateral threshold arrangements, as
applicable. As at July 31, 201
3, the bank would be required to
provide additional collateral to counterparties totalling $106
million and $322 million under a one-notch and two-notch downgrade,
respectively.   
Insurance Risk  
There were no significant changes in the risk management practices or
risk levels of our insurance business during the quarter. BMO's
insurance risk management practices are outlined on page 89 of BMO's
2012 Annual Report. 
Information Management and Security Risk  
As described in the Operational Risk section on pages 88 to 89 of
BMO's 2012 annual MD&A, information security risks for financial
institutions like BMO have increased in recent years. Our operations
include online and mobile financial services that feature the secure
processing, transmission and storage of confidential information.
Given our use of the Internet and reliance on digital technologies,
we face cyber security risks, which could include information
security risk such as threats of hacking, identity theft and
corporate espionage, and denial of service risk such as threats
targeted at causing system failure and service disruption. BMO
maintains systems and procedures to prevent, monitor, react to and
manage cyber security threats. It is possible that we, or those with
whom we do business, may not anticipate or implement effective
measures against all such security threats because the techniques
used change frequently and can originate from a wide variety of
sources, which have become increasingly sophisticated. In the event
of such an occurrence, BMO may experience losses or reputational
damage. 
Derivative Transactions  
As discussed in the Select Financial Instruments section, the
Enhanced Disclosure Task Force has recommended enhanced disclosures
in a numbers of areas including counterparty credit risk arising from
derivative transactions. With limited exceptions, we utilize the
International Swaps and Derivatives Association (ISDA) Master
Agreement to document our contractual trading relationships for
over-the-counter (OTC) derivatives with our counterparties. ISDA
Master Agreements set out the legal framework and standard terms that
apply to all the derivative transactions entered into bilaterally
between the parties. In addition to providing "Events of Default" and
"Termination Events", which can lead to the early termination of
transactions prior to their maturity date, ISDA Master Agreements
also contain rules for the calculation and netting of termination
values (also known as "Close-out Amounts") for transactions between
counterparties to produce a single net aggregate amount payable by
one party to the other.  
Credit Support Annexes (CSAs) are commonly included with ISDA Master
Agreements to provide for the exchange of collateral between the
parties where one party's OTC derivatives exposure to the other party
exceeds an agreed amount (Threshold). The purpose of
collateralization is to mitigate counterparty credit risk. Collateral
can be exchanged as initial margin and/or variation margin. CSAs
outline, among other things, provisions setting out acceptable
collateral types (e.g. government treasuries and cash) and how they
will be valued (discounts are often applied to the market values), as
well as Thresholds, whether or not the collateral can be re-pledged
by the recipient and how interest is calculated. The following table
represents the notional amounts of our OTC derivative contracts
comprised of those which are centrally cleared and settled through a
designated clearing house and those which are non-centrally cleared.
The notional amounts of our derivatives represent the amount to which
a rate or price is applied in order to calculate the amount of cash
that must be exchanged under the contract. Notional amounts do not
represent assets or liabilities and therefore are not recorded in our
Consolidated Balance Sheet. 


 
                                                                            
----------------------------------------------------------------------------
Over-the-Counter Derivatives (Notional amounts)                     Table 13
----------------------------------------------------------------------------
                                                                            
                   Non-centrally cleared            Centrally cleared       
              ------------------------------ ------------------------------ 
(Canadian $                                                                 
 in millions,                                                               
 except as           Q3-       Q2-       Q4-        Q3-       Q2-       Q4- 
 noted)             2013      2013      2012       2013      2013      2012 
-------------------------------------------- ------------------------------ 
Interest Rate                                                               
 Contracts                                                                  
  Swaps        1,193,149 1,320,998 1,563,766    948,655   685,100   401,410 
  Forward rate                                                              
   agreements     46,103    87,901   223,482    420,457   421,416   346,266 
  Purchased                                                                 
   options        18,289    18,349    24,015          -         -         - 
  Written                                                                   
   options        22,284    22,745    31,364          -         -         - 
----------------------------------------------------------------------------
Total interest                                                              
 rate                                                                       
 contracts     1,279,825 1,449,993 1,842,627  1,369,112 1,106,516   747,676 
----------------------------------------------------------------------------
                                                                            
Foreign                                                                     
 Exchange                                                                   
 Contracts                                                                  
  Cross-                                                                    
   currency                                                                 
   swaps          44,325    43,052    30,245          -         -         - 
  Cross-                                                                    
   currency                                                                 
   interest                                                                 
   rate swaps    244,292   242,791   238,675          -         -         - 
  Forward                                                                   
   foreign                                                                  
   exchange                                                                 
   contracts     231,202   245,181   217,345          -         -         - 
  Purchased                                                                 
   options        12,883    13,799     8,682          -         -         - 
  Written                                                                   
   options        15,520    14,871    10,588          -         -         - 
----------------------------------------------------------------------------
Total foreign                                                               
 exchange                                                                   
 contracts       548,222   559,694   505,535          -         -         - 
----------------------------------------------------------------------------
                                                                            
Commodity                                                                   
 Contracts                                                                  
  Swaps           16,001    15,396    15,528          -         -         - 
  Purchased                                                                 
   options         8,413     8,405     9,384          -         -         - 
  Written                                                                   
   options         4,446     4,502     5,479          -         -         - 
----------------------------------------------------------------------------
Total                                                                       
 commodity                                                                  
 contracts        28,860    28,303    30,391          -         -         - 
----------------------------------------------------------------------------
                                                                            
----------------------------------------------------------------------------
Total equity                                                                
 contracts        37,113    34,703    30,000          -         -         - 
----------------------------------------------------------------------------
Credit Default                                                              
 Swaps                                                                      
  Purchased        8,582    10,507    11,682        237        25         - 
  Written         14,769    21,221    24,126        205         -         - 
----------------------------------------------------------------------------
Total credit                                                                
 default swaps    23,351    31,728    35,808        442        25         - 
----------------------------------------------------------------------------
Total          1,917,371 2,104,421 2,444,361  1,369,554 1,106,541   747,676 
============================================================================
 
                           Total            
              ------------------------------
(Canadian $                                 
 in millions,                               
 except as           Q3-       Q2-       Q4-
 noted)             2013      2013      2012
--------------------------------------------
Interest Rate                               
 Contracts                                  
  Swaps        2,141,804 2,006,098 1,965,176
  Forward rate                              
   agreements    466,560   509,317   569,748
  Purchased                                 
   options        18,289    18,349    24,015
  Written                                   
   options        22,284    22,745    31,364
--------------------------------------------
Total interest                              
 rate                                       
 contracts     2,648,937 2,556,509 2,590,303
--------------------------------------------
                                            
Foreign                                     
 Exchange                                   
 Contracts                                  
  Cross-                                    
   currency                                 
   swaps          44,325    43,052    30,245
  Cross-                                    
   currency                                 
   interest                                 
   rate swaps    244,292   242,791   238,675
  Forward                                   
   foreign                                  
   exchange                                 
   contracts     231,202   245,181   217,345
  Purchased                                 
   options        12,883    13,799     8,682
  Written                                   
   options        15,520    14,871    10,588
--------------------------------------------
Total foreign                               
 exchange                                   
 contracts       548,222   559,694   505,535
--------------------------------------------
                                            
Commodity                                   
 Contracts                                  
  Swaps           16,001    15,396    15,528
  Purchased                                 
   options         8,413     8,405     9,384
  Written                                   
   options         4,446     4,502     5,479
--------------------------------------------
Total                                       
 commodity                                  
 contracts        28,860    28,303    30,391
--------------------------------------------
                                            
--------------------------------------------
Total equity                                
 contracts        37,113    34,703    30,000
--------------------------------------------
Credit Default                              
 Swaps                                      
  Purchased        8,819    10,532    11,682
  Written         14,974    21,221    24,126
--------------------------------------------
Total credit                                
 default swaps    23,793    31,753    35,808
--------------------------------------------
Total          3,286,925 3,210,962 3,192,037
============================================

 
Caution 
This Risk Management section contains forward-looking statements.
Please see the Caution Regarding Forward-Looking Statements.  
Adjusted results in this Risk Management section are non-GAAP amounts
or non-GAAP measures. Please see the Non-GAAP Measures section. 


 
                                                                            
----------------------------------------------------------------------------
Summary Quarterly Earnings Trends (1)                               Table 14
----------------------------------------------------------------------------
                                                                            
(Canadian $                                                                 
 in millions,           Q3-    Q2-    Q1-    Q4-    Q3-   Q2-    Q1-    Q4- 
 except as noted)      2013   2013   2013   2012   2012  2012   2012   2011 
----------------------------------------------------------------------------
Total revenue         4,050  3,944  4,081  4,176  3,878 3,959  4,117  3,822 
Provision for credit                                                        
 losses - specific                                                          
 (see below)             57    175    178    216    229   195    122    299 
Provision for credit                                                        
 losses - collective     20    (30)     -    (24)     8     -     19     63 
Non-interest expense  2,542  2,568  2,590  2,701  2,484 2,499  2,554  2,432 
Reported net income                                                         
 (see below)          1,137    975  1,048  1,082    970 1,028  1,109    768 
Adjusted net income                                                         
 (see below)          1,136    997  1,041  1,125  1,013   982    972    832 
----------------------------------------------------------------------------
Basic earnings per                                                          
 share ($)             1.69   1.43   1.53   1.59   1.42  1.52   1.65   1.12 
Diluted earnings per                                                        
 share ($)             1.68   1.42   1.53   1.59   1.42  1.51   1.63   1.11 
Adjusted diluted                                                            
 earnings per share                                                         
 ($)                   1.68   1.46   1.52   1.65   1.49  1.44   1.42   1.20 
Net interest margin                                                         
 on earning assets                                                          
 (%)                   1.75   1.79   1.85   1.83   1.88  1.89   2.05   2.01 
Adjusted net interest                                                       
 margin on earning                                                          
 assets (%)            1.63   1.64   1.67   1.67   1.70  1.76   1.85   1.78 
Effective income tax                                                        
 rate (%)              20.6   20.8   20.2   15.7   16.2  18.7   22.0   25.3 
Adjusted effective                                                          
 income tax rate (%)   20.1   20.0   19.9   17.9   16.9  19.5   23.7   20.7 
Canadian/U.S. dollar                                                        
 exchange rate                                                              
 (average)             1.04   1.02   1.00   0.99   1.02  0.99   1.01   1.01 
                                                                            
Provision for credit                                                        
 losses - specific                                                          
 (2)                                                                        
  P&C Canada            126    154    128    146    147   167    155    178 
  P&C U.S.               40     55     32     75     76    60     63     71 
----------------------------------------------------------------------------
Personal and                                                                
 Commercial Banking     166    209    160    221    223   227    218    249 
Private Client Group     (1)     1      2     11      5     1      5      2 
BMO Capital Markets       2     (6)   (15)    (4)     -    19     (9)    12 
Corporate Services,                                                         
 including T&O         (110)   (29)    31    (12)     1   (52)   (92)    36 
----------------------------------------------------------------------------
BMO Financial Group                                                         
 provision for credit                                                       
 losses - specific       57    175    178    216    229   195    122    299 
----------------------------------------------------------------------------
                                                                            
Reported net income:                                                        
  P&C Canada            497    430    458    442    459   433    441    419 
  P&C U.S.              153    155    182    140    139   142    159    162 
----------------------------------------------------------------------------
Personal and                                                                
 Commercial Banking     650    585    640    582    598   575    600    581 
Private Client Group    218    141    163    164    109   147    104    138 
BMO Capital Markets     280    275    310    314    250   233    224    156 
Corporate Services,                                                         
 including T&O          (11)   (26)   (65)    22     13    73    181   (107)
----------------------------------------------------------------------------
BMO Financial Group                                                         
 net income           1,137    975  1,048  1,082    970 1,028  1,109    768 
============================================================================
                                                                            
Adjusted net income:                                                        
  P&C Canada            500    431    461    444    462   436    443    422 
  P&C U.S.              165    168    195    156    155   157    176    179 
----------------------------------------------------------------------------
Personal and                                                                
 Commercial Banking     665    599    656    600    617   593    619    601 
Private Client Group    225    148    169    169    114   153    109    143 
BMO Capital Markets     281    276    310    315    250   233    224    156 
Corporate Services,                                                         
 including T&O          (35)   (26)   (94)    41     32     3     20    (68)
----------------------------------------------------------------------------
BMO Financial Group                                                         
 adjusted net income  1,136    997  1,041  1,125  1,013   982    972    832 
============================================================================
(1)   Adjusted results in this table are non-GAAP amounts or non-GAAP       
      measures. Please see the Non-GAAP Measures section.                   
(2)   Prior period balances have been restated to reflect a change in       
      accounting allocation methodology for provisions for credit losses.   
      See the Review of Operating Groups' Performance for more details.     

 
Summary Quarterly Earnings Trends (Cont'd.) 
BMO's quarterly earnings trends were reviewed in detail on pages 96
and 97 of BMO's 2012 annual MD&A. Readers are encouraged to refer to
that review for a more complete discussion of trends and factors
affecting past quarterly results including the modest impact of
seasonal variations in results. Table 14 outlines summary results for
the fourth quarter of fiscal 2011 through the third quarter of fiscal
2013.   
Periodically, certain business lines and units within the business
lines are transferred between client operating groups to more closely
align BMO's organizational structure with its strategic priorities.
Comparative figures have been restated to conform to the current
presentation. In the first quarter of fiscal 2013, we commenced
charging provisions for credit losses to the bank's operating groups
based on actual credit losses incurred. Previously we had charged the
groups with credit losses based on an expected loss provisioning
methodology. Prior period results have been restated accordingly.   
We have remained focused on embracing a culture that places the
customer at the centre of everything we do. Economic conditions were
at times challenging for some of our businesses in late 2011 and
2012, but conditions have improved overall and quarterly adjusted
results have generally trended higher over the past two years.   
P&C Canada third quarter results continued to benefit from strong
volume growth in both the personal and commercial segments, improving
provisions for credit losses and this quarter, stable net interest
margins with higher fee income. The net income trend in previous
quarters has been relatively consistent. Revenue and net income were
lower in the second quarter of each year due to three fewer days. In
previous quarters, net interest margin was declining due to lower
deposit spreads in the low-rate environment, and changes in mix
including loan growth exceeding deposit growth.  Expense increases
have been modest, reflecting continued investment in the business.  
PCG produced strong results for the quarter. Recent quarterly results
in PCG traditional wealth businesses have grown on a relatively
consistent basis, driven by growth in client assets and benefits from
a continued focus on productivity. Quarterly results in Insurance
have been subject to variability, resulting primarily from changes in
long-term interest rates.  
BMO Capital Markets results are influenced by market factors that can
contribute to variability in results. In 2012, results were good in
the first three quarters, but the fourth quarter results were
significantly stronger, driven by a recovery of prior periods' income
taxes and higher revenue due to an improved market environment. This
trend has continued in 2013 with good results in each quarter.  
P&C U.S. results have benefited from the M&I acquisition as well as
increases in commercial loan balances, which had seen minimal growth
since the economic downturn that started in 2007. P&C U.S. had very
strong results in the first quarter of 2013 and has been relatively
stable in the second and third quarters with good core commercial and
industrial loan growth and lower expenses compared to the prior
year's results. Net interest margin has been declining primarily due
to lower deposit spreads given the low-rate environment and loan
spreads due to competitive pricing, and growth in lower spread
assets. 
BMO's overall provisions for credit losses measured as a percentage
of loans and acceptances continued to trend lower in recent quarters
relative to 2012 and the fourth quarter of 2011. Adjusted provisions,
which exclude provisions on the M&I purchased performing loan
portfolio and changes in the collective allowance, were relatively
consistent throughout 2012 and into the second quarter of 2013 and
lower than in the fourth quarter of 2011, primarily due to recoveries
of provisions on the purchased credit impaired loan portfolio and an
improvement in the U.S. credit environment. Adjusted provisions
declined significantly in the third quarter of 2013, mainly due to
lower provisions in P&C Canada and P&C U.S., coupled with higher
recoveries of credit losses on the M&I purchased credit impaired loan
portfolio in Corporate Services. 
Corporate Services quarterly net income can vary, in large part due
to the inclusion of the adjusting items, which are largely recorded
in Corporate Services. Adjusted results in Corporate Services were
relatively steady in 2012 and better than in 2011. This was primarily
due to significant recoveries of provisions on the M&I purchased
credit impaired loan portfolio. These recoveries can vary and reduced
recoveries in the first quarter of 2013 together with lower revenues
and increased expenses lowered Corporate Services results that
quarter. These recoveries increased in the second and third quarters,
increasing net income. 
Movements in exchange rates in 2012 and for 2013 to date have been
subdued. A stronger U.S. dollar increases the translated value of
U.S.-dollar-denominated revenues, expenses, provisions for credit
losses, income taxes and net income. 
The effective income tax rate can vary, as it depends on the timing
of resolution of certain tax matters, recoveries of prior periods'
income taxes and the relative proportion of earnings attributable to
the different jurisdictions in which we operate.  
Caution   
This Summary Quarterly Earnings Trends section contains
forward-looking statements. Please see the Caution Regarding
Forward-Looking Statements.  
Adjusted results in this Summary Quarterly Earnings Trends section
are non-GAAP amounts or non-GAAP measures. Please see the Non-GAAP
Measures section. 
Balance Sheet 
Total assets of $549.3 billion at July 31, 2013, increased $23.9
billion from October 31, 2012, including a $3.5 billion increase as a
result of the stronger U.S. dollar. The increase primarily reflects
growth in net loans and acceptances of $18.5 billion, cash and cash
equivalents and interest bearing deposits with banks of $14.3 billion
and securities borrowed or purchased under resale agreements of $6.7
billion, partially offset by a decrease in derivative financial
assets of $16.4 billion. All remaining assets increased by a combined
$0.8 billion.  
The $18.5 billion increase in net loans and acceptances was primarily
due to an increase in residential mortgages, primarily in P&C Canada,
and an increase in loans to businesses and governme
nts in both P&C
Canada and P&C U.S.  
The $14.3 billion increase in cash and cash equivalents and interest
bearing deposits with banks was primarily due to increased balances
held with central banks.  
The $6.7 billion increase in securities borrowed or purchased under
resale agreements was mainly due to increased client-driven
activities. 
The $16.4 billion decrease in derivative financial assets and the
$15.8 billion decrease in derivative financial liabilities were
primarily due to declines in the fair value of interest rate
contracts as a result of rising interest rates.  
Liabilities and equity increased $23.9 billion from October 31, 2012.
The change primarily reflects increases in deposits of $34.5 billion,
securities lent or sold under repurchase agreements of $7.9 billion
and shareholders' equity of $1.0 billion, partially offset by
decreases in derivative financial liabilities of $15.8 billion and
securities sold but not yet purchased of $2.4 billion. All remaining
liabilities and equity decreased by a combined $1.3 billion.  
The $34.5 billion increase in deposits was largely driven by a $26.6
billion increase in business and government deposits due to increased
U.S. dollar deposits and wholesale funding issuances. Deposits by
individuals increased $4.6 billion, largely driven by increased
retail operating deposits in P&C Canada, while deposits by banks
increased $3.3 billion.  
Contractual obligations by year of maturity are outlined in Note 18
to the unaudited interim consolidated financial statements. 
Capital Management 
Third Quarter 2013 Regulatory Capital Review  
BMO's Basel III capital position is strong, with a Common Equity Tier
1 (CET1) Ratio of 9.6% at July, 31, 2013, down from 9.7% at the end
of the preceding quarter, up from a pro-forma estimate of 8.7% at
October 31, 2012, and well in excess of the expectation of the Office
of the Superintendent of Financial Institutions (OSFI) that banks
attain a 7% target, as discussed in the following paragraph. 
Effective the first quarter of 2013, regulatory capital requirements
for BMO are determined on a Basel III basis. In 2013, the minimum
required Basel III capital ratios are a 3.5% CET1 Ratio, 4.5% Tier 1
Ratio and 8% Total Capital Ratio, such ratios being calculated using
a five year phase-in of regulatory adjustments and nine year
phase-out of instruments that no longer qualify as regulatory capital
under the Basel III rules. However, OSFI's guidance requires Canadian
deposit-taking institutions to meet the 2019 Basel III capital
requirements in 2013, other than the phase-out of non-qualifying
capital, (also referred to as the 'all-in' requirements) and expects
them to attain a target Basel III CET1 Ratio of at least 7% (4.5%
minimum plus 2.5% capital conservation buffer) by January 31, 2013.
On March 26, 2013, OSFI announced that, effective 2016, BMO and five
other domestic systemically important banks (D-SIBs) would each be
required to hold a 1% CET1 buffer, in addition to the 2.5% capital
conservation buffer, to reduce the probability of D-SIB failure.  
The CET1 Ratio decreased by less than 10 basis points from the second
quarter, due primarily to higher risk-weighted assets (RWA), as
discussed below, and the impact of share repurchases under our normal
course issuer bid (NCIB), largely offset by higher CET1 capital, as
discussed below. The CET1 ratio increased by approximately 90 basis
points from our pro-forma estimate at October 31, 2012, due to higher
CET1 capital and lower RWA, as described below. 
CET1 capital at July 31, 2013, was $20.6 billion, up $0.4 billion
from the second quarter and up $1.3 billion from the pro-forma CET1
capital estimate of $19.3 billion at October 31, 2012, due mainly to
retained earnings growth and the issuance of common shares through
the Shareholder Dividend Reinvestment and Share Purchase Plan (DRIP)
and the exercise of stock options, partly offset by the purchase and
cancellation of common shares under the bank's NCIB share repurchase
program.  
The Basel III RWA of $214 billion at July 31, 2013, was up $6 billion
from the second quarter, primarily due to model methodology and
calibration changes and the impact of foreign exchange on our
U.S.-dollar-denominated RWA. The RWA increase from new loan
originations was offset by paydowns of higher risk-weighted loans and
positive credit migration. Our July 31, 2013 RWA was $8 billion lower
than the Basel III pro-forma estimate of $222 billion at October 31,
2012. Compared to October 31, 2012, the decrease in RWA was due
mainly to lower Credit Valuation Adjustment (CVA) RWA, lower risk in
certain portfolios and better risk assessments. The lower CVA RWA
resulted from OSFI's decision, announced in December 2012, to delay
the effective date for the imposition of the CVA risk capital charge
until January 2014. This delay improved our CET1 Ratio, at July 31,
2013, by approximately 35 basis points. 
OSFI advised banks in a letter dated August 21, 2013, that it will
begin phasing in the CVA risk capital charge for Canadian banks in
the first quarter of 2014. The CET1 CVA risk capital charge
applicable to BMO during fiscal 2014 will be 57% of the
fully-implemented charge, and this will increase each year until it
reaches 100% by 2019. BMO estimates that its third quarter 2013 CET1
Ratio would be reduced by approximately 20 basis points if the 2014
CVA risk capital charge was currently in effect.  
The bank's Basel III Tier 1 and Total Capital Ratios were 11.2% and
13.5%, respectively, at July 31, 2013, compared with 11.3% and 13.7%,
respectively, in the second quarter and 10.5% and 12.9%,
respectively, on a pro-forma basis at October 31, 2012. These ratios
declined from the second quarter primarily due to the same factors
that caused the decline in the CET1 Ratio from the second quarter.
These ratios improved from the pro-forma estimates at October 31,
2012, due to higher CET1 capital and lower RWA, as described above,
partly offset by the phase-out of non-common instruments that do not
meet OSFI's Basel III requirements, including the non-viability
contingent capital requirements, and by the redemption of $200
million Class B Preferred Shares Series 5 and US$250 million
Exchangeable Preferred Stock, Series A during the second quarter.  
BMO's Assets-to-Capital Multiple (ACM), a leverage ratio monitored by
OSFI and calculated using the transitional total capital prescribed
by OSFI, was 16.2 at July 31, 2013. BMO's ACM decreased from 16.3 in
the second quarter, primarily due to increased capital, and increased
from 15.2 at October 31, 2012, on a Basel II basis, primarily due to
balance sheet growth and Basel III transitional modifications. 
Additional details on the Basel III regulatory capital changes can be
found in the Enterprise-Wide Capital Management section on pages 60
to 64 of BMO's 2012 Annual Report. 
BMO's investments in foreign operations are primarily denominated in
U.S. dollars. Foreign exchange gains or losses on the translation of
the investments in foreign operations to Canadian dollars are
reported in shareholders' equity (although they do not attract tax
until realized). When coupled with the foreign exchange impact of
U.S.-dollar-denominated RWA on Canadian-dollar equivalent RWA, and
with the impact of U.S.-dollar-denominated capital deductions on our
Canadian dollar capital, this may result in volatility in the bank's
capital ratios. BMO may hedge this risk of foreign exchange gains or
losses by funding its foreign investments in U.S. dollars or,
alternatively, to offset the impact of foreign exchange rate changes
on the bank's capital ratios, may enter into derivative contracts,
such as forward currency contracts, or elect to fund its investment
in Canadian dollars. 
Other Capital Developments 
In the third quarter, we purchased four million shares under the
bank's NCIB share repurchase program, for an aggregate repurchase of
eight million shares since the inception of the program in February
2013. The timing and amount of purchases under the program are
subject to management discretion based on factors such as market
conditions and capital adequacy. The bank only initiates purchases
under the program after consulting with OSFI.  
During the quarter, 951,000 common shares were issued through the
DRIP and the exercise of stock options.  
On July 22, 2013, the Bank announced that it did not intend to
exercise its right to redeem the currently outstanding Non-Cumulative
5-Year Rate Reset Class B Preferred Shares, Series 16 (Series 16
Preferred Shares) of the Bank on August 25, 2013. As a result,
subject to certain conditions, the holders of the Series 16 Preferred
Shares had the right, at their option, to elect by August 12, 2013,
to convert all or part of their Series 16 Preferred Shares on a
one-for-one basis into Non-Cumulative Floating Rate Class B Preferred
Shares, Series 17 (Series 17 Preferred Shares) of the Bank, effective
August 26, 2013. As a result, approximately 6.3 million Series 16 and
approximately 5.7 million Series 17 Preferred Shares will be
outstanding for the 5-year period commencing on August 26, 2013, and
ending on August 25, 2018. The reset dividend rate on the Series 16
Preferred Shares for the next 5 years will be 3.39% and the initial
quarterly dividend rate on the Series 17 Preferred Shares will be
2.669%, in each case a reduction from the original 5.2% rate. In
2018, BMO may decide to call the Series 16 and Series 17 Preferred
Shares (subject to regulatory approval) or to reset the fixed rate
for another five years; if BMO elects to reset, the holders of the
Series 16 and Series 17 Preferred Shares will again have the right to
elect to hold either fixed rate Series 16 Preferred Shares or
floating rate Series 17 Preferred Shares. 
On August 27, 2013, BMO announced that the Board of Directors had
declared a quarterly dividend payable to common shareholders of $0.74
per common share, unchanged from the preceding quarter and up $0.02
per share from a year ago. The dividend and share repurchases reflect
our strong capital position and the success of our business
strategies.  
The dividend is payable November 26, 2013, to shareholders of record
on November 1, 2013. Common shareholders may elect to have their cash
dividends reinvested in common shares of the bank in accordance with
the DRIP.  
Caution  
The foregoing Capital Management sections contain forward-looking
statements. Please see the Caution Regarding Forward-Looking
Statements. 
The foregoing Capital Management sections contain adjusted results
and measures, which are non-GAAP. Please see the Non-GAAP Measures
section. 


 
                                                                            
----------------------------------------------------------------------------
Qualifying Regulatory Capital and Risk-Weighted Assets              Table 15
----------------------------------------------------------------------------
                                                                            
Basel III Regulatory                                                        
 Capital and Risk-             (1)           (2)          (1)           (2) 
 Weighted Assets            All-in  Transitional       All-in  Transitional 
                       -------------------------- --------------------------
(Canadian $ in                                                              
 millions)                 Q3-2013       Q3-2013      Q2-2013       Q2-2013 
----------------------------------------------------------------------------
  Gross Common Equity                                                       
   (3)                      27,374        27,524       26,893        26,967 
  Regulatory                                                                
   adjustments applied                                                      
   to Common Equity         (6,747)            -       (6,695)            - 
----------------------------------------------------------------------------
Common Equity Tier 1                                                        
 capital (CET1)             20,627        27,524       20,198        26,967 
----------------------------------------------------------------------------
  Additional Tier 1                                                         
   Eligible Capital (4)      3,769         3,769        3,779         3,779 
  Regulatory                                                                
   adjustments applied                                                      
   to Tier 1                  (410)       (3,760)        (409)       (3,705)
----------------------------------------------------------------------------
Additional Tier 1                                                           
 capital (AT1)               3,359             9        3,370            74 
----------------------------------------------------------------------------
Tier 1 capital (T1 =                                                        
 CET1 + AT1)                23,986        27,533       23,568        27,041 
----------------------------------------------------------------------------
  Tier 2 Eligible                                                           
   Capital (5)               4,902         4,903        4,919         4,919 
  Regulatory                                                                
   adjustments applied                                                      
   to Tier 2                   (50)            -          (50)            - 
----------------------------------------------------------------------------
Tier 2 capital (T2)          4,852         4,903        4,869         4,919 
----------------------------------------------------------------------------
Total capital (TC= T1 +                                                     
 T2)                        28,838        32,436       28,437        31,960 
----------------------------------------------------------------------------
Total risk-weighted                                                         
 assets                    214,233       229,792      207,974       215,863 
----------------------------------------------------------------------------
Capital Ratios (%)                                                          
CET1 Ratio                     9.6          12.0          9.7          12.5 
Tier 1 Capital Ratio          11.2          12.0         11.3          12.5 
Total Capital Ratio           13.5          14.1         13.7          14.8 
============================================================================
(1)   "All-in" regulatory capital assumes that all Basel III regulatory     
      adjustments are applied effective January 1, 2013, and that the       
      capital value of instruments which no longer qualify as regulatory    
      capital under Basel III rules will be phased out at a rate of 10% per 
      year from January 1, 2013, and continuing to January 1, 2022.         
(2)   Transitional regulatory capital assumes that all Basel III regulatory 
      capital adjustments are phased in from January 1, 2014, to January 1, 
      2018, and that the capital value of instruments that no longer qualify
      as regulatory capital under Basel III rules will be phased out at a   
      rate of 10% per year from January 1, 2013, and continuing to January  
      1, 2022.                                                              
(3)   Gross Common Equity includes issued qualifying common shares, retained
      earnings, accumulated other comprehensive income and eligible common  
      share capital issued by subsidiaries.                                 
(4)   Additional Tier 1 Eligible Capital includes directly and indirectly   
      issued qualifying Additional Tier 1 instruments and directly and      
      indirectly issued capital instruments, to the extent eligible, which  
      are subject to phase-out under Basel III.                             
(5)   Tier 2 Eligible Capital includes directly and indirectly issued       
      qualifying Tier 2 instruments and directly and indirectly issued      
      capital instruments, to the extent eligible, that are subject to      
      phase-out under Basel III.                                            
                                                                            
                                                                            
----------------------------------------------------------------------------
Outstanding Shares and Securities Convertible into Common                   
Shares                                                              Table 16
----------------------------------------------------------------------------
                                                                            
                                                                            
                                                            Number of shares
As at August 21, 2013                                       or dollar amount
----------------------------------------------------------------------------
Common shares                                                    644,400,000
Class B Preferred Shares                                                    
  Series 13                                            $         350,000,000
  Series 14                                            $         250,000,000
  Series 15                                            $         250,000,000
  Series 16 (1)                                        $         300,000,000
  Series 18                                            $         150,000,000
  Series 21                                            $         275,000,000
  Series 23                                            $         400,000,000
  Series 25                                            $         290,000,000
                                                                            
Stock options                                                               
  - vested                                                         8,467,000
  - non-vested                                                     7,700,000
============================================================================
(1)   Effective August 26, 2013, approximately 5.7 million Series 16        
      Preferred Shares will be converted into Series 17 Preferred Shares on 
      a one-for-one basis.                                                  
                                                                            
Details on share capital are outlined in Note 20 to the audited consolidated
financial statements on pages 156 and 157 of BMO's 2012 Annual Report.      

 
Eligible Dividends Designation 
For the purposes of the Income Tax Act (Canada) and any similar
provincial and territorial legislation, BMO designates all dividends
paid or deemed to be paid on both its common and preferred shares as
"eligible dividends", unless indicated otherwise. 
Transactions with Related Parties  
In the ordinary course of business, we provide banking services to
our key management personnel, joint ventures and associates on the
same terms that we offer to our customers for those services.  
The Bank's policies and procedures for related party transactions did
not materially change from October 31, 2012, as described in Note 27
to the audited consolidated financial statements on pages 168 and 169
of BMO's 2012 Annual Report.  
Off-Balance Sheet Arrangements 
BMO enters into a number of off-balance sheet arrangements in the
normal course of operations. The most significant of these are Credit
Instruments, Special Purpose Entities (SPEs), and Guarantees, which
are described on pages 64, 65, 66 and 70 of BMO's 2012 Annual Report
as well as in Notes 5 and 7 to the unaudited interim consolidated
financial statements. We consolidate all of our SPEs, except for
certain Canadian customer securitization and structured finance
vehicles. See the Select Financial Instruments section for comments
on any significant changes to these arrangements during the quarter
ended July 31, 2013. 
Accounting Policies and Critical Accounting Estimates  
Significant accounting policies are described in the notes to our
audited consolidated financial statements for the year ended October
31, 2012, together with a discussion of certain accounting estimates
that are considered particularly important as they require management
to make significant judgments, some of which relate to matters that
are inherently uncertain. Readers are encouraged to review that
discussion.  
Future Changes in Accounting Policies 
BMO monitors the potential changes proposed by the International
Accounting Standards Board (IASB) and analyses the effect that
changes in the standards may have on BMO's financial reporting and
accounting policies. New standards and amendments to existing
standards, which are effective for the Bank in the future, can be
found in Note 1 to the audited consolidated financial statements on
pages 126 and 127 of BMO's 2012 Annual Report. 
U.S. Regulatory Developments 
We continue to monitor and prepare for U.S. regulatory developments
including financial reforms under the Dodd-Frank Wall Street Reform
and Consumer Protection Act (the Dodd-Frank Act) and highlight recent
developments in this section. For a more comprehensive discussion,
see the U.S. Regulatory Developments section on page 69 of BMO's 2012
annual MD&A.   
Under the Dodd-Frank Act, swaps are now subject to a comprehensive
regulatory regime. Certain swaps are currently required to be
centrally cleared and will soon be required to be traded on an
exchange. As a registered swap dealer in the United States, BMO is
now subject to swap reporting and business conduct requirements.
Capital and margin requirements relating to swaps are currently being
reviewed by U.S. and international regulators.  
In December 2012, the Federal Reserve Board (FRB) issued for comment
a proposed rulemaking that would establish enhanced prudential
standards and early remediation requirements for certain foreign
banks with U.S. operations, including BMO. The proposal would
establish new requirements for organizational structure, risk
management, capital, liquidity, stress testing, and early remediation
covering all U.S. operations of foreign banks. The proposed
requirements applicable to BMO Financial Corp. (BFC) are similar to
those that already apply to BFC and its subsidiaries as domestic U.S.
banks and bank holding companies. The proposed rule would also affect
BMO's U.S. branches. The FRB has indicated the requirements would be
effective July 1, 2015.  
On July 2, 2013, the Federal Reserve Board approved a final rule to
help ensure banks maintain strong capital positions, with increased
minimum requirements for both the quantity and quality of capital
held by banking organizations. The phase in period for the
requirements applicable to BFC will not begin until January 1, 2015.  
Based on our interpretation of the final Basel III capital rule in
the U.S., BFC is well positioned to meet the pending U.S. regulatory
requirements. 
In order to implement the Durbin Amendment portion of the Dodd Frank
Act, the Federal Reserve has issued a rule that, among other things,
sets standards for debit card interchange fees, including maximum
fees of approximately $0.21 per transaction. On July 31, 2013, a
federal district court invalidated the interchange transaction fee
standards and certain other aspects of the rule, but granted a stay
of its order. The Federal Reserve has announced it will appeal the
ruling. BMO is monitoring the developments, however, based on
currently available information, the ultimate resolution is not
expected to be material to BMO. 
Caution  
This U.S. Regulatory Developments section contains forward-looking
statements. Please see the Caution Regarding Forward-Looking
Statements. 
Select Financial Instruments  
Pages 64 to 66 of BMO's 2012 annual MD&A provide enhanced disclosure
relating to select financial instruments that, commencing in 2008 and
based on subsequent assessments, markets had come to regard as
carrying higher risk. Readers are encouraged to review that
disclosure to assist in understanding the nature and extent of BMO's
exposures. 
On October 29, 2012, the Enhanced Disclosure Task Force of the
Financial Stability Board published its report, Enhancing the Risk
Disclosures of Banks. We currently comply with many of the
recommendations, and we continue to review our disclosures for future
filings and enhance them as appropriate.   
We follow a practice of reporting on significant changes in the
select financial instruments since year end, if any, in our interim
MD&A. There have been no changes of substance from the disclosure in
our annual MD&A, other than the liquidity facility provided to our
structured investment vehicle was fully paid off in the current
quarter. 
Select Geographic Exposures  
Select geographic disclosures were disclosed and discussed on pages
67, 68, 112 and 113 of BMO's 2012 Annual Report. Our exposure to
select countries of interest, as at July 31, 2013, is set out in the
tables that follow, which summarize our exposure to Greece, Ireland,
Italy, Portugal and Spain (GIIPS) along with a broader group of
countries of interest in Europe where our gross exposure is greater
than $500 million. Our gross and net portfolio exposures are
summarized in Table 17 for lending, securities (inclusive of credit
default swaps (CDS) activity), repo-style transactions and
derivatives. These totals are further broken down by counterparty
type in Tables 18 to 20. We also provide a summary of our April 30,
2013, and October 31, 2012, exposures for ease of comparison. There
has been limited change in our exposures. 
For greater clarity, BMO's CDS exposures in Europe are outlined
separately in Table 21. As part of our credit risk management
framework, purchased CDS risk is controlled through a regularly
reviewed list of approved counterparties. The majority of CDS
exposures are offsetting in nature, typically contain matched
contractual terms and are attributable to legacy credit trading
strategies that have been in run-off mode since 2008. 


 
                                                                            
----------------------------------------------------------------------------
European Exposure by Country (10) (Canadian $ in millions)          Table 17
----------------------------------------------------------------------------
                                                                            
As at July 31, 2013                                                         
                                                                  Repo-Style
                                 Lending (1)  Securities (2)       Trans.(3)
                         ---------------------------------------------------
Country                  Commitments  Funded   Gross     Net   Gross     Net
----------------------------------------------------------------------------
GIIPS                                                                       
Greece                             -       -       -       -       -       -
Ireland (5)                        -       -      26       -     132       3
Italy                              8       8     191       -      79       -
Portugal                           -       -     128       -       -       -
Spain                             73      73     122       -       -       -
----------------------------------------------------------------------------
Total - GIIPS (6)                 81      81     467       -     211       3
----------------------------------------------------------------------------
Eurozone (excluding                                                         
 GIIPS)                                                                     
France                            24      24     596     461   2,641       -
Germany                           55      16   1,761   1,455     981       1
Netherlands                      389     204     767     696   1,542       4
Other (7)                        396     235     309     175      15       3
----------------------------------------------------------------------------
Total - Eurozone                                                            
 (excluding GIIPS) (8)           864     479   3,433   2,787   5,179       8
----------------------------------------------------------------------------
Rest of Europe                                                              
Denmark                           15      15   1,098   1,097       2       -
Norway                            13      13   1,182   1,182     554       -
Russian Federation               504     504       -       -       -       -
Switzerland                      442      31      47       -     352       9
United Kingdom                   367     130     449     190   4,180      22
Other (7)                        118      64     561     210     118       1
----------------------------------------------------------------------------
Total - Rest of Europe                                                      
 (8)                           1,459     757   3,337   2,679   5,206      32
----------------------------------------------------------------------------
Total - All of Europe          2,404   1,317   7,237   5,466  10,596      43
----------------------------------------------------------------------------
 
As at July 31, 2013                                         
                             Derivatives (4)           Total
                         -----------------------------------
Country                        Gross     Net   Gross     Net
------------------------------------------------------------
GIIPS                                                       
Greece                             -       -       -       -
Ireland (5)                       36       3     194       6
Italy                              3       1     281       9
Portugal                           -       -     128       -
Spain                              8       3     203      76
------------------------------------------------------------
Total - GIIPS (6)                 47       7     806      91
------------------------------------------------------------
Eurozone (excluding                                         
 GIIPS)                                                     
France                           207      60   3,468     545
Germany                           61      51   2,858   1,523
Netherlands                       56      17   2,754     921
Other (7)                         64      12     784     425
------------------------------------------------------------
Total - Eurozone                                            
 (excluding GIIPS) (8)           388     140   9,864   3,414
------------------------------------------------------------
Rest of Europe                                              
Denmark                            -       -   1,115   1,112
Norway                            65      65   1,814   1,260
Russian Federation                 -       -     504     504
Switzerland                        9       8     850      48
United Kingdom                   394     220   5,390     562
Other (7)                          4       4     801     279
------------------------------------------------------------
Total - Rest of Europe                                      
 (8)                             472     297  10,474   3,765
------------------------------------------------------------
Total - All of Europe            907     444  21,144   7,270
------------------------------------------------------------
Details of the summary amounts reflected in the columns     
above are provided in Tables 18 to 20.                      
                                                                            
As at April 30, 2013                                      
                  
                                                                  Repo-Style
                                 Lending (1)  Securities (2)       Trans.(3)
                         ---------------------------------------------------
Country                  Commitments  Funded   Gross     Net   Gross     Net
----------------------------------------------------------------------------
Total - GIIPS                     77      77     492       -     318       1
----------------------------------------------------------------------------
Total - Eurozone                                                            
 (excluding GIIPS)               728     439   3,527   2,809   5,979      36
----------------------------------------------------------------------------
Total - Rest of Europe         1,301   1,013   3,406   2,690   4,214      37
----------------------------------------------------------------------------
Total - All of Europe          2,106   1,529   7,425   5,499  10,511      74
----------------------------------------------------------------------------
                                                                            
 
                                                            
As at April 30, 2013                                        
                             Derivatives (4)           Total
                         -----------------------------------
Country                        Gross     Net   Gross     Net
------------------------------------------------------------
Total - GIIPS                     63      10     950      88
------------------------------------------------------------
Total - Eurozone                                            
 (excluding GIIPS)               480      57  10,714   3,341
------------------------------------------------------------
Total - Rest of Europe           599     235   9,520   3,975
------------------------------------------------------------
Total - All of Europe          1,142     302  21,184   7,404
------------------------------------------------------------
                                                            
As at October 31, 2012                                                      
                                                                  Repo-Style
                                 Lending (1)  Securities (2)       Trans.(3)
                         ---------------------------------------------------
Country                  Commitments  Funded   Gross     Net   Gross     Net
----------------------------------------------------------------------------
Total - GIIPS                    116      69     500       -     242       8
----------------------------------------------------------------------------
Total - Eurozone                                                            
 (excluding GIIPS)               934     608   4,074   3,306   3,746      10
----------------------------------------------------------------------------
Total - Rest of Europe         1,167     916   3,711   2,771   3,986      15
----------------------------------------------------------------------------
Total - All of Europe          2,217   1,593   8,285   6,077   7,974      33
----------------------------------------------------------------------------
                                                                            
 
As at October 31, 2012                                      
                             Derivatives (4)           Total
                         -----------------------------------
Country                        Gross     Net   Gross     Net
------------------------------------------------------------
Total - GIIPS                     69       6     927      83
------------------------------------------------------------
Total - Eurozone                                            
 (excluding GIIPS)               600      76   9,354   4,000
------------------------------------------------------------
Total - Rest of Europe           468     126   9,332   3,828
------------------------------------------------------------
Total - All of Europe          1,137     208  19,613   7,911
------------------------------------------------------------
                                                            
(1)   Lending includes loans and trade finance. Amounts are net of write-   
      offs and gross of specific allowances, both of which are not          
      considered material.                                                  
(2)   Securities include cash products, insurance investments and traded    
      credit. Gross traded credit includes only the long positions and      
      excludes offsetting short positions.                                  
(3)   Repo-style transactions are all with bank counterparties.             
(4)   Derivatives amounts are marked-to-market, incorporating transaction   
      netting and, for counterparties where a Credit Support Annex is in    
      effect, collateral offsets. Derivative replacement risk net of        
      collateral for all of Europe is approximately $2.7 billion as at July 
      31, 2013.                                                             
(5)   Does not include Irish subsidiary reserves we are required to maintain
      with the Irish Central Bank of $81 million as at July 31, 2013.       
(6)   BMO's direct exposures to GIIPS are primarily to banks for trade      
      finance and trading products. Net exposures remain modest at $91      
      million, with no unfunded commitments as at July 31, 2013.            
(7)   Includes countries with less than $500 million in gross exposure.     
      Other Eurozone includes exposures to Austria, Belgium, Cyprus,        
      Finland, Luxembourg, Slovakia and Slovenia. Other Rest of Europe      
      includes exposures to Croatia, Czech Republic, Hungary, Iceland,      
      Poland and Sweden.                                                    
(8)   BMO's net direct exposure to the other Eurozone countries (the other  
      12 countries that share the common euro currency) as at July 31, 2013,
      totalled approximately $3.4 billion, of which 80% was to              
      counterparties in countries with a rating of Aaa/AAA by both Moody's  
      and S&P, with approximately 84% rated Aaa/AAA by one of the two rating
      agencies. Our net direct exposure to the Rest of Europe totalled      
      approximately $3.8 billion, of which 64% was to counterparties in     
      countries with a Moody's/S&P rating of Aaa/AAA. A significant majority
      of our sovereign exposure consists of tradeable cash products, while  
      exposure related to banks was comprised of trading instruments, short-
      term debt, derivative positions and letters of credit and guarantees. 
(9)   Sovereign includes sovereign-backed bank cash products.               
(10)  Other Exposures (including indirect exposures) not included in the    
      tables as at July 31, 2013:                                           
 
--  BMO also has exposure to entities in a number of European countries
    through our credit protection vehicle and U.S customer securitization
    vehicle. These exposures are not included in the tables due to the
    credit protection incorporated in their structures. 
    --  BMO has direct exposure to those credit structures, which in turn
        have exposures to loans or securities originated by entities in
        Europe. As noted on pages 65 and 66 of BMO's 2012 annual MD&A in the
        Credit Protection Vehicle section, this structure has first-loss
        protection and hedges are in place. 
    --  The notional exposure held in the credit protection vehicle to
        issuers in Greece, Italy and Spain represented 3.7%, of its total
        notional exposure. The credit protection vehicle had notional
        exposure to five of the other 12 countries that share the euro
        currency. This exposure represented 12% of total notional exposure,
        of which 86% was rated investment grade by S&P (73% by Moody's). The
        notional exposure to the Rest of Europe was 15% of total notional
        exposure, with 76% rated investment grade by S&P (63% by Moody's).  
    --  BMO has exposure to GIIPS and other European countries through our
        U.S. customer securitization vehicle, which has commitments that
        involve reliance on collateral of which 0.8% represents loans or
        securities originated by entities in Europe. At the end of the third
        quarter, exposure to Sweden was the largest component at 0.2%.
        Exposure to Spain was approximately 0.1%, and there was no exposure
        to Italy, Ireland, Greece or Portugal.  
--  BMO has exposure to European supranational institutions totalling $0.2
    billion, predominantly in the form of tradeable cash products.  
--  BMO's indirect exposure to Europe in the form of euro-denominated
    collateral to support trading activity was EUR274 million in securities
    issued by entities in European countries, of which EUR2 million was held
    in securities related to GIIPS and EUR130 million was in French
    securities. In addition, EUR118 million of cash collateral was also held
    at July 31, 2013. 
--  Indirect exposure by way of guarantees from entities in European
    countries totalled $512 million, of which $5 million was exposure to
    GIIPS, $244 million to the other Eurozone countries and $263 million to
    the Rest of Europe.  
 
                                                                            
                                                                            
----------------------------------------------------------------------------
European Lending Exposure by Country and Counterparty (10)                  
(Canadian $ in millions)                                            Table 18
----------------------------------------------------------------------------
                                                                            
As at July 31, 2013                                                         
                                      Lending (1)                           
           -----------------------------------------------------------------
                                Commitments                           Funded
           -------------------------------- --------------------------------
Country      Bank Corporate Sovereign Total  Bank Corporate Sovereign  Total
------------------------------------------- --------------------------------
GIIPS                                                                       
Greece          -         -         -     -     -         -         -      -
Ireland (5)     -         -         -     -     -         -         -      -
Italy           8         -         -     8     8         -         -      8
Portugal        -         -         -     -     -         -         -      -
Spain          73         -         -    73    73         -         -     73
----------------------------------------------------------------------------
Total -                                                                     
 GIIPS         81         -         -    81    81         -         -     81
----------------------------------------------------------------------------
Eurozone                                                                    
 (excluding                                                                 
 GIIPS)                                                                     
France         24         -         -    24    24         -         -     24
Germany        11        44         -    55    11         5         -     16
Netherlands    28       361         -   389    28       176         -    204
Other (7)     278       118         -   396   210        25         -    235
----------------------------------------------------------------------------
Total -                                                                     
 Eurozone                                                                   
 (excluding                                                                 
 GIIPS)       341       523         -   864   273       206         -    479
----------------------------------------------------------------------------
Rest of                                                                     
 Europe                                                                     
Denmark        15         -         -    15    15         -         -     15
Norway         13         -         -    13    13         -         -     13
Russian                                                                     
 Federation   478        26         -   504   478        26         -    504
Switzerland     3       439         -   442     3        28         -     31
United                                                                      
 Kingdom      103       264         -   367   103        27         -    130
Other (7)      23        95         -   118    23        41         -     64
----------------------------------------------------------------------------
Total -                                                                     
 Rest of                                                                    
 Europe       635       824         - 1,459   635       122         -    757
----------------------------------------------------------------------------
Total - All                                                                 
 of Europe  1,057     1,347         - 2,404   989       328         -  1,317
----------------------------------------------------------------------------
Refer to footnotes in Table 17.                                             
                                                                            
                                                                            
----------------------------------------------------------------------------
European Securities Exposure by Country and Counterparty (10)               
(Canadian $ in millions)                                            Table 19
----------------------------------------------------------------------------
                                                                            
                                                                            
 As at July 31, 2013                                                        
                                     Securities (2)                         
           -----------------------------------------------------------------
                                      Gross                              Net
           -------------------------------- --------------------------------
                            Sovereign                       Sovereign       
Country      Bank Corporate       (9) Total  Bank Corporate       (9)  Total
------------------------------------------- --------------------------------
GIIPS                                                                       
Greece          -         -         -     -     -         -         -      -
Ireland (5)     -         -        26    26     -         -         -      -
Italy          55        22       114   191     -         -         -      -
Portugal        -         -       128   128     -         -         -      -
Spain          41        40        41   122     -         -         -      -
----------------------------------------------------------------------------
Total -                                                                     
 GIIPS         96        62       309   467     -         -         -      -
----------------------------------------------------------------------------
Eurozone                                                                    
 (excluding                                                                 
 GIIPS)                                                                     
France         31       104       461   596     -         -       461    461
Germany       133       214     1,414 1,761     2        39     1,414  1,455
Netherlands   587        77       103   767   587         6       103    696
Other (7)      32        27       250   309     -         -       175    175
----------------------------------------------------------------------------
Total -                                                                     
 Eurozone                                                                   
 (excluding                                                                 
 GIIPS)       783       422     2,228 3,433   589        45     2,153  2,787
----------------------------------------------------------------------------
Rest of                                                                     
 Europe                                                                     
Denmark       534         1       563 1,098   534         -       563  1,097
Norway      1,182         -         - 1,182 1,182         -         -  1,182
Russian                                                                     
 Federation     -         -         -     -     -         -         -      -
Switzerland    11        36         -    47     -         -         -      -
United                                                                      
 Kingdom      112       262        75   449    54        61        75    190
Other (7)     210         4       347   561   210         -         -    210
----------------------------------------------------------------------------
Total -                                                                     
 Rest of                                                                    
 Europe     2,049       303       985 3,337 1,980        61       638  2,679
----------------------------------------------------------------------------
Total - All                                                                 
 of Europe  2,928       787     3,522 7,237 2,569       106     2,791  5,466
----------------------------------------------------------------------------
Refer to footnotes in Table 17.                           
                                                          
                                                                            
----------------------------------------------------------------------------
European Repo & Derivatives Exposure by Country and                         
Counterparty (10) (Canadian $ in millions)                          Table 20
----------------------------------------------------------------------------
                                                                            
As at July 31, 2013                                                         
                           Repo-Style                                       
                           Trans. (3)             Derivatives (4)           
                  ------------------- --------------------------------------
                               Net of                                       
                     Gross Collateral                                  Gross
                  ------------------- --------------------------------------
Country              Total      Total       Bank Corporate Sovereign   Total
------------------------------------- --------------------------------------
GIIPS                                                                       
Greece                   -          -          -         -         -       -
Ireland (5)            132          3         33         3         -      36
Italy                   79          -          3         -         -       3
Portugal                 -          -          -         -         -       -
Spain                    -          -          8         -         -       8
----------------------------------------------------------------------------
Total - GIIPS          211          3         44         3         -      47
----------------------------------------------------------------------------
Eurozone                                                                    
 (excluding GIIPS)                                                          
France               2,641          -        207         -         -     207
Germany                981          1         61         -         -      61
Netherlands          1,542          4         56         -         -      56
Other (7)               15          3         62         2         -      64
----------------------------------------------------------------------------
Total - Eurozone                                                            
 (excluding GIIPS)   5,179          8        386         2         -     388
----------------------------------------------------------------------------
Rest of Europe                                                              
Denmark                  2          -          -         -         -       -
Norway                 554          -         65         -         -      65
Russian Federation       -          -          -         -         -       -
Switzerland            352          9          6         -         3       9
United Kingdom       4,180         22        347        18        29     394
Other (7)              118          1          4         -         -       4
----------------------------------------------------------------------------
Total - Rest of                                                             
 Europe              5,206         32        422        18        32     472
----------------------------------------------------------------------------
Total - All of                                                              
 Europe             10,596         43        852        23        32     907
----------------------------------------------------------------------------
                                                                            
 
As at July 31, 2013                                       
                               Derivatives (4)            
                  ----------------------------------------
                                         Net of Collateral
                  ----------------------------------------
Country               Bank  Corporate  Sovereign     Total
----------------------------------------------------------
GIIPS                                                     
Greece                   -          -          -         -
Ireland (5)              -          3          -         3
Italy                    1          -          -         1
Portugal                 -          -          -         -
Spain                    3          -          -         3
----------------------------------------------------------
Total - GIIPS            4          3          -         7
----------------------------------------------------------
Eurozone                                                  
 (excluding GIIPS)                                        
France                  60          -          -        60
Germany                 51          -          -        51
Netherlands             17          -          -        17
Other (7)               10          2          -        12
----------------------------------------------------------
Total - Eurozone                                          
 (excluding GIIPS)     138          2          -       140
----------------------------------------------------------
Rest of Europe                                            
Denmark                  -          -          -         -
Norway                  65          -          -        65
Russian Federation       -          -          -         -
Switzerland              5          -          3         8
United Kingdom         173         18         29       220
Other (7)                4          -          -         4
----------------------------------------------------------
Total - Rest of                                           
 Europe                247         18         32       297
----------------------------------------------------------
Total - All of                                            
 Europe                389         23         32       444
----------------------------------------------------------
                                                          
Refer to footnotes in Table 17.                        
                                                                            
                                                                            
----------------------------------------------------------------------------
Credit Default Swaps (CDS) by Country and Credit Quality                    
(Canadian $ in millions)                                            Table 21
----------------------------------------------------------------------------
                                                                            
As at July 31, 2013                                         
                                 Fair Value                 
                ------------------------------------------- 
                       Purchased           Written          
                ---------------- -----------------          
                   Inv. Non-Inv.    Inv.  Non-Inv.    Total 
Country           Grade    Grade   Grade     Grade Exposure 
-------------------------------- -------------------------- 
GIIPS                                                       
Greece                -        -       -         -        - 
Ireland (5)           1        -      (1)        -        - 
Italy                 4        -      (4)        -        - 
Portugal             11        -     (11)        -        - 
Spain                 3        -      (3)        -        - 
------------------------------------------------------------
Total - GIIPS        19        -     (19)        -        - 
------------------------------------------------------------
Eurozone                                                    
 (excluding                                                 
 GIIPS)                                                     
France               (2)       -       1         -       (1)
Germany              (2)       -       2         -        - 
Netherlands           -        -       -         -        - 
Other (7)            (1)       -       1         -        - 
------------------------------------------------------------
Total - Eurozone                                            
 (excluding                                                 
 GIIPS)              (5)       -       4         -       (1)
------------------------------------------------------------
Rest of Europe                                              
Denmark               -        -       -         -        - 
Norway                -        -       -         -        - 
Russian                                                     
 Federation           -        -       -         -        - 
Switzerland           2        -       1         -        3 
United Kingdom        2        -      (1)        -        1 
Other (7)             -        -      (2)        -       (2)
------------------------------------------------------------
Total - Rest of                                             
 Europe               4        -      (2)        -        2 
------------------------------------------------------------
Total - All of                                              
 Europe              18        -     (17)        -        1 
------------------------------------------------------------
                                                            
 
As at July 31, 2013                                                         
                                          Notional                          
                ------------------------------------------------------------
                               Purchased                   Written          
                ------------------------ --------------------------         
                   Inv. Non-Inv.              Inv. Non-Inv.           Total 
Country           Grade    Grade   Total     Grade    Grade  Total Exposure 
---------------------------------------- -----------------------------------
GIIPS                                                                       
Greece                -        -       -         -        -      -        - 
Ireland (5)         (24)       -     (24)       24        -     24        - 
Italy              (186)       -    (186)      186        -    186        - 
Portugal           (122)       -    (122)      122        -    122        - 
Spain              (130)       -    (130)      130        -    130        - 
----------------------------------------------------------------------------
Total - GIIPS      (462)       -    (462)      462        -    462        - 
----------------------------------------------------------------------------
Eurozone                                                                    
 (excluding                                                                 
 GIIPS)                                                                     
France             (164)       -    (164)      135        -    135      (29)
Germany            (345)       -    (345)      320        -    320      (25)
Netherlands         (75)       -     (75)       57       14     71       (4)
Other (7)          (128)       -    (128)      128        -    128        - 
----------------------------------------------------------------------------
Total - Eurozone                                                            
 (excluding                                                                 
 GIIPS)            (712)       -    (712)      640       14    654      (58)
----------------------------------------------------------------------------
Rest of Europe                                                              
Denmark              (1)       -      (1)        1        -      1        - 
Norway                -        -       -         -        -      -        - 
Russian                                                                     
 Federation          (4)       -      (4)        4        -      4        - 
Switzerland        (283)       -    (283)       60        -     60     (223)
United Kingdom     (293)       -    (293)      266       14    280      (13)
Other (7)          (346)       -    (346)      338        7    345       (1)
----------------------------------------------------------------------------
Total - Rest of                                                             
 Europe            (927)       -    (927)      669       21    690     (237)
----------------------------------------------------------------------------
Total - All of                                                              
 Europe          (2,101)       -  (2,101)    1,771       35  1,806     (295)
----------------------------------------------------------------------------
                                                                            
As at April 30, 2013                                        
                                 Fair Value                 
                --------------------------------------------
                       Purchased           Written          
                ---------------- -----------------          
                   Inv. Non-Inv.    Inv.  Non-Inv.    Total 
Country           Grade    Grade   Grade     Grade Exposure 
------------------------------------------------------------
Total - GIIPS        17        -     (18)        -       (1)
------------------------------------------------------------
Total - Eurozone                                            
 (excluding                                                 
 GIIPS)              (4)       -       4         -        - 
------------------------------------------------------------
Total - Rest of                                             
 Europe              (3) 
      -       -         -       (3)
------------------------------------------------------------
Total - All of                                              
 Europe              10        -     (14)        -       (4)
------------------------------------------------------------
 
As at April 30, 2013                                                        
                                          Notional                          
                ------------------------------------------------------------
                               Purchased                   Written          
                ------------------------ --------------------------         
                   Inv. Non-Inv.              Inv. Non-Inv.           Total 
Country           Grade    Grade   Total     Grade    Grade  Total Exposure 
----------------------------------------------------------------------------
Total - GIIPS      (488)       -    (488)      488        -    488        - 
----------------------------------------------------------------------------
Total - Eurozone                                                            
 (excluding                                                                 
 GIIPS)            (778)       -    (778)      708       13    721      (57)
----------------------------------------------------------------------------
Total - Rest of                                                             
 Europe            (981)     (10)   (991)      738       20    758     (233)
----------------------------------------------------------------------------
Total - All of                                                              
 Europe          (2,247)     (10) (2,257)    1,934       33  1,967     (290)
----------------------------------------------------------------------------
                                                            
                                                            
As at October 31, 2012                                      
                                 Fair Value                 
                --------------------------------------------
                       Purchased           Written          
                ---------------- -----------------          
                   Inv. Non-Inv.    Inv.  Non-Inv.    Total 
Country           Grade    Grade   Grade     Grade Exposure 
------------------------------------------------------------
Total - GIIPS        30        -     (31)        -       (1)
------------------------------------------------------------
Total - Eurozone                                            
 (excluding                                                 
 GIIPS)              (1)       -       1         -        - 
------------------------------------------------------------
Total - Rest of                                             
 Europe               2        -      (1)        -        1 
------------------------------------------------------------
Total - All of                                              
 Europe              31        -     (31)        -        - 
------------------------------------------------------------
 
                                                                            
                                                                            
As at October 31, 2012                                                      
                                          Notional                          
                ------------------------------------------------------------
                               Purchased                   Written          
                ------------------------ --------------------------         
                   Inv. Non-Inv.              Inv. Non-Inv.           Total 
Country           Grade    Grade   Total     Grade    Grade  Total Exposure 
----------------------------------------------------------------------------
Total - GIIPS      (517)       -    (517)      511        5    516       (1)
----------------------------------------------------------------------------
Total - Eurozone                                                            
 (excluding                                                                 
 GIIPS)          (1,041)       -  (1,041)      998       13  1,011      (30)
----------------------------------------------------------------------------
Total - Rest of                                                             
 Europe          (1,273)     (25) (1,298)    1,053       20  1,073     (225)
----------------------------------------------------------------------------
Total - All of                                                              
 Europe          (2,831)     (25) (2,856)    2,562       38  2,600     (256)
----------------------------------------------------------------------------
Refer to footnotes in Table 17.                                             
                                                                            
Notes:                                                                      
 

 
-     All purchased and written exposures are with bank counterparties.     
-     29% of purchased and 38% of written CDS exposure is subject to        
      complete restructuring trigger events (full restructuring). Under the 
      terms of these contracts, any restructuring event qualifies as a      
      credit event and any bond of maturity up to 30 years is deliverable   
      against the contract.                                                 
-     71% of purchased and 62% of written CDS exposure is subject to        
      modified-modified restructuring trigger events. Under the terms of    
      these contracts, restructuring agreements count as a credit event;    
      however, the deliverable obligation against the contract is limited to
      a maturity limit of 60 months for restructured obligations and 30     
      months for all other obligations.                                     
-     Table excludes $27 million of Itraxx CDS Index purchased protection.  
      The index is comprised equally of 25 constituent names in the         
      following regions: GIIPS (26%), Eurozone (excluding GIIPS) (48%) and  
      rest of Europe (26%).                                                 

 
Review of Operating Groups' Performance  


 
                                                                            
----------------------------------------------------------------------------
Operating Groups' Summary Income Statements and Statistics for              
Q3-2013                                                             Table 22
----------------------------------------------------------------------------
                                                                            
                                                        Q3-2013             
                                            --------------------------------
(Canadian $                                                                 
 in millions,                                                         Total 
 except as noted)                       P&C     PCG  BMO CM    Corp     BMO 
----------------------------------------------------------------------------
Net interest income (teb) (1)         1,718     146     354     (72)  2,146 
Non-interest revenue                    635     723     515      31   1,904 
----------------------------------------------------------------------------
Total revenue (teb) (1)               2,353     869     869     (41)  4,050 
Provision for credit losses             166      (1)      2     (90)     77 
Non-interest expense                  1,287     585     514     156   2,542 
----------------------------------------------------------------------------
Income before income taxes              900     285     353    (107)  1,431 
Income taxes (recovery) (teb) (1)       250      67      73     (96)    294 
-----------------------------------------------------------------------
-----
Reported net income Q3-2013             650     218     280     (11)  1,137 
Reported net income Q2-2013             585     141     275     (26)    975 
Reported net income Q3-2012             598     109     250      13     970 
============================================================================
Adjusted net income Q3-2013             665     225     281     (35)  1,136 
Adjusted net income Q2-2013             599     148     276     (26)    997 
Adjusted net income Q3-2012             617     114     250      32   1,013 
============================================================================
Other statistics (% except as noted)                                        
----------------------------------------------------------------------------
Return on equity                       18.1    29.3    19.0      nm    15.6 
Adjusted return on equity              18.5    30.3    19.1      nm    15.6 
Operating leverage                        -    20.7     1.0      nm     2.2 
Adjusted operating leverage            (0.4)   21.0     1.1      nm     0.9 
Efficiency ratio (teb)                 54.7    67.3    59.1      nm    62.8 
Adjusted efficiency ratio (teb)        53.8    66.2    59.0      nm    63.2 
Net interest margin on earning                                              
 assets (teb)                          2.94    2.94    0.69      nm    1.75 
Adjusted net interest margin on                                             
 earning assets (teb)                  2.94    2.94    0.69      nm    1.63 
Net economic profit ($ millions) (2)    282     147     115    (162)    382 
Average common equity ($ billions)     13.8     2.9     5.6     5.4    27.7 
Average earning assets ($ billions)   232.2    19.6   203.1    31.3   486.2 
Full-time equivalent staff           24,862   6,157   2,247  13,362  46,628 
============================================================================
 
                                                    YTD-2013                
                                    ----------------------------------------
(Canadian $                                                                 
 in millions,                                                         Total 
 except as noted)                       P&C     PCG  BMO CM    Corp     BMO 
----------------------------------------------------------------------------
Net interest income (teb) (1)         5,073     418     951      18   6,460 
Non-interest revenue                  1,857   1,995   1,672      91   5,615 
----------------------------------------------------------------------------
Total revenue (teb) (1)               6,930   2,413   2,623     109  12,075 
Provision for credit losses             535       2     (19)   (118)    400 
Non-interest expense                  3,798   1,740   1,532     630   7,700 
----------------------------------------------------------------------------
Income before income taxes            2,597     671   1,110    (403)  3,975 
Income taxes (recovery) (teb) (1)       722     149     245    (301)    815 
----------------------------------------------------------------------------
Reported net income Q3-2013           1,875     522     865    (102)  3,160 
Reported net income Q2-2013                                                 
Reported net income Q3-2012           1,773     360     707     267   3,107 
============================================================================
Adjusted net income Q3-2013           1,920     542     867    (155)  3,174 
Adjusted net income Q2-2013                                                 
Adjusted net income Q3-2012           1,829     376     707      55   2,967 
============================================================================
Other statistics (% except as noted)                                        
----------------------------------------------------------------------------
Return on equity                       18.0    24.2    19.9      nm    14.9 
Adjusted return on equity              18.4    25.2    19.9      nm    15.0 
Operating leverage                      0.3     8.8     3.7      nm    (1.2)
Adjusted operating leverage            (0.1)    9.1     3.8      nm    (0.2)
Efficiency ratio (teb)                 54.8    72.1    58.4      nm    63.8 
Adjusted efficiency ratio (teb)        53.9    71.0    58.3      nm    63.6 
Net interest margin on earning                                              
 assets (teb)                          3.00    2.90    0.63      nm    1.80 
Adjusted net interest margin on                                             
 earning assets (teb)                  3.00    2.90    0.63      nm    1.65 
Net economic profit ($ millions) (2)    799     314     390    (540)    963 
Average common equity ($ billions)     13.5     2.9     5.6     5.0    27.0 
Average earning assets ($ billions)   226.3    19.3   201.8    33.0   480.4 
Full-time equivalent staff                                                  
============================================================================
(1)   Operating group revenues, income taxes and net interest margin are    
      stated on a taxable equivalent basis (teb). The group teb adjustments 
      are offset in Corporate Services, and Total BMO revenue, income taxes 
      and net interest margin are stated on a GAAP basis.                   
(2)   Net economic profit is a non-GAAP measure. Please see the Non-GAAP    
      Measures section.                                                     
                                                                            
Adjusted results in this table are non-GAAP amounts or non-GAAP measures.   
Please see the Non-GAAP Measures section.                                   
                                                                            
Corp means Corporate Services, including Technology and Operations.         
nm - not meaningful                                                         

 
The following sections review the financial results of each of our
operating segments and operating groups for the third quarter of
2013. 
Periodically, certain business lines and units within the business
lines are transferred between client groups to more closely align
BMO's organizational structure with its strategic priorities. Results
for prior periods are restated to conform to the current
presentation.  
Corporate Services results reflect certain items in respect of the
acquired loan portfolio, including the recognition of a portion of
the credit mark that is reflected in net interest income over the
term of the purchased loans and provisions for credit losses on the
acquired portfolio. Integration and restructuring costs, run-off
structured credit activities and changes in the collective allowance
are also included in Corporate Services.  
Commencing in the first quarter of 2013, we changed the way in which
we evaluate our operating segments to reflect the provisions for
credit losses on an actual credit loss basis rather than on an
expected loss basis. Provisions for the purchased performing and
purchased credit impaired loan portfolios continue to be evaluated
and reported in Corporate Services.   
During the first quarter of 2013 we refined our methodology for the
allocation of certain revenues in Corporate Services by geographic
region. As a consequence, we have reallocated certain revenue of
prior periods from Canada to the United States in Corporate Services. 
BMO analyzes revenue at the consolidated level based on GAAP revenues
reflected in the consolidated financial statements rather than on a
taxable equivalent basis (teb), which is consistent with our Canadian
peer group. Like many banks, we continue to analyze revenue on a teb
basis at the operating group level. This basis includes an adjustment
that increases GAAP revenues and the GAAP provision for income taxes
by an amount that would raise revenues on certain tax-exempt items to
a level equivalent to amounts that would incur tax at the statutory
rate. The offset to the group teb adjustments is reflected in
Corporate Services revenues and income tax provisions. The teb
adjustments for the third quarter of 2013 totalled $120 million, up
from $71 million in the second quarter of 2013, and up from $66
million in the third quarter of 2012.  


 
                                                                            
----------------------------------------------------------------------------
Personal and Commercial Banking (P&C)                               Table 23
----------------------------------------------------------------------------
                                                                            
                                                                            
(Canadian $                                 % Increase           % Increase 
 in millions,                               (Decrease)           (Decrease) 
 except as noted)         Q3-2013  Q3-2012  vs Q3-2012  Q2-2013  vs Q2-2013 
-----------
-----------------------------------------------------------------
                                                                            
Net interest income (teb)   1,718    1,711           -    1,653           4 
Non-interest revenue          635      608           5      609           4 
----------------------------------------------------------------------------
Total revenue (teb)         2,353    2,319           2    2,262           4 
Provision for credit                                                        
 losses                       166      223         (25)     209         (21)
Non-interest expense        1,287    1,267           2    1,249           3 
----------------------------------------------------------------------------
Income before income                                                        
 taxes                        900      829           9      804          12 
Income taxes (teb)            250      231           9      219          13 
----------------------------------------------------------------------------
Reported net income           650      598           9      585          11 
============================================================================
Adjusted net income           665      617           8      599          11 
----------------------------------------------------------------------------
                                                                            
Return on equity (%)         18.1     18.4        (0.3)    17.1         1.0 
Adjusted return on equity                                                   
 (%)                         18.5     19.0        (0.5)    17.5         1.0 
Operating leverage (%)          -     (4.1)         nm     (0.6)         nm 
Adjusted operating                                                          
 leverage (%)                (0.4)    (3.2)         nm     (1.0)         nm 
Efficiency ratio (%)                                                        
 (teb)                       54.7     54.7           -     55.2        (0.5)
Adjusted efficiency ratio                                                   
 (%) (teb)                   53.8     53.5         0.3     54.3        (0.5)
Net interest margin on                                                      
 earning assets (%) (teb)    2.94     3.18       (0.24)    3.01       (0.07)
Average earning assets ($                                                   
 billions)                  232.2    213.9           9    225.4           3 
============================================================================
 
(Canadian $                                 % Increase 
 in millions,                               (Decrease) 
 except as noted)        YTD-2013 YTD-2012 vs YTD-2012 
-------------------------------------------------------
                                                       
Net interest income (teb)   5,073    5,137          (1)
Non-interest revenue        1,857    1,799           3 
-------------------------------------------------------
Total revenue (teb)         6,930    6,936           - 
Provision for credit                                   
 losses                       535      668         (20)
Non-interest expense        3,798    3,812           - 
-------------------------------------------------------
Income before income                                   
 taxes                      2,597    2,456           6 
Income taxes (teb)            722      683           6 
-------------------------------------------------------
Reported net income         1,875    1,773           6 
=======================================================
Adjusted net income         1,920    1,829           5 
-------------------------------------------------------
                                                       
Return on equity (%)         18.0     18.1        (0.1)
Adjusted return on equity                              
 (%)                         18.4     18.7        (0.3)
Operating leverage (%)        0.3     (4.5)         nm 
Adjusted operating                                     
 leverage (%)                (0.1)    (3.2)         nm 
Efficiency ratio (%)                                   
 (teb)                       54.8     55.0        (0.2)
Adjusted efficiency ratio                              
 (%) (teb)                   53.9     53.8         0.1 
Net interest margin on                                 
 earning assets (%) (teb)    3.00     3.26       (0.26)
Average earning assets ($                              
 billions)                  226.3    210.6           7 
=======================================================
Adjusted results in this table are non-GAAP amounts or 
non-GAAP measures. Please see the Non-GAAP Measures    
section.                                               
nm - not meaningful                                    

 
The Personal and Commercial Banking (P&C) operating group represents
the sum of our two retail and business banking operating segments,
Personal and Commercial Banking Canada (P&C Canada) and Personal and
Commercial Banking U.S. (P&C U.S.). These operating segments are
reviewed separately in the sections that follow.  


 
                                                                            
----------------------------------------------------------------------------
Personal and Commercial Banking Canada (P&C Canada)                 Table 24
----------------------------------------------------------------------------
                                                                            
(Canadian $                                 % Increase           % Increase 
 in millions,                               (Decrease)           (Decrease) 
 except as noted)         Q3-2013  Q3-2012 vs. Q3-2012  Q2-2013 vs. Q2-2013 
----------------------------------------------------------------------------
Net interest income (teb)   1,125    1,093           3    1,059           6 
Non-interest revenue          495      469           6      473           5 
----------------------------------------------------------------------------
Total revenue (teb)         1,620    1,562           4    1,532           6 
Provision for credit                                                        
 losses                       126      147         (14)     154         (19)
Non-interest expense          821      790           4      794           3 
----------------------------------------------------------------------------
Income before income                                                        
 taxes                        673      625           8      584          16 
Provision for income                                                        
 taxes (teb)                  176      166           8      154          16 
----------------------------------------------------------------------------
Reported net income           497      459           9      430          16 
============================================================================
Adjusted net income           500      462           8      431          16 
----------------------------------------------------------------------------
                                                                            
Personal revenue            1,011      972           4      964           5 
Commercial revenue            609      590           3      568           7 
Operating leverage (%)        0.1     (0.2)         nm     (2.5)         nm 
Efficiency ratio (%)                                                        
 (teb)                       50.6     50.7        (0.1)    51.9        (1.3)
Net interest margin on                                                      
 earning assets (%) (teb)    2.58     2.76       (0.18)    2.59       (0.01)
Average earning assets ($                                                   
 billions)                  172.9    157.7          10    167.7           3 
============================================================================
 
(Canadian $                                 % Increase 
 in millions,                               (Decrease) 
 except as noted)        YTD-2013 YTD-2012 vs YTD-2012 
-------------------------------------------------------
Net interest income (teb)   3,286    3,277           - 
Non-interest revenue        1,429    1,377           4 
-------------------------------------------------------
Total revenue (teb)         4,715    4,654           1 
Provision for credit                                   
 losses                       408      469         (13)
Non-interest expense        2,428    2,373           2 
-------------------------------------------------------
Income before income                                   
 taxes                      1,879    1,812           4 
Provision for income                                   
 taxes (teb)                  494      479           3 
-------------------------------------------------------
Reported net income         1,385    1,333           4 
=======================================================
Adjusted net income         1,392    1,341           4 
-------------------------------------------------------
                                                       
Personal revenue            2,954    2,917           1 
Commercial revenue          1,761    1,737           1 
Operating leverage (%)       (1.0)    (1.2)         nm 
Efficiency ratio (%)                                   
 (teb)                       51.5     51.0         0.5 
Net interest margin on                                 
 earning assets (%) (teb)    2.61     2.83       (0.22)
Average earning assets ($                              
 billions)                  168.4    154.5           9 
=======================================================
Adjusted results in this table are non-GAAP amounts or 
non-GAAP measures. Please see the Non-GAAP Measures    
section.                                               
nm - not meaningful                                    

 
Q3 2013 vs Q3 2012 
P&C Canada net income of $497 million increased $38 million or 9%
from a year ago. Revenue was up $58 million or 4% from the prior year
to $1,620 million, driven by higher balance and fee volumes across
most products, partially offset by the impact of lower net interest
margin. Provisions for credit losses fell $21 million or 14% mainly
due to lower provisions in the consumer portfolio.  
Non-interest expense increased $31 million or 4% due to continued
investment in the business, including increases in front-line roles.  
In the personal banking segment, revenue increased $39 million or 4%
year over year due to the effects of higher balances and fee volumes
across most products, partially offset by the impact of lower net
interest margin. Total personal lending balances (including
mortgages, Homeowner ReadiLine and other consumer lending products,
but excluding credit cards) increased 10% year over year. Total
personal lending (excluding credit cards) market share was up 19
basis points and would have increased even more except for the impact
from two recent acquisitions by competitors.   
Personal deposit balances increased 4% year over year mainly due to
increased retail operating deposits.   
In the commercial banking segment, revenue increased $19 million or
3% due to the effects of higher balance and fee volumes across most
products, partially offset by the impact of lower net interest
margin.  
Commercial loan balance growth was good with 12% year over year
growth. Commercial deposit balances increased 15% year over year,
marking the fourth straight quarter of increasing growth.  
Net interest margin decreased 18 basis points to 2.58% due to lower
deposit spreads in the low-rate environment, and changes in mix
including loan growth exceeding deposit growth.  
Average current loans and acceptances increased $16 billion or 10%
from a year ago and deposits increased $8 billion or 8%.  
Q3 2013 vs Q2 2013 
Net income increased $67 million or 16% from last quarter. Revenue
increased $88 million or 6% due to the effects of higher balance and
fee volumes across most products and three more days in the current
quarter. Net interest margin was relatively stable, down 1 basis
point due to mix with loan and deposit spreads essentially unchanged. 
Personal revenue increased $47 million or 5% due to higher balance
and fee volumes across most products and three more days, partially
offset by lower net interest margin. Personal lending market share
was up 19 basis points.  
Commercial revenue increased $41 million or 7% due to the effects of
higher balance and fee volumes across most products and three more
days.  
Commercial lending market share for small and medium-sized loans was
consistent with last quarter, while commercial deposits market share
increased 50 basis points.   
Provisions for credit losses fell $28 million with decreases in both
the consumer and commercial portfolios.  
Non-interest expense of $821 million increased $27 million or 3% due
to three more days and continued investment in the business,
including higher employee-related costs.   
Average current loans and acceptances increased $5 billion or 3% from
last quarter, while deposits increased $3 billion or 3%. 
Q3 YTD 2013 vs Q3 YTD 2012 
Net income increased $52 million or 4% year to date. Revenue
increased $61 million or 1% due to the effects of higher balance and
fee volumes across most products, partially offset by the impact of
lower net interest margin.   
Provisions for credit losses fell $61 million or 13%, with decreases
mainly in the consumer portfolio.  
Non-interest expense increased $55 million or 2% primarily due to
continued investment in the business, including higher
employee-related costs with increases in front-line roles.   
Average current loans and acceptances increased $15 billion or 10%,
while deposits increased $7 billion or 6%.  


 
                                                                            
----------------------------------------------------------------------------
Personal and Commercial Banking U.S. (P&C U.S.)                     Table 25
----------------------------------------------------------------------------
                                                                            
(Canadian $                                % Increase           % Increase  
 in millions,                               (Decrease)           (Decrease) 
 except as noted)         Q3-2013  Q3-2012  vs Q3-2012  Q2-2013  vs Q2-2013 
----------------------------------------------------------------------------
Net interest income (teb)     593      618          (4)     594           - 
Non-interest revenue          140      139           -      136           2 
----------------------------------------------------------------------------
Total revenue (teb)           733      757          (3)     730           - 
Provision for credit                                                        
 losses                        40       76         (47)      55         (26)
Non-interest expense          466      477          (2)     455           3 
----------------------------------------------------------------------------
Income before income                                                        
 taxes                        227      204          10      220           2 
Provision for income                                                        
 taxes (teb)                   74       65          11       65          11 
----------------------------------------------------------------------------
Reported net income           153      139          10      155          (1)
============================================================================
Adjusted net income           165      155           6      168          (1)
----------------------------------------------------------------------------
                                                                            
Operating leverage (%)       (1.2)    (8.3)         nm      2.2          nm 
Adjusted operating                                                          
 leverage (%)                (2.1)    (6.6)         nm      1.3          nm 
Efficiency ratio (%)                                                        
 (teb)                       63.7     62.9         0.8     62.2         1.5 
Adjusted efficiency ratio                                                   
 (%) (teb)                   61.1     59.8         1.3     59.6         1.5 
Net interest margin on                                                      
 earning assets (%) (teb)    4.01     4.42       (0.41)    4.17       (0.16)
Average earning assets ($                                                   
 billions)                   59.3     56.2           6     57.7           3 
============================================================================
                                                                            
U.S. Select Financial                                                       
 Data (US$ in millions,                                                     
 except as noted)                                                           
Net interest income (teb)     571      607          (6)     583          (2)
Non-interest revenue          134      137          (2)     135           - 
----------------------------------------------------------------------------
Total revenue (teb)           705      744          (5)     718          (2)
Non-interest expense          448      468          (4)     447           1 
Reported net income           147      137           7      152          (3)
Adjusted net income           160      153           4      163          (3)
Average earning assets                                                      
 (US$ billions)              57.1     55.2           3     56.7           1 
============================================================================
 
(Canadian $                                 % Increase 
 in millions,                               (Decrease) 
 except as noted)        YTD-2013 YTD-2012 vs YTD-2012 
-------------------------------------------------------
Net interest income (teb)   1,787    1,860          (4)
Non-interest revenue          428      422           1 
-------------------------------------------------------
Total revenue (teb)         2,215    2,282          (3)
Provision for credit                                   
 losses                       127      199         (36)
Non-interest expense        1,370    1,439          (5)
-------------------------------------------------------
Income before income                                   
 taxes                        718      644          11 
Provision for income                                   
 taxes (teb)                  228      204          11 
-------------------------------------------------------
Reported net income           490      440          11 
=======================================================
Adjusted net income           528      488           8 
-------------------------------------------------------
                                                       
Operating leverage (%)        1.8     (1.3)         nm 
Adjusted operating                                     
 leverage (%)                 1.0      2.4          nm 
Efficiency ratio (%)                                   
 (teb)                       61.9     63.0        (1.1)
Adjusted efficiency ratio                              
 (%) (teb)                   59.3     59.9        (0.6)
Net interest margin on                                 
 earning assets (%) (teb)    4.13     4.43       (0.30)
Average earning assets ($                              
 billions)                   57.9     56.1           3 
=======================================================
                                                       
U.S. Select Financial                                  
 Data (US$ in millions,                                
 except as noted)                                      
Net interest income (teb)   1,757    1,846          (5)
Non-interest revenue          421      419           - 
-------------------------------------------------------
Total revenue (teb)         2,178    2,265          (4)
Non-interest expense        1,346    1,428          (6)
Reported net income           482      437          10 
Adjusted net income           520      485           7 
Average earning assets                                 
 (US$ billions)              56.9     55.7           2 
=======================================================
Adjusted results in this table are non-GAAP amounts or 
non-GAAP measures. Please see the Non-GAAP Measures    
section.                                               
nm - not meaningful                                    

 
Q3 2013 vs Q3 2012 (in U.S. $) 
Net income of $147 million increased $10 million or 7% from $137
million in the third quarter a year ago. Adjusted net income was $160
million, an increase of $7 million or 4% from a year ago due to lower
provisions for credit losses and reduced expenses.   
Revenue of $705 million decreased $39 million or 5% from a year ago,
as the effect of loan growth was more than offset by the effects of
lower net interest margin, reductions in certain loan portfolios and
lower deposit fees.   
Net interest margin decreased by 41 basis points primarily due to
lower deposit spreads given the low-rate environment and loan spreads
due to competitive pricing, and growth in lower spread assets.  
Provisions for credit losses were $39 million compared with $74
million a year ago.  
Non-interest expense of $448 million decreased $20 million or 4%.
Adjusted non-interest expense of $430 million was $14 million or 3%
lower, primarily reflecting synergy-related savings, partially offset
by the effects of selective investments in the business. 
Average current loans and acceptances increased $1.2 billion year
over year to $51 billion. The core commercial and industrial loan
portfolio continues to grow, increasing by $3.9 billion from a year
ago to $23.0 billion. As expected, there were decreases in certain
loan portfolios and in our personal loan balances, due in part to the
effects of our continued practice of selling most mortgage
originations in the secondary market and active loan portfolio
management.  
Average deposits were essentially unchanged year over year at $59
billion, as growth in our commercial business and in our personal
chequing and savings accounts was largely offset by a planned
reduction in higher cost personal money market and time deposit
accounts.  
Q3 2013 vs Q2 2013 (in U.S. $)  
Net income declined $5 million or 3% and adjusted net income
decreased $3 million or 3% from the prior quarter.  
Revenue decreased $13 million or 2% primarily due to a decline in net
interest margin.   
The decrease in net interest margin of 16 basis points was unusually
high, primarily due to lower deposit spreads given the low-rate
environment and lower loan spreads due to competitive loan pricing,
including the repricing of one commercial portfolio, and growth in
lower spread assets.  
Provisions for credit losses declined $14 million primarily due to
lower provisions in the commercial portfolio, driven by lower new
reservations and higher recoveries from previously written-off
amounts.  
Non-interest expense and adjusted non-interest expense both increased
$1 million or 1% from the prior quarter.  
Average current loans and acceptances increased by $0.5 billion from
the prior quarter, our third consecutive quarter of positive growth.
Core commercial and industrial loans increased $0.9 billion or 4%
from the previous quarter.  
Average deposits decreased modestly by $0.5 billion from the prior
quarter due to a planned reduction in higher cost deposits and normal
fluctuations in our commercial clients' cash management activities.  
Q3 YTD 2013 vs Q3 YTD 2012 (in U.S. $) 
Net income of $482 million increased $45 million or 10%. Adjusted net
income of $520 million increased $35 million or 7% due to reduced
expenses and lower provisions for credit losses.  
Revenue of $2,178 million decreased $87 million or 4%. The benefits
of increased commercial loans and fees and higher gains on the sales
of newly originated mortgages were more than offset by the effects of
lower net interest margin and reductions in deposit fees and
securities gains.  
Net interest margin decreased by 30 basis points.  
Provisions for credit losses of $125 million decreased $72 million or
37% year over year. 
Non-interest expense of $1,346 million decreased $82 million or 6%.
Adjusted non-interest expense of $1,290 million decreased $67 million
or 5%. The decrease was primarily due to synergy-related savings in
the current year, partially offset by the effects of selective
investments in the business.  
Average current loans and acceptances of $51 billion and deposits of
$59 billion increased slightly from the prior year.  
Adjusted results in the foregoing P&C U.S. sections are non-GAAP
amounts or non-GAAP measures. Please see the Non-GAAP Measures
section. 


 
                                                                            
----------------------------------------------------------------------------
Private Client Group (PCG)                                          Table 26
----------------------------------------------------------------------------
                                                                            
(Canadian $                                % Increase           % Increase  
 in millions,                               (Decrease)           (Decrease) 
 except as noted)         Q3-2013  Q3-2012  vs Q3-2012  Q2-2013  vs Q2-2013 
----------------------------------------------------------------------------
Net interest income (teb)     146      133          10      135           8 
Non-interest revenue          723      546          32      630          15 
----------------------------------------------------------------------------
Total revenue (teb)           869      679          28      765          14 
Provision for credit                                                        
 losses                        (1)       5       (+100)       1       (+100)
Non-interest expense          585      546           7      586           - 
----------------------------------------------------------------------------
Income before income                                                        
 taxes                        285      128        +100      178          60 
Provision for income                                                        
 taxes (teb)                   67       19        +100       37          79 
----------------------------------------------------------------------------
Reported net income           218      109         100      141          54 
============================================================================
Adjusted net income           225      114          97      148          52 
----------------------------------------------------------------------------
                                                                            
Financial Measures and                                                      
 Ratios (%)                                                                 
Return on equity (%)         29.3     19.7         9.6     19.9         9.4 
Adjusted return on equity                                                   
 (%)                         30.3     20.7         9.6     20.9         9.4 
Operating leverage (%)       20.7     (3.7)         nm     (3.0)         nm 
Adjusted operating                                                          
 leverage                    21.0     (2.8)         nm     (2.8)         nm 
Efficiency ratio (%)                                                        
 (teb)                       67.3     80.3       (13.0)    76.6        (9.3)
Adjusted efficiency ratio                                                   
 (%) (teb)                   66.2     79.2       (13.0)    75.4        (9.2)
Net interest margin on                                                      
 earning assets (%) (teb)    2.94     2.91        0.03     2.86        0.08 
Average earning assets ($                                                   
 billions)                   19.6     18.2           8     19.4           1 
============================================================================
                                                                            
U.S. Select Financial                                                       
 Data (US$ in millions,                                                     
 except as noted)                                                           
Total revenue (teb)           178      172           4      175           2 
Non-interest expense          142      136           5      144          (1)
Reported net income            26       22          14       19          27 
Adjusted net income            31       26          18       25          21 
Average earning assets ($                                                   
 billions)                    2.7      2.9          (8)     2.6           3 
----------------------------------------------------------------------------
 
                                            % Increase 
(Canadian $                                 (Decrease) 
 in millions,                                  vs YTD- 
 except as noted)        YTD-2013 YTD-2012        2012 
-------------------------------------------------------
Net interest income (teb)     418      428          (2)
Non-interest revenue        1,995    1,692          18 
-------------------------------------------------------
Total revenue (teb)         2,413    2,120          14 
Provision for credit                                   
 losses                         2       11         (85)
Non-interest expense        1,740    1,657           5 
-------------------------------------------------------
Income before income                                   
 taxes                        671      452          49 
Provision for income                                   
 taxes (teb)                  149       92          64 
-------------------------------------------------------
Reported net income           522      360          45 
=======================================================
Adjusted net income           542      376          44 
-------------------------------------------------------
                                                       
Financial Measures and                                 
 Ratios (%)                                            
Return on equity (%)         24.2     22.3         1.9 
Adjusted return on equity                              
 (%)                         25.2     23.2         2.0 
Operating leverage (%)        8.8     (4.0)         nm 
Adjusted operating                                     
 leverage                     9.1     (3.0)         nm 
Efficiency ratio (%)                                   
 (teb)                       72.1     78.2        (6.1)
Adjusted efficiency ratio                              
 (%) (teb)                   71.0     77.1        (6.1)
Net interest margin on                                 
 earning assets (%) (teb)    2.90     3.24       (0.34)
Average earning assets ($                              
 billions)                   19.3     17.6           9 
=======================================================
                                                       
U.S. Select Financial                                  
 Data (US$ in millions,                                
 except as noted)                                      
Total revenue (teb)           525      529          (1)
Non-interest expense          429      411           4 
Reported net income            64       71         (11)
Adjusted net income            80       83          (4)
Average earning assets ($                              
 billions)                    2.6      2.9         (10)
-------------------------------------------------------
Adjusted results in this table are non-GAAP amounts or 
non-GAAP measures. Please see the Non-GAAP Measures    
section.                                               
nm - not meaningful                                    

 
Q3 2013 vs Q3 2012 
PCG produced strong results for the quarter. Net income of $218
million doubled from a year ago. Adjusted net income of $225 million
increased $111 million or 97% from a year ago. Adjusted net income in
PCG traditional wealth businesses was a record $131 million, up $35
million or 37% from a year ago. Results reflect growth in client
assets, increased transaction volumes and a continued focus on
productivity. Adjusted net income in Insurance was $94 million, up
$76 million from a year ago. The increase was due to a $42 million
after-tax benefit from increases in long-term interest rates in the
current quarter relative to a $45 million after-tax charge a year
ago, partially offset by benefits from changes in our investment
portfolio to improve asset-liability management in the prior year.
The underlying Insurance business continues to perform well.  
Revenue was $869 million, up $190 million or 28% from a year ago.
Revenue in PCG traditional wealth businesses was $727 million, up 12%
from a year ago due to growth in client assets, increased transaction
volumes and the benefit of acquisitions. Insurance revenue was $142
million, up $110 million due to the factors mentioned above. 
Non-interest expense was $585 million, up $39 million or 7% from a
year ago. Adjusted non-interest expense was $576 million, up $38
million or 7% due to higher revenue-based costs, in line with revenue
growth, and costs associated with recent acquisitions. Growth in
expenses was offset in part by benefits from a continued focus on
productivity.  
Assets under management and administration grew by $63 billion or 13%
from a year ago to $527 billion, with assets under management up 11%
year over year, driven mainly by growth in new client assets coupled
with market appreciation.  
Q3 2013 vs Q2 2013  
Net income was up $77 million or 54% and adjusted net income was up
$77 million or 52% from the second quarter. Adjusted net income in
PCG traditional wealth businesses was up $17 million or 16%. Adjusted
net income in Insurance more than doubled, with an increase of $60
million, from the second quarter. 
Revenue increased $104 million or 14%. Revenue in PCG traditional
wealth businesses increased $25 million or 4% due to growth across
most businesses. Insurance revenue more than doubled due to
favourable movements in long-term interest rates relative to the
second quarter and continued growth in both the creditor and life
insurance businesses, partially offset by benefits from changes in
our investment portfolio to improve asset-liability management in the
second quarter. 
Non-interest and adjusted non-interest expense were consistent with
the second quarter as growth in revenue-based costs was offset by
benefits from a continued focus on productivity.  
Assets under management and administration grew by $5 billion or 1%
due to the stronger U.S. dollar and growth in new client assets.  
Q3 YTD 2013 vs Q3 YTD 2012  
Net income was $522 million, up $162 million or 45% from a year ago.
Adjusted net income was $542 million, up $166 million or 44% from a
year ago. Adjusted net income in PCG traditional wealth businesses
was $350 million, an increase of $56 million or 19%. Adjusted net
income in Insurance of $192 million more than doubled, with an
increase of $110 million from a year ago.  
Revenue was $2,413 million, up $293 million or 14% from a year ago.
Revenue in PCG traditional wealth businesses was $2,108 million, up
$143 million or 7% due to growth across most businesses. Prior year
results included higher than usual revenue from a strategic
investment. Insurance revenue was $305 million, up $150 million or
97% due to favourable movements in long-term interest rates relative
to a year ago, higher benefits from changes in our investment
portfolio to improve asset-liability management and continued growth
in both the creditor and life insurance businesses.   
Non-interest expense was $1,740 million, up $83 million or 5% from a
year ago. Adjusted non-interest expense was $1,713 million, up $78
million or 5%. The increase was due to higher revenue-based costs, in
line with revenue growth, and costs of recent acquisitions, offset in
part by benefits from a continued focus on productivity. 
Adjusted results in the foregoing PCG sections are non-GAAP amounts
or non-GAAP measures. Please see the Non-GAAP Measures section. 


 
                                                                            
----------------------------------------------------------------------------
BMO Capital Markets                                                 Table 27
----------------------------------------------------------------------------
                                                                            
(Canadian $                                % Increase           % Increase  
 in millions,                               (Decrease)           (Decrease) 
 except as noted)         Q3-2013  Q3-2012  vs Q3-2012  Q2-2013  vs Q2-2013 
----------------------------------------------------------------------------
Net interest income (teb)     354      319          11      299          19 
Non-interest revenue          515      489           5      551          (6)
----------------------------------------------------------------------------
Total revenue (teb)           869      808           8      850           2 
Provision for credit                                                        
 losses                         2        -        +100       (6)       +100 
Non-interest expense          514      482           7      503           2 
----------------------------------------------------------------------------
Income before income                                                        
 taxes                        353      326           9      353           - 
Provision for income                                                        
 taxes (teb)                   73       76          (3)      78          (3)
----------------------------------------------------------------------------
Reported net income           280      250          12      275           2 
============================================================================
Adjusted net income           281      250          13      276           2 
----------------------------------------------------------------------------
                                                                            
Trading Products revenue      569      492          16      550           4 
Investment and Corporate                                                    
 Banking revenue              300      316          (5)     300           - 
Return on equity (%)         19.0     20.9        (1.9)    19.4        (0.4)
Operating leverage (%)        1.0     (8.5)         nm      0.1          nm 
Efficiency ratio (%)                                                        
 (teb)                       59.1     59.6        (0.5)    59.3        (0.2)
Net interest margin on                                                      
 earning assets (%) (teb)    0.69     0.63        0.06     0.61        0.08 
Average earning assets ($                                                   
 billions)                  203.1    200.7           1    201.6           1 
----------------------------------------------------------------------------
                                                                            
U.S. Select Financial                                                       
 Data (US$ in millions,                                                     
 except as noted)                                                           
Total revenue (teb)           245      273         (10)     266          (7)
Non-interest expense          212      202           5      211           1 
Reported net income            25       51         (51)      46         (47)
Adjusted net income            26       51         (50)      47         (46)
Average earning assets                                                      
 (US$ billions)              80.5     75.8           6     81.4          (1)
----------------------------------------------------------------------------
 
                                            % Increase 
(Canadian $                                 (Decrease) 
 in millions,                                  vs YTD- 
 except as noted)        YTD-2013 YTD-2012        2012 
-------------------------------------------------------
Net interest income (teb)     951      920           3 
Non-interest revenue        1,672    1,455          15 
-------------------------------------------------------
Total revenue (teb)         2,623    2,375          10 
Provision for credit                                   
 losses                       (19)      10       (+100)
Non-interest expense        1,532    1,435           7 
-------------------------------------------------------
Income before income                                   
 taxes                      1,110      930          19 
Provision for income                                   
 taxes (teb)                  245      223          10 
-------------------------------------------------------
Reported net income           865      707          22 
=======================================================
Adjusted net income           867      707          23 
-------------------------------------------------------
                                                       
Trading Products revenue    1,660    1,488          12 
Investment and Corporate                               
 Banking revenue              963      887           9 
Return on equity (%)         19.9     19.9           - 
Operating leverage (%)        3.7    (11.2)         nm 
Efficiency ratio (%)                                   
 (teb)                       58.4     60.4        (2.0)
Net interest margin on                                 
 earning assets (%) (teb)    0.63     0.64       (0.01)
Average earning assets ($                              
 billions)                  201.8    193.2           4 
-------------------------------------------------------
                                                       
U.S. Select Financial                                  
 Data (US$ in millions,                                
 except as noted)                                      
Total revenue (teb)           801      763           5 
Non-interest expense          635      607           5 
Reported net income           155      116          34 
Adjusted net income           157      116          35 
Average earning assets                                 
 (US$ billions)              78.6     72.0           9 
-------------------------------------------------------
Adjusted results in this table are non-GAAP amounts or 
non-GAAP measures. Please see the Non-GAAP Measures    
section.                                               
nm - not meaningful                                    

 
Q3 2013 vs Q3 2012 
Net income for the quarter increased $30 million or 12% from the
prior year to $280 million, driven by good performance across our
diversified businesses. ROE was 19.0% compared with 20.9% a year ago. 
Revenue increased $61 million or 8% to $869 million. Increases in
trading revenue and equity underwriting more than offset a decline in
mergers and acquisitions and in interest-rate-sensitive businesses.
The stronger U.S. dollar increased revenues by $7 million relative to
a year ago.  
Non-interest expense increased $32 million or 7%, primarily due to
increased employee costs. The stronger U.S. dollar increased expenses
by $4 million relative to a year ago. 
Q3 2013 vs Q2 2013 
Net income increased $5 million or 2% from the previous quarter.
Revenue increased $19 million or 2%, driven by strong client-driven
trading performance and better equity and debt underwriting, which
more than offset a reduction in merger and acquisition revenues and
lower investment securities gains. The stronger U.S. dollar increased
revenue by $7 million relative to the previous quarter.  
Non-interest expense increased $11 million or 2% from the previous
quarter, primarily driven by higher employee costs. The stronger U.S.
dollar increased expenses $4 million relative to the previous
quarter. 
Q3 YTD 2013 vs Q3 YTD 2012 
Net income increased $158 million or 22% from the previous year to
$865 million. Revenue was $248 million or 10% higher. Increases in
both net income and revenue were driven by higher trading revenue and
investment banking fees. The stronger U.S. dollar increased revenue
by $10 million relative to the prior year.  
Non-interest expense was $97 million or 7% higher than in the prior
year, primarily due to increased employee costs, in line with better
revenue performance, and higher technology and support costs. The
stronger U.S. dollar increased expenses by $5 million relative to the
prior year. 


 
                                                                            
----------------------------------------------------------------------------
Corporate Services, Including Technology and Operations             Table 28
----------------------------------------------------------------------------
                                                                            
(Canadian $                                % Increase            % Increase 
 in millions,                               (Decrease)           (Decrease) 
 except as noted)         Q3-2013  Q3-2012  vs Q3-2012  Q2-2013  vs Q2-2013 
----------------------------------------------------------------------------
Net interest income                                                         
 before group teb offset       48      128         (62)      82         (41)
Group teb offset             (120)     (66)        (80)     (71)        (69)
----------------------------------------------------------------------------
Net interest income (teb)     (72)      62       (+100)      11       (+100)
Non-interest revenue           31       10        +100       56         (49)
----------------------------------------------------------------------------
Total revenue (teb)           (41)      72       (+100)      67       (+100)
Provision for (recovery                                                     
 of) credit losses            (90)       9       (+100)     (59)        (53)
Non-interest expense          156      189         (18)     230         (32)
----------------------------------------------------------------------------
Profit (loss) before                                                        
 income taxes                (107)    (126)         15     (104)         (5)
Provision for (recovery                                                     
 of) income taxes (teb)       (96)    (139)         31      (78)        (24)
----------------------------------------------------------------------------
Reported net income                                                         
 (loss)                       (11)      13       (+100)     (26)         53 
----------------------------------------------------------------------------
Adjusted Results                                                            
Adjusted total revenue                                                      
 (teb)                       (199)    (129)        (54)    (118)        (72)
Adjusted recovery of                                                        
 credit losses               (154)    (112)         39      (94)         63 
Adjusted non-interest                                                       
 expense                      104       80          29       95           8 
Adjusted net income                                                         
 (loss)                       (35)      32       (+100)     (26)        (40)
----------------------------------------------------------------------------
Corporate Services                                                          
 Provision for (Recovery                                                    
 of) Credit Losses                                                          
Impaired real estate loan                                                   
 portfolio                    (14)       6       (+100)      13       (+100)
Purchased credit impaired                                                   
 loans                       (140)    (118)         19     (107)         31 
----------------------------------------------------------------------------
Recovery of credit                                                          
 losses, adjusted basis      (154)    (112)         39      (94)         63 
Collective provision           20        8        +100      (30)       +100 
Purchased performing                                                        
 loans                         44      113         (61)      65         (32)
----------------------------------------------------------------------------
Provision for (recovery                                                     
 of) credit losses,                                                         
 reported basis               (90)       9       (+100)     (59)        (53)
----------------------------------------------------------------------------
Average loans and                                                           
 acceptances                  961    1,796         (46)   1,068         (10)
Period-end loans and                                                        
 acceptances                  695    1,560         (55)     995         (30)
----------------------------------------------------------------------------
                                                                            
U.S. Select Financial                                                       
 Data (US$ in millions)                                                     
Total revenue (teb)            71      127         (45)      67           2 
Provision for (recovery                                                     
 of) credit losses           (106)      45       (+100)     (79)        (34)
Non-interest expense           85      118         (29)      90          (8)
Reported net income                                                         
 (loss)                        62        4        +100       39          72 
Adjusted total revenue                                                      
 (teb)                        (78)     (81)          2     (106)         25 
Adjusted recovery of                                                        
 credit losses               (148)    (108)         36      (93)         58 
Adjusted non-interest                                                       
 expense                       37       15        +100       31          14 
Adjusted net income                                                         
 (loss)                        26       34         (21)     (23)       +100 
============================================================================
 
(Canadian $                                 % Increase 
 in millions,                               (Decrease) 
 except as noted)        YTD-2013 YTD-2012 vs YTD-2012 
-------------------------------------------------------
Net interest income                                    
 before group teb offset      273      352         (23)
Group teb offset             (255)    (174)        (46)
-------------------------------------------------------
Net interest income (teb)      18      178         (90)
Non-interest revenue           91      345         (74)
-------------------------------------------------------
Total revenue (teb)           109      523         (79)
Provision for (recovery                                
 of) credit losses           (118)    (116)         (2)
Non-interest expense          630      633           - 
-------------------------------------------------------
Profit (loss) before                                   
 income taxes                (403)       6       (+100)
Provision for (recovery                                
 of) income taxes (teb)      (301)    (261)        (16)
-------------------------------------------------------
Reported net income                                    
 (loss)                      (102)     267       (+100)
-------------------------------------------------------
Adjusted Results                                       
Adjusted total revenue                                 
 (teb)                       (454)    (284)        (61)
Adjusted recovery of                                   
 credit losses               (299)    (331)         (9)
Adjusted non-interest                                  
 expense                      348      273          28 
Adjusted net income                                    
 (loss)                      (155)      55       (+100)
-------------------------------------------------------
Corporate Services                                     
 Provision for (Recovery                               
 of) Credit Losses                                     
Impaired real estate loan                              
 portfolio                      7       46         (85)
Purchased credit impaired                              
 loans                       (306)    (377)        (19)
-------------------------------------------------------
Recovery of credit                                     
 losses, adjusted basis      (299)    (331)         (9)
Collective provision          (10)      27       (+100)
Purchased performing                                   
 loans                        191      188           2 
-------------------------------------------------------
Provision for (recovery                                
 of) credit losses,                                    
 reported basis              (118)    (116)         (2)
-------------------------------------------------------
Average loans and                                      
 acceptances                1,073    1,999         (46)
Period-end loans and                                   
 acceptances                  695    1,560         (55)
-------------------------------------------------------
                                                       
U.S. Select Financial                                  
 Data (US$ in millions)                                
Total revenue (teb)           254      434         (42)
Provision for (recovery                                
 of) credit losses           (161)     (99)        (62)
Non-interest expense          314      342          (8)
Reported net income                                    
 (loss)                        90      181         (50)
Adjusted total revenue                                 
 (teb)                       (280)    (159)        (78)
Adjusted recovery of                                   
 credit losses               (296)    (325)         (9)
Adjusted non-interest                                  
 expense                      115       63          80 
Adjusted net income                                    
 (loss)                       (33)     126       (+100)
=======================================================
Adjusted results in this table are non-GAAP amounts or 
non-GAAP measures. Please see the Non-GAAP Measures    
section.                                               
nm - not meaningful                                    

 
Corporate Services 
Corporate Services consists of Corporate Units and Technology and
Operations.  
Corpo
rate Units provide enterprise-wide expertise and governance
support in a variety of areas, including strategic planning, risk
management, finance, legal and compliance, marketing, communications
and human resources.  
Technology and Operations (T&O) manages, maintains and provides
governance over information technology, operations services, real
estate and sourcing for BMO Financial Group.  
The costs of Corporate Units and T&O services are largely transferred
to the three client operating groups (P&C, PCG and BMO Capital
Markets), and only relatively minor amounts are retained in Corporate
Services results. As such, Corporate Services adjusted operating
results largely reflect the impact of certain asset-liability
management activities, the elimination of taxable equivalent
adjustments, the results from certain impaired asset portfolios, the
recovery of provisions for credit losses on the M&I purchased credit
impaired loan portfolio and certain unallocated amounts. Corporate
Services reported results also reflect a number of items and
activities that are excluded from BMO's adjusted results to help
assess BMO's performance. These adjusting items are not reflective of
core operating results. They are itemized in the Non-GAAP Measures
section. All adjusting items are recorded in Corporate Services
except the amortization of acquisition-related intangible assets,
which is recorded in the operating groups. 
Financial Performance Review 
Q3 2013 vs Q3 2012  
Corporate Services net loss for the quarter was $11 million, compared
with net income of $13 million a year ago. The adjusted net loss in
the third quarter of 2013 was $35 million, compared with adjusted net
income of $32 million a year ago. Adjusted revenues were lower driven
primarily by a higher group teb offset. Adjusted non-interest
expenses were higher primarily due to higher technology costs.
Adjusted recoveries of credit losses increased in the current year
primarily due to higher recoveries on the M&I purchased credit
impaired loan portfolio.  
Q3 2013 vs Q2 2013   
Corporate Services net loss for the quarter was $11 million, compared
with a net loss of $26 million in the second quarter. The adjusted
net loss was $35 million, compared with a net loss of $26 million in
the second quarter. Adjusted revenues were lower primarily due to a
higher group teb offset. Adjusted non-interest expenses were higher
primarily due to higher technology costs. Adjusted recoveries of
credit losses increased primarily due to higher recoveries on the M&I
purchased credit impaired loan portfolio.  
Q3 YTD 2013 vs Q3 YTD 2012  
Corporate Services net loss for the year to date was $102 million,
compared with net income of $267 million a year ago. Adjusted net
loss for the year to date was $155 million, compared with net income
of $55 million from a year ago. Adjusted revenues were lower with
half of the decrease due to a higher group teb offset and the
remaining half due to lower revenue from a variety of items, none of
which were individually significant. Adjusted non-interest expenses
were higher primarily due to higher technology costs, and increased
benefit costs, including pension. Adjusted recoveries of credit
losses decreased primarily due to lower recoveries of credit losses
on the M&I purchased credit impaired loan portfolio.  
Loans and acceptances at the end of the current quarter were $695
million, down $865 million from the prior year and $300 million from
the preceding quarter, reflecting run-off in the impaired real estate
secured loan portfolio.  
Adjusted results in the foregoing Corporate Services section are
non-GAAP amounts or non-GAAP measures. Please see the Non-GAAP
Measures section. 


 
                                                                            
----------------------------------------------------------------------------
Non-GAAP Measures (1)                                               Table 29
----------------------------------------------------------------------------
                                                                            
(Canadian $                                                                 
 in millions,                                                               
 except as noted)       Q3-2013    Q2-2013    Q3-2012   YTD-2013   YTD-2012 
----------------------------------------------------------------------------
Reported Results                                                            
Revenue                   4,050      3,944      3,878     12,075     11,954 
Non-interest expense     (2,542)    (2,568)    (2,484)    (7,700)    (7,537)
----------------------------------------------------------------------------
Pre-provision, pre-                                                         
 tax earnings             1,508      1,376      1,394      4,375      4,417 
Provision for credit                                                        
 losses                     (77)      (145)      (237)      (400)      (573)
Provision for income                                                        
 taxes                     (294)      (256)      (187)      (815)      (737)
----------------------------------------------------------------------------
Net Income                1,137        975        970      3,160      3,107 
============================================================================
Reported Measures (%                                                        
 except as noted)                                                           
EPS ($)                    1.68       1.42       1.42       4.63       4.56 
Net income growth            17         (5)        37          2         32 
EPS growth                   18         (6)        30          2         22 
Revenue growth                4          -         17          1         18 
Non-interest expense                                                        
 growth                       2          3         12          2         19 
Efficiency ratio           62.8       65.1       64.1       63.8       63.1 
Operating leverage          2.2       (3.2)       4.9       (1.2)      (1.4)
Return on equity           15.6       14.2       14.5       14.9       15.9 
============================================================================
                                                                            
Adjusting Items (Pre-                                                       
 tax)                                                                       
Credit-related items                                                        
 on the M&I purchased                                                       
 performing loan                                                            
 portfolio (2)              110        119         76        357        350 
M&I integration costs                                                       
 (3)                        (49)       (50)      (105)      (191)      (249)
Amortization of                                                             
 acquisition-related                                                        
 intangible assets                                                          
 (3)                        (32)       (31)       (33)       (94)      (100)
Decrease (increase)                                                         
 in the collective                                                          
 allowance for credit                                                       
 losses                     (20)        22         15          2         33 
Run-off structured                                                          
 credit activities                                                          
 (4)                          1          6        (15)        14        197 
Restructuring costs                                                         
 (3)                          -        (82)         -        (82)       (99)
----------------------------------------------------------------------------
Adjusting items                                                             
 included in reported                                                       
 pre-tax income              10        (16)       (62)         6        132 
============================================================================
                                                                            
Adjusting Items                                                             
 (After tax)                                                                
Credit-related items                                                        
 on the M&I purchased                                                       
 performing loan                                                            
 portfolio                   68         73         47        220        216 
M&I integration costs       (30)       (31)       (65)      (118)      (155)
Amortization of                                                             
 acquisition-related                                                        
 intangible assets          (23)       (22)       (24)       (67)       (72)
Decrease (increase)                                                         
 in the collective                                                          
 allowance for credit                                                       
 losses                     (15)        11         14         (4)        26 
Run-off structured                                                          
 credit activities            1          6        (15)        14        194 
Restructuring costs           -        (59)         -        (59)       (69)
============================================================================
Adjusting items                                                             
 included in reported                                                       
 after-tax net income         1        (22)       (43)       (14)       140 
EPS ($)                       -      (0.04)     (0.07)     (0.02)      0.21 
============================================================================
                                                                            
Adjusted Results (1)                                                        
Revenue                   3,892      3,759      3,677     11,512     11,147 
Non-interest expense     (2,458)    (2,402)    (2,342)    (7,324)    (7,077)
----------------------------------------------------------------------------
Pre-provision, pre-                                                         
 tax earnings             1,434      1,357      1,335      4,188      4,070 
Provision for credit                                                        
 losses                     (13)      (110)      (116)      (219)      (358)
Provision for income                                                        
 taxes                     (285)      (250)      (206)      (795)      (745)
----------------------------------------------------------------------------
Adjusted net Income       1,136        997      1,013      3,174      2,967 
============================================================================
                                                                            
Adjusted Measures (%                                                        
 except as noted) (1)                                                       
EPS ($)                    1.68       1.46       1.49       4.65       4.35 
Net income growth            12          2         18          7         21 
EPS growth                   13          1         11          7         11 
Revenue growth                6          1          9          3         11 
Non-interest expense                                                        
 growth                       5          2         13          3         16 
Efficiency ratio           63.2       63.9       63.7       63.6       63.5 
Operating leverage          0.9       (1.0)      (4.4)      (0.2)      (5.1)
Return on equity           15.6       14.5       15.2       15.0       15.2 
============================================================================
(1)   Adjusted results in this table are non-GAAP amounts or non-GAAP       
      measures.                                                             
(2)   Comprised of $154 million of net interest income and $44 million of   
      specific provisions for credit losses in Q3-2013; $176 million of net 
      interest income, $65 million of specific provisions for credit losses 
      and $8 million of collective recoveries in Q2-2013; and $212 million  
      of net interest income, $113 million of specific provisions and $23   
      million of collective provisions for credit losses in Q3-2012.        
(3)   Included in non-interest expense.                                     
(4)   Substantially all included in trading revenue, in non-interest        
      revenue.                                                              

 
Non-GAAP Measures (Cont'd.) 
Results and measures in this MD&A are presented on a GAAP basis. They
are also presented on an adjusted basis that excludes the impact of
certain items as set out in Table 29. Management assesses performance
on both a reported and an adjusted basis and considers both bases to
be useful in assessing underlying ongoing business performance.
Presenting results on both bases provides readers with an enhanced
understanding of how management views results. It also permits
readers to assess the impact of the specified items on results for
the periods presented and to better assess results excluding those
items if they consider the items to not be reflective of ongoing
results. As such, the presentation may facilitate readers' analysis
of trends, as well as comparisons with our competitors. Adjusted
results and measures are non-GAAP and as such do not have
standardized meaning 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. Details
of adjustments are also set out in the Adjusted Net Income section. 
Certain of the adjusting items relate to expenses that arise as a
result of acquisitions, including the amortization of
acquisition-related intangible assets, and these expenses have been
designated as adjusting items because the purchase decision may not
consider the amortization of such assets to be a relevant expense.
Certain other items have also been designated as adjusting items due
to the fact that they can affect trend analysis. These include
changes in the collective allowance and credit-related amounts in
respect of the acquired M&I performing loan portfolio, M&I
integration costs, run-off structured credit activities and
restructuring costs. All of the above adjusting items are recorded in
Corporate Services except the amortization of acquisition-related
intangible assets, which is charged to the operating groups as
outlined below.  
Net economic profit represents net income available to common
shareholders after deduction of a charge for capital, and is
considered a reasonable measure of added economic value.  
Pre-provision, pre-tax earnings is considered a useful measure of
performance because it excludes the effects of credit losses and
income taxes, which can at times mask performance because of their
size and variability.   
In the third quarter of 2013, adjusting items increased reported net
income by $1 million after tax, comprised of a $68 million after-tax
net benefit of credit-related items in respect of the M&I purchased
performing loan portfolio (including $154 million in net interest
income, net of a $44 million specific provision for credit losses and
related income taxes of $42 million); costs of $49 million ($30
million after tax) for the integration of M&I; an increase in the
collective allowance for credit losses of $20 million ($15 million
after tax) on loans other than the M&I purchased loan portfolio; a
$32 million ($23 million after tax) charge for amortization of
acquisition-related intangible assets on all acquisitions; and a
benefit from run-off structured credit activities of $1 million
before and after tax primarily included in trading revenue.
Amortization of acquisition-related intangible assets was charged to
the operating groups as follows: P&C Canada $3 million before and
after tax; P&C U.S. $19 million ($12 million after tax); PCG $9
million ($7 million after tax); and BMO Capital Markets $1 million
before and after tax.   
In the second quarter of 2013, adjusting items decreased net income
by $22 million after tax, comprised of a $73 million after-tax net
benefit of credit-related items in respect of the M&I purchased
performing loan portfolio (including $176 million in net interest
income, net of a $57 million provision for credit losses and related
income taxes of $46 million); costs of $50 million ($31 million after
tax) for the integration of M&I; a restructuring charge of $82
million ($59 million after tax) to align our cost structure with the
current and future business environment; a decrease in the collective
allowance for credit losses of $22 million ($11 million after tax) on
loans other than the M&I purchased loan portfolio; a $31 million ($22
million after tax) charge for amortization of acquisition-related
intangible assets on all acquisitions; and a benefit from run-off
structured credit activities of $6 million before and after tax. The
$57 million provision included in the credit-related items above
included $65 million of specific provisions and an $8 million
decrease in the collective allowance for credit losses on the
acquired M&I performing loan portfolio. Amortization of
acquisition-related intangible assets was charged to the operating
groups as follows: P&C Canada $2 million ($1 million after tax); P&C
U.S. $19 million ($13 million after tax); PCG $9 million ($7 million
after tax); and BMO Capital Markets $1 million before and after tax.  
In the third quarter of 2012, adjusting items decreased reported net
income by $43 million after tax, comprised of a $47 million after-tax
net benefit of credit-related items in respect of the M&I purchased
performing loan portfolio (including $212 million in net interest
income, net of a $136 million provision for credit losses and related
income taxes of $29 million); costs of $105 million ($65 million
after tax) for the integration of M&I; a decrease in the collective
allowance for credit losses of $15 million ($14 million after tax) on
loans other than the M&I purchased loan portfolio; a $33 million ($24
million after tax) charge for amortization of acquisition-related
intangible assets on all acquisitions; and a loss on run-off
structured credit activities of $15 before and after tax. The $136
million provision included in the credit-related items above included
$113 million of specific provisions and a $23 million increase in the
collective allowance for credit losses on the acquired M&I performing
loan portfolio. Amortization of acquisition-related intangible assets
was charged to the operating groups as follows: P&C Canada $3 million
before and after tax; P&C U.S. $23 million ($16 million after tax);
and PCG $7 million ($5 million after tax).  
Our complete Third Quarter 2013 Report to Shareholders, including our
unaudited interim consolidated financial statements for the period
ended July 31, 2013, is available online at
www.bmo.com/investorrelations and at www.sedar.com. 
INVESTOR AND MEDIA PRESENTATION 
Investor Presentation Materials  
Interested parties are invited to visit our website at
www.bmo.com/investorrelations to review our 2012 Annual Report, this
quarterly news release, presentation materials and a supplementary
financial information package online.  
Quarterly Conference Call and Webcast Presentations  
Interested parties are also invited to listen to our quarterly
conference call on Tuesday, August 27, 2013, at 1:30 p.m. (EDT). At
that time, senior BMO executives will comment on results for the
quarter and respond to questions from the investor community. The
call may be accessed by telephone at 416-695-9753 (from within
Toronto) or 1-888-789-0089 (toll-free outside Toronto). A replay of
the conference call can be accessed until Monday, December 2, 2013,
by calling 905-694-9451 (from within Toronto) or 1-800-408-3053
(toll-free outside Toronto) and entering passcode 1254867.  
A live webcast of the call can be accessed on our website at
www.bmo.com/investorrelations. A replay can also be accessed on the
site.  


 
Media Relations Contacts                                                    
Ralph Marranca, Toronto, ralph.marranca@bmo.com, 416-867-3996               
Ronald Monet, Montreal, ronald.monet@bmo.com, 514-877-1873                  
                                                                            
Investor Relations Contacts                                                 
Sharon Haward-Laird, Head, Investor Relations, sharon.hawardlaird@bmo.com,  
416-867-6656                                                                
Andrew Chin, Director, andrew.chin@bmo.com, 416-867-7019                    
                                                                            
Chief Financial Officer                                                     
Tom Flynn, Executive Vice-President and CFO,                                
tom.flynn@bmo.com, 416-867-4689                                             
                                                                            
Corporate Secretary                                                         
Barbara Muir, Senior Vice-President, Deputy General Counsel,                
Corporate Affairs and Corporate Secretary                                   
corp.secretary@bmo.com, 416-867-6423                                        
                                                                            
----------------------------------------------------------------------------
Shareholder Dividend Reinvestment and  For other shareholder information,   
Share Purchase                         please contact                       
Plan (the Plan)                        Bank of Montreal                     
Average market price as defined under  Shareholder Services                 
the Plan                               Corporate Secretary's Department     
May 2013 $62.91                        One First Canadian Place, 21st Floor 
June 2013 $60.02                       Toronto, Ontario M5X 1A1             
July 2013 $65.32                       Telephone: (416) 867-6785            
                                       Fax: (416) 867-6793                  
For dividend information, change in    E-mail: corp.secretary@bmo.com       
shareholder address                                                         
or to advise of duplicate mailings,    For further information on this      
please contact                         report, please contact               
Computershare Trust Company of Canada  Bank of Montreal                     
100 University Avenue, 9th Floor       Investor Relations Department        
Toronto, Ontario M5J 2Y1               P.O. Box 1, One First Canadian Place,
Telephone: 1-800-340-5021 (Canada and  18th Floor                           
the United States)                     Toronto, Ontario M5X 1A1             
Telephone: (514) 982-7800                                                   
(international)                        To review financial results online,  
Fax: 1-888-453-0330 (Canada and the    please visit our website at          
United States)                         www.bmo.com. To review regulatory    
Fax: (416) 263-9394 (international)    filings and disclosures online,      
E-mail: service@computershare.com      please visit our website at          
                                       www.bmo.com/investorrelations.       
----------------------------------------------------------------------------

 
(R) Registered trademark of Bank of Montreal 


 
 ---------------------------------------------------------------------------
 Annual Meeting 2014                                                        
 The next Annual Meeting of Shareholders will be held on Tuesday, April 1,  
 2014, in Toronto, Ontario.                                                 
 ---------------------------------------------------------------------------

Contacts:
Media Relations Contacts
Ralph Marranca, Toronto
416-867-3996
ralph.marranca@bmo.com 
Ronald Monet, Montreal
514-877-1873
ronald.monet@bmo.com 
Investor Relations Contacts
Sharon Haward-Laird, Head, Investor Relations
416-867-6656
sharon.hawardlaird@bmo.com 
Andrew Chin, Director
416-867-7019
andrew.chin@bmo.com 
Chief Financial Officer
Tom Flynn, Executive Vice-President and CFO
416-867-4689
tom.flynn@bmo.com 
Corporate Secretary
Barbara Muir, Senior Vice-President, Deputy General Counsel,
Corporate Affairs and Corporate Secretary
416-867-6423
corp.secretary@bmo.com
 
 
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