BMO’s book value up 18% since 2010

“BMO’s fourth quarter results mark a strong finish to a pivotal year for the bank,” says Bill Downe, president and CEO of BMO Financial Group. “We successfully completed the conversion of the core banking platform in the U.S., and also turned the page on the purchase of M&I, announced 24 months ago.”

He adds, “Since the fourth quarter of 2010, we have generated reported earnings of $7.3 billion and increased BMO’s book value from $19.3 billion to $26.2 billion—an increase of 18%. During the year we increased the dividend, and grew net loans and acceptances by 7.4%. A concerted focus on efficiency was reflected in a reduction of 700 full-time employees.”

Not to mention, he says, “P&C Canada experienced good quarter-over-quarter balance sheet growth. [There’s] growth in residential mortgage market share, and the changes to Canada’s mortgage market announced earlier this year are aligned with BMO’s risk practices.”

Regarding the bank’s U.S. wealth segment, he says it’s attracted new client assets over the past year. The segment delivered over $100 million in adjusted earnings in 2012, and the bank has emerged as a leader in the ETF market in Canada.

Read: BMO to streamline fund shelf and BMO expands ETF lineup

Concurrent with the release of results, BMO announced a first quarter 2013 dividend of $0.72 per common share, unchanged from the preceding quarter and equivalent to an annual dividend of $2.88 per common share.

BMO’s capital position is strong. It plans to initiate a normal course issuer bid for up to 15,000,000 of the bank’s own common shares.

Read the bank’s consolidated financial statements and accompanying analysis.

Private Client Group

Net income was $166 million, up $29 million or 21% from a year ago.

These results reflect higher revenue across most businesses, offset by higher strategic initiative spending to drive future revenue growth.

Adjusted net income in PCG Insurance was $76 million, up $36 million or 86% from a year ago. These results benefited from changes to our investment portfolio to improve asset-liability management and the annual review of actuarial assumptions. Lower interest rates reduced PCG Insurance adjusted net income by $7 million in the current quarter, and by $19 million a year ago.

Assets under management and administration grew $40 billion from a year ago to $465 billion due to market appreciation and new client assets.

Read: Canadians are emotional investors: BMO

BMO Capital Markets

Net income for the quarter was $293 million, more than double the level of a year ago.

Revenues in the current quarter were significantly higher, as the market environment improved from the weak conditions of the previous year. These conditions provided more business opportunities, driving solid improvement in our trading revenue, particularly in interest rate and equity trading and increased underwriting fees.

BMO Capital Markets participated in 134 new issues in the quarter, including 38 corporate debt deals, 29 government debt deals, 57 common equity transactions and 10 issues of preferred shares, raising $52 billion.

Acquisition of Marshall & Ilsley

On July 5, 2011, BMO completed the acquisition of M&I. Activities of the acquired business are primarily reflected in the P&C U.S., Private Client Group and Corporate Services segments, with a small amount included in BMO Capital Markets.

The acquired business contributed $90 million to reported net income and $169 million to adjusted net income for the quarter. It contributed $647 million to reported net income and $730 million to adjusted net income for the fiscal year. In 2011, it contributed $105 million to net income and $180 million to adjusted net income.