BMO Financial Group

BMO Financial Group Reports Fourth Quarter and Fiscal 2018 Results

Toronto (ots/PRNewswire) - Fourth Quarter 2018

Financial Results Highlights

Fourth Quarter 2018 Compared with Fourth Quarter 2017:

- Net income of $1,695 million, up 38%, including a benefit from the 
  remeasurement of an employee benefit liability2 in the current 
  quarter; adjusted net income1 of $1,529 million, up 17% 
- EPS3 of $2.57, up 42%; adjusted EPS1,3 of $2.32, up 19%      
- ROE of 16.1%, up from 12.1%; adjusted ROE1 of 14.5%, up from 12.9% 
- Provision for credit losses4 (PCL) of $175 million, compared with 
  $202 million in the prior year 
- Common Equity Tier 1 Ratio of 11.3% 
- Dividend increased by $0.04 from the prior quarter to $1.00, up 8% 
  from the prior year 

Fiscal 2018 Compared with Fiscal 2017:

- Net income of $5,450 million, up 2% including the impact of the 
  revaluation of our U.S. net deferred tax asset in the current 
  year5; adjusted net income1 of $5,979 million, up 9% 
- EPS3 of $8.17, up 3%; adjusted EPS1,3 of $8.99, up 10% 
- ROE of 13.2%, compared with 13.3%; adjusted ROE1 of 14.6%, up from 
  13.7% 
- PCL of $662 million4, including a $38 million recovery on 
  performing loans, compared with $822 million on an adjusted basis 
  and $746 million on a reported basis  

For the fourth quarter ended October 31, 2018, BMO Financial Group (TSX: BMO) (NYSE:BMO) recorded net income of $1,695 million or $2.57 per share on a reported basis, and net income of $1,529 million or $2.32 per share on an adjusted basis.

"BMO's fourth quarter results demonstrated continued positive momentum and ended a successful year in which the bank delivered $6 billion in adjusted earnings and growth in adjusted earnings per share of 10%, led by strong performance in our Personal and Commercial banking businesses," said Darryl White, Chief Executive Officer, BMO Financial Group.

"This year, we continued to make good progress against our strategic objectives. We grew our U.S. segment at an accelerated pace, increased momentum in our Commercial banking business, adding relationships, loans and deposits, and delivered real value to our personal customers with new and enhanced digital capabilities. We've invested in and grown our businesses, and at the same time, improved efficiency, returned capital to our shareholders through increased dividends and share buybacks, and maintained a strong CET 1 ratio of 11.3%.

"Looking ahead to 2019, we will continue to build on this strong foundation and our differentiating strengths, including an integrated North American platform and deep relationships in our wealth, capital markets and P&C businesses, to deliver sustainable and competitive long-term performance," concluded Mr. White.

Reported net income in the current quarter included a benefit of $203 million after-tax ($277 million pre-tax) from the remeasurement of an employee benefit liability, which was excluded from adjusted earnings. Reported net income in the current year also includes a $425 million charge related to the revaluation of our U.S. net deferred tax asset5 which was also excluded from adjusted earnings. Other adjusting items are included in the Non-GAAP Measures table on page 5.

(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)        The current    
           quarter        
           included a     
           benefit from   
           the            
           remeasurement  
           of an employee 
           benefit        
           liability as a 
           result of an   
           amendment to   
           our other      
           employee future
           benefits plan  
           for certain    
           employees that 
           was announced  
           in the fourth  
           quarter of     
           2018. This     
           amount has been
           included in    
           Corporate      
           Services in    
           non-interest   
           expense.       
(3)        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.     
(4)        Effective the  
           first quarter  
           of 2018, the   
           bank           
           prospectively  
           adopted IFRS 9,
           Financial      
           Instruments    
           (IFRS 9). Under
           IFRS 9, we     
           refer to the   
           provision for  
           credit losses  
           on impaired    
           loans and the  
           provision for  
           credit losses  
           on performing  
           loans. Prior   
           periods have   
           not been       
           restated. Refer
           to the Changes 
           in Accounting  
           Policies       
           section on page
           121 of BMO's   
           2018 Annual    
           MD&A for       
           further        
           details. In    
           prior periods, 
           changes to the 
           collective     
           allowance were 
           an adjusting   
           item. Refer to 
           the Non-GAAP   
           measures on    
           page 5.        
(5)        Reported net   
           income in the  
           first quarter  
           of 2018        
           included a $425
           million (US$339
           million) charge
           related to the 
           revaluation of 
           our U.S. net   
           deferred tax   
           asset as a     
           result of the  
           enactment of   
           the U.S. Tax   
           Cuts and Jobs  
           Act. See the   
           Critical       
           Accounting     
           Estimates -    
           Income Taxes   
           and Deferred   
           Tax Assets     
           section on page
           119 of BMO's   
           2018 Annual    
           MD&A.          
Note: All 
ratios and
percentage
changes in
this      
document  
are based 
on        
unrounded 
numbers    

Return on equity (ROE) was 16.1%, up from 12.1% in the prior year and adjusted ROE was 14.5%, up from 12.9%. Return on tangible common equity (ROTCE) was 19.5%, compared with 14.8% in the prior year and adjusted ROTCE was 17.3%, compared with 15.5%.

Concurrent with the release of results, BMO announced a first quarter 2019 dividend of $1.00 per common share, up $0.04 or 4% from the prior quarter and up $0.07 per share or 8% from the prior year. The quarterly dividend of $1.00 per common share is equivalent to an annual dividend of $4.00 per common share.

BMO's 2018 audited annual consolidated financial statements and accompanying management discussion & analysis (MD&A), is available online at www.bmo.com/investorrelations and at www.sedar.com.

Fourth Quarter Operating Segment Overview

Canadian P&C

Reported fourth quarter net income of $675 million and adjusted net income of $676 million both increased $51 million or 8% from the prior year. Adjusted net income excludes the amortization of acquisition-related intangible assets. Results reflect revenue growth and lower provision for credit losses, partially offset by higher expenses.

During the quarter, we continued to enhance our digital capabilities as we launched Business Xpress, a small business lending platform that speeds up the loan approval process by 95% for small business loans. The platform uses data analytics technology and best-in-class automatic adjudication strategies providing a faster and more convenient way for Canada's small businesses to obtain capital.

U.S. P&C

Reported net income of $372 million increased $102 million or 37% and adjusted net income of $383 million increased $102 million or 36% from the prior year. Adjusted net income excludes the amortization of acquisition-related intangible assets.

Reported net income of US$285 million increased US$71 million or 33% and adjusted net income of US$294 million increased US$71 million or 31% from the prior year, due to good revenue growth and lower taxes from the benefit of U.S. tax reform and a favourable U.S. tax item, partially offset by higher expenses and higher provisions for credit losses.

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

BMO Wealth Management

Reported net income of $219 million increased $44 million or 25% and adjusted net income of $229 million increased $40 million or 21% from the prior year. Adjusted net income excludes the amortization of acquisition-related intangible assets. Traditional wealth reported net income of $192 million was unchanged and adjusted net income of $202 million decreased $4 million or 2% from the prior year, as business growth and lower taxes were more than offset by a legal provision and higher expenses. Insurance net income of $27 million was below trend but increased $44 million from the prior year, primarily due to less elevated reinsurance claims in the current year, with this partially offset by unfavourable market movements in the current quarter relative to favourable market movements in the prior year.

BMO Global Asset Management was named the Best Environmental Social and Governance (ESG) Research Team in the Investment Week Sustainable & ESG Investment Awards 2018. This award recognizes our longstanding commitment and leadership in responsible investing, and our belief that prudent management of ESG issues can have an important impact on the creation of long-term investor value.

BMO Capital Markets

Reported net income of $298 million decreased $18 million or 6%, and adjusted net income of $309 million decreased $7 million or 2% from a year ago, as higher Investment and Corporate Banking revenue and lower taxes were more than offset by higher expenses and lower Trading Products revenue. Adjusted net income excludes acquisition integration costs and the amortization of acquisition-related intangible assets.

On September 1, 2018, we completed the acquisition of KGS-Alpha Capital Markets (KGS-Alpha), a U.S. fixed income broker-dealer specializing in U.S. mortgage and asset-backed securities in the institutional investor market.

Corporate Services

Reported net income for the quarter was $131 million, compared with a net loss of $158 million in the prior year. Corporate Services adjusted net loss for the quarter was $68 million, compared with an adjusted net loss of $102 million in the prior year. Adjusted results increased mainly due to higher revenue excluding the teb adjustment and lower expenses. The adjusted results exclude a benefit of $203 million after-tax from the remeasurement of an employee benefit liability in the current period, a restructuring charge in the prior year, and acquisition integration costs in both periods.

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

Capital

BMO's Common Equity Tier 1 (CET1) Ratio was 11.3% at October 31, 2018. The CET1 Ratio decreased from 11.4% at the end of the third quarter, as retained earnings growth, net of share repurchases, was more than offset by higher risk-weighted assets, including an acquisition.

Provision for Credit Losses

The total provision for credit losses was $175 million, a decrease of $27 million from the prior year. The provision for credit losses on impaired loans of $177 million decreased $25 million from $202 million in the prior year, primarily due to lower provisions in the P&C businesses and higher net recoveries in BMO Capital Markets and Corporate Services. There was a $2 million net recovery of credit losses on performing loans in the current quarter.

Caution

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

Regulatory Filings

Our continuous disclosure materials, including our 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 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.

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

The Financial Review commentary is as of December 4, 2018. The material that precedes this section comprises part of this Financial Review. The Financial Review should be read in conjunction with the unaudited interim consolidated financial statements for the period ended October 31, 2018, included in this document, as well as the audited annual consolidated financial statements for the year ended October 31, 2018, and the MD&A for fiscal 2018.

The 2018 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.

Bank of Montreal's management, under the supervision of the CEO and CFO, has evaluated the effectiveness, as of October 31, 2018, 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 October 31, 2018, which 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.

Financial Highlights

(Canadian $ in      Q4-2018 Q3-2018 Q4-2017 Fiscal  Fiscal 
millions, except as                         2018    2017   
noted)                                                     
Summary Income                                             
Statement                                                  
Net interest income 2,669   2,607   2,535   10,313  10,007 
Non-interest        3,253   3,213   3,120   12,724  12,253 
revenue                                                    
Revenue             5,922   5,820   5,655   23,037  22,260 
Insurance claims,   390     269     573     1,352   1,538  
commissions and                                            
changes in policy                                          
benefit liabilities                                        
(CCPB)                                                     
Revenue, net of     5,532   5,551   5,082   21,685  20,722 
CCPB                                                       
Provision for       177     177     na      700     na     
credit losses on                                           
impaired loans (1)                                         
Provision for       (2)     9       na      (38)    na     
(recovery of)                                              
credit losses on                                           
performing loans                                           
(1)                                                        
Total provision for 175     186     202     662     746    
credit losses (1)                                          
Non-interest        3,224   3,386   3,375   13,613  13,330 
expense                                                    
Provision for       438     443     278     1,960   1,296  
income taxes                                               
Net income          1,695   1,536   1,227   5,450   5,350  
Attributable to     1,695   1,536   1,227   5,450   5,348  
bank shareholders                                          
Attributable to     -       -       -       -       2      
non-controlling                                            
interest in                                                
subsidiaries                                               
Net income          1,695   1,536   1,227   5,450   5,350  
Adjusted net income 1,529   1,565   1,309   5,979   5,508  
Common Share Data                                          
($ except as noted)                                        
Earnings per share  2.57    2.31    1.81    8.17    7.92   
Adjusted earnings   2.32    2.36    1.94    8.99    8.16   
per share                                                  
Earnings per share  41.9    13.0    (10.3)  3.1     14.5   
growth (%)                                                 
Adjusted earnings   19.3    16.4    (7.6)   10.1    8.5    
per share growth                                           
(%)                                                        
Dividends declared  0.96    0.96    0.90    3.78    3.56   
per share                                                  
Book value per      64.73   63.31   61.92   64.73   61.92  
share                                                      
Closing share price 98.43   103.11  98.83   98.43   98.83  
Number of common                                           
shares outstanding                                         
(in millions)                                              
End of period       639.3   639.9   647.8   639.3   647.8  
Average diluted     641.8   642.4   650.3   644.9   652.0  
Total market value  62.9    66.0    64.0    62.9    64.0   
of common shares ($                                        
billions)                                                  
Dividend yield (%)  3.9     3.7     3.6     3.8     3.6    
Dividend payout     37.2    41.4    49.5    46.2    44.8   
ratio (%)                                                  
Adjusted dividend   41.3    40.6    46.2    41.9    43.5   
payout ratio (%)                                           
Financial Measures                                         
and Ratios (%)                                             
Return on equity    16.1    14.7    12.1    13.2    13.3   
Adjusted return on  14.5    15.0    12.9    14.6    13.7   
equity                                                     
Return on tangible  19.5    17.9    14.8    16.2    16.3   
common equity                                              
Adjusted return on  17.3    18.0    15.5    17.5    16.5   
tangible common                                            
equity                                                     
Net income growth   38.1    10.7    (8.8)   1.9     15.5   
Adjusted net income 16.8    13.9    (6.2)   8.6     9.7    
growth                                                     
Revenue growth      4.7     6.6     7.2     3.5     5.6    
Revenue growth, net 8.9     6.6     (2.2)   4.6     6.0    
of CCPB                                                    
Non-interest        (4.5)   3.0     1.4     2.1     2.2    
expense growth                                             
Adjusted            6.0     3.7     (0.1)   3.4     3.6    
non-interest                                               
expense growth                                             
Efficiency ratio,   58.3    61.0    66.4    62.8    64.3   
net of CCPB                                                
Adjusted efficiency 62.4    60.3    64.1    62.2    62.9   
ratio, net of CCPB                                         
Operating leverage, 13.4    3.6     (3.6)   2.5     3.8    
net of CCPB                                                
Adjusted operating  2.9     2.9     (2.1)   1.2     2.0    
leverage, net of                                           
CCPB                                                       
Net interest margin 1.49    1.49    1.57    1.51    1.55   
on average earning                                         
assets                                                     
Effective tax rate  20.6    22.4    18.5    26.5    19.5   
Adjusted effective  19.7    22.4    19.3    20.7    19.8   
tax rate                                                   
Total               0.18    0.19    0.22    0.17    0.20   
PCL-to-average net                                         
loans and                                                  
acceptances                                                
(annualized)                                               
PCL on impaired     0.18    0.18    0.22    0.18    0.22   
loans-to-average                                           
net loans and                                              
acceptances                                                
(annualized)                                               
Balance Sheet (as                                          
at, $ millions,                                            
except as noted)                                           
Assets              774,048 765,318 709,580 774,048 709,580
Gross loans and     404,215 395,295 376,886 404,215 376,886
acceptances                                                
Net loans and       402,576 393,635 375,053 402,576 375,053
acceptances                                                
Deposits            522,051 506,916 479,792 522,051 479,792
Common              41,387  40,516  40,114  41,387  40,114 
shareholders'                                              
equity                                                     
Cash and            29.9    28.2    28.5    29.9    28.5   
securities-to-total                                        
assets ratio (%)                                           
Capital Ratios (%)                                         
CET1 Ratio          11.3    11.4    11.4    11.3    11.4   
Tier 1 Capital      12.9    12.9    13.0    12.9    13.0   
Ratio                                                      
Total Capital Ratio 15.2    14.9    15.1    15.2    15.1   
Leverage Ratio      4.2     4.2     4.4     4.2     4.4    
Foreign Exchange                                           
Rates ($)                                                  
As at Canadian/U.S. 1.3169  1.2997  1.2895  1.3169  1.2895 
dollar                                                     
Average             1.3047  1.3032  1.2621  1.2878  1.3071 
Canadian/U.S.                                              
dollar                                                      
(1)           Effective the
              first quarter
              of 2018, the 
              bank         
              prospectively
              adopted IFRS 
              9, Financial 
              Instruments  
              (IFRS 9).    
              Under IFRS 9,
              we refer to  
              the provision
              for credit   
              losses on    
              impaired     
              loans and the
              provision for
              credit losses
              on performing
              loans. Prior 
              periods have 
              not been     
              restated. The
              provision for
              credit losses
              in periods   
              prior to the 
              first quarter
              of 2018 is   
              comprised of 
              both specific
              and          
              collective   
              provisions.  
              Refer to the 
              Changes in   
              Accounting   
              Policies     
              section on   
              page 121 of  
              BMO's 2018   
              Annual MD&A  
              for further  
              details.     
Certain      
comparative  
figures have 
been         
reclassified 
to conform   
with the     
current      
period's     
presentation.
Adjusted     
results are  
non-GAAP     
amounts or   
non-GAAP     
measures.    
Please see   
the Non-GAAP 
Measures     
section.     
na - not     
applicable    

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 they have been derived from our audited annual consolidated 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 following table. Results and measures that exclude the impact of Canadian/U.S. dollar exchange rate movements on our U.S. segment are non-GAAP measures (please see the Foreign Exchange section on page 7 for a discussion of the effects of changes in exchange rates on our results). 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, as well as comparisons with our competitors. 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      Q4-2018 Q3-2018 Q4-2017 Fiscal   Fiscal  
millions, except as                         2018     2017    
noted)                                                       
Reported Results                                             
Revenue             5,922   5,820   5,655   23,037   22,260  
Insurance claims,   (390)   (269)   (573)   (1,352)  (1,538) 
commissions and                                              
changes in policy                                            
benefit liabilities                                          
(CCPB)                                                       
Revenue, net of     5,532   5,551   5,082   21,685   20,722  
CCPB                                                         
Total provision for (175)   (186)   (202)   (662)    (746)   
credit losses                                                
Non-interest        (3,224) (3,386) (3,375) (13,613) (13,330)
expense                                                      
Income before       2,133   1,979   1,505   7,410    6,646   
income taxes                                                 
Provision for       (438)   (443)   (278)   (1,960)  (1,296) 
income taxes                                                 
Net Income          1,695   1,536   1,227   5,450    5,350   
EPS ($)             2.57    2.31    1.81    8.17     7.92    
Adjusting Items                                              
(Pre-tax) (1)                                                
Acquisition         (18)    (8)     (24)    (34)     (87)    
integration costs                                            
(2)                                                          
Amortization of     (31)    (28)    (34)    (116)    (149)   
acquisition-related                                          
intangible assets                                            
(3)                                                          
Restructuring costs -       -       (59)    (260)    (59)    
(4)                                                          
Decrease in the     -       -       -       -        76      
collective                                                   
allowance for                                                
credit losses (5)                                            
Benefit from the    277     -       -       277      -       
remeasurement of an                                          
employee benefit                                             
liability (6)                                                
Adjusting items     228     (36)    (117)   (133)    (219)   
included in                                                  
reported pre-tax                                             
income                                                       
Adjusting Items                                              
(After tax) (1)                                              
Acquisition         (13)    (7)     (15)    (25)     (55)    
integration costs                                            
(2)                                                          
Amortization of     (24)    (22)    (26)    (90)     (116)   
acquisition-related                                          
intangible assets                                            
(3)                                                          
Restructuring costs -       -       (41)    (192)    (41)    
(4)                                                          
Decrease in the     -       -       -       -        54      
collective                                                   
allowance for                                                
credit losses (5)                                            
Benefit from the    203     -       -       203      -       
remeasurement of an                                          
employee benefit                                             
liability (6)                                                
U.S. net deferred   -       -       -       (425)    -       
tax asset                                                    
revaluation (7)                                              
Adjusting items     166     (29)    (82)    (529)    (158)   
included in                                                  
reported net income                                          
after tax                                                    
Impact on EPS ($)   0.25    (0.05)  (0.13)  (0.82)   (0.24)  
Adjusted Results                                             
Revenue             5,922   5,820   5,655   23,037   22,260  
Insurance claims,   (390)   (269)   (573)   (1,352)  (1,538) 
commissions and                                              
changes in policy                                            
benefit liabilities                                          
(CCPB)                                                       
Revenue, net of     5,532   5,551   5,082   21,685   20,722  
CCPB                                                         
Total provision for (175)   (186)   (202)   (662)    (822)   
credit losses                                                
Non-interest        (3,452) (3,350) (3,258) (13,480) (13,035)
expense                                                      
Income before       1,905   2,015   1,622   7,543    6,865   
income taxes                                                 
Provision for       (376)   (450)   (313)   (1,564)  (1,357) 
income taxes                                                 
Net income          1,529   1,565   1,309   5,979    5,508   
EPS ($)             2.32    2.36    1.94    8.99     8.16     
(1)           Adjusting items are
              generally included 
              in Corporate       
              Services, with the 
              exception of the   
              amortization of    
              acquisition-related
              intangible assets  
              and certain        
              acquisition        
              integration costs, 
              which are charged  
              to the operating   
              groups.            
(2)           Acquisition        
              integration costs  
              related to BMO     
              Transportation     
              Finance are charged
              to Corporate       
              Services, since the
              acquisition impacts
              both Canadian and  
              U.S. P&C           
              businesses.        
              KGS-Alpha          
              acquisition        
              integration costs  
              are reported in BMO
              Capital Markets.   
              Acquisition        
              integration costs  
              are recorded in    
              non-interest       
              expense.           
(3)           These expenses were
              charged to the     
              non-interest       
              expense of the     
              operating groups.  
              Before-tax and     
              after-tax amounts  
              for each operating 
              group are provided 
              on pages 14, 15,   
              16, 18 and 20.     
(4)           In Q2-18, we       
              recorded a         
              restructuring      
              charge, primarily  
              related to         
              severance costs, as
              a result of an     
              ongoing bank-wide  
              initiative to      
              simplify how we    
              work, drive        
              increased          
              efficiency and     
              invest in          
              technology to move 
              our business       
              forward. A         
              restructuring      
              charge in Q4-17 was
              also taken as we   
              continued to       
              accelerate the use 
              of technology to   
              enhance customer   
              experience and     
              focused on driving 
              operational        
              efficiencies.      
              Restructuring costs
              are included in    
              non-interest       
              expense in         
              Corporate Services.
(5)           Adjustments to the 
              collective         
              allowance for      
              credit losses are  
              recorded in        
              Corporate Services 
              provision for      
              credit losses in   
              2017 and prior     
              years.             
(6)           The current quarter
              included a $277    
              million pre-tax    
              benefit from the   
              remeasurement of an
              employee benefit   
              liability as a     
              result of an       
              amendment to our   
              other employee     
              future benefits    
              plan for certain   
              employees that was 
              announced in the   
              fourth quarter of  
              2018. This amount  
              has been included  
              in Corporate       
              Services in        
              non-interest       
              expense.           
(7)           Charge related to  
              the revaluation of 
              our U.S. net       
              deferred tax asset 
              as a result of the 
              enactment of the   
              U.S. Tax Cuts and  
              Jobs Act. For more 
              information see the
              Critical Accounting
              Estimates - Income 
              Taxes and Deferred 
              Tax Assets section 
              on page 119 of     
              BMO's 2018 Annual  
              MD&A for further   
              details.           
Certain      
comparative  
figures have 
been         
reclassified 
to conform   
with the     
current      
year's       
presentation.
Adjusted     
results and  
measures in  
this table   
are non-GAAP 
amounts or   
non-GAAP     
measures.     

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 in this document may include, but are not limited to, statements with respect to our objectives and priorities for fiscal 2019 and beyond, our strategies or future actions, our targets, expectations for our financial condition or share price, the regulatory environment in which we operate and the results of or outlook for our operations or for the Canadian, U.S. and international economies, and include statements of our management. Forward-looking statements are typically identified by words such as "will", "would", "should", "believe", "expect", "anticipate", "project", "intend", "estimate", "plan", "goal", "target", "may" and "could".

By their nature, forward-looking statements require us to make assumptions and are subject to inherent risks and uncertainties, both general and specific in nature. 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 - many of which are beyond our control and the effects of which can be difficult to predict - 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; the Canadian housing market, weak, volatile or illiquid capital and/or credit markets; interest rate and currency value fluctuations; changes in monetary, fiscal, or economic policy and tax legislation and interpretation; the level 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, and the effect of such changes on funding costs; judicial or regulatory proceedings; the accuracy and completeness of the information we obtain with respect to our customers and counterparties; failure of third parties to comply with their obligations to us; our ability to execute our strategic plans and to complete and integrate acquisitions, including obtaining regulatory approvals; critical accounting estimates and the effect of changes to accounting standards, rules and interpretations on these estimates; operational and infrastructure risks, including with respect to reliance on third parties; changes to our credit ratings; political conditions, including changes relating to or affecting economic or trade matters; global capital markets activities; the possible effects on our business of war or terrorist activities; outbreaks of disease or illness that affect local, national or international economies; natural disasters and disruptions to public infrastructure, such as transportation, communications, power or water supply; technological changes; information and cyber security, including the threat of hacking, identity theft and corporate espionage, as well as the possibility of denial of service resulting from efforts targeted at causing system failure and service disruption; and our ability to anticipate and effectively manage risks arising from all of the foregoing factors.

We caution that the foregoing list is not exhaustive of all possible factors. Other factors and risks could adversely affect our results. For more information, please see the discussion in the Risks That May Affect Future Results section on page 79 of BMO's 2018 Annual MD&A, and the sections related to credit and counterparty, market, insurance, liquidity and funding, operational, model, legal and regulatory, business, strategic, environmental and social, and reputation risk, in the Enterprise-Wide Risk Management section on page 78 of BMO's 2018 Annual MD&A, all of which outline certain key factors and risks that may affect our future results. Investors and others should carefully consider these factors and risks, as well as other uncertainties and potential events, and the inherent uncertainty of forward-looking statements. We do 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.

Material economic assumptions underlying the forward-looking statements contained in this document are set out in the Economic Developments and Outlook section on page 30 of BMO's Annual MD&A. 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 governments, historical relationships between economic and financial variables, and the risks to the domestic and global economy.

Foreign Exchange

The Canadian dollar equivalents of BMO's U.S. results that are denominated in U.S. dollars increased relative to the third quarter of 2018 and the fourth quarter of 2017 due to the stronger U.S. dollar. The table below indicates the relevant average Canadian/U.S. dollar exchange rates and the impact of changes in the rates on our U.S. segment results. References in this document to the impact of the U.S. dollar do not include U.S.-dollar-denominated amounts recorded outside of BMO's U.S. segment.

Economically, our U.S. dollar income stream was unhedged to changes in foreign exchange rates during the current and prior year. We regularly determine whether to execute hedging transactions to mitigate the impact of foreign exchange rate movements on net income.

See the Enterprise-Wide Capital Management section on page 69 of the 2018 Annual MD&A for a discussion of the impact that changes in foreign exchange rates can have on our capital position. Changes in foreign exchange rates will also affect accumulated other comprehensive income, primarily from the translation of our investments in foreign operations.

This Foreign Exchange section contains forward-looking statements. Please see the Caution Regarding Forward Looking Statements.

Effects of Changes in Exchange Rates on BMO's U.S. Segment Reported and Adjusted Results

                                             Q4-2018    
(Canadian $ in millions, except as noted)    vs. Q4-2017 vs. Q3-2018
Canadian/U.S. dollar exchange rate (average)                        
Current period                               1.3047      1.3047     
Prior period                                 1.2621      1.3032     
Effects on U.S. segment reported results                            
Increased net interest income                33          1          
Increased non-interest revenue               26          1          
Increased revenues                           59          2          
Increased provision for credit losses        (3)         -          
Increased expenses                           (44)        (1)        
Increased income taxes                       (2)         (1)        
Increased reported net income                10          -          
Impact on earnings per share ($)             0.02        0.00       
Effects on U.S. segment adjusted results                            
Increased net interest income                33          1          
Increased non-interest revenue               26          1          
Increased revenues                           59          2          
Increased provision for credit losses        (2)         -          
Increased expenses                           (42)        (1)        
Increased income taxes                       (4)         (1)        
Increased adjusted net income                11          -          
Impact on adjusted earnings per share ($)    0.02        0.00        
Adjusted     
results in   
this section 
are non-GAAP 
amounts or   
non-GAAP     
measures.    
Please see   
the Non-GAAP 
Measures     
section.     
Certain      
comparative  
figures have 
been         
reclassified 
to conform   
with the     
current      
year's       
presentation. 
Net IncomeQ4 2018 vs Q4 2017

Reported net income was $1,695 million, up $468 million or 38% from 
the prior year. Adjusted net income was $1,529 million, up $220 
million or 17% from the prior year. Adjusted net income excludes a 
benefit of $203 million after-tax from a remeasurement of an employee
benefit liability in the current year, a restructuring charge in the 
prior year, and the amortization of acquisition-related intangible 
assets and acquisition integration costs in both periods. EPS of 
$2.57 was up $0.76 or 42% from the prior year. Adjusted EPS of $2.32 
was up $0.38 or 19%. 

Results reflect strong growth in U.S. P&C, good performance in Canadian P&C and a lower Corporate Services loss, partially offset by lower income in BMO Capital Markets. Wealth Management results increased, largely reflecting less elevated reinsurance claims in the current year.

Q4 2018 vs Q3 2018

Reported net income was up $159 million or 10% and adjusted net income was down $36 million or 2% from the prior quarter. Adjusted net income excludes the remeasurement benefit in the current quarter and the amortization of acquisition-related intangible assets and acquisition integration costs in both periods. EPS was up $0.26 or 11% and adjusted EPS was down $0.04 or 2%.

Results reflect higher income in the P&C businesses and BMO Capital Markets, more than offset by lower income in Wealth Management and Corporate Services.

Adjusted results in this Net Income section are non-GAAP amounts or non-GAAP measures. Please see the Non-GAAP Measures section.

Revenue 
Q4 2018 vs Q4 2017
Revenue of $5,922 million increased $267 million or 5% from the prior
year, or 4% excluding the impact of the stronger U.S. dollar. On a 
basis that nets insurance claims, commissions and changes in policy 
benefit liabilities (CCPB) against insurance revenue (net revenue), 
revenue of $5,532 million increased $450 million or 9%, or 8% 
excluding the impact of the stronger U.S. dollar. Revenue increased 
in all operating groups compared with the prior year.  

Net interest income of $2,669 million increased $134 million or 5%, or $100 million or 4% excluding the impact of the stronger U.S. dollar. Net interest income, excluding trading of $2,774 million increased $187 million or 7%, largely due to higher deposit and loan volumes in the P&C businesses. Average earning assets of $711.7 billion increased $69.1 billion or 11%, or 9% excluding the impact of the stronger U.S. dollar, due to loan growth, higher securities, higher securities borrowed or purchased under resale agreements and increased cash resources. BMO's overall net interest margin decreased 8 basis points, and 7 basis points on an excluding trading basis, primarily driven by lower spreads in BMO Capital Markets, mainly due to higher volumes of lower spread assets.

Net non-interest revenue of $2,863 million increased $316 million or 12%. Excluding trading revenue, net non-interest revenue increased $141 million or 6%, with increases in most non-interest revenue categories.

Gross insurance revenue decreased $144 million from the prior year due to increases in long-term interest rates decreasing the fair value of investments in the current year, compared with decreases in long-term interest rates increasing the fair value of investments in the prior year and weaker equity markets in the current year, partially offset by higher annuity sales. Insurance revenue can experience variability arising from fluctuations in the fair value of insurance assets. The investments which support policy benefit liabilities comprise predominantly fixed income and some equity assets. These investments are recorded at fair value with changes in fair value recorded in insurance revenue in the Consolidated Statement of Income. These fair value changes are largely offset by changes in the fair value of policy benefit liabilities, the impact of which is reflected in CCPB, as discussed on page 10. We generally focus on analyzing revenue net of CCPB given the extent to which insurance revenue can vary and that this variability is largely offset in CCPB.

Q4 2018 vs Q3 2018

Revenue increased $102 million or 2% from the prior quarter. Net revenue decreased $19 million as lower Wealth Management revenue was partially offset by growth in other businesses.

Net interest income of $2,669 million increased $62 million or 2%, compared with the prior quarter. Net interest income excluding trading of $2,774 million increased $43 million or 2%, compared with the prior quarter, mainly driven by higher deposit and loan volumes in the P&C businesses. Average earning assets increased $19.6 billion or 3%, largely driven by higher securities, loan growth and increased cash resources. BMO's overall net interest margin of 1.49% was unchanged. On an excluding trading basis, net interest margin decreased 2 basis points to 1.84% mainly due to higher volumes of lower spread assets in BMO Capital Markets.

Net non-interest revenue decreased $81 million or 3%. Excluding trading revenue, net non-interest revenue decreased $55 million or 2%, primarily due to lower net insurance revenue and underwriting and advisory fees.

Gross insurance revenue increased $58 million due to higher annuity sales in the current quarter, partially offset by increases in long-term interest rates decreasing the fair value of investments in the current quarter, compared with the prior quarter and weaker equity markets in the current quarter. The increase in insurance revenue was largely offset by higher insurance claims, commissions and changes in policy benefit liabilities as discussed on page 10.

Net interest income and non-interest revenue are detailed in the unaudited interim consolidated financial statements.

Provision for Credit Losses

Effective the first quarter of 2018, the bank prospectively adopted IFRS 9, Financial Instruments (IFRS 9). Under IFRS 9, we refer to the provision for credit losses on impaired loans and the provision for credit losses on performing loans. The provision for credit losses on impaired loans under IFRS 9, is consistent with the specific provision under IAS 39 in prior years. The provision for credit losses on performing loans replaced the collective provision under IAS 39. Refer to the Changes in Accounting Policy section on page 121 of BMO's Annual MD&A for an explanation of the provision for credit losses. Prior periods have not been restated.

Q4 2018 vs Q4 2017

The total provision for credit losses was $175 million, a decrease of $27 million from the prior year. The provision for credit losses on impaired loans of $177 million decreased $25 million from $202 million in the prior year, primarily due to lower provisions in the P&C businesses and net recoveries in BMO Capital Markets and Corporate Services, compared with provisions in the prior year. There was a decrease for credit losses on performing loans of $2 million, as net recoveries of credit losses in Canadian P&C, BMO Capital Markets, and Corporate Services were largely offset by provisions in U.S P&C.

Q4 2018 vs Q3 2018

The total provision for credit losses was down $11 million from the prior quarter. The provision for credit losses on impaired loans was flat at $177 million. There was a $2 million net recovery of credit losses on performing loans in the quarter, compared with a provision for credit losses on performing loans of $9 million in the prior quarter.

Provision for Credit Losses by Operating Group (1)

(Canadian  Canadian U.S. Total WealthManagement BMO            CorporateServices Total
$ in       P&C      P&C  P&C                    CapitalMarkets (2)               Bank 
millions)                                                                             
Q4-2018                                                                               
Provision  118      61   179   2                (3)            (1)               177  
for                                                                                   
(recovery                                                                             
of) credit                                                                            
losses on                                                                             
impaired                                                                              
loans                                                                                 
Provision  (15)     18   3     1                (4)            (2)               (2)  
for                                                                                   
(recovery                                                                             
of) credit                                                                            
losses on                                                                             
performing                                                                            
loans                                                                                 
Total      103      79   182   3                (7)            (3)               175  
provision                                                                             
for                                                                                   
(recovery                                                                             
of) credit                                                                            
losses                                                                                
Q3-2018                                                                               
Provision  120      54   174   2                3              (2)               177  
for                                                                                   
(recovery                                                                             
of) credit                                                                            
losses on                                                                             
impaired                                                                              
loans                                                                                 
Provision  17       (14) 3     2                4              -                 9    
for                                                                                   
(recovery                                                                             
of) credit                                                                            
losses on                                                                             
performing                                                                            
loans                                                                                 
Total      137      40   177   4                7              (2)               186  
provision                                                                             
for                                                                                   
(recovery                                                                             
of) credit                                                                            
losses                                                                                
Q4-2017                                                                               
Total      130      64   194   -                4              4                 202  
specific                                                                              
and                                                                                   
collective                                                                            
provision                                                                             
for                                                                                   
(recovery                                                                             
of) credit                                                                            
losses                                                                                
Fiscal                                                                                
2018                                                                                  
Provision  466      258  724   6                (17)           (13)              700  
for                                                                                   
(recovery                                                                             
of) credit                                                                            
losses on                                                                             
impaired                                                                              
loans                                                                                 
Provision  3        (38) (35)  -                (1)            (2)               (38) 
for                                                                                   
(recovery                                                                             
of) credit                                                                            
losses on                                                                             
performing                                                                            
loans                                                                                 
Total      469      220  689   6                (18)           (15)              662  
provision                                                                             
for                                                                                   
(recovery                                                                             
of) credit                                                                            
losses                                                                                
Fiscal                                                                                
2017                                                                                  
Total      483      289  772   8                44             (78)              746  
specific                                                                              
and                                                                                   
collective                                                                            
provision                                                                             
for                                                                                   
(recovery                                                                             
of) credit                                                                            
losses (2)                                                                             
(1)           Effective the
              first quarter
              of 2018, the 
              bank         
              prospectively
              adopted IFRS 
              9, Financial 
              Instruments  
              (IFRS 9).    
              Under IFRS 9,
              we refer to  
              the provision
              for credit   
              losses on    
              impaired     
              loans and the
              provision for
              credit losses
              on performing
              loans. Prior 
              periods have 
              not been     
              restated. The
              provision for
              credit losses
              in periods   
              prior to the 
              first quarter
              of 2018 is   
              comprised of 
              specific     
              provisions   
              for operating
              groups and   
              includes both
              specific and 
              collective   
              provisions   
              for Corporate
              Services.    
              Refer to the 
              Changes in   
              Accounting   
              Policies     
              section on   
              page 121 of  
              BMO's 2018   
              Annual MD&A  
              for further  
              details.     
(2)           Adjustments  
              to the       
              collective   
              allowance for
              credit losses
              are recorded 
              in Corporate 
              Services     
              provision for
              credit losses
              in 2017 and  
              prior years. 
Certain      
comparative  
figures have 
been         
reclassified 
to conform   
with the     
current      
period's     
presentation. 

Provision for Credit Losses Performance Ratios

                   Q4-2018 Q3-2018 Q4-2017 Fiscal Fiscal
                                           2018   2017  
Total              0.18    0.19    0.22    0.17   0.20  
PCL-to-average                                          
net loans and                                           
acceptances                                             
(annualized) (%)                                        
PCL on impaired    0.18    0.18    0.22    0.18   0.22  
loans-to-average                                        
net loans and                                           
acceptances                                             
(annualized) (%)                                         

Impaired Loans

Total gross impaired loans (GIL) of $1,936 million at the end of the current quarter, down from $2,220 million in the prior year, with the largest decrease in impaired loans in service industries, and the oil and gas sector. GIL decreased $140 million from $2,076 million in the third quarter of 2018.

Factors contributing to the change in GIL are outlined in the following table. Loans classified as impaired during the quarter totalled $443 million, down from $522 million in the third quarter of 2018 and $527 million in the prior year.

Changes in Gross Impaired Loans (GIL) and Acceptances (1)

(Canadian $ Q4-2018 Q3-2018 Q4-2017 Fiscal  Fiscal 
in                                  2018    2017   
millions,                                          
except as                                          
noted)                                             
GIL,        2,076   2,152   2,154   2,220   2,383  
beginning                                          
of period                                          
Classified  443     522     527     2,078   2,193  
as impaired                                        
during the                                         
period                                             
Transferred (188)   (151)   (135)   (708)   (607)  
to not                                             
impaired                                           
during the                                         
period                                             
Net         (214)   (322)   (184)   (1,051) (1,017)
repayments                                         
Amounts     (194)   (140)   (146)   (618)   (618)  
written-off                                        
Recoveries  -       -       -       -       -      
of loans                                           
and                                                
advances                                           
previously                                         
written-off                                        
Disposals   (5)     -       (45)    (11)    (46)   
of loans                                           
Foreign     18      15      49      26      (68)   
exchange                                           
and other                                          
movements                                          
GIL, end of 1,936   2,076   2,220   1,936   2,220  
period                                             
GIL to      0.48    0.53    0.59    0.48    0.59   
gross loans                                        
and                                                
acceptances                                        
(%)                                                 
(1)           GIL      
              excludes 
              purchased
              credit   
              impaired 
              loans.   
                       
                       
                       
                       
                       
                       
                       
Certain      
comparative  
figures have 
been         
reclassified 
to conform   
with the     
current      
period's     
presentation. 

Insurance Claims, Commissions and Changes in Policy Benefit Liabilities

Insurance claims, commissions and changes in policy benefit liabilities (CCPB) were $390 million in the fourth quarter of 2018, a decrease of $183 million from $573 million in the fourth quarter of 2017 due to the impact of increases in long-term interest rates decreasing the fair value of policy benefit liabilities in the current quarter, compared with decreases in long-term interest rates increasing the fair value of policy benefit liabilities in the prior year, less elevated reinsurance claims in the current year and the impact of weaker equity markets in the current year, partially offset by higher annuity sales. CCPB increased $121 million from $269 million in the third quarter of 2018, due to the impact of higher annuity sales and elevated reinsurance claims in the current quarter, partially offset by higher increases in long-term interest rates decreasing the fair value of policy benefit liabilities in the current quarter, compared with the prior quarter and the impact of weaker equity markets in the current quarter. The changes related to the fair value of policy benefit liabilities and annuity sales were largely offset in revenue.

Non-Interest Expense

Reported non-interest expense of $3,224 million decreased $151 million or 4% from the prior year. Adjusted non-interest expense of $3,452 million increased $194 million or 6%, or 5% excluding the impact of the stronger U.S. dollar, largely reflecting higher employee-related expenses, including an acquisition, higher technology costs and a gain on sale of an office building in the prior year. Adjusted non-interest expense excludes a benefit of $277 million pre-tax in the current quarter from the remeasurement of an employee benefit liability as a result of an amendment to our other employee future benefits plan for certain employees that was announced in the fourth quarter of 2018, a restructuring charge of $59 million in the prior year and acquisition integration costs and the amortization of acquisition-related intangible assets in both periods.

Reported non-interest expense decreased $162 million or 5% from the third quarter of 2018, reflecting the benefit in the current quarter. Adjusted non-interest expense increased $102 million or 3%, with increases in most expense categories.

Reported operating leverage on a net revenue basis was positive 13.4% year-over-year. Adjusted operating leverage on a net revenue basis was positive 2.9% year-over-year.

The reported efficiency ratio was 54.4% compared with 59.7% in the prior year and was 58.3% on a net revenue basis, compared with 66.4% in the prior year. The adjusted efficiency ratio was 58.3% compared with 57.6% in the prior year and was 62.4% on a net revenue basis, compared with 64.1% in the prior year.

Non-interest expense is detailed in the unaudited interim consolidated financial statements.

Adjusted results in this Non-Interest Expense section are non-GAAP amounts or non-GAAP measures. Please see the Non-GAAP Measures section.

Income Taxes

The provision for income taxes of $438 million increased $160 million from the fourth quarter of 2017 and decreased $5 million from the third quarter of 2018. The effective tax rate for the quarter was 20.6%, compared with 18.5% in the prior year and 22.4% in the third quarter of 2018.

The adjusted provision for income taxes of $376 million increased $63 million from the prior year and decreased $74 million from the third quarter of 2018. The adjusted effective tax rate was 19.7% in the current quarter, compared with 19.3% in the prior year and 22.4% in the third quarter of 2018. The higher reported and adjusted effective tax rates in the current quarter relative to the fourth quarter of 2017 were primarily due to lower tax-exempt income from securities and changes in earnings mix, partially offset by a favourable U.S. tax item and the benefit of U.S. tax reform. The lower reported and adjusted effective tax rates in the current quarter relative to the third quarter of 2018 were primarily due to a favourable U.S. tax item.

On a taxable equivalent basis (teb), the reported effective tax rate for the quarter was 23.0%, compared with 27.1% in the prior year and 24.7% in the third quarter of 2018. On a teb basis, the adjusted effective tax rate for the quarter was 22.5%, compared with 27.2% in the prior year and 24.7% in the third quarter of 2018.

Adjusted results in this Income Taxes section are non-GAAP amounts or non-GAAP measures. Please see the Non-GAAP Measures Section.

Capital Management

Fourth Quarter 2018 Regulatory Capital Review

BMO's Common Equity Tier 1 (CET1) Ratio was 11.3% at October 31, 2018.

The CET1 Ratio decreased from 11.4% at the end of the third quarter and at October 31, 2017, as retained earnings growth was more than offset by higher RWA and the impact of share buybacks.

CET1 Capital at October 31, 2018, was $32.7 billion, up from $31.7 billion at July 31, 2018, mainly due to higher retained earnings, net of share repurchases, and the impact of foreign exchange movements on accumulated other comprehensive income. CET1 Capital was up from $30.6 billion at October 31, 2017, largely driven by retained earnings growth net of share repurchases.

CET 1 Capital RWA were $289.2 billion at October 31, 2018, up from $277.5 billion at July 31, 2018 and $269.5 billion at October 31, 2017, driven by business growth, including the impact of the acquisition of KGS-Alpha, and the impact of foreign exchange movements, partially offset by changes in asset quality.

The bank's Tier 1 and Total Capital Ratios were 12.9% and 15.2%, respectively, at October 31, 2018, compared with 12.9% and 14.9%, respectively, at July 31, 2018. The Tier 1 Capital Ratio was unchanged as the factors impacting the CET1 Ratio were largely offset by the issuance of preferred shares. The Total Capital Ratio was higher mainly due to the issuance of subordinated notes. The Tier 1 and Total Capital Ratios were 13.0% and 15.1%, respectively, at October 31, 2017. The Tier 1 Ratio was lower, compared with October 31, 2017, mainly due to the factors impacting the CET1 Ratio. The Total Capital Ratio was higher, compared with October 31, 2017, mainly due to the issuances of subordinated notes net of redemptions, partially offset by the factors impacting the Tier 1 Ratio.

BMO's Leverage Ratio was 4.2% at October 31, 2018, consistent with July 31, 2018. The October 31, 2018 Leverage Ratio was down from 4.4% at October 31, 2017, mainly due to higher leverage exposures driven by business growth.

The impact of foreign exchange movements on capital ratios was largely offset. BMO's investments in foreign operations are primarily denominated in U.S. dollars, and the foreign exchange impact of U.S.-dollar-denominated RWA and capital deductions may result in variability in the bank's capital ratios. BMO may manage the impact of foreign exchange movements on its capital ratios and did so during the fourth quarter. Any such activities could also impact our book value and return on equity.

Regulatory Capital

Regulatory capital requirements for BMO are determined in accordance with OSFI's CAR Guideline, which is based on the capital standards developed by the BCBS. For more information see the Enterprise-Wide Capital Management section on pages 69 to 75 of BMO's 2018 Annual MD&A.

OSFI's capital requirements are summarized in the following table.

(% of         Minimum             Pillar 1       Domestic        OSFI                                BMO Capitaland
risk-weighted capitalrequirements CapitalBuffers StabilityBuffer capitalrequirementsincludingcapital LeverageRatios
assets)                           (1)            (2)             buffers                             as atOctober  
                                                                                                     31, 2018      
Common Equity 4.5%                3.5%           1.5%            9.5%                                11.3%         
Tier 1 Ratio                                                                                                       
Tier 1        6.0%                3.5%           1.5%            11.0%                               12.9%         
Capital Ratio                                                                                                      
Total Capital 8.0%                3.5%           1.5%            13.0%                               15.2%         
Ratio                                                                                                              
Leverage      3.0%                na             na              3.0%                                4.2%          
Ratio                                                                                                               
(1)        The minimum 4.5%
           CET1 Ratio      
           requirement is  
           augmented by    
           3.5% in Pillar 1
           Capital Buffers,
           which can absorb
           losses during   
           periods of      
           stress. The     
           Pillar 1 Capital
           Buffers include 
           a 2.5% Capital  
           Conservation    
           Buffer, a 1.0%  
           Common Equity   
           Tier 1 Surcharge
           for Domestic    
           Systemically    
           Important Banks 
           (D-SIBs) and a  
           Countercyclical 
           Buffer as       
           prescribed by   
           OSFI (immaterial
           for the fourth  
           quarter of      
           2018). If a     
           bank's capital  
           ratios fall     
           within the range
           of this combined
           buffer,         
           restrictions on 
           discretionary   
           distributions of
           earnings (such  
           as dividends,   
           share           
           repurchases and 
           discretionary   
           compensation)   
           would ensue,    
           with the degree 
           of such         
           restrictions    
           varying         
           according to the
           position of the 
           bank's ratios   
           within the      
           buffer range.   
(2)        OSFI requires   
           all D-SIBs to   
           maintain a      
           Domestic        
           Stability Buffer
           (DSB) against   
           Pillar 2 risks  
           associated with 
           systemic        
           vulnerabilities.
           The DSB can     
           range from 0% to
           2.5% of total   
           RWA and is      
           currently set at
           1.5%. Breaches  
           of the DSB will 
           not result in a 
           bank being      
           subject to      
           automatic       
           constraints on  
           capital         
           distributions.  
na - not  
applicable 

Qualifying Regulatory Capital and Risk-Weighted Assets

(Canadian $   Q4-2018 Q3-2018 Q4-2017
in millions,                         
except as                            
noted)                               
Gross Common  41,387  40,516  40,114 
Equity (1)                           
Regulatory    (8,666) (8,828) (9,481)
adjustments                          
applied to                           
Common Equity                        
Common Equity 32,721  31,688  30,633 
Tier 1                               
Capital                              
(CET1)                               
Additional    4,790   4,390   4,690  
Tier 1                               
Eligible                             
Capital (2)                          
Regulatory    (291)   (353)   (215)  
adjustments                          
applied to                           
Tier 1                               
Additional    4,499   4,037   4,475  
Tier 1                               
Capital (AT1)                        
Tier 1        37,220  35,725  35,108 
Capital (T1 =                        
CET1 + AT1)                          
Tier 2        7,017   5,849   5,538  
Eligible                             
Capital (3)                          
Regulatory    (121)   (141)   (50)   
adjustments                          
applied to                           
Tier 2                               
Tier 2        6,896   5,708   5,488  
Capital (T2)                         
Total Capital 44,116  41,433  40,596 
(TC = T1 +                           
T2)                                  
Risk-Weighted                        
Assets (4)                           
(5)                                  
CET1 Capital  289,237 277,506 269,466
Risk-Weighted                        
Assets                               
Tier 1        289,420 277,681 269,466
Capital                              
Risk-Weighted                        
Assets                               
Total Capital 289,604 277,857 269,466
Risk-Weighted                        
Assets                               
Capital                              
Ratios (%)                           
CET1 Ratio    11.3    11.4    11.4   
Tier 1        12.9    12.9    13.0   
Capital Ratio                        
Total Capital 15.2    14.9    15.1   
Ratio                                 
(1) Gross Common  
    Equity        
    includes      
    issued        
    qualifying    
    common shares,
    retained      
    earnings,     
    accumulated   
    other         
    comprehensive 
    income and    
    eligible      
    common share  
    capital issued
    by            
    subsidiaries. 
(2) 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.          
(3) 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.          
(4) The           
    implementation
    of the Credit 
    Valuation     
    Adjustment    
    (CVA) was     
    phased in     
    commencing the
    first quarter 
    of 2014. The  
    applicable    
    scalars to the
    fully         
    implemented   
    CVA charge for
    CET1, Tier 1  
    Capital and   
    Total Capital 
    are 72%, 77%  
    and 81%,      
    respectively  
    in 2017; and  
    80%, 83% and  
    86%,          
    respectively, 
    in 2018.      
(5) For           
    institutions  
    using advanced
    approaches for
    credit risk or
    operational   
    risk, there is
    a capital     
    floor as      
    prescribed in 
    OSFI's CAR    
    Guideline.    
    OSFI revised  
    its capital   
    floor         
    calculation   
    effective the 
    second quarter
    of 2018 at a  
    floor factor  
    of 70%, 72.5% 
    in the third  
    quarter and   
    75% for the   
    fourth quarter
    onward.        

Other Capital Developments

On June 1, 2018, we renewed our normal course issuer bid (NCIB) effective for one year. Under the NCIB, we may purchase up to 20 million common shares for cancellation. The NCIB is a regular part of BMO's capital management strategy. The timing and amount of purchases under the NCIB are subject to management discretion based on factors such as market conditions and capital levels. The bank will consult with OSFI before making purchases under the NCIB. During the quarter, we repurchased and cancelled 1 million common shares under the NCIB.

During the quarter, 399,780 common shares were issued through the exercise of stock options.

On August 25, 2018, we redeemed all of our 6,267,391 outstanding Non-Cumulative 5-Year Rate Reset Class B Preferred Shares, Series 16 and all of our 5,732,609 outstanding Non-Cumulative Floating Rate Class B Preferred Shares, Series 17, at a redemption price of $25.00 per share plus all declared and unpaid dividends.

On September 17, 2018, we completed our domestic public offering of $400 million of Non-Cumulative 5-Year Rate Reset Class B Preferred Shares Series 44.

On October 5, 2018, we completed our U.S. public offering of US$850 million of 4.338% Subordinated Notes due 2028, through our U.S. Medium-Term Note Program.

On November 16, 2018, BMO Capital Trust II, a subsidiary of Bank of Montreal, announced its intention to redeem all of its $450 million issued and outstanding BMO Tier 1 Notes - Series A on December 31, 2018.

On December 4, 2018, BMO announced that the Board of Directors had declared a quarterly dividend on common shares of $1.00 per share, up $0.04 per share or 4% from the prior quarter, and up $0.07 per share or 8% from a year ago. The dividend is payable on February 26, 2019, to shareholders of record on February 1, 2019. Common shareholders may elect to have their cash dividends reinvested in common shares of BMO in accordance with the Shareholder Dividend Reinvestment and Share Purchase Plan.

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.

Caution

The foregoing Capital Management section contains forward-looking statements. Please see the Caution Regarding Forward-Looking Statements.

Review of Operating Groups' PerformanceHow BMO Reports Operating 
Group Results
The following sections review the financial results of each of our 
operating groups and operating segments for the fourth quarter of 
2018. 

Periodically, certain business lines and units within the business lines are transferred between client and corporate support groups to more closely align BMO's organizational structure with its strategic priorities. In addition, revenue and expense allocations are updated to more accurately align with current experience. Results for prior periods are restated to conform with the current presentation.

Effective the first quarter of 2018, the allocation of certain revenue items from Corporate Services to the operating groups was updated to better align with underlying business activity. Results for prior periods and related ratios have been reclassified to conform with the current presentation.

The following additional reclassifications were made effective the first quarter of 2018. Loan losses related to certain fraud costs have been reclassified from provision for credit losses to other non-interest expense in Canadian and U.S. P&C. Certain fees have been reclassified from deposit and payment service charges to card fees within non-interest revenue in Canadian P&C. Also, cash collateral balances were reclassified from loans and deposits to other assets and other liabilities in BMO Capital Markets. Results for prior periods and related ratios have been reclassified to conform with the current period's presentation.

Restructuring costs and acquisition integration costs that impact more than one operating group are included in Corporate Services.

BMO analyzes revenue at the consolidated level based on GAAP revenue reflected in the audited annual consolidated financial statements rather than on a taxable equivalent basis (teb), which is consistent with our Canadian peer group. Like many banks, we analyze revenue on a teb basis at the operating group level. Revenue and the provision for income taxes are increased on tax-exempt securities to an equivalent before-tax basis to facilitate comparisons of income between taxable and tax-exempt sources. The offset to the group teb adjustments is reflected in Corporate Services revenue and provision for income taxes.

Effective with the adoption of IFRS 9, we allocate the provision for credit losses on performing loans and the related allowance to operating groups. In 2017 and prior years, the collective provision and allowance was held in Corporate Services.

Personal and Commercial Banking (P&C)

(Canadian $ in      Q4-2018 Q3-2018 Q4-2017 Fiscal  Fiscal 
millions, except as                         2018    2017   
noted)                                                     
Net interest income 2,431   2,396   2,263   9,384   8,812  
(teb)                                                      
Non-interest        835     841     787     3,311   3,248  
revenue                                                    
Total revenue (teb) 3,266   3,237   3,050   12,695  12,060 
Provision for       179     174     na      724     na     
credit losses on                                           
impaired loans (1)                                         
Provision for       3       3       na      (35)    na     
(recovery of)                                              
credit losses on                                           
performing loans                                           
(1)                                                        
Total provision for 182     177     194     689     772    
credit losses (1)                                          
Non-interest        1,740   1,732   1,642   6,817   6,566  
expense                                                    
Income before       1,344   1,328   1,214   5,189   4,722  
income taxes                                               
Provision for       297     322     320     1,241   1,184  
income taxes (teb)                                         
Reported net income 1,047   1,006   894     3,948   3,538  
Amortization of     12      12      12      47      49     
acquisition-related                                        
intangible assets                                          
(2)                                                        
Adjusted net income 1,059   1,018   906     3,995   3,587  
Net income growth   17.1    14.1    2.8     11.6    8.3    
(%)                                                        
Adjusted net income 16.9    13.9    2.6     11.4    8.0    
growth (%)                                                 
Revenue growth (%)  7.1     6.7     1.9     5.3     4.0    
Non-interest        5.9     4.4     0.7     3.8     2.4    
expense growth (%)                                         
Adjusted            6.0     4.5     0.8     3.9     2.5    
non-interest                                               
expense growth (%)                                         
Return on equity    19.0    18.5    17.1    18.6    16.7   
(%)                                                        
Adjusted return on  19.3    18.8    17.3    18.8    16.9   
equity (%)                                                 
Operating leverage  1.2     2.3     1.2     1.5     1.6    
(teb) (%)                                                  
Adjusted operating  1.1     2.2     1.1     1.4     1.5    
leverage (teb) (%)                                         
Efficiency ratio    53.3    53.5    53.9    53.7    54.4   
(teb) (%)                                                  
Adjusted efficiency 52.8    53.1    53.3    53.2    53.9   
ratio (teb) (%)                                            
Net interest margin 2.98    2.97    2.94    2.97    2.90   
on average earning                                         
assets (teb) (%)                                           
Average earning     324,014 319,954 305,841 316,359 304,178
assets                                                     
Average gross loans 330,502 325,545 309,413 321,537 306,381
and acceptances                                            
Average net loans   328,923 323,984 309,280 320,019 306,239
and acceptances                                            
Average deposits    258,602 251,671 236,309 250,221 238,419 
(1)        Effective the
           first quarter
           of 2018, the 
           bank         
           prospectively
           adopted IFRS 
           9, Financial 
           Instruments  
           (IFRS 9).    
           Under IFRS 9,
           we refer to  
           the provision
           for credit   
           losses on    
           impaired     
           loans and the
           provision for
           credit losses
           on performing
           loans. Prior 
           periods have 
           not been     
           restated. The
           provision for
           credit losses
           in periods   
           prior to the 
           first quarter
           of 2018 is   
           comprised of 
           specific     
           provisions.  
           Refer to the 
           Changes in   
           Accounting   
           Policies     
           section on   
           page 121 of  
           BMO's Annual 
           MD&A for     
           further      
           details.     
(2)        Before tax   
           amounts of   
           $16 million  
           in Q4-2018,  
           $15 million  
           in Q3-2018,  
           $16 million  
           in Q4-2017,  
           $61 million  
           for fiscal   
           2018 and $66 
           million for  
           fiscal 2017  
           are included 
           in           
           non-interest 
           expense.     
Adjusted  
results in
this table
are       
non-GAAP  
amounts or
non-GAAP  
measures. 
Please see
the       
Non-GAAP  
Measures  
section.  
na - not  
applicable 

The Personal and Commercial Banking (P&C) operating group represents the sum of our two retail and commercial operating segments, Canadian Personal and Commercial Banking (Canadian P&C) and U.S. Personal and Commercial Banking (U.S. P&C). The P&C banking business net income of $1,047 million and adjusted net income of $1,059 million were both up 17% from the prior year. Adjusted net income excludes the amortization of acquisition-related intangible assets. These operating segments are reviewed separately in the sections that follow.

Adjusted results in this P&C section are non-GAAP amounts or non-GAAP measures. Please see the non-GAAP Measures section.

Canadian Personal and Commercial Banking (Canadian P&C)

(Canadian $ in      Q4-2018 Q3-2018 Q4-2017 Fiscal  Fiscal 
millions, except as                         2018    2017   
noted)                                                     
Net interest income 1,421   1,402   1,369   5,541   5,261  
Non-interest        547     550     515     2,171   2,182  
revenue                                                    
Total revenue       1,968   1,952   1,884   7,712   7,443  
Provision for       118     120     na      466     na     
credit losses on                                           
impaired loans (1)                                         
Provision for       (15)    17      na      3       na     
(recovery of)                                              
credit losses on                                           
performing loans                                           
(1)                                                        
Total provision for 103     137     130     469     483    
credit losses (1)                                          
Non-interest        954     949     917     3,805   3,622  
expense                                                    
Income before       911     866     837     3,438   3,338  
income taxes                                               
Provision for       236     224     213     884     827    
income taxes                                               
Reported net income 675     642     624     2,554   2,511  
Amortization of     1       -       1       2       3      
acquisition-related                                        
intangible assets                                          
(2)                                                        
Adjusted net income 676     642     625     2,556   2,514  
Personal revenue    1,266   1,257   1,227   5,013   4,718  
Commercial revenue  702     695     657     2,699   2,725  
Net income growth   8.3     4.6     5.3     1.7     13.2   
(%)                                                        
Revenue growth (%)  4.4     5.2     4.3     3.6     6.5    
Non-interest        3.9     4.1     2.9     5.0     3.5    
expense growth (%)                                         
Adjusted            3.9     4.1     2.9     5.0     3.5    
non-interest                                               
expense growth (%)                                         
Operating leverage  0.5     1.1     1.4     (1.4)   3.0    
(%)                                                        
Adjusted operating  0.5     1.1     1.4     (1.4)   3.0    
leverage (%)                                               
Efficiency ratio    48.5    48.6    48.7    49.3    48.7   
(%)                                                        
Net interest margin 2.62    2.60    2.59    2.60    2.53   
on average earning                                         
assets (%)                                                 
Average earning     215,290 213,829 210,110 212,965 207,815
assets                                                     
Average gross loans 226,953 224,799 219,114 223,536 215,848
and acceptances                                            
Average net loans   226,070 223,936 218,909 222,673 215,667
and acceptances                                            
Average deposits    162,480 159,818 154,335 159,483 152,492 
(1)        Effective    
           first quarter
           of 2018, the 
           bank         
           prospectively
           adopted IFRS 
           9, Financial 
           Instruments  
           (IFRS 9).    
           Under IFRS 9,
           we refer to  
           the provision
           for credit   
           losses on    
           impaired     
           loans and the
           provision for
           credit losses
           on performing
           loans. Prior 
           periods have 
           not been     
           restated. The
           provision for
           credit losses
           in periods   
           prior to the 
           first quarter
           of 2018 is   
           comprised of 
           specific     
           provisions.  
           Refer to the 
           Changes in   
           Accounting   
           Policies     
           section on   
           page 121 of  
           BMO's 2018   
           Annual MD&A  
           for further  
           details.     
(2)        Before tax   
           amounts of $1
           million in   
           Q4-2018, $nil
           in Q3-2018   
           and Q4-2017, 
           $2 million   
           for fiscal   
           2018 and $3  
           million for  
           fiscal 2017  
           are included 
           in           
           non-interest 
           expense.     
Adjusted  
results in
this table
are       
non-GAAP  
amounts or
non-GAAP  
measures. 
Please see
the       
Non-GAAP  
Measures  
section.  
na - not  
applicable 

Q4 2018 vs Q4 2017

Canadian P&C reported net income of $675 million and adjusted net income of $676 million both increased $51 million or 8% from the prior year. Adjusted net income excludes the amortization of acquisition-related intangible assets. Results reflect revenue growth and lower provisions for credit losses, partially offset by higher expenses.

Revenue of $1,968 million increased $84 million or 4% from the prior year due to higher balances across most products, increased non-interest revenue and higher margins. Net interest margin of 2.62% was up 3 basis points, primarily due to the benefit of favourable product mix.

Personal revenue increased $39 million or 3% due to increased non-interest revenue, higher balances across most products and higher margins. Commercial revenue increased $45 million or 7% mainly due to higher balances across most products and increased non-interest revenue.

Total provision for credit losses of $103 million decreased $27 million from the prior year. The provision for credit losses on impaired loans decreased $12 million to $118 million, due to lower commercial provisions. There was a $15 million recovery of credit losses on performing loans in the current quarter.

Non-interest expense of $954 million increased $37 million or 4%, reflecting continued investment in the business, primarily related to higher technology investments and investment in sales force.

Average gross loans and acceptances of $227.0 billion increased $7.8 billion or 4% from the prior year. Total personal lending balances (excluding retail cards) were relatively unchanged, reflecting certain participation choices, including reduced participation in non-proprietary mortgage channels, offset by 3% growth in proprietary mortgages and amortizing home equity line of credit (HELOC) loans. Commercial loan balances (excluding corporate cards) increased 12%. Average deposits of $162.5 billion increased $8.1 billion or 5%. Personal deposit balances increased 3%, including growth of 5% in chequing account balances, while commercial deposit balances increased 9%.

Q4 2018 vs Q3 2018

Reported net income increased $33 million or 5% and adjusted net income increased $34 million or 5% from the prior quarter.

Revenue increased $16 million or 1% due to higher balances across most products and higher margins, partially offset by lower non-interest revenue. Net interest margin of 2.62% was up 2 basis points in part due to the benefit of a favourable product mix.

Personal revenue increased $9 million or 1% due to higher balances across most products. Commercial revenue increased $7 million or 1%, mainly due to higher balances across most products.

Total provision for credit losses decreased $34 million. The provision for credit losses on impaired loans decreased $2 million due to lower commercial provisions, partially offset by higher consumer provisions. There was a $15 million recovery of credit losses on performing loans in the current quarter, compared with a $17 million provision for credit losses on performing loans in the prior quarter.

Non-interest expense increased $5 million or 1%, reflecting continued investment in the business.

Average gross loans and acceptances increased $2.2 billion or 1%, while average deposits increased $2.7 billion or 2%.

Adjusted results in this Canadian P&C section are non-GAAP amounts or non-GAAP measures. Please see the Non-GAAP Measures section.

U.S. Personal and Commercial Banking (U.S. P&C)

(US$ in millions,   Q4-2018 Q3-2018 Q4-2017 Fiscal  Fiscal
except as noted)                            2018    2017  
Net interest income 774     762     708     2,983   2,718 
(teb)                                                     
Non-interest        222     223     216     886     817   
revenue                                                   
Total revenue (teb) 996     985     924     3,869   3,535 
Provision for       46      42      na      201     na    
credit losses on                                          
impaired loans (1)                                        
Provision for       14      (11)    na      (31)    na    
(recovery of)                                             
credit losses on                                          
performing loans                                          
(1)                                                       
Total provision for 60      31      52      170     221   
credit losses (1)                                         
Non-interest        602     601     574     2,338   2,253 
expense                                                   
Income before       334     353     298     1,361   1,061 
income taxes                                              
Provision for       49      74      84      278     274   
income taxes (teb)                                        
Reported net income 285     279     214     1,083   787   
Amortization of     9       9       9       35      36    
acquisition-related                                       
intangible assets                                         
(2)                                                       
Adjusted net income 294     288     223     1,118   823   
Net income growth   32.8    35.3    1.9     37.5    (0.8) 
(%)                                                       
Adjusted net income 31.4    33.8    1.6     35.8    (1.0) 
growth (%)                                                
Revenue growth (%)  7.8     8.5     2.8     9.4     1.6   
Non-interest        4.8     4.1     2.6     3.8     2.4   
expense growth (%)                                        
Adjusted            5.1     4.3     2.8     4.0     2.6   
non-interest                                              
expense growth (%)                                        
Operating leverage  3.0     4.4     0.2     5.6     (0.8) 
(%) (teb)                                                 
Adjusted operating  2.7     4.2     -       5.4     (1.0) 
leverage (%) (teb)                                        
Efficiency ratio    60.5    61.0    62.2    60.4    63.7  
(%) (teb)                                                 
Adjusted efficiency 59.4    59.9    60.9    59.3    62.4  
ratio (%) (teb)                                           
Net interest margin 3.69    3.71    3.70    3.72    3.69  
on average earning                                        
assets (%) (teb)                                          
Average earning     83,336  81,428  75,849  80,255  73,752
assets                                                    
Average gross loans 79,369  77,301  71,546  76,067  69,294
and acceptances                                           
Average net loans   78,835  76,765  71,603  75,558  69,324
and acceptances                                           
Average deposits    73,668  70,478  64,952  70,431  65,724
(Canadian $                                               
equivalent in                                             
millions)                                                 
Net interest income 1,010   994     894     3,843   3,551 
(teb)                                                     
Non-interest        288     291     272     1,140   1,066 
revenue                                                   
Total revenue (teb) 1,298   1,285   1,166   4,983   4,617 
Provision for       61      54      na      258     na    
credit losses on                                          
impaired loans (1)                                        
Provision for       18      (14)    na      (38)    na    
(recovery of)                                             
credit losses on                                          
performing loans                                          
(1)                                                       
Total provision for 79      40      64      220     289   
credit losses (1)                                         
Non-interest        786     783     725     3,012   2,944 
expense                                                   
Income before       433     462     377     1,751   1,384 
income taxes                                              
Provision for       61      98      107     357     357   
income taxes (teb)                                        
Reported net income 372     364     270     1,394   1,027 
Adjusted net income 383     376     281     1,439   1,073 
Net income growth   37.3    36.0    (2.7)   35.7    (2.2) 
(%)                                                       
Adjusted net income 35.9    34.4    (3.1)   34.0    (2.4) 
growth (%)                                                
Revenue growth (%)  11.4    9.0     (1.8)   7.9     0.1   
Non-interest        8.4     4.6     (2.0)   2.3     1.0   
expense growth (%)                                        
Adjusted            8.7     4.9     (1.8)   2.6     1.2   
non-interest                                              
expense growth (%)                                        
Average earning     108,724 106,125 95,731  103,394 96,363
assets                                                    
Average gross loans 103,549 100,746 90,299  98,001  90,533
and acceptances                                           
Average net loans   102,853 100,048 90,371  97,346  90,572
and acceptances                                           
Average deposits    96,122  91,853  81,974  90,738  85,927 
(1)        Effective the
           first quarter
           of 2018, the 
           bank         
           prospectively
           adopted IFRS 
           9, Financial 
           Instruments  
           (IFRS 9).    
           Under IFRS 9,
           we refer to  
           the provision
           for credit   
           losses on    
           impaired     
           loans and the
           provision for
           credit losses
           on performing
           loans. Prior 
           periods have 
           not been     
           restated. The
           provision for
           credit losses
           in periods   
           prior to the 
           first quarter
           of 2018 is   
           comprised of 
           specific     
           provisions.  
           Refer to the 
           Changes in   
           Accounting   
           Policies     
           section on   
           page 121 of  
           BMO's 2018   
           Annual MD&A  
           for further  
           details.     
(2)        Before tax   
           amounts of   
           US$11 million
           in Q4-2018   
           and Q3-2018, 
           US$13 million
           in Q4-2017,  
           US$45 million
           in fiscal    
           2018 and     
           US$49 million
           in fiscal    
           2017 are     
           included in  
           non-interest 
           expense.     
Adjusted  
results in
this table
are       
non-GAAP  
amounts or
non-GAAP  
measures. 
Please see
the       
Non-GAAP  
Measures  
section.  
na - not  
applicable 

Q4 2018 vs Q4 2017

Reported net income of $372 million increased $102 million or 37% and adjusted net income of $383 million increased $102 million or 36% from the prior year. Adjusted net income excludes the amortization of acquisition-related intangible assets. All amounts in the remainder of this section are on a U.S. dollar basis.

Reported net income of $285 million increased $71 million or 33% and adjusted net income of $294 million increased $71 million or 31% from the prior year, due to good revenue growth and lower taxes from the benefit of U.S. tax reform and a favourable U.S. tax item, partially offset by higher expenses and higher provisions for credit losses. The benefit of U.S. tax reform was approximately $28 million in reported net income and $29 million in adjusted net income in the current quarter.

Revenue of $996 million increased $72 million or 8% from the prior year, mainly due to higher deposit revenue and increased loan volumes, net of loan spread compression. Net interest margin decreased 1 basis point to 3.69%, mainly due to loan spread compression and a change in business mix, including a residential loan portfolio purchase, partially offset by improved deposit revenue, driven primarily by higher interest rates and interest recoveries.

Total provision for credit losses of $60 million increased $8 million from the prior year. The provision for credit losses on impaired loans decreased $6 million to $46 million due to lower commercial provisions, partially offset by higher consumer provisions. There was a $14 million provision for credit losses on performing loans in the quarter.

Non-interest expense of $602 million increased $28 million or 5% and adjusted non-interest expense of $591 million increased $30 million or 5%, due to continued investment in the business, including technology investments.

Average gross loans and acceptances increased $7.8 billion or 11% from the prior year to $79.4 billion, driven by commercial loan growth of 10% and increased personal loan volumes, due largely to the purchase of a mortgage portfolio in the first quarter of 2018.

Average deposits of $73.7 billion increased $8.7 billion or 13% from the prior year with 16% growth in commercial and 12% growth in personal volumes, reflective of our continued commitment to grow our treasury management business.

Q4 2018 vs Q3 2018

Reported net income increased $8 million or 2% and adjusted net income increased $7 million or 2% from the prior quarter. All amounts in the remainder of this section are on a U.S. dollar basis.

Reported net income and adjusted net income both increased $6 million or 2% largely due to a favourable U.S. tax item and higher revenue, partially offset by higher provision for credit losses.

Revenue increased $11 million or 1%. Net interest margin decreased 2 basis points reflecting higher loan growth at lower spreads, partially offset by higher interest recoveries and improved deposit revenue.

Total provision for credit losses increased $29 million from the prior quarter. The provision for credit losses on impaired loans increased $4 million due to higher commercial and consumer provisions. There was a $14 million provision for credit losses on performing loans in the current quarter, compared with a $11 million net recovery of credit losses on performing loans in the prior quarter.

Non-interest expense and adjusted non-interest expense both increased $1 million.

Average gross loans and acceptances increased $2.1 billion or 3% due to growth in commercial and personal loan volumes. Average deposits increased $3.2 billion or 5% due to 9% growth in commercial and 2% growth in personal volumes.

Adjusted results in this U.S. P&C section are non-GAAP amounts or non-GAAP measures. Please see the Non-GAAP Measures section.

BMO Wealth Management

(Canadian $ in      Q4-2018 Q3-2018 Q4-2017 Fiscal  Fiscal 
millions, except as                         2018    2017   
noted)                                                     
Net interest income 210     212     194     826     722    
Non-interest        1,359   1,326   1,490   5,468   5,492  
revenue                                                    
Total revenue       1,569   1,538   1,684   6,294   6,214  
Insurance claims,   390     269     573     1,352   1,538  
commissions and                                            
changes in policy                                          
benefit liabilities                                        
(CCPB)                                                     
Revenue, net of     1,179   1,269   1,111   4,942   4,676  
CCPB                                                       
Provision for       2       2       na      6       na     
credit losses on                                           
impaired loans (1)                                         
Provision for       1       2       na      -       na     
(recovery of)                                              
credit losses on                                           
performing loans                                           
(1)                                                        
Total provision for 3       4       -       6       8      
(recovery of)                                              
credit losses (1)                                          
Non-interest        880     875     841     3,509   3,351  
expense                                                    
Income before       296     390     270     1,427   1,317  
income taxes                                               
Provision for       77      99      95      355     350    
income taxes                                               
Reported net income 219     291     175     1,072   967    
Amortization of     10      10      14      41      65     
acquisition-related                                        
intangible assets                                          
(2)                                                        
Adjusted net income 229     301     189     1,113   1,032  
Traditional Wealth  192     202     192     805     729    
businesses reported                                        
net income                                                 
Traditional Wealth  202     212     206     846     794    
businesses adjusted                                        
net income                                                 
Insurance reported  27      89      (17)    267     238    
net income                                                 
Net income growth   25.3    8.3     (38.1)  11.0    24.5   
(%)                                                        
Adjusted net income 21.2    6.5     (37.9)  8.0     17.6   
growth (%)                                                 
Revenue growth (%)  (6.9)   6.7     30.9    1.3     5.2    
Revenue growth, net 6.0     6.8     (8.0)   5.7     7.1    
of CCPB (%)                                                
Non-interest        4.7     5.0     1.0     4.7     0.4    
expense growth (%)                                         
Adjusted            5.4     5.7     2.5     5.7     1.9    
non-interest                                               
expense growth (%)                                         
Return on equity    14.1    18.9    11.6    17.8    15.9   
(%)                                                        
Adjusted return on  14.7    19.5    12.5    18.5    17.0   
equity (%)                                                 
Operating leverage, 1.3     1.8     (9.0)   1.0     6.7    
net of CCPB (%)                                            
Adjusted operating  0.6     1.1     (10.5)  -       5.2    
leverage, net of                                           
CCPB (%)                                                   
Efficiency ratio,   74.7    68.9    75.7    71.0    71.7   
net of CCPB (%)                                            
Adjusted efficiency 55.3    56.0    48.9    54.9    52.6   
ratio (%)                                                  
Adjusted efficiency 73.6    67.8    74.1    70.0    70.0   
ratio, net of CCPB                                         
(%)                                                        
Assets under        438,274 451,216 429,448 438,274 429,448
management                                                 
Assets under        382,839 394,513 359,773 382,839 359,773
administration (3)                                         
Average earning     32,784  31,704  28,754  31,167  28,026 
assets                                                     
Average gross loans 21,559  20,736  18,538  20,290  18,068 
and acceptances                                            
Average net loans   21,531  20,706  18,533  20,260  18,063 
and acceptances                                            
Average deposits    33,968  34,327  33,281  34,251  33,289  
(1)        Effective the  
           first quarter  
           of 2018, the   
           bank           
           prospectively  
           adopted IFRS 9,
           Financial      
           Instruments    
           (IFRS 9). Under
           IFRS 9, we     
           refer to the   
           provision for  
           credit losses  
           on impaired    
           loans and the  
           provision for  
           credit losses  
           on performing  
           loans. Prior   
           periods have   
           not been       
           restated. The  
           provision for  
           credit losses  
           in periods     
           prior to the   
           first quarter  
           of 2018 is     
           comprised of   
           specific       
           provisions.    
           Refer to the   
           Changes in     
           Accounting     
           Policies       
           section on page
           121 of BMO's   
           2018 Annual    
           MD&A for       
           further        
           details.       
(2)        Before tax     
           amounts of $13 
           million in     
           Q4-2018 and    
           Q3-2018, $18   
           million in     
           Q4-2017, $52   
           million for    
           fiscal 2018 and
           $80 million for
           fiscal 2017 are
           included in    
           non-interest   
           expense.       
(3)        Certain assets 
           under          
           management that
           are also       
           administered by
           us and included
           in assets under
           administration.
Adjusted  
results in
this table
are       
non-GAAP  
amounts or
non-GAAP  
measures. 
Please see
the       
Non-GAAP  
Measures  
section.  
na - not  
applicable 

Q4 2018 vs Q4 2017

Reported net income of $219 million increased $44 million or 25% and adjusted net income of $229 million increased $40 million or 21% from the prior year. As outlined below, net income in the current quarter was impacted by elevated reinsurance claims and a legal provision. Adjusted net income excludes the amortization of acquisition-related intangible assets. Traditional wealth reported net income of $192 million was unchanged and adjusted net income of $202 million decreased $4 million or 2% from the prior year, as business growth and lower taxes were more than offset by a legal provision and higher expenses. Insurance net income of $27 million was below trend but increased $44 million, primarily due to less elevated reinsurance claims in the current year, with this partially offset by unfavourable market movements in the current quarter relative to favourable market movements in the prior year.

Revenue of $1,569 million decreased $115 million or 7% from the prior year. Revenue, net of CCPB, was $1,179 million, an increase of $68 million or 6%. Revenue in traditional wealth was $1,100 million, an increase of $32 million or 3%, due to business growth from higher deposit and loan revenue, net new client assets and higher equity markets on average, partially offset by a legal provision in the current year and the impact of a divestiture of a non-core business in the prior year. Insurance revenue, net of CCPB, of $79 million increased $36 million from the prior year due to the drivers noted above.

Non-interest expense of $880 million increased $39 million or 5% and adjusted non-interest expense of $867 million increased $44 million or 5%, largely due to higher revenue-based costs and technology investments partially offset by the impact of the divestiture noted above.

Assets under management increased $8.8 billion or 2% from the prior year to $438.3 billion, primarily driven by growth in client assets. Assets under administration increased $23.1 billion or 6% from the prior year to $382.8 billion, primarily driven by growth in client assets. Year-over-year loans and deposits grew by 16% and 2%, respectively, as we continue to diversify our product mix.

Q4 2018 vs Q3 2018

Reported net income of $219 million and adjusted net income of $229 million both decreased $72 million. Traditional wealth reported net income was $192 million compared with $202 million in the prior quarter and adjusted net income was $202 million, compared with $212 million in the prior quarter, primarily due to lower fee based revenue partially offset by the benefit of a favourable U.S. tax item. Insurance net income of $27 million decreased $62 million or 69% from the prior quarter, primarily due to elevated reinsurance claims and unfavourable market movements in the current quarter relative to favourable market movements in the prior quarter.

Revenue, net of CCPB, decreased $90 million or 7%. Revenue in traditional wealth decreased $24 million or 2%, primarily due to lower fee-based revenue. Net insurance revenue decreased $66 million or 46%, due to the drivers noted above.

Reported and adjusted non-interest expense both increased $5 million or 1%.

Assets under management decreased $12.9 billion or 3%, and assets under administration decreased $11.7 billion or 3%, mainly due to weaker equity markets. Quarter-over-quarter loans grew by 4%, while deposits were down 1%.

Adjusted results in this BMO Wealth Management section are non-GAAP amounts or non-GAAP measures. Please see the Non-GAAP Measures section.

BMO Capital Markets

(Canadian $ in      Q4-2018 Q3-2018 Q4-2017 Fiscal  Fiscal 
millions, except as                         2018    2017   
noted)                                                     
Net interest income 147     135     315     659     1,233  
(teb)                                                      
Non-interest        982     968     800     3,696   3,336  
revenue                                                    
Total revenue (teb) 1,129   1,103   1,115   4,355   4,569  
Provision for       (3)     3       na      (17)    na     
(recovery of)                                              
credit losses on                                           
impaired loans (1)                                         
Provision for       (4)     4       na      (1)     na     
(recovery of)                                              
credit losses on                                           
performing loans                                           
(1)                                                        
Total provision for (7)     7       4       (18)    44     
(recovery of)                                              
credit losses (1)                                          
Non-interest        763     698     679     2,851   2,778  
expense                                                    
Income before       373     398     432     1,522   1,747  
income taxes                                               
Provision for       75      97      116     366     472    
income taxes (teb)                                         
Reported net income 298     301     316     1,156   1,275  
Acquisition         9       2       -       11      -      
integration costs                                          
(2)                                                        
Amortization of     2       -       -       2       2      
acquisition-related                                        
intangible assets                                          
(3)                                                        
Adjusted net income 309     303     316     1,169   1,277  
Trading Products    629     638     645     2,539   2,694  
revenue                                                    
Investment and      500     465     470     1,816   1,875  
Corporate Banking                                          
revenue                                                    
Net income growth   (5.6)   7.0     (18.4)  (9.4)   3.2    
(%)                                                        
Adjusted net income (2.3)   7.5     (18.4)  (8.5)   3.3    
growth (%)                                                 
Revenue growth (%)  1.4     4.8     (4.8)   (4.7)   5.9    
Non-interest        12.3    1.1     2.9     2.6     7.9    
expense growth (%)                                         
Adjusted            10.3    0.8     3.0     2.1     7.9    
non-interest                                               
expense growth (%)                                         
Return on equity    12.2    13.2    15.7    12.8    15.3   
(%)                                                        
Adjusted return on  12.6    13.3    15.7    13.0    15.4   
equity (%)                                                 
Operating leverage  (10.9)  3.7     (7.7)   (7.3)   (2.0)  
(teb) (%)                                                  
Adjusted operating  (8.9)   4.0     (7.8)   (6.8)   (2.0)  
leverage (teb) (%)                                         
Efficiency ratio    67.5    63.3    61.0    65.5    60.8   
(teb) (%)                                                  
Adjusted efficiency 66.3    63.1    60.9    65.1    60.8   
ratio (teb) (%)                                            
Net interest margin 0.21    0.19    0.49    0.24    0.47   
on average earning                                         
assets (teb) (%)                                           
Average earning     284,248 276,780 257,153 271,839 263,128
assets                                                     
Average assets      317,655 312,369 295,097 307,087 302,518
Average gross loans 47,972  46,653  46,831  46,724  48,217 
and acceptances                                            
Average net loans   47,909  46,590  46,808  46,658  48,191 
and acceptances                                            
Average deposits    143,849 139,051 138,217 138,440 144,357 
(1)        Effective the
           first quarter
           of 2018, the 
           bank         
           prospectively
           adopted IFRS 
           9, Financial 
           Instruments  
           (IFRS 9).    
           Under IFRS 9,
           we refer to  
           the provision
           for credit   
           losses on    
           impaired     
           loans and the
           provision for
           credit losses
           on performing
           loans. Prior 
           periods have 
           not been     
           restated. The
           provision for
           credit losses
           in periods   
           prior to the 
           first quarter
           of 2018 is   
           comprised of 
           the specific 
           provisions.  
           Refer to the 
           Changes in   
           Accounting   
           Policies     
           section on   
           page 121 of  
           BMO's 2018   
           Annual MD&A  
           for further  
           details.     
(2)        KGS-Alpha    
           acquisition  
           integration  
           costs before 
           tax amounts  
           of $12       
           million in   
           Q4-2018, $2  
           million in   
           Q3-2018 and  
           $14 million  
           for          
           fiscal-2018  
           are included 
           in           
           non-interest 
           expense.     
(3)        Before tax   
           amounts of $2
           million in   
           Q4-2018, $nil
           in Q3-2018   
           and Q4-2017, 
           $3 million   
           for fiscal   
           2018 and     
           fiscal 2017  
           are included 
           in           
           non-interest 
           expense.     
Adjusted  
results in
this table
are       
non-GAAP  
amounts or
non-GAAP  
measures. 
Please see
the       
Non-GAAP  
Measures  
section.  
na - not  
applicable
           

Q4 2018 vs Q4 2017

Reported net income of $298 million decreased $18 million or 6%, and adjusted net income of $309 million decreased $7 million or 2% from a year ago, as higher Investment and Corporate Banking revenue and lower taxes were more than offset by higher expenses and lower Trading Products revenue. Adjusted net income excludes acquisition integration costs and the amortization of acquisition-related intangible assets.

Revenue of $1,129 million increased $14 million or 1%. Excluding the impact of the stronger U.S. dollar, revenue was relatively unchanged. Investment and Corporate Banking revenue increased, mainly due to higher corporate banking-related revenue, while underwriting and advisory revenue decreased slightly from a strong quarter a year ago. Trading Products revenue decreased primarily due to softer interest rate trading and lower new equity issuances, partially offset by the impact of the acquisition of KGS-Alpha in the quarter.

Total net recovery of credit losses was $7 million, compared with total net provisions of $4 million in the prior year. The net recovery of credit losses on impaired loans was $3 million, compared with a $4 million provision in the prior year. There was a $4 million net recovery of credit losses on performing loans in the current quarter.

Non-interest expense of $763 million increased $84 million or 12% and adjusted non-interest expense of $749 million increased $70 million or 10%, or 9% excluding the impact of the stronger U.S. dollar, largely due to continued investment in the business, including the impact of the acquisition.

Q4 2018 vs Q3 2018

Reported net income of $298 million decreased $3 million or 1%, and adjusted net income of $309 million increased $6 million or 2% from the prior quarter, primarily due to higher revenue, the benefit of a favourable U.S. tax item and recovery of credit losses, partially offset by higher expenses.

Revenue increased $26 million or 2% from the prior quarter. Investment and Corporate Banking revenue increased primarily driven by higher corporate banking-related revenue, while underwriting and advisory revenue decreased slightly from a strong prior quarter. Trading Products revenue decreased due to softer interest rate trading and lower new equity issuances, partially offset by the impact of the acquisition.

Total net recovery of credit losses was $7 million, compared with total net provisions of $7 million in the prior quarter. The net recovery of credit losses on impaired loans was $3 million, compared with a provision of $3 million in the prior quarter. There was a $4 million net recovery of credit losses on performing loans, compared with a $4 million provision in the prior quarter.

Non-interest expense of $763 million increased $65 million or 9% and adjusted non-interest expense of $749 million increased $53 million or 8%, largely due to continued investment in the business, including the impact of the acquisition.

Adjusted results in this BMO Capital Markets section are non-GAAP amounts or non-GAAP measures. Please see the Non-GAAP Measures section.

Corporate Services

(Canadian $   Q4-2018 Q3-2018 Q4-2017 Fiscal Fiscal 
in millions,                          2018   2017   
except as                                           
noted)                                              
Net interest  (52)    (74)    (61)    (243)  (193)  
income before                                       
group teb                                           
offset                                              
Group teb     (67)    (62)    (176)   (313)  (567)  
offset                                              
Net interest  (119)   (136)   (237)   (556)  (760)  
income (teb)                                        
Non-interest  77      78      43      249    177    
revenue                                             
Total revenue (42)    (58)    (194)   (307)  (583)  
(teb)                                               
Provision for (1)     (2)     na      (13)   na     
(recovery of)                                       
credit losses                                       
on impaired                                         
loans (1)                                           
Provision for (2)     -       na      (2)    na     
(recovery of)                                       
credit losses                                       
on performing                                       
loans (1)                                           
Total         (3)     (2)     4       (15)   (78)   
provision                                           
(recovery of)                                       
credit losses                                       
(1)                                                 
Non-interest  (159)   81      213     436    635    
expense                                             
Income (loss) 120     (137)   (411)   (728)  (1,140)
before income                                       
taxes                                               
Provision for (11)    (75)    (253)   (2)    (710)  
(recovery of)                                       
income taxes                                        
(teb)                                               
Reported net  131     (62)    (158)   (726)  (430)  
income (loss)                                       
Acquisition   4       5       15      14     55     
integration                                         
costs (2)                                           
Restructuring -       -       41      192    41     
costs (3)                                           
Decrease in   -       -       -       -      (54)   
the                                                 
collective                                          
allowance for                                       
credit losses                                       
(4)                                                 
U.S. net      -       -       -       425    -      
deferred tax                                        
asset                                               
revaluation                                         
(5)                                                 
Benefit from  (203)   -       -       (203)  -      
the                                                 
remeasurement                                       
of an                                               
employee                                            
benefit                                             
liability (6)                                       
Adjusted net  (68)    (57)    (102)   (298)  (388)  
loss                                                 
(1)        Effective the 
           first quarter 
           of 2018, the  
           bank          
           prospectively 
           adopted IFRS  
           9, Financial  
           Instruments   
           (IFRS 9).     
           Under IFRS 9, 
           we refer to   
           the provision 
           for credit    
           losses on     
           impaired loans
           and the       
           provision for 
           credit losses 
           on performing 
           loans. Prior  
           periods have  
           not been      
           restated.     
           Changes in the
           provision for 
           credit losses 
           on performing 
           loans under   
           this          
           methodology   
           will not be   
           considered an 
           adjusting     
           item. The     
           provision for 
           credit losses 
           in periods    
           prior to the  
           first quarter 
           of 2018 is    
           comprised of  
           both specific 
           and collective
           provisions.   
           Refer to the  
           Changes in    
           Accounting    
           Policies      
           section on    
           page 121 of   
           BMO's 2018    
           Annual MD&A   
           for further   
           details.      
(2)        Acquisition   
           integration   
           costs related 
           to the        
           acquired BMO  
           Transportation
           Finance       
           business are  
           included in   
           non-interest  
           expense.      
(3)        In Q2-18, we  
           recorded a    
           restructuring 
           charge,       
           primarily     
           related to    
           severance     
           costs, as a   
           result of an  
           ongoing       
           bank-wide     
           initiative to 
           simplify how  
           we work, drive
           increased     
           efficiency and
           invest in     
           technology to 
           move our      
           business      
           forward. A    
           restructuring 
           charge in     
           Q4-17 was also
           taken as we   
           continued to  
           accelerate the
           use of        
           technology to 
           enhance       
           customer      
           experience and
           focused on    
           driving       
           operational   
           efficiencies. 
           Restructuring 
           costs are     
           included in   
           non-interest  
           expense.      
(4)        In 2017, the  
           adjustment to 
           the collective
           allowance for 
           credit losses 
           before-tax    
           amount of $76 
           million was   
           excluded from 
           Corporate     
           Services      
           adjusted      
           provision for 
           (recovery of) 
           credit losses.
(5)        Charge due to 
           the           
           revaluation of
           our U.S. net  
           deferred tax  
           asset as a    
           result of the 
           enactment of  
           the U.S. Tax  
           Cuts and Jobs 
           Act. See the  
           Critical      
           Accounting    
           Estimates -   
           Income Taxes  
           and Deferred  
           Tax Assets    
           section on    
           page 119 of   
           BMO's 2018    
           Annual MD&A.  
(6)        The current   
           quarter       
           included a    
           benefit of    
           $203 million  
           after-tax     
           ($277 million 
           pre-tax) from 
           the           
           remeasurement 
           of an employee
           benefit       
           liability as a
           result of an  
           amendment to  
           our other     
           employee      
           future        
           benefits plan 
           for certain   
           employees that
           was announced 
           in the fourth 
           quarter of    
           2018. This    
           amount was    
           included in   
           non-interest  
           expense.      
Adjusted  
results in
this table
are       
non-GAAP  
amounts or
non-GAAP  
measures. 
Please see
the       
Non-GAAP  
Measures  
section.  
na - not  
applicable 

Corporate Services consists of Corporate Units and Technology and Operations (T&O). Corporate Units provide enterprise-wide expertise, governance and support in a variety of areas, including strategic planning, risk management, finance, legal and regulatory compliance, human resources, communications, marketing, real estate, procurement, data and analytics, and innovation. T&O manages, maintains and provides governance of information technology, cyber security and operations services.

The costs of these Corporate Units and T&O services are largely transferred to the three operating groups (Personal and Commercial Banking, Wealth Management and BMO Capital Markets), with any remaining amounts retained in Corporate Services results. As such, Corporate Services results largely reflect the impact of residual treasury-related activities, the elimination of taxable equivalent adjustments, residual unallocated expenses, certain acquisition integration costs and restructuring costs, as well as the one-time non-cash charge related to the revaluation of our U.S. net deferred tax asset in the first quarter of 2018 and a benefit from the remeasurement of an employee benefit liability in the fourth quarter of 2018.

Q4 2018 vs Q4 2017

Corporate Services reported net income for the quarter was $131 million, compared with a net loss of $158 million in the prior year. The adjusted net loss for the quarter was $68 million, compared with an adjusted net loss of $102 million in the prior year. Adjusted results exclude a benefit of $203 million after-tax from the remeasurement of an employee benefit liability in the current year and a restructuring charge in the prior year, as well as acquisition integration costs in both periods. Adjusted results increased mainly due to higher revenue excluding the teb adjustment and lower expenses. The current quarter includes above-trend securities gains. Reported results increased due to the remeasurement benefit, a restructuring charge in the prior year, and the drivers noted above.

Q4 2018 vs Q3 2018

Corporate Services reported net income for the quarter was $131 million, compared with a net loss of $62 million in the prior quarter. The adjusted net loss was $68 million, compared with an adjusted net loss of $57 million in the prior quarter. Adjusted results exclude the remeasurement benefit in the current period, as well as acquisition integration costs in both periods. The adjusted results decreased due to higher expenses, partially offset by higher revenue excluding the teb adjustment. Reported results increased due to the remeasurement benefit in the current quarter partially offset by the drivers noted above.

Adjusted results in this Corporate Services section are non-GAAP amounts or non-GAAP measures. Please see the Non-GAAP Measures section.

Risk Management

Our risk management policies and processes to measure, monitor and control credit and counterparty, market, insurance, liquidity and funding, operational, model, legal and regulatory, business, strategic, environmental and social and reputation risk are outlined in the Enterprise-Wide Risk Management section on pages 78 to 116 of BMO's 2018 Annual MD&A.

Condensed Consolidated Financial Statements

Consolidated Statement of Income

(Unaudited)       For the   For   
(Canadian $ in    three     the   
millions,         months    twelve
except as         ended     months
noted)                      ended 
                  October   July     October   October   October
                  31,       31,      31,       31,       31,    
                  2018      2018     2017      2018      2017   
Interest,                                                       
Dividend and                                                    
Fee Income                                                      
Loans           $ 4,486   $ 4,246  $ 3,583   $ 16,275  $ 13,564 
Securities        746       686      465       2,535     1,801  
Deposits with     206       161      106       641       324    
banks                                                           
                  5,438     5,093    4,154     19,451    15,689 
Interest                                                        
Expense                                                         
Deposits          1,881     1,626    1,101     6,080     3,894  
Subordinated      61        55       43        226       155    
debt                                                            
Other             827       805      475       2,832     1,633  
liabilities                                                     
                  2,769     2,486    1,619     9,138     5,682  
Net Interest      2,669     2,607    2,535     10,313    10,007 
Income                                                          
Non-Interest                                                    
Revenue                                                         
Securities        257       259      234       1,029     969    
commissions and                                                 
fees                                                            
Deposit and       292       294      282       1,144     1,123  
payment service                                                 
charges                                                         
Trading           477       503      302       1,830     1,352  
revenues                                                        
Lending fees      266       248      230       997       917    
Card fees         143       144      132       564       479    
Investment        438       446      416       1,742     1,622  
management and                                                  
custodial fees                                                  
Mutual fund       359       372      354       1,473     1,411  
revenues                                                        
Underwriting      242       262      251       936       1,036  
and advisory                                                    
fees                                                            
Securities        83        51       41        239       171    
gains, other                                                    
than trading                                                    
Foreign           42        41       60        182       191    
exchange gains,                                                 
other than                                                      
trading                                                         
Insurance         485       427      629       1,879     2,070  
revenue                                                         
Investments in    38        44       47        167       386    
associates and                                                  
joint ventures                                                  
Other             131       122      142       542       526    
                  3,253     3,213    3,120     12,724    12,253 
Total Revenue     5,922     5,820    5,655     23,037    22,260 
Provision for     175       186      202       662       746    
Credit Losses                                                   
Insurance         390       269      573       1,352     1,538  
Claims,                                                         
Commissions and                                                 
Changes in                                                      
Policy Benefit                                                  
Liabilities                                                     
Non-Interest                                                    
Expense                                                         
Employee          1,612     1,873    1,842     7,459     7,467  
compensation                                                    
Premises and      745       672      628       2,753     2,491  
equipment                                                       
Amortization of   125       126      127       503       485    
intangible                                                      
assets                                                          
Travel and        186       157      183       673       693    
business                                                        
development                                                     
Communications    70        70       69        282       286    
Professional      158       142      172       564       563    
fees                                                            
Other             328       346      354       1,379     1,345  
                  3,224     3,386    3,375     13,613    13,330 
Income Before     2,133     1,979    1,505     7,410     6,646  
Provision for                                                   
Income Taxes                                                    
Provision for     438       443      278       1,960     1,296  
income taxes                                                    
Net Income      $ 1,695   $ 1,536  $ 1,227   $ 5,450   $ 5,350  
Attributable                                                    
to:                                                             
Bank              1,695     1,536    1,227     5,450     5,348  
shareholders                                                    
                                                                
                  -         -        -         -         2      
Non-controlling                                                 
interest in                                                     
subsidiaries                                                    
Net Income      $ 1,695   $ 1,536  $ 1,227   $ 5,450   $ 5,350  
Earnings Per                                                    
Share (Canadian                                                 
$)                                                              
Basic           $ 2.58    $ 2.32   $ 1.82    $ 8.19    $ 7.95   
Diluted           2.57      2.31     1.81      8.17      7.92   
Dividends per     0.96      0.96     0.90      3.78      3.56   
common share                                                     
Certain      
comparative  
figures have 
been         
reclassified 
to conform   
with the     
period's     
presentation. 

Consolidated Statement of Comprehensive Income

(Unaudited)          For the   For   
(Canadian $ in       three     the   
millions)            months    twelve
                     ended     months
                               ended 
                     October   July     October   October   October
                     31,       31,      31,       31,       31,    
                     2018      2018     2017      2018      2017   
Net Income         $ 1,695   $ 1,536  $ 1,227   $ 5,450   $ 5,350  
Other                                                              
Comprehensive                                                      
Income (Loss), net                                                 
of taxes                                                           
Items that may                                                     
subsequently be                                                    
reclassified to                                                    
net income                                                         
Net change in                                              
unrealized gains                                           
(losses) on fair                                           
value through OCI                                          
securities (1)                                             
Unrealized gains     (49)      16       na        (251)     na     
(losses) on fair                                                   
value through OCI                                                  
debt securities                                                    
arising during the                                                 
period (2)                                                         
Unrealized gains     na        na       27        na        95     
on                                                                 
available-for-sale                                                 
securities arising                                                 
during the period                                                  
(3)                                                                
Reclassification     (22)      (7)      (17)      (65)      (87)   
to earnings of                                                     
(gains) in the                                                     
period (4)                                                         
                     (71)      9        10        (316)     8      
Net change in                                                      
unrealized gains                                                   
(losses) on cash                                                   
flow hedges                                                        
(Losses) on          (309)     (218)    (27)      (1,228)   (839)  
derivatives                                                        
designated as cash                                                 
flow hedges                                                        
arising during the                                                 
period (5)                                                         
Reclassification     120       101      36        336       61     
to earnings of                                                     
losses on                                                          
derivatives                                                        
designated as cash                                                 
flow hedges (6)                                                    
                     (189)     (117)    9         (892)     (778)  
Net gains (losses)                                                 
on translation of                                                  
net foreign                                                        
operations                                                         
Unrealized gains     303       145      952       417       (885)  
(losses) on                                                        
translation of net                                                 
foreign operations                                                 
Unrealized gains     (62)      (43)     (138)     (155)     23     
(losses) on hedges                                                 
of net foreign                                                     
operations (7)                                                     
                     241       102      814       262       (862)  
Items that will                                                    
not be                                                             
reclassified to                                                    
net income                                                         
Gains (losses) on    (42)      204      103       261       420    
remeasurement of                                                   
pension and other                                                  
employee future                                                    
benefit plans (8)                                                  
Gains on                                                           
remeasurement of                                                   
own credit risk on                                                 
financial                                                          
liabilities          (18)      26       (32)      (24)      (148)  
designed at fair                                                   
value (9)                                                          
                     (60)      230      71        237       272    
Other                (79)      224      904       (709)     (1,360)
Comprehensive                                                      
Income (Loss), net                                                 
of taxes                                                           
Total              $ 1,616   $ 1,760  $ 2,131   $ 4,741   $ 3,990  
Comprehensive                                                      
Income                                                             
Attributable to:                                                   
Bank shareholders    1,616     1,760    2,131     4,741     3,988  
Non-controlling      -         -        -         -         2      
interest in                                                        
subsidiaries                                                       
Total              $ 1,616   $ 1,760  $ 2,131   $ 4,741   $ 3,990  
Comprehensive                                                      
Income                                                              
(1)        Periods reported  
           before November 1,
           2017 represent    
           available-for-sale
           securities.       
(2)        Net of income tax 
           (provision)       
           recovery of $22   
           million, $(7)     
           million, na for   
           the three months  
           ended, and $69    
           million, na for   
           the twelve months 
           ended,            
           respectively.     
(3)        Net of income tax 
           (provision) of na,
           na, $(1) million  
           for the three     
           months ended, and 
           na, $(21) million 
           for the twelve    
           months ended,     
           respectively.     
(4)        Net of income tax 
           provision of $8   
           million, $3       
           million, $8       
           million for the   
           three months      
           ended, and $23    
           million, $36      
           million for the   
           twelve months     
           ended,            
           respectively.     
(5)        Net of income tax 
           recovery of $114  
           million, $78      
           million, $15      
           million for the   
           three months      
           ended, and $432   
           million, $322     
           million for the   
           twelve months     
           ended,            
           respectively.     
(6)        Net of income tax 
           (recovery) of     
           $(43) million,    
           $(37) million,    
           $(13) million for 
           the three months  
           ended, and $(121) 
           million, $(21)    
           million for the   
           twelve months     
           ended,            
           respectively.     
(7)        Net of income tax 
           (provision)       
           recovery of $22   
           million, $16      
           million, $50      
           million for the   
           three months      
           ended, and $56    
           million, $(8)     
           million for the   
           twelve months     
           ended,            
           respectively.     
(8)        Net of income tax 
           (provision)       
           recovery of $23   
           million, $(74)    
           million, $(29)    
           million for the   
           three months      
           ended, and $(111) 
           million, $(157)   
           million for the   
           twelve months     
           ended,            
           respectively.     
(9)        Net of income tax 
           (provision)       
           recovery of $7    
           million, $(12)    
           million, $12      
           million for the   
           three months      
           ended, and $6     
           million, $53      
           million for the   
           twelve months     
           ended,            
           respectively.     
na - not  
applicable
due to    
IFRS 9    
adoption.  

Consolidated Balance Sheet

(Unaudited)                As at            
(Canadian $ in                              
millions)                                   
                 October   July      October
                 31,       31,       31,    
                 2018      2018      2017   
Assets                                      
Cash and Cash  $ 42,142  $ 41,072  $ 32,599 
Equivalents                                 
Interest         8,305     7,637     6,490  
Bearing                                     
Deposits with                               
Banks                                       
Securities       180,935   167,318   163,198
Securities       85,051    101,679   75,047 
Borrowed or                                 
Purchased                                   
Under Resale                                
Agreements                                  
Loans                                       
Residential      119,620   118,736   115,258
mortgages                                   
Consumer         63,225    62,485    61,944 
instalment and                              
other personal                              
Credit cards     8,329     8,236     8,071  
Business and     194,456   187,964   175,067
government                                  
                 385,630   377,421   360,340
Allowance for    (1,639)   (1,660)   (1,833)
credit losses                               
                 383,991   375,761   358,507
Other Assets                                
Derivative       26,204    24,810    28,951 
instruments                                 
Customers?       18,585    17,874    16,546 
liability                                   
under                                       
acceptances                                 
Premises and     1,986     1,924     2,033  
equipment                                   
Goodwill         6,373     6,275     6,244  
Intangible       2,272     2,207     2,159  
assets                                      
Current tax      1,515     1,647     1,371  
assets                                      
Deferred tax     2,037     2,065     2,865  
assets                                      
Other            14,652    15,049    13,570 
                 73,624    71,851    73,739 
Total Assets   $ 774,048 $ 765,318 $ 709,580
Liabilities                                 
and Equity                                  
Deposits       $ 522,051 $ 506,916 $ 479,792
Other                                       
Liabilities                                 
Derivative       24,411    24,480    27,804 
instruments                                 
Acceptances      18,585    17,874    16,546 
Securities       28,804    24,409    25,163 
sold but not                                
yet purchased                               
Securities       66,684    83,471    55,119 
lent or sold                                
under                                       
repurchase                                  
agreements                                  
Securitization   25,051    23,545    23,054 
and structured                              
entities'                                   
liabilities                                 
Current tax      50        48        125    
liabilities                                 
Deferred tax     74        66        233    
liabilities                                 
Other            35,829    34,135    32,361 
                 199,488   208,028   180,405
Subordinated     6,782     5,618     5,029  
Debt                                        
Equity                                      
Preferred        4,340     4,240     4,240  
shares                                      
Common shares    12,929    12,924    13,032 
Contributed      300       302       307    
surplus                                     
Retained         25,856    24,909    23,709 
earnings                                    
Accumulated      2,302     2,381     3,066  
other                                       
comprehensive                               
income                                      
Total Equity     45,727    44,756    44,354 
Total          $ 774,048 $ 765,318 $ 709,580
Liabilities                                 
and Equity                                   

Consolidated Statement of Changes in Equity

(Unaudited)                   For the       For the
(Canadian $ in                three         twelve 
millions)                     months        months 
                              ended         ended  
                              October       October       October         October
                              31,           31,           31,             31,    
                              2018          2017          2018            2017   
Preferred Shares                                                                 
Balance at          $         4,240   $     4,240   $     4,240   $       3,840  
beginning of period                                                              
Issued during the             400           -             400             900    
period                                                                           
Redeemed during the           (300)         -             (300)           (500)  
period                                                                           
Balance at End of             4,340         4,240         4,340           4,240  
Period                                                                           
Common Shares                                                                    
Balance at                    12,924        13,044        13,032          12,539 
beginning of period                                                              
Issued under the              -             -             -               448    
Shareholder                                                                      
Dividend                                                                         
Reinvestment and                                                                 
Share Purchase Plan                                                              
Issued under the              26            9             99              146    
Stock Option Plan                                                                
Repurchased for               (21)          (21)          (202)           (101)  
cancellation                                                                     
Balance at End of             12,929        13,032        12,929          13,032 
Period                                                                           
Contributed Surplus                                                              
Balance at                    302           305           307             294    
beginning of period                                                              
Stock option                  (2)           2             (12)            6      
expense, net of                                                                  
options exercised                                                                
Other                         -             -             5               7      
Balance at End of             300           307           300             307    
Period                                                                           
Retained Earnings                                                                
Balance at                    24,909        23,183        23,709          21,205 
beginning of period                                                              
Impact from                   -             na            99              na     
adopting IFRS 9                                                                  
Net income                    1,695         1,227         5,450           5,348  
attributable to                                                                  
bank shareholders                                                                
Dividends           -                 (43)          (48)          (184)           (184)  
                    Preferred                                                            
                    shares                                                               
                                                                                         
                                                                                         
                                                                                         
                    - Common          (614)         (583)         (2,424)         (2,312)
                    shares                                                               
Share issue expense           (5)           -             (5)             (9)    
Common shares                 (86)          (70)          (789)           (339)  
repurchased for                                                                  
cancellation                                                                     
Balance at End of             25,856        23,709        25,856          23,709 
Period                                                                           
Accumulated Other                                                        
Comprehensive                                                            
Income (Loss) on                                                         
Fair Value through                                                       
OCI Securities, net                                                      
of taxes (1)                                                             
Balance at                    (244)         46            56              48     
beginning of period                                                              
Impact from                   -             na            (55)            na     
adopting IFRS 9                                                                  
Unrealized (losses)           (49)          na            (251)           na     
on fair value                                                                    
through OCI debt                                                                 
securities arising                                                               
during the period                                                                
Unrealized gains on           na            27            na              95     
available-for-sale                                                               
securities arising                                                               
during the period                                                                
Reclassification to           (22)          (17)          (65)            (87)   
earnings of (gains)                                                              
in the period                                                                    
Balance at End of             (315)         56            (315)           56     
Period                                                                           
Accumulated Other                                                                
Comprehensive                                                                    
(Loss) on Cash Flow                                                              
Hedges, net of                                                                   
taxes                                                                            
Balance at                    (885)         (191)         (182)           596    
beginning of period                                                              
(Losses) on                   (309)         (27)          (1,228)         (839)  
derivatives                                                                      
designated as cash                                                               
flow hedges arising                                                              
during the period                                                                
Reclassification to           120           36            336             61     
earnings of losses                                                               
on derivatives                                                                   
designated as cash                                                               
flow hedges in the                                                               
period                                                                           
Balance at End of             (1,074)       (182)         (1,074)         (182)  
Period                                                                           
Accumulated Other                                                                
Comprehensive                                                                    
Income on                                                                        
Translation                                                                      
of Net Foreign                                                                   
Operations, net of                                                               
taxes                                                                            
Balance at                    3,486         2,651         3,465           4,327  
beginning of period                                                              
Unrealized gains              303           952           417             (885)  
(losses) on                                                                      
translation of net                                                               
foreign operations                                                               
Unrealized gains              (62)          (138)         (155)           23     
(losses) on hedges                                                               
of net foreign                                                                   
operations                                                                       
Balance at End of             3,727         3,465         3,727           3,465  
Period                                                                           
Accumulated Other                                                                
Comprehensive                                                                    
Income (Loss) on                                                                 
Pension and Other                                                                
Employee                                                                         
Future Benefit                                                                   
Plans, net of taxes                                                              
Balance at                    211           (195)         (92)            (512)  
beginning of period                                                              
Gains (losses) on             (42)          103           261             420    
remeasurement of                                                                 
pension and other                                                                
employee future                                                                  
benefit plans                                                                    
Balance at End of             169           (92)          169             (92)   
Period                                                                           
Accumulated Other                                                                
Comprehensive                                                                    
(Loss) on Own                                                                    
Credit Risk on                                                                   
Financial                                                                        
Liabilities                                                                      
Designated at Fair                                                               
Value, net of taxes                                                              
Balance at                    (187)         (149)         (181)           (33)   
beginning of period                                                              
(Losses) on         (18)              (32)          (24)          (148)  
remeasurement of                                                         
own credit risk on                                                       
financial                                                                
liabilities                                                              
designated at fair                                                       
value                                                                    
Balance at End of             (205)         (181)         (205)           (181)  
Period                                                                           
Total Accumulated             2,302         3,066         2,302           3,066  
Other Comprehensive                                                              
Income                                                                           
Total Shareholders? $         45,727  $     44,354  $     45,727  $       44,354 
Equity                                                                           
Non-controlling                                                                  
Interest in                                                                      
Subsidiaries                                                                     
Balance at                    -             -             -               24     
beginning of period                                                              
Net income                    -             -             -               2      
attributable to                                                                  
non-controlling                                                                  
interest                                                                         
Redemption/purchase           -             -             -               (25)   
of non-controlling                                                               
interest                                                                         
Other                         -             -             -               (1)    
Balance at End of             -             -             -               -      
Period                                                                           
Total Equity        $         45,727  $     44,354  $     45,727  $       44,354  
(1)        Periods reported  
           before November 1,
           2017 represent    
           available-for-sale
           securities.       
na - not  
applicable
due to    
IFRS 9    
adoption.  

INVESTOR AND MEDIA PRESENTATION

Investor Presentation Materials

Interested parties are invited to visit our website at www.bmo.com/investorrelations to review our 2018 Annual MD&A and audited annual consolidated financial statements, quarterly presentation materials and supplementary financial information package.

Quarterly Conference Call and Webcast Presentations

Interested parties are also invited to listen to our quarterly conference call on Tuesday, December 4, 2018, at 8:00 a.m. (ET). 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 416-641-2144 (from within Toronto) or 1-888-789-9572 (toll-free outside Toronto) Passcode: 5126346. A replay of the conference call can be accessed until Monday, February 25, 2019, by calling 905-694-9451 (from within Toronto) or 1-800-408-3053 (toll-free outside Toronto) and entering Passcode: 5740558.

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.

Shareholder Dividend      For other shareholder        
Reinvestment and Share    information, including the   
Purchase Plan (the Plan)  notice for our normal course 
Average market price as   issuer bid, please contact   
defined under the         Bank of MontrealShareholder  
PlanAugust 2018:          ServicesCorporate Secretary's
$106.33September 2018:    DepartmentOne First Canadian 
$107.98October 2018:      Place, 21st FloorToronto,    
$98.90 For dividend       Ontario M5X 1A1Telephone:    
information, change in    (416) 867-6785Fax: (416)     
shareholder address or to 867-6793E-mail:              
advise of duplicate    corp.secretary@bmo.com  For  
mailings, please contact  further information on this  
Computershare Trust       document, please contactBank 
Company of Canada100      of MontrealInvestor Relations
University Avenue, 8th    DepartmentP.O. Box 1, One    
FloorToronto, Ontario M5J First Canadian Place, 10th   
2Y1Telephone:             FloorToronto, Ontario M5X 1A1
1-800-340-5021 (Canada    To review financial results  
and the United            and regulatory filings and   
States)Telephone: (514)   disclosures online, please   
982-7800                  visit our website at         
(international)Fax:    www.bmo.com/investorrelations
1-888-453-0330 (Canada    .                            
and the United                                         
States)Fax: (416)                                      
263-9394                                               
(international)E-mail:                                 
service@computershare.com                           
                                                        

Our 2018 Annual MD&A, audited annual consolidated financial statements and annual report on Form 40-F (filed with the U.S. Securities and Exchange Commission) are available online at www.bmo.com/investorrelations and at www.sedar.com. Printed copies of the bank's complete 2018 audited financial statements are available free of charge upon request at 416-867-6785 or corp.secretary@bmo.com.

Annual      
Meeting 2019
The next    
Annual      
Meeting of  
Shareholders
will be held
on Tuesday, 
April 2,    
2019 in     
Toronto,    
Ontario.     

® Registered trademark of Bank of Montreal

Media Relations Contacts: Paul Gammal, Toronto, paul.gammal@bmo.com, 416-867-6543; Investor Relations Contacts: Jill Homenuk, Head, Investor, Media & Government Relations, jill.homenuk@bmo.com, 416-867-4770; Christine Viau, Director, Investor Relations, christine.viau@bmo.com, 416-867-6956



Weitere Meldungen: BMO Financial Group

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