2024 Annual Report: Message to Shareholders
2024 Annual Report:
Message to Shareholders
By Darryl White
Chief Executive Officer, BMO Financial Group
Dec 5, 2024
Download the 2024 Annual Report: Message to Shareholders (PDF)
By Darryl White
Chief Executive Officer, BMO Financial Group
Dec 5, 2024
Download the 2024 Annual Report: Message to Shareholders (PDF)
For 207 years, BMO has provided our customers and communities with the financial strength, expert guidance and innovative tools to help them prosper and thrive. Now, serving our clients as North America’s eighth largest bank with total assets of $1.41 trillion, Team BMO is focused on delivering for our clients with the full scope and strength of our products and services.
Throughout more than two centuries, we’ve helped generations of clients to prosper and supported the growth of businesses. 2024 was no different. Our ongoing strategic investments to expand and enhance the scale of BMO’s North American operations are delivering value to more clients throughout more communities than ever before. This year’s Annual Report illustrates the strength of those outcomes and our work to support our clients and deliver shareholder value.
Navigating the economic landscape
This year, the global economy continued to endure challenges, with restrictive interest rates, higher costs of living, persistent and growing geopolitical tensions and extreme weather once again impacting markets, communities, businesses and families. Through it all, BMO was there for our customers.
As we entered the latter half of the year, reasons for more optimism emerged. With monetary policy having done the work of moderating inflation in most major economies, many have achieved the desired “soft landing”.
The U.S. economy has performed better than expected, led by a boom in tech spending, fiscal support and resilient consumer spending. In Canada – with borrowing costs continuing to weigh on individuals, families and businesses, and growth coming in relatively weaker – the Bank of Canada took aggressive action, cutting rates early and consistently. Other central banks, including in the U.S. and Europe, are beginning to follow suit.
The strength of BMO’s North American platform
BMO’s resilient operating performance through 2024 underscored the strength of our North American platform. Aided by strong expense management, we drove good pre-provision pre-tax earnings performance for the year, with growth across all operating groups. We completed the integration of Bank of the West and accelerated our momentum in these new markets. We met our commitment to positive operating leverage in each of the last three quarters and for the full year.
Delivering superior risk management is one of our five strategic priorities, and a point of pride for our bank. We’re in the business of helping our clients make progress, and this year a combination of environmental headwinds and specific client outcomes led to elevated provisions for credit losses. While we have a long track record of strong credit performance, our 2024 outcomes in this area did not meet our expectations. We expect provisions for credit losses to moderate through 2025, with some variability quarter to quarter, as the business environment improves.
Our conviction in our growth capacity is bolstered by our capital base, as measured by our CET1 Ratio. This ratio, which compares the bank’s capital against its risk-weighted assets, increased meaningfully by 110 basis points from last year to 13.6%, providing a sturdy foundation for the more constructive business growth we anticipate in 2025, creating ample capacity to support our clients and return excess capital to our shareholders. Our liquidity is also strong, and we saw customer deposits grow significantly by $61 billion, or 9%, signs of a very healthy franchise. We continue to maintain the longest dividend payout record of any company in Canada at 196 years – a record we’re fiercely proud of.
Purpose, strategy and performance
BMO entered into fiscal 2025 with a clear agenda and momentum. Our bank is designed to deliver sustained performance in any environment, and the teams executing it do so with a strong sense of Purpose, every day.
This Purpose is core to who we are. We’re committed to Boldly Grow the Good in business and life as we drive progress for a thriving economy, a sustainable future, and an inclusive society.
That means helping businesses grow, helping customers buy homes and strengthening the communities we serve – all while driving innovation to make those outcomes easier. It means ensuring our customers, employees and communities have opportunities to make it all happen.
As we drive this progress, members of Team BMO remain focused on achieving profitable growth through disciplined execution of our strategic priorities, which include growing client loyalty, accelerating our Digital First strategy and delivering on our climate ambition to be our clients’ lead partner in the transition to a net zero world. And we’re doing it while growing our businesses, closely managing credit, and elevating our focus on rebuilding our return on equity (ROE).
Strong financial performance is integral to our Purpose. We know that the stronger we perform as a team, the greater the good we can grow for our clients, our colleagues and the communities we serve. After our most recent U.S. expansion, that includes delivering more BMO to more customers than ever before.
The evolution of BMO U.S.
The performance of our U.S. business is an essential part of our strategy and our growth ambition – it’s at the core of who we are.
This year, we celebrated the 40th anniversary of BMO’s acquisition of Harris Bank, which set the 20th century foundation for our growth into a nationally significant U.S. bank. Our recent market entry to the U.S. West and notably California, with the acquisition of Bank of the West, represented the natural next step in our North American growth strategy.
From humble roots in New York City in 1818, today BMO U.S. has evolved into a Top 10 U.S. bank offering diversified banking solutions in three of the top five U.S. banking markets, and digital retail banking and payments platforms that extend nationally. Our U.S. operations stand at more than US$420 billion in assets, and we continue to grow alongside our customers, every day.
While this represents an impressive story of growth, ambition and achievement, what’s most exciting is the potential of our U.S. franchise as we continue the next phase of our evolution. We have grown in scale and now it’s time to focus on winning in key areas – bringing all of our capabilities to best serve our clients in strategic and profitable growth markets.
Canada and the U.S. have established one of the world’s most successful trading relationships, providing a competitive edge to businesses on both sides of the border. This North American advantage helps lower prices, supports jobs and creates better opportunities for businesses to scale and enhance productivity – and BMO will do our part to reinforce, promote and defend this partnership, while ensuring our clients can maximize their opportunity in both countries and realize its full benefit.
Driving innovation through digital
Named by Fast Company as one of the World’s Most Innovative Companies in 2024, which evaluates businesses across 58 industries in every region of the world, BMO is delivering valuable digital experiences that help our clients make real financial progress in every one of our businesses.
As a digitally enabled, future-ready bank, we were ranked as one of the top 10 banks in the world in the Innovation pillar of the Evident AI Index, an independent benchmark for AI maturity in financial services, and we were recently recognized by The Digital Banker with five Global Retail Banking Innovation Awards for leadership in digital innovation, customer experience and delivery excellence. This includes for BMO Customer Feedback Assist, our large language model (LLM) powered tool that helps employees address customer feedback and improve customer satisfaction.
At BMO, we believe that the prosperity of our customers, colleagues and the communities we serve is integral to who we are and what we do. When they succeed, we succeed.
Our team also won a Red Dot Design Concept award for our re-imagined business banking experience – a first for any bank in Canada and the U.S. in this category. And BMO was ranked #1 in satisfaction with the Wealth Management Digital Experience among Full-Service Investors in the J.D. Power1 2024 Canada Wealth Management Digital Experience Study.
Data is at the core of our Digital First advantage, securely increasing personalization and providing more powerful insights for customers and our partners. Our cloud evolution is the key enabler, fuelling a modernized engine that accelerates innovation and delivers high value.
To support these leading innovations, BMO understands and embraces the opportunity to harness emerging technologies, including new applications of artificial intelligence and quantum computing, to optimize and enhance the value we bring to our clients and partners – doing so with the support of our unwavering culture of governance, ethics and responsible use of data and technology.
Leading with ethics
Underpinning our drive to innovate is our commitment to doing what’s right. We consistently lead by example, ensuring that our teams understand that as we compete to win, the way we achieve our goals is just as important as the outcome.
Recognition of leading ethical business practices is hard-won. It’s earned by a commitment to operating with transparency, good governance and integrity. I’m proud that, for seven years running, BMO has been recognized as one of the World’s Most Ethical Companies by Ethisphere, a global leader in defining and advancing the standards of ethical business practices. This year, BMO was again the only bank in Canada – and one of only four worldwide – to be honoured.
We encourage our employees to speak up when something doesn’t seem right. BMO’s Code of Conduct underpins our actions, and every member of Team BMO is expected to read it, to understand it, and to follow it. Our team members are encouraged to ask questions if they’re unsure and, in making the right decision, to know they can count on the unwavering support of the entire organization.
That support also extends to helping employees build their skills. BMO is committed to the learning and skill development of our team, and we’ve made significant investments in award-winning learning programs, providing employees with unique career-building experiences that help them grow and develop, both personally and professionally.
Employee engagement and our winning culture are critical enablers to sustained business performance and advancing our Purpose, and we’re proud to have been recognized as one of the Most Admired Corporate Cultures in Canada by Waterstone Human Capital this year.
Thank you to all our employees for their commitment to our customers and for always looking for ways to perform at the highest level.
Looking ahead
As we look ahead to 2025, I’m confident in our team’s ability to deliver. At BMO, we believe that the prosperity of our customers, colleagues and the communities we serve is integral to who we are and what we do. When they succeed, we succeed.
We will continue to be inspired by our clients, helping them make the progress that enables our economy and society to thrive. With BMO’s strength and stability, we’re well positioned to execute with purpose, pace and discipline in the year ahead.
To all of our partners, thank you for putting your trust in BMO. I can’t wait to see what we can do together in 2025 – and beyond.
1 For more information, refer to www.jdpower.com/business.
Download the 2024 Annual Report: Message to Shareholders (PDF)
