Financial Results Highlights

Fourth Quarter 2020 Compared With Fourth Quarter 2019:

Net income⁴ of $1,584 million, up 33%; adjusted net income¹ of $1,610 million, up $3 million from the prior year
Reported EPS² of $2.37, up 33%; adjusted EPS^1,2of $2.41, compared with $2.43 in the prior year
Revenue, net of CCPB³, of $5,986 million, up 4%
Provision for credit losses (PCL) of $432 million, compared with $253 million; current quarter includes PCL on performing loans of $93 million
ROE of 12.4%, up from 9.9%; adjusted ROE¹ of 12.6%, compared with 13.5%
Common Equity Tier 1 Ratio of 11.9%, up from 11.4% in the prior year
Dividend of $1.06, unchanged from the prior quarter and the prior year

Fiscal 2020 Compared With Fiscal 2019:

Net income⁴ of $5,097 million, compared with $5,758 million; adjusted net income¹ of $5,201 million, compared with $6,249 million
Reported EPS² of $7.55, compared with $8.66; adjusted EPS^1,2 of $7.71, compared with $9.43
Revenue, net of CCPB³, of $23,478 million, up 3%
Provision for credit losses of $2,953 million, compared with $872 million, including PCL on performing loans of $1,431 million
ROE of 10.1%, compared with 12.6%; adjusted ROE¹ of 10.3%, compared with 13.7%

TORONTO, Dec. 1, 2020 /PRNewswire/ - For the fourth quarter ended October 31, 2020, BMO Financial Group (TSX: BMO) (NYSE: BMO) recorded net income of $1,584 million or $2.37 per share on a reported basis, and net income of $1,610 million or $2.41 per share on an adjusted basis.

"BMO continued to demonstrate strong operating momentum this quarter, delivering adjusted earnings of $1.6 billion and adjusted earnings per share of $2.41, with pre-provision, pre-tax earnings up 7% from last year, good operating leverage and an efficiency ratio of 58.7%," said Darryl White, Chief Executive Officer, BMO Financial Group.

"We entered the year in a strong position with good momentum across our businesses. Throughout the challenges brought on by the pandemic we have been on the front line of the economic recovery, supporting our customers, communities and employees through uncertainty and hardship. Our results for the year are a testament to the resilience and diversification of our businesses and our ability to quickly adapt to the evolving environment, while actively delivering against our strategic priorities. In 2020, adjusted earnings per share were $7.71, having appropriately provisioned for loan losses. Adjusted pre-provision, pre-tax earnings increased 7%, as we held expenses stable to last year, delivered above-target positive operating leverage of 2.7%, improved our efficiency by 160 basis points from last year and maintained strong capital and liquidity positions."

"As we look ahead to 2021, we are continuing to accelerate the execution of our strategy and our Purpose, to Boldly Grow the Good in business and life. We are recognized as a global leader in sustainability, including being the highest rated bank and placing 15^th overall among the 5,500 companies reviewed by the Wall Street Journal in its recent ranking of the Most Sustainably Managed Companies in the World, and scoring in the top 10% of banks on the Dow Jones Sustainability Indices. We're positioning our businesses for profitable growth, providing unwavering support for our customers and championing an inclusive recovery for our communities. We are focused on sustaining our momentum and competitive strengths, leveraging strong client loyalty and a winning culture to continue to build a digitally enabled, highly efficient and future ready bank," concluded Mr. White.

(1)	Results and measures in this document are presented on a GAAP basis. They are also presented on an adjusted basis that excludes the impact of certain items. Adjusted results and measures are non-GAAP and are detailed for all reported periods in the Non-GAAP Measures section, where such non-GAAP measures and their closest GAAP counterparts are disclosed.
(2)	All Earnings per Share (EPS) measures in this document refer to diluted EPS, unless specified otherwise. EPS is calculated using net income after deducting total dividends on preferred shares and distributions payable on other equity instruments.
(3)	On a basis that nets insurance claims, commissions and changes in policy benefit liabilities (CCPB) against insurance revenue.
(4)	Q4-2019 reported net income included a $357 million after-tax ($484 million pre-tax) restructuring charge, related to severance and a small amount of real estate-related costs, to continue to improve efficiency, including accelerating delivery against key bank-wide initiatives focused on digitization, organizational redesign and simplification of the way BMO does business. Q4-2019 reported net income also included a $25 million (pre-tax and after-tax) net impact of major reinsurance claims from Japanese typhoons incurred after the announced wind-down of the reinsurance business. The restructuring charge was included in non-interest expense in Corporate Services and the reinsurance adjustment was included in CCPB in BMO Wealth Management.

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

The bank's operational performance remains resilient, despite ongoing impacts from COVID-19. Reported net income of $1,584 million and adjusted net income of $1,610 million were impacted by higher provisions for credit losses, which increased $179 million pre-tax, or $131 million after tax from the prior year. Net revenue increased 4% from last year, with increases in BMO Capital Markets, BMO Wealth Management and Corporate Services, partially offset by decreases in the P&C businesses. The bank maintained a disciplined approach to expense management, with adjusted expenses increasing 1% year-over-year and positive adjusted net operating leverage of 2.1%. Results demonstrated the resiliency of the bank's diversified earnings platform in a challenging environment.

Return on equity (ROE) was 12.4%, up from 9.9% in the prior year, and adjusted ROE was 12.6%, compared with 13.5% in the prior year. Return on tangible common equity (ROTCE) was 14.5%, up from 11.9% in the prior year, and adjusted ROTCE was 14.5%, compared with 15.7% in the prior year.

Concurrent with the release of results, BMO announced a first quarter 2021 dividend of $1.06 per common share, unchanged from the prior quarter and the prior year. The quarterly dividend of $1.06 per common share is equivalent to an annual dividend of $4.24 per common share.

The extent to which the COVID-19 pandemic impacts BMO's business, results of operations, reputation and financial performance and condition, including its regulatory capital and liquidity ratios, and credit ratings, as well as its impact on the bank's customers, competitors and trading exposures, and the potential loss from higher credit, counterparty and mark-to-market losses, will depend on future developments, which are highly uncertain and cannot be predicted, including the scope, severity and duration of the pandemic and actions taken by governments, and governmental and regulatory authorities, which could vary by country and region, and other third parties in response to the pandemic. The COVID-19 pandemic may also impact the bank's ability to achieve, or the timing to achieve, certain previously announced targets, goals and objectives. Please refer to the Impact of COVID-19 section, as well as the Risks That May Affect Future Results section on page 73 of BMO's 2020 Annual Report.

BMO's 2020 audited annual consolidated financial statements and accompanying Management Discussion and Analysis (MD&A) are available online at www.bmo.com/investorrelations and at www.sedar.com.

Fourth Quarter Operating Segment Overview

Canadian P&C
Reported net income was $647 million and adjusted net income was $648 million, or 9% lower than the reported and adjusted net income of $710 million in the prior year. Adjusted net income excludes the amortization of acquisition-related intangible assets. Net income decreased due to lower revenue and higher provisions for credit losses, partially offset by lower expenses.

During the quarter, Canadian P&C launched Family Bundle, the first offering of its kind for Canadian families. The Family Bundle allows family members residing in the same household to bank together under one BMO Performance or Premium plan chequing account, and one monthly fee. The bank also achieved Gold Level standing in the Progressive Aboriginal Relations program, awarded by the Canadian Council for Aboriginal Business, the only bank to have achieved this level for the sixth consecutive year, reflecting the bank's commitment to prosperity within Indigenous communities.

U.S. P&C
Reported net income was $324 million, or 17% lower than $393 million in the prior year, and adjusted net income was $333 million, or 17% lower than $404 million. Adjusted net income excludes the amortization of acquisition-related intangible assets.

Reported net income was US$245 million, or 17% lower than US$297 million in the prior year, and adjusted net income was US$253 million, or 17% lower than US$305 million, due to higher provisions for credit losses on performing loans, with lower revenue more than offset by lower expenses.

During the quarter, the Federal Deposit Insurance Corporation released its annual deposit market share report and the bank improved its market share in Chicago and maintained its ranking of second place in the Chicago and Milwaukee markets, and third place within its core footprint, which includes Illinois, Kansas, Wisconsin, Missouri, Indiana, and Minnesota.

BMO Wealth Management
Reported net income was $320 million, an increase of $54 million or 20% from the prior year, and adjusted net income was $328 million, an increase of $28 million or 9%. Adjusted net income excludes the net impact of major reinsurance claims incurred in the prior year after the announced wind-down of the reinsurance business and the amortization of acquisition-related intangible assets in both years. Traditional Wealth reported net income was $253 million, an increase of $17 million or 7%, and adjusted net income was $261 million, an increase of $16 million or 6%, with higher revenue, partially offset by higher expenses. Insurance net income was $67 million, an increase of $37 million on a reported basis and $12 million on an adjusted basis, primarily reflecting unfavourable market movements in the prior year.

This quarter BMO Harris Financial Advisors announced a partnership with LPL Financial, an industry leading broker-dealer provider, which will enhance its premium brokerage and advisory services and provide clients with a superior digital experience, making it easier for clients while simplifying and streamlining operations.

BMO Capital Markets
Reported net income was $379 million, an increase of $108 million or 40% from the prior year, and adjusted net income was $387 million, an increase of $105 million or 38%. Adjusted net income excludes the amortization of acquisition-related intangible assets and acquisition integration costs. Strong revenue performance was partially offset by higher provisions for credit losses and higher expenses.

In the current quarter, BMO Capital Markets acted as joint active bookrunner on Canada's largest technology IPO for Canadian digital payment processing company Nuvei Corp., raising US$805 million with a listing on the Toronto Stock Exchange. As a lead lender since 2015, BMO Capital Markets has been providing Nuvei Corp. with comprehensive and consistent coverage, leading multiple financing transactions over the years.

Corporate Services
Reported and adjusted net loss for the quarter was $86 million, compared with a reported net loss of $446 million and an adjusted net loss of $89 million in the prior year. Adjusted results in the prior year exclude the restructuring charge. Adjusted results are relatively unchanged, as higher revenue and the impact of a favourable tax rate in the current quarter were offset by higher expenses.

Adjusted results in this Fourth Quarter Operating Segment Overview section are non-GAAP amounts or non-GAAP measures. Please refer to the Non-GAAP Measures section.

Capital
BMO's Common Equity Tier 1 (CET1) Ratio was 11.9% as at October 31, 2020. The CET1 Ratio increased from 11.6% at the end of the third quarter, driven by retained earnings growth and the issuance of common shares through the Shareholder Dividend Reinvestment and Share Purchase Plan.

Risk-weighted assets were largely consistent with the prior quarter.

Provision for Credit Losses
Total provision for credit losses was $432 million, an increase of $179 million from the prior year, primarily due to the impact of COVID-19. The total provision for credit losses ratio was 38 basis points, compared with 23 basis points in the prior year. The provision for credit losses on impaired loans was $339 million, an increase of $108 million from the prior year, primarily due to higher provisions in the Canadian P&C and BMO Capital Markets businesses. The provision for credit losses on impaired loans ratio was 30 basis points, compared with 21 basis points in the prior year. There was a $93 million provision for credit losses on performing loans in the current quarter, compared with $22 million in the prior year. The $93 million provision for credit losses on performing loans in the current quarter, reflects a more severe adverse scenario, partially offset by an improving economic outlook and reduced balances. Refer to the Critical Accounting Estimates and Allowance for Credit Losses sections on pages 114 to 116 in BMO's 2020 Annual Report and Note 4 in its audited annual consolidated financial statements for further information on the allowance for credit losses as at October 31, 2020.

Caution
The foregoing sections contain forward-looking statements. Please refer to the Caution Regarding Forward-Looking Statements.

Regulatory Filings
BMO's continuous disclosure materials, including interim filings, annual Management's Discussion and Analysis and audited annual consolidated financial statements, Annual Information Form and Notice of Annual Meeting of Shareholders and Proxy Circular, are available on the bank's website at www.bmo.com/investorrelations, on the Canadian Securities Administrators' website at www.sedar.com, and on the EDGAR section of the U.S. Securities and Exchange Commission's website at www.sec.gov. Information contained in or otherwise accessible through the bank's website (www.bmo.com), or any third party websites mentioned herein, does not form part of this document.

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.

Financial Review

Management's Discussion and Analysis (MD&A) commentary is as at December 1, 2020. The material that precedes this section comprises part of this MD&A. The MD&A should be read in conjunction with the unaudited condensed consolidated financial statements for the period ended October 31, 2020, included in this document, as well as the audited consolidated financial statements for the year ended October 31, 2020, and the MD&A for fiscal 2020, contained in BMO's 2020 Annual Report.

BMO's 2020 Annual Report includes a comprehensive discussion of its businesses, strategies and objectives, and can be accessed on the bank's website at www.bmo.com/investorrelations. Readers are also encouraged to visit the site to view other quarterly financial information.

Financial Highlights

(Canadian $ in millions, except as noted)	Q4-2020	Q3-2020	Q4-2019	Fiscal 2020	Fiscal 2019
Summary Income Statement
Net interest income (1)	3,530	3,535	3,364	13,971	12,888
Non-interest revenue	2,456	3,654	2,723	11,215	12,595
Revenue	5,986	7,189	6,087	25,186	25,483
Insurance claims, commissions and changes in policy benefit liabilities (CCPB)	-	1,189	335	1,708	2,709
Revenue, net of CCPB	5,986	6,000	5,752	23,478	22,774
Provision for credit losses on impaired loans	339	446	231	1,522	751
Provision for credit losses on performing loans	93	608	22	1,431	121
Total provision for credit losses	432	1,054	253	2,953	872
Non-interest expense (1)	3,548	3,444	3,987	14,177	14,630
Provision for income taxes	422	270	318	1,251	1,514
Net income attributable to equity holders of the bank	1,584	1,232	1,194	5,097	5,758
Adjusted net income	1,610	1,259	1,607	5,201	6,249
Common Share Data ($, except as noted)
Earnings per share	2.37	1.81	1.78	7.55	8.66
Adjusted earnings per share	2.41	1.85	2.43	7.71	9.43
Earnings per share growth (%)	32.9	(22.8)	(30.7)	(12.8)	6.0
Adjusted earnings per share growth (%)	(0.7)	(22.3)	4.8	(18.2)	4.9
Dividends declared per share	1.06	1.06	1.03	4.24	4.06
Book value per share	77.40	76.60	71.54	77.40	71.54
Closing share price	79.33	73.28	97.50	79.33	97.50
Number of common shares outstanding (in millions)
End of period	645.9	642.8	639.2	645.9	639.2
Average diluted	645.8	641.7	640.4	642.1	640.4
Total market value of common shares ($ billions)	51.2	47.1	62.3	51.2	62.3
Dividend yield (%)	5.3	5.8	4.2	5.3	4.2
Dividend payout ratio (%)	44.6	58.7	57.6	56.1	46.8
Adjusted dividend payout ratio (%)	43.9	57.3	42.3	54.9	43.0
Financial Measures and Ratios (%)
Return on equity	12.4	9.4	9.9	10.1	12.6
Adjusted return on equity	12.6	9.6	13.5	10.3	13.7
Return on tangible common equity	14.5	11.1	11.9	11.9	15.1
Adjusted return on tangible common equity	14.5	11.1	15.7	11.9	16.1
Net income growth	32.6	(20.9)	(29.6)	(11.5)	5.6
Adjusted net income growth	0.1	(20.4)	5.0	(16.8)	4.5
Revenue growth	(1.7)	7.8	3.3	(1.2)	11.3
Revenue growth, net of CCPB	4.1	3.8	4.5	3.1	5.7
Non-interest expense growth	(11.0)	(1.4)	24.9	(3.1)	8.6
Adjusted non-interest expense growth	1.5	(1.5)	1.2	0.3	5.0
Efficiency ratio, net of CCPB	59.3	57.4	69.3	60.4	64.2
Adjusted efficiency ratio, net of CCPB	58.7	56.8	60.0	59.8	61.4
Operating leverage, net of CCPB	15.1	5.2	(20.4)	6.2	(2.9)
Adjusted operating leverage, net of CCPB	2.1	5.3	3.8	2.7	0.8
Net interest margin on average earning assets	1.61	1.59	1.71	1.64	1.70
Effective tax rate	21.1	18.0	21.0	19.7	20.8
Adjusted effective tax rate	21.1	18.2	22.0	19.8	21.1
Total PCL-to-average net loans and acceptances (annualized)	0.38	0.89	0.23	0.63	0.20
PCL on impaired loans-to-average net loans and acceptances (annualized)	0.30	0.38	0.21	0.33	0.17
Balance Sheet (as at, $ millions, except as noted)
Assets	949,261	973,508	852,195	949,261	852,195
Gross loans and acceptances	461,800	466,611	451,537	461,800	451,537
Net loans and acceptances	458,497	463,360	449,687	458,497	449,687
Deposits	659,034	660,600	568,143	659,034	568,143
Common shareholders' equity	49,995	49,239	45,728	49,995	45,728
Cash and securities-to-total assets ratio (%)	31.7	32.1	28.9	31.7	28.9
Capital ratios (%)
CET1 Ratio	11.9	11.6	11.4	11.9	11.4
Tier 1 Capital Ratio	13.6	13.1	13.0	13.6	13.0
Total Capital Ratio	16.2	15.8	15.2	16.2	15.2
Leverage Ratio	4.8	4.7	4.3	4.8	4.3
Foreign Exchange Rates ($)
As at Canadian/U.S. dollar	1.3319	1.3386	1.3165	1.3319	1.3165
Average Canadian/U.S. dollar	1.3217	1.3584	1.3240	1.3441	1.3290


(1)	Effective the first quarter of 2020, the bank adopted IFRS 16, Leases (IFRS 16), recognizing the cumulative effect of adoption in opening retained earnings with no changes to prior periods. Under IFRS 16, the bank as lessee is required to recognize a right-of-use asset and a corresponding lease liability for most leases. BMO recognized $90 million in Q4-2020 and $91 million in Q3-2020 of depreciation on the right-of-use assets recorded in non-interest expense. BMO recognized $13 million in both Q4-2020 and Q3-2020 of interest on the lease liability recorded in interest expense. For the twelve months ended October 31, 2020, BMO recognized $360 million and $53 million, respectively. Refer to the Changes in Accounting Policies in 2020 section on page 118 of BMO's 2020 Annual Report for further details.

Adjusted results are non-GAAP amounts or non-GAAP measures. Please refer to the Non-GAAP Measures section.

Non-GAAP Measures
Results and measures in this document are presented on a GAAP basis. 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. They are also presented on an adjusted basis that excludes the impact of certain items, as set out in the table below. Results and measures that exclude the impact of Canadian/U.S. dollar exchange rate movements on BMO's U.S. segment are non-GAAP measures. Please refer to the Foreign Exchange section for a discussion of the effects of changes in exchange rates on BMO's results. Pre-provision pre-tax earnings (PPPT) is a non-GAAP measure, and is calculated as the difference between revenue, net of insurance claims, commissions and changes in policy benefit liabilities (CCPB), and non-interest expense. Management assesses performance on a reported basis and on an adjusted basis, and considers both to be useful in assessing underlying ongoing business performance. Presenting results on both bases provides readers with a better understanding of how management assesses results. It also permits readers to assess the impact of certain specified items on results for the periods presented, and to better assess results excluding those items that may not be reflective of ongoing results. As such, the presentation may facilitate readers' analysis of trends. Except as otherwise noted, management's discussion of changes in reported results in this document applies equally to changes in the corresponding adjusted results. Adjusted results and measures are non-GAAP and as such do not have standardized meanings under GAAP. They are unlikely to be comparable to similar measures presented by other companies and should not be viewed in isolation from, or as a substitute for, GAAP results.

Non-GAAP Measures

(Canadian $ in millions, except as noted)	Q4-2020	Q3-2020	Q4-2019	Fiscal 2020	Fiscal 2019
Reported Results
Revenue	5,986	7,189	6,087	25,186	25,483
Insurance claims, commissions and changes in policy benefit liabilities (CCPB)

BMO Financial Group Reports Fourth Quarter and Fiscal 2020 Results