2022 Annual Meeting of Shareholders: Address to Shareholders

Thank you, George, and good morning, everyone. Bonjour à tous.

Before I begin, I want to take a moment to acknowledge the humanitarian and economic crisis being experienced as a result of Russia’s invasion of Ukraine. Shining through this turmoil, the resolve of the Ukrainian people and the global outpouring of support is sustaining hope for peace.

To support our Ukrainian and Russian employees, customers, and community members, we’ve waived fees for personal wire transfers from Canada to Ukraine, donated to the Canadian Red Cross’ Ukraine Humanitarian Crisis Appeal and at branches across Canada we’re facilitating donations on behalf of the Red Cross – our U.S. customers may donate directly to the American Red Cross.

It has been a long and difficult journey through the pandemic, and current events create further uncertainty for many, including our customers. The economic impacts are being felt by consumers with rising inflation impacting everyday purchases like groceries and gas, while disruptions to global supply-chains and labour markets are making it harder for businesses to recover.

While downside risks to global growth are mounting, there is reason for optimism. Households remain well-cushioned with excess savings, growth had solid momentum in the first few months of this year, Canadian unemployment is at its lowest rate on record since 1976, and re-opening opportunities are waiting in the wings as the pandemic abates.

As we adjust our lives from the pandemic to the endemic, and as global economies assume the challenges of continued resilience in the face of rising inflation and slowing growth, the communities we serve are turning the corner from crisis to recovery.

With recovery brings renewed hope and opportunities for progress.

As one of North America’s leading banks, we’re driving forward with energy and confidence: because the stronger we perform, the greater our ability to turn our progress into progress for our customers, our clients, the communities we serve, and for you, our shareholders.

In 2021, we took significant steps to achieve our ambition to be a high-performing, digitally enabled, future-ready bank – and delivered very strong financial performance. As we continued to grow the bank, our growth powered our capability to live our Purpose: to Boldly Grow the Good in business and life.

Our North American growth strategy continues

Our U.S. operating segment is one such area of growth. While we’ve operated in the United States since 1818, we’ve been steadily growing our presence in the U.S. since our 1984 acquisition of Harris Bank.

In 2011, we doubled that footprint with our acquisition of M&I. Over the past decade, we have significantly accelerated this strategy.

I showed this same slide at our annual meeting three years ago, and today I’m pleased to update you on our progress.

BMO’s commercial banking business now ranks among the top 5 commercial lenders in North America and works in strong collaboration with our U.S. wealth business with almost 30% of U.S. commercial clients having a wealth relationship; and we’ve expanded the scope of this business to a national basis serving 14 industry verticals and opening 5 new offices in key growth markets since 2019.

We’ve invested strategically in our U.S. capital markets business, with revenues up 47% since 2019 and now contributing 50% of our capital markets earnings.

And through strategic, scale-boosting, digital investments we’ve expanded our retail deposit capabilities to serve customers in all 50 U.S. states.

In 2021, our U.S. operating segment generated 36% of BMO’s revenue, with approximately half of that revenue originating outside the U.S. Midwest. The picture is now clear: BMO’s U.S. footprint is no longer defined as the Midwest – it’s the U.S.

If you were to compare where we are today with where we were in 2010, you’ll see impressive performance improvement and organic growth.

And while our U.S. segment once delivered superior growth but lagged the rest of the bank on key profitability measures, it now has efficiency and ROE on par with the total bank and continues to drive superior growth. This is impressive fundamental improvement.

Just before moving on, let’s take a quick look at what our high-performing U.S. footprint will look like as we take the natural next step in BMO’s North American growth strategy with our announced agreement to acquire the Bank of the West.

Bank of the West is a well-run, well-performing bank with a competitive position in leading U.S. markets complementary to our own, including the highly attractive California market.

As announced in December, if approved by regulators, BMO will have a top 5 position in 24 U.S. markets with strong share and growth opportunities in key MSAs, bringing our U.S. segment’s revenue and PPPT to 44% of the total bank.

During 2022, your management team is working hard to deliver on our business priorities and planning carefully for the closing of the announced Bank of the West acquisition at the end of calendar 2022. Based on the strong performance improvement of our U.S. segment and the quality of the Bank of the West’s people and franchise, 2023 is shaping up to be a very exciting year in our history.

Purpose-driven growth across every aspect of ESG

Our capability to live our Purpose – to Boldly Grow the Good in business and life – is fuelled by the execution of our strategy and our ability to deliver the strong business performance that leads to exceptional financial results.

As one of North America’s largest financial institutions, we take seriously our responsibility to act on the most pressing issues of our times and leverage our market position to support progress for all. We’ve made bold commitments to grow the good in three areas: for a thriving economy, a sustainable future, and a more inclusive society.

We’re committed to creating a more inclusive and equitable society for groups facing systemic barriers by driving greater access to social and economic opportunities.

Since renewing our 5-year Zero Barriers to Inclusion diversity, equity and inclusion strategy last year, we made significant progress in 2021.

In the U.S., we launched BMO EMpower to advance an inclusive economic recovery, pledging US$5 billion over five years and exceeding our Year 1 target by extending more than US$2 billion in commitments.

In Canada, we announced a $12 billion commitment to finance affordable and accessible housing over a 10-year period, including support for financing affordable housing and infrastructure projects for Indigenous Peoples, both on- and off-reserve.

And we expanded our BMO for Women program on both sides of the border – providing a dedicated bank-wide program that helps remove barriers to women’s empowerment.

We take pride in driving change and we recognize the critical role of banks in catalyzing climate action by financing the energy transition as we manage our business and work with our clients on the path to net zero emissions by 2050.

2021 was a very busy year on this front.

We declared our ambition to be our clients’ lead partner in the transition to a net zero world and took steps to drive our financing activities and operations in support of this transition.

We introduced the BMO Climate Institute – a new multi-disciplinary organization harnessing science and analytics that is powered by innovative technology and industry-leading expertise.

We joined the Global Net-Zero Banking Alliance reinforcing our commitment to financing the climate transition.

And we created a dedicated Energy Transition Group that is supporting our clients in innovative ways to help them achieve their energy transition goals.

BMO is a recognized leader in sustainability – and for good reason. Our commitment for a sustainable future – and the work we do to bring it to life and make change – means we consistently rank among the most sustainable companies in the world.

After being included in the Dow Jones Sustainability Index for the past 16 years, this year we reached new heights as one of only five companies in Canada – and only two North American banks – to be named to their prestigious “World Index”.

This global recognition of our progress strengthens our resolve and confirms we are on the right path, enabling us to drive solutions not just here in North America, but on the world stage.

Download the 2022 Annual Meeting of Shareholders: Address to Shareholders (PDF)