Bank of Montreal (TSX:BMO)

Investor Day 2015

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Jan 29, 2015

Well, good morning. Thanks very much to all of you for coming. I think the audience is about half online, and thank you to all of those who are participating in the webcast and to all of you here in the room. We are delighted to have you here, and thank you for participating. I know a number of you had an opportunity earlier this morning to walk through the revamped First Canadian Place retail space, where all three of the businesses are represented. I hope that was a constructive use of your time. Also, we had an opportunity to look at some of the technology that is working its way into the daily lives of our bankers, and I hope you found that as energizing as we do. We are all pretty excited about this day. We look forward to the opportunity to go down to a level of detail, operating business level, and talk about how we compete. Most importantly, to give you the opportunity to meet the leaders of the individual businesses, the people who are inspiring the front line and working with our customers every day. I have to tell you, I have an enormous amount of confidence, not only in the strategy as it is laid out in the material that they are going to cover with you, but in the people that are leading these initiatives as well. I think when the day is over, you will have a good feel for not only why the bank has momentum in the individual businesses, but how that is going to play out in the future. Every part of the strategy comes back to the commitment to customer and a sense of how important brand is. That is derived from a clear understanding of who our customers are and the fact that people are most concerned with the fact that money is personal and their bank should be, too. The whole notion of how we face the market, how we communicate with customers, how we understand what is most important to them should come through in every one of the presentations, and it should be part of the way that you think of the Bank of Montreal and the various parts of BMO as uniquely competitive in the marketplace moving forward. That applies in the physical space and in the digital space equally. The third thing that I want to say before we get underway is that you cannot ignore the economic environment. Globally, we are in a low-interest rate environment. Commodity prices have weakened quite significantly since really June of 2014. In Canada, for the first time, we are going to have a headwind that is a little bit stronger than the U.S., where, in fact, we are seeing a shift in momentum. In the intermediate term, and I say probably by mid-year, the continuous strengthening of the U.S. economy is going to be very positive for the manufacturing and service sector in Canada. In the short run, you can feel those pressures. What is important about today is the things that we are talking about relate to how the bank competes in a slow market or an expanding market. The foundation for it is the momentum that we have generated in each one of these businesses through markets over the last seven or eight years, which have ebbed and flowed. But in each case, the focus on the customer is allowing us to grow our business. And see, that is another customer calling right now to add a second product or maybe it might even be a prospect. You should take that call, Connie. But it really is the competitiveness of the individual businesses that I think will stand out. We did an investor day in December of 2006, and I went back and looked at the notes. Only a few of you, in fact, I think only two or three of you who were in the room attended that meeting. But when I think about really the arc of competitiveness that you can see across all of our businesses, the strategy that we are operating under, we laid out at that time. The proof points were not nearly as clear as they were in year two and year four. But today, it is abundantly clear how we compete and why we have confidence in the business whatever the economic environment. With that, I am going to turn you over to Frank Techar, is going to lead today, and the first speaker is going to be Sharon Haward-Laird, our Head of Investor Relations. I am going to stay. I am looking forward to the day and hope we will have a chance to talk. Thanks. Sharon? Good morning, everyone. Thank you, Bill. I would like to add my welcome to those of you joining us on the webcast and for those of you who are able to join us at our executive offices here in Toronto. One point of order, I would like to, on behalf of those speaking today, note that forward-looking statements may be made during this presentation. Actual results could differ materially from forecast projections or conclusions in these statements. I would also remind our attendees and listeners that the bank uses non-GAAP financial measures to arrive at adjusted results to assess and measure performance by business and the overall bank. Management assesses performance on both a reported and adjusted basis and considers both to be useful in assessing underlying business performance. Our presenters will generally be referring to adjusted results in their remarks unless otherwise noted. Additional information on adjusting items, the bank's reported results, and factors and assumptions related to forward-looking information can be found in our annual MD&A and our fourth quarter earnings release. Now let us turn to today's agenda. We have a very full schedule of presentations for you today, and we are excited to talk to you about each of our businesses that we are covering. We will start with Frank Techar, BMO's Chief Operating Officer, who will make some opening remarks. The rest of the day will essentially be divided into two segments. The morning segment will focus on BMO's Canadian Personal and Commercial Banking business. Cam Fowler, Head of Canadian Personal and Commercial Banking, will provide a strategic overview of the business. Cam will be followed by the heads of the two lines of business within Canadian banking, Steve Murphy from commercial banking and Ernie Johannson from personal banking. We'll also hear from two of our division executives, Carolyn Booth from our Atlantic Provinces division, and Andrew Auerbach from the Greater Toronto division. After their presentations, we'll have a 30-minute Q&A period. Following a break for lunch, we'll begin the afternoon with a strategic overview of our Canadian and international wealth management business, and that will be led by Gilles Ouellette, Group Head, Wealth Management. Following Gilles' presentation, we'll hear from several members of Gilles' leadership team, Rajiv Silgardo and Barry McInerney, Co-CEOs from BMO Global Asset Management, Charyl Galpin, head of BMO Nesbitt Burns, our full-service investment firm, Julie Barker-Merz, head of BMO InvestorLine, Peter McCarthy, head of BMO Insurance, and Myra Cridland, head of Private Banking for Canada and Asia. After their presentations, we'll have another 30-minute Q&A session. Frank Techar will then close the day with some brief remarks. I'd like to just introduce a few other members of the bank senior management team who are with us today. Tom Flynn, Chief Financial Officer, Surjit Rajpal, Chief Risk Officer, Jean-Michel Arès, Chief Technology & Operations Officer, Joanna Rotenberg, Chief Marketing Officer and Head of Strategy, and Connie Stefankiewicz, Head of North American Channels and Solutions. We also have other senior members of the individual teams who won't be presenting, and they'll be introduced by Cam and Gilles during their presentations. As this event is being webcast live, and perhaps we should have mentioned this earlier, if you could please turn off your cell phones and hold your questions until the Q&A sessions. During Q&A, we'll have microphones, and we'd ask that you wait until you have a microphone, state your name before asking your question. Now, with the logistics over, I'd like to turn it over to Frank Techar, Chief Operating Officer of BMO Financial Group. Thanks, Sharon. Good morning, everyone. Thank you all for joining us today. I was one of those people who was here in 2006, and one thing hasn't changed since then, and that is that my boss covers all the material before I actually have the opportunity to make my comments. There's going to be a few things that I am going to reinforce for you, a few other things I'd like to add just to start the day. As you know, this Investor Day does feature our Canadian P&C and our wealth businesses, and we do appreciate the time that you've taken to learn a little bit more about us. We're awfully proud of the great progress that we've made in both of the businesses, strengthening both of them over the course of the last four or five years, and we hope that the presentations you will find informative over the course of the day. Last time we showcased our Canadian P&C business was about five years ago, and the first thing I'd just like to share with you is today we think we're a much different bank. I think you'll find that this theme resonates throughout today's presentation, and I'll give you my perspective on a few reasons why we believe that. Since 2009, the bank's net income has nearly doubled, and 2014 was another year of tremendous progress in advancing our strategic priorities. We generated $4.5 billion in adjusted net income, declared $2 billion in dividends to our shareholders. We ended the year with a strong capital base in excess of 10%. We announced our intention to renew our share buyback program, and we also completed the $1.3 billion acquisition of F&C Asset Management. It was another in a long line of very busy years for us. There's also been meaningful change in the two businesses we're showcasing today. Both of them are larger, they're more diverse, and they have stronger positions in the marketplace. 2014 was a record year for Canadian P&C, with $2 billion in earnings, up from $1.4 billion in 2009, an increase of over 40%. Over the same period, operating efficiency improved significantly. You'll hear later from Cam and his leaders about some of the specific things we've done to achieve the great progress in our largest business. Wealth management has also grown significantly since 2009. Client assets have tripled to over $800 billion, and earnings have more than doubled to over $800 million. We have a very strong lineup of leading wealth businesses, which Gilles and his team will tell you more about this afternoon. Another important change since 2009 is our business mix. The wealth management contribution of operating revenue has grown to 22%, and last year combined, our personal commercial and wealth contribution was over 78% of operating revenue. While today is focused on Canadian P&C and wealth, we also believe that our footprint and presence in the U.S. is an advantage, especially in today's environment. Our U.S. segment is large and growing and contributed 20% of total bank net income in 2014. During a period when the U.S. economy continues to improve, we have good growth opportunities across each of our U.S. businesses. We're confident we have the right strategies in all our businesses and the ability to adapt to evolving market conditions. This gives us confidence that we can continue to perform well and deliver on our medium-term objectives. The customer landscape, as you know, has changed dramatically over the last few years as well. There's an ongoing shift towards digital and a demand for personalized service in the moment. This has required us to develop new capabilities and new ways to respond to customer needs by working together across businesses and across borders. Advances in technology and communication are transforming the lives of consumers and how they do their banking. Extending the digital experience across all of our channels is a key focus for us across the company. We're integrating the best features of the latest technology and are gaining recognition with big increases in usage. For example, in Canada, financial transactions such as deposits, withdrawals, bill payments, and transfers through our digital channels were up over 20% just this past year. Our mobile customer usage has nearly doubled. For those of you who are here in person, I hope you had a chance to check out our technology demo room. We're excited about the new capabilities that we have on display there, and we've developed over the last couple of years. You'll hear more from our presenters today about digital and how we're offering clients a more integrated and seamless experience. Look, another big difference about the company is that we have changed the way we go to market. We're working more closely together as one bank across businesses and across borders. We view our businesses as complementary, providing our customers with a full suite of capabilities. It's no accident that we're presenting the Canadian P&C business and the wealth business today together. You'll hear about how these businesses are collaborating to bring all we have to offer to our customers and drive future growth. With the expansion of our U.S. footprint in 2011, we have significant scale as the second-largest Canadian bank as measured by retail branches in Canada and the U.S. That means to us a significant opportunity to expand our capabilities to customers across our North American platform. For this reason, cross-business and cross-border initiatives are an advantage and a significant opportunity for us. Let me give you a few examples just to reinforce this point. Our commercial business in Canada and the U.S. are partnering to create banking treasury and payment solutions for clients doing business in both countries. We have strong, seasoned bankers on both sides of the border who understand not only their industry specialties, but they understand the many nuances associated with doing business in both countries. We've established a team of bankers to serve this growing client base and expect to add over 150 north and southbound clients this year, and to ultimately double the existing cross-border revenues in the next four to five years. We also track referrals across our businesses. In 2014, over CAD 12 billion in assets were referred between Canadian P&C and Wealth Management. Through strong collaboration between these businesses, net mutual fund sales through our branch network has grown at a three-year compound annual growth rate of over 20%. This afternoon, you'll hear about the opportunity we have to increase penetration of our online brokerage business within our Canadian P&C customer base, along with other examples about how we're working together. One final example I'll share is how we've transferred our expertise and capabilities in auto dealer financing from Canada to the U.S. with great success. We started building our U.S. business in 2010 from the ground up, and we've leveraged the knowledge and best practices that were well established in our Canadian business. Today, we have a national business in the U.S. operating in 26 states with over 100 dealers as clients, and our loan book has grown to approximately $2.5 billion with a three-year CAGR of 60%. I'm sure you've noticed also that we've taken a refreshed look at how we speak to the market through our brand. A big reason for the strong financial performance I've talked about and what Bill mentioned is that we've consistently looked at our business through the customer lens. People are redefining their expectations in banking, and they largely want to make their own financial decisions. There is no playbook. The way people plan their lives and set financial goals is fundamentally different than the way it was a few years ago. While money is a very personal thing, banks are still seen as being very transactional. We're evolving our brand to deliver on these changing customer needs and expectations, and our basic promise to our customers has not changed. We want to make them feel understood, feel valued, and most of all, feel confident that they're making the right decisions. This is captured in our tagline, "We're here to help." We launched our new campaign in late fall, supported by incredible energy from our people. Thousands of employees helped us co-create this work, and over 7,000 ideas were submitted. We're pleased with the early results, and we're getting great early feedback from the marketplace. We believe our refreshed brand will be a strong driver of increased customer loyalty for growing existing customer relationships and, of course, attracting new customers who realize that we're just not any bank. All of these are proven drivers for share gains and growth. As I've highlighted, big things have happened in our industry over the last six years, and we've responded, which has led to a lot of change in our company. But we think that change gives us a lot of confidence in the future. Our common thread throughout all this change is that the customer remains at the top of our five strategic priorities that guide the bank. We've been clear about what we think is important, and this has led directly to our strong financial performance. You're going to hear us talking with confidence today about our business and our ability to compete going forward. However, clearly, the expectations for the Canadian economy have slowed considerably over the past few months. As Bill mentioned, we're not immune to those impacts, but we're confident in our businesses, and we'll manage through them during this adjustment period. To close, the biggest reason I feel confident about the future is because of the strength of our people and the individuals who lead them. You'll have the opportunity to get to know some of our strongest leaders today. With that, I'll turn the podium over to one of those strong leaders, Cam Fowler, the Head of our Canadian P&C business. Cam, over to you. Thank you. Thank you, Frank, and good morning, everyone, and welcome. Thrilled to be with you here this morning. Over the past year, I've had the chance to meet with many of you and talk about the strength of our Canadian bank. I'm thrilled to meet more of you today. Hope you enjoyed the branch tour this morning. I'm really proud of that branch, the format, the feel of the place, the people we have driving it. It's a special spot, and the First Canadian Place branch represents our view in many ways of the future of banking. It's a talented team with a winning mindset, and I think really importantly, its integration with the wealth management business is critical to us and is critical to our clients. Before I start, I'd like to introduce the team members who will be speaking today. We have Steve Murphy, who's the Head of Canadian Commercial Banking. We have Carolyn Booth, Head of the Atlantic Provinces Division, Ernie Johannson, Head of Canadian Personal Banking, and Andrew Auerbach, who's the Head of the Greater Toronto Division. In addition, I'd like to introduce some of the members of the team who are equally critical to our success and are here today. We have Andrew Irvin in the front row, Head of North American Payments and Treasury Solutions. We have Steve Wouters, Head of North American Retail Payments, Jim Kelsey, Head of the Corporate Finance Division. We have Connie Stefankiewicz, Head of North American Channels, Wendy Miller, Chief Risk Officer, and Mark Oakes is our Chief Financial Officer. As you see from the agenda, I'll speak first, and then Steve Murphy and Carolyn Booth will cover our commercial strategy and performance, followed by Ernie Johannson and Andrew Auerbach, who'll provide a perspective on the retail business. I'll focus on four areas today. The strong foundation we've built in the Canadian bank, our recent performance highlights, and our strategic priorities going forward. Finally, our commitment to delivering on our medium-term objectives. Let me start by laying out a few facts. Our Canadian Personal and Commercial Bank contributed 46% of BMO's earnings in 2014. We delivered CAD 6.5 billion in revenue and CAD 2 billion in net income. We have over 7 million retail customers, and we are the number one MasterCard and AIR MILES issuer. We have nearly 400,000 business clients and a strong number two market share position in business lending. Finally, as Frank mentioned, we are a North American bank with the important capabilities that connect our businesses, east and west connections across our footprint between personal, commercial, and wealth, and north-south connections between wealth, retail, commercial, and our payments businesses. I'm very proud of the work that we've done to revitalize our Canadian bank in recent years. This is particularly true of my leadership team. I believe our success has been built upon the strength of our people. We have a unique and powerful structure that is complemented by exceptional talent and three distinct leadership roles. We have Personal and Commercial Banking business leaders, Ernie Johannson and Steve Murphy, who develop the customer product channel and sales strategies for our personal and commercial businesses nationally. We have our payments leaders, Steve Wouters and Andrew Irvin, who develop customer and product strategies for our payments businesses, and these are North American mandates. Finally, we have our distribution leaders, including Andrew Auerbach and Carolyn, who execute these strategies and drive customer growth, loyalty, and risk management in their own geographic markets. We have eight of these geographic leaders reporting directly to me. Platform renewal has also been a critical component of our strong foundation. Given the importance to our strategy, we focused on our sales system, our commercial platform, and our cards platform, and I will take each one of these in turn. One of the most impactful decisions we have made in recent years relates to the evolution of our sales model. We moved from six divisions nationally to eight and built distinct sales forces for the personal and commercial businesses. This change brought our distribution leaders closer to our customers and increased the focus and capacity of the sales forces. Today, we have 70 personal and 13 commercial Vice Presidents across eight divisions who are empowered to drive our brand, our customer franchise in their own community, and we have been very pleased with the results. We have also renewed our commercial banking platform with a focus on two areas. The first has been bringing together front and middle office capabilities in each geography to strengthen local decisioning on deals and accelerating execution time. The second is that we replaced our commercial lending platform to create additional frontline capacity that can be invested in broader conversations with existing and new clients, with a particular focus on deposit growth. We believe these changes position us well to expand our already strong commercial business in the coming quarters. In our payments business, we recently converted our retail cards portfolio to a new platform. This upgrade will give us faster time to market with new products, improved fraud management, better price and portfolio management, and importantly, alignment with our U.S. and corporate card businesses. Another foundational focus has been our channels, where we have invested in an integrated and seamless experience for our customers. Let me start with digital. Winning in digital is critical to our loyalty and growth agendas, and we believe we are well-positioned to do so. Clearly, the rise in adoption and confidence with mobile and tablet in particular, is driving migration of service transactions to lower-cost self-service channels. It is also creating an opportunity to engage our customers in different ways that are more aligned to today's realities, always on, connected, on the move, transactions across multiple touch points, anytime and anywhere. Given these opportunities, we have significantly increased our digital capabilities. BMO now has a market-leading mobile banking app, number 1 in the App Store when launched, and we have had over 4 million downloads. We also recently introduced a best-in-class tablet app with leading personal financial management capabilities and the ability to bank and invest through a single application. We are the first to deliver a North American remote deposit capability for business clients. Our clients and prospects are extremely excited about this capability. We launched in November, and the response has been outstanding, 150 orders a week. Finally, we enhanced BMO.com, our public site, to include a more responsive design and intuitive navigation, which we believe sets the standard for the industry. Our branches are the cornerstone of our business and will remain so in the coming years. It's clear, though, that the role of the branch, the size of the branch, its capacity, its connectivity will change through time. Our physical presence will be crucial to our distribution, with an emphasis on customer acquisition and advice-based sales. We focus on two important areas when it comes to the branch. Number one, optimizing the locations that we have, and number two, tailoring the formats to the needs of the market, and in many cases, this has led to much smaller format branches. These new formats have performed very well for us, with 35% less square footage, significant reduction in capital spend per branch, operating costs down 16%, and a meaningful increase in revenue per square foot. In addition to our branch and digital presence, we also have a strong and growing ATM network. We have a world standard contact center that supports our growth and loyalty aspirations with inbound and outbound voice and digital capabilities. Our performance in both growth and loyalty is strong and improving in each channel. We are diligently focused on ensuring that we find ways to connect seamlessly with our customers across all channels. The final pillar of our foundational strength is our unique strategic partnerships. We are the largest Canadian MasterCard issuers and AIR MILES issuer. AIR MILES is Canada's premier coalition loyalty program with two-thirds of Canadian households participating. Sobeys and Shell are the second and third largest partners in the AIR MILES program, and both have cards programs through BMO. We hold a 50% ownership share in Moneris Solutions Corporation, Canada's largest merchant acquirer, with 35% market share in the acquiring market. We are proud to be the official bank of the Canadian Defence Community, serving the unique needs of the Canadian military. Finally, we are the premier partner of Toronto FC and the official bank of the Toronto Raptors. We select our partnerships carefully with a focus on ensuring that they deliver an extension of our brand and community presence in support of our growth and loyalty aspirations. Our renewed foundation across our teams, platforms, channels, and partnerships has supported our growth. It's clear. Our revenue and net income were strong throughout 2014, driven by healthy core volume and positive operating leverage of 2.1%. This growth has been underpinned by market-leading balance sheet growth. Our loans grew 8% year-on-year, our deposits 10%, and our mutual fund sales grew in healthy double digits. We've been particularly strong in residential mortgages and commercial deposits, which have been areas of focus for us over the past two years. With respect to our portfolio, these charts demonstrate our balance sheet is well-diversified on both sides. Of particular note is that nearly 90% of our commercial book is secured. We believe our strength and diversification in commercial lending will benefit us. Before we move to our objectives and strategy, I'll pause and comment on the market. As we entered the year, we expected industry loan growth to continue to moderate in line with what we've seen over the last few quarters. However, as Frank Techar mentioned, it's clear that expectations for the Canadian economy have slowed in recent months. Against this backdrop, with the pace of change in payments, digital, and regulation, we are focused on the activities that have made us successful in the past, specifically strong operating discipline against our strategic priorities. With these trends in mind, we are focused on three medium-term financial objectives. The first is annual net income growth above 7%, top-tier balance sheet growth, and productivity ratio in the mid-40s. To achieve these objectives, we have four clear strategic priorities: superior customer loyalty and growth, digital channel acceleration, high-performing teams, and strong operating discipline. It starts with our customer and customer growth specifically, and this means increasing our primary customers and share of wallet in personal banking and deepening our relationships in commercial banking and achieving industry-leading customer loyalty. In personal banking, we know that growing our customer base is critical as primary customers engage more deeply with us and they stay longer. We have an opportunity to increase our customer share in mortgages, lending, and mutual fund, advice-based sales, where we are strong and where we have invested in recent years and where we are seeing good growth. We are also focused on Canadians looking to switch or consolidate banking relationships and ensuring that we have exciting and easy-to-access offerings for Canadians, new Canadians, and young Canadians. Payments will be important to our customer success. Our payments business is a key source of customer acquisition and an area of emphasis for our personal bank. In commercial, we are focused on growing lending share in targeted sectors, specifically manufacturing, healthcare, franchising, professionals, and small and micro business. We have deposit share opportunities in certain sectors in Ontario and Quebec, where we are currently underrepresented. We are clear on our commitment to lead the industry in customer loyalty. We are committed at every level of our organization, from front office to back office, senior executive to teller. We have strong loyalty today, but our goal is to be number one. Over the past five years, we have moved from the back of the pack to the front of the pack, and in this past year, we took the next step in our journey by realigning our net promoter score methodology to bring it more in line with external benchmarks, to survey more of our customers, and to cover all of our channels. We will use the learnings from this loyalty data for coaching, process improvement, and experience improvements, which we believe will take us to the number one spot we seek. Our recent success in creating leading digital experiences has resulted in strong increase in adoption and transaction penetration, in mobile particularly. Our goal is to double online originations by 2017. Based on current adoption and consumer preferences, we expect digital sales to equal the production of 200 branches over the next three to five years. To drive this performance, we are focused on user experience, improved analytics, and customer insights. We have had success. For example, we are seeing strong digital originations in credit cards, where 29% of sales originate online, almost double the Canadian average of 16%. Building on our learnings and cards, we are now focused on deposit and saving accounts and simple investments. Turning to our people, we believe strongly that to win in this business, we need the best team in banking. We measure this by the engagement of our employees and the productivity of the sales force. Employee engagement measures how engaged employees are relative to leading company based on vision, values, views of leadership, and careers. This is important because just as a fully engaged customer, a promoter, is worth 3 times more than a neutral or a detractor, fully engaged employees drive stronger customer and business results, and they stay with our company longer. Research from Sirota, a leading human capital research company, shows that companies with the highest engagement scores consistently outperform their peers. They do so because their employees believe in them. In our business, we have strong employee engagement scores, 81%, which is top tier when we compare with the Canadian FIs. Our goal is to increase this engagement by 5% over the next three years. This would put us in the top tier on engagement compared to the global companies across all industries, not just financial services. I'd like to spend a moment on productivity. We've made excellent progress in the capabilities of our frontline staff and in the number and quality of interactions they're having with our customers and clients. That said, there is more we can do to manage the performance variability across our sales force and better equip our teams to make best use of the emerging digital world. To this end, we're focused on continually improved sales force productivity for both personal and commercial businesses, with the goal of improving personal sales force productivity by 3%-5% per year and increasing the capacity of our commercial account managers by 25%. I'll finish by emphasizing our commitment to strong operating discipline. First, we are committed to ensuring that our strength and risk management underpins everything that we do for our customers and our clients. The risk management systems we have in place maintains a strong first line of defense that allows us to optimize risk and returns decisions effectively and effectively apply credit management practices across our business. From an efficiency standpoint, we have demonstrated an ability to grow faster than the market while maintaining close control on expenses. This discipline has served us well in delivering positive operating leverage and will continue to do so. One final point that I'll add in terms of operating discipline, the simplification of our business processes through digitization and building digitization as a discipline, a capability within the organization, is one of the ways that will continue to fuel further investment in our business, creating even greater value for our customers. I'll close by reinforcing just a few points. The environment will change and competitive response will as well. We have a strong foundation, a clear strategy, and confidence that through focused execution, we can deliver powerful results. We did this in late 2013 and throughout 2014, and we will continue to. Our customer and digital focus will underpin our medium-term success. We're well-positioned, and we're confident that we can meet our medium-term objectives. I'll now turn things over to Steve Murphy, who will lay out the priorities and progress in the commercial business. Thank you. Thank you very much, Cam. Good morning, everyone. I am pleased to be here today to talk about our commercial banking strategy and the exciting things that we are doing to deliver great client experience and grow the business. Let us get started with a quick overview. BMO has a strong and highly profitable commercial banking business, representing 35% of personal and commercial revenue and 47% of personal and commercial net income. We have earned a strong number 2 position in lending market share, and our opportunity to gain share is in small business. We are getting great traction. I am going to talk a little bit more about that in a few moments, but making bold moves when opportunities arise is part of our success. Like our announcement yesterday that we are reducing the rate on new Canadian small business financing loans by 50 basis points. We have senior leaderships in local markets, experienced bankers plugged into what is going on in their regional economy. We are number 1 in agriculture in Canada and number 2 in agriculture in North America. This sector is a great example of how we have developed our strength in lending by knowing the industry sector, what drives the growth, the major players, the threats, and the opportunities. Knowing our clients, understanding their needs, and being there with solutions in good times and in challenging times too. BMO is the number 1 corporate card issuer in Canada and number 8 in North America. Earlier this month, we launched Spend Dynamics, which increases the controls a company has over the corporate cards in use across their organization. We are leaders in product innovation. In payments, we focus on giving clients the control they want and need over their cash flow. With our award-winning online banking for business, clients from small businesses to large corporations can manage all aspects of their treasury needs online. With DepositEdge, launched in the fall, BMO was the first to deliver North American commercial remote deposit capability. DepositEdge enables our clients to deposit checks online using a desktop scanner when and where it is convenient for them. In the fall, we also launched PAYD Pro, which turns your mobile device into a point-of-sale solution. It is Canada's first mobile debit-credit solution, and it is a game-changer for small businesses. PAYD Pro is provided by Moneris Solutions, and since August, we have seen our strongest five-month Moneris sales period ever. In lending, we are differentiated by sophisticated solutions we can bring forward to any size client in any industry, depending upon their needs. We offer senior debt, asset-based lending, sub-debt, and real estate. In auto finance, where we have been active for 30 years, we are among the top 2 banks in the sector. More recently, we acquired Aver Media in 2013 to extend our film and television production financing capabilities. Through our cross-border capabilities, our clients can transact with ease through the Canada-U.S. border. This year, we are focusing on seamless cross-border lending solutions. All these achievements and capabilities have contributed to strong financial performance. In 2014, revenue growth was 7%, which ranks second among our competitors. We achieved this revenue growth despite the impact of competitive pressure and spread compression in a low-interest rate environment. Efficiency improved year-over-year by 20 basis points. We made significant investments in new processes with the usual period of adjustment for people, we are starting to realize the benefits. We had balance sheet growth of 9% in both loans and deposits above the market growth rate of 7%. We rank number 2 in balance growth, significantly better than the previous year, and we achieved these financial results while maintaining a very high-quality loan portfolio. Our total lending portfolio is $50 billion and well-diversified without concentration in any one sector or geography. It's worth noting, oil and gas represents just 2% of the portfolio. Our provision for credit loss ratio was 29 basis points in 2013 and 23 basis points in 2014, which we believe to be at or better than our peers. Our risk management approach is based on three lines of defense. Our frontline workforce is accountable for their risk-taking. Our risk colleagues provide effective challenge, and our audit colleagues provide independent oversight and confirmation that our risk framework is performing effectively. Our overall relationship management approach also plays a role. It requires us to have good working understanding of our clients and their businesses. That approach also distinguishes us in the marketplace. The Canadian Federation of Independent Business conducts a survey every three years called Battle of the Banks. They survey Canadian small and mid-sized businesses on the service they receive from Canadian FIs. Among the big banks, BMO is tied for number 1 in the last survey, with significant strength in the value provided by our account managers. The Bond Marketing Intelligence survey of Canadian businesses measures our performance on key service areas. This third-party survey guides our loyalty strategy and helps us monitor our success. The most recent report ranks BMO account managers number 1 for providing valuable in-depth discussions and being easy to do business with. Great feedback gives us confidence in our strategy, but the real validation comes in our results for client growth and share of wallet. Since 2012, our client growth has been 13.5%, or 13,000 net new clients. That's due to a 20% improvement in acquisition and a 10% improvement in retention over that period. Share of wallet for our larger clients is top tier. They have products with us that are four main solution categories, deposits, loans, collections, and disbursements. Our largest opportunity is in small business. We have clients on average two out of four of our product categories. We're leveraging our strength in mid-market to provide small business with similar but simplified products. I'll expand on that a little bit later. The impact of adding one product category is between $1,000 and $5,000 in one-year revenue, depending upon the size of the client. Let me now turn to how we approach relationship management. We have 400,000 clients, from startup to growth to ongoing expansion. A client relationship management approach differentiates us. And while that sounds straightforward, to a degree, everyone claims a client focus. At BMO, relationship management means more. It means regular engagement with clients to assess their evolving needs and customized solutions, drawing upon a full range of products right across BMO Financial Group. For us, it's about seamlessly bringing the full value of BMO to every relationship and growing with our clients. To illustrate how that works, let me provide three short examples. We set up Aboriginal banking in 1992. Today, our total portfolio balances are about $3 billion, with average 15% growth over the last three years. We have 14 Aboriginal banking branches, and we are one of two major banks with a non-reserve housing loan program. We're the only bank to have been honored in four consecutive years with the Canadian Council for Aboriginal Business' Gold PAR Award. That's the Progressive Aboriginal Relations Award. We provide full banking services across all of our lines of business, with our growth priority being in the trust and asset management area. You may have seen a story in The Financial Post earlier this month featuring our client, the Whitecap Dakota Nation of Saskatchewan. They recently transferred their full relationship to BMO from another bank. What they said differentiated BMO was our engagement with them, understanding their business, and defining the right terms to finance their infrastructure needs. I said clients grow with us, and it's one of the pleasures of commercial banking to be part of so many legacies. One family business came to BMO as a sewing shop in 1930. Eighty-five years later, it's an international garment business, still family-run and still a loyal BMO client. We have lots of these stories, businesses that start small and over time are managed by generations of our bankers as they grow and expand. My final story involves a high-tech company, 10 years in business, 100 employees and growing, who came to BMO for a payment card so they could purchase supplies. They weren't looking to switch banks. But the conversation that followed with the BMO account manager impressed the client with the time and expense savings we could offer this business. Long story short, a payment card application grew to a full relationship. The client transferred to us CAD 25 million in deposits and the rest of their banking. What ties these three stories together is BMO's sharp focus on each client's unique needs, from startup to established companies, and the value of our relationship management approach. These are just three examples of the kind of relationships and conversations all of our bankers are conducting every day across the country. Let me turn now to our strategic priorities and how we are building on our strengths. We have three key strategic priorities, superior customer loyalty and growth, a high-performing team, and strong operating discipline. I'll start with loyalty. Our goal is to be number one in the Bond survey, which tells us our relative performance on key drivers of commercial client loyalty. There's no clear leader among the banks, so it's ours for the taking. Our biggest opportunity is in small business. They're satisfied with us, but too often they don't see us or really anyone as their primary bank. We want to be the destination bank for small business. To get there, we conduct our own client surveys immediately following key transactions for insights into areas where we do well or need to improve. This feedback is routed to account management involved to take any necessary action. Loyalty scores are part of our performance scorecard, so we get paid on delivering the right client experience. We also listen to feedback on our overall offering. Clients want time savings and simplicity. Products like BMO DepositEdge, that eliminates the need to go to a branch to make deposits, and PAYD Pro, that turns a smartphone into a debit machine, are key to retaining clients and attracting new ones. We believe achieving number one in the Bond survey and maintaining number one will drive client growth and share of wallet. We know, for example, that when we help a client manage their payments, we become their primary bank and a 10%-20% increase in profitable operating deposit balances follows. We are also building on our number two lending share. We are strongest in Atlantic and B.C., where we jockey for number one position. In Alberta and Prairies, we are number two. Our opportunity is in Ontario and Quebec, where we are number three. We think we are well-positioned to take advantage of the benefits of the strengthening U.S. economy, lower gas prices, and the low Canadian dollar. We are picking our battles by market and selecting industries such as manufacturing, where there is an opportunity to grow our relative share and where Ontario and Quebec are poised to take advantage of the sector's growth. We are making gains. Quarter-over-quarter, we saw our small business market share grow by 40 basis points in Quebec and 37 basis points in Ontario, the fastest among our competitors. Across the country, we are targeting growing a dynamic client segment, such as women entrepreneurs, who now represent over half of new small business startups. We want to be the bank for women in business, as evidenced by our recent announcement that we are dedicating CAD 2 billion of our balance sheet to financing solutions to this group. By executing on this strategy, we are confident we will gain lending market share. Our growth priorities depend on our continued momentum, though, in deposits as well. We are focused on increasing our deposit market share. Our market-leading growth in deposits since 2012 and our 2013 move from fifth to fourth in market share reflects the pivot we have made in the business. Our growth strategy centers on picking battles geographically. Again, our greatest opportunity is in Ontario and Quebec, and delivering leading payment solutions to drive profitable deposit balances. Our clients and our sales force embraced our payment solutions. Our cash management share grew 5% in two years, putting us in a tie for second place, and our Moneris Canadian market share is 35%. BMO DepositEdge is averaging about 150 sales per week, for a total of about 1,300 since we went live in mid-November. We are targeting deposit-rich industries in municipalities, universities, school boards, hospitals, not-for-profit, and knowledge-based industries to help them manage their cash flow and win their profitable operating deposits. In knowledge-based industries, for example, we are seeing a kind of renaissance in tech incubators associated with universities and increased capital investment. We have developed specific strategies to win that business. We are confident that we will grow deposit share with our strategy, targeting geographic opportunities, growth segments, and industries we choose to compete. How do we go about achieving our target growth? We focus on our team and a strong operating discipline to support them in executing our strategy. Let us start with the team. Our people are our core strength. Just as we believe that client engagement is essential to success, so we believe employee engagement is essential. These are the people who our clients rely on to bring together our channels and products into time-saving solutions. We have 2,000 expert bankers across Canada in 27 banking centers, supported by our branches and online, mobile, and telephone capabilities. Three points I want to emphasize. First, our bankers are generalist relationship managers who specialize in select industries based on their market. Second, they have the authority and the credit qualification to make lending decisions locally, which clients appreciate and which reduces delays. Third, our bankers grow within roles, across roles and industries, and into leadership positions. The opportunities for rewarding careers in commercial banking are significant. Carolyn's going to tell you more shortly about what that looks like in action and how we support that select expertise. Let me turn to learning and its critical importance to commercial banking. It's a fact you just can't turn someone into a commercial banker overnight. You have to take the time to develop commercial bankers, to help them acquire deep knowledge, credit skills, and expertise with clients. They need the right training throughout their development. We have a commercial curriculum that covers a differentiated relationship management approach, something we call Relationship Management the BMO Way. We also have a full program of credit qualification for both credit and cash management. The outcome is fully qualified bankers with a consistent and disciplined approach. Finally, great people deserve great leaders, and our commercial leaders go through ongoing training so they can lead their teams to consistently deliver the best results. With the right strategy and the right team in place, you need to create conditions for execution excellence. To us, that means strong operating discipline. In 2013 and 2014, we made our largest investment ever to re-engineer our processes and improve our platforms. This transformation included the implementation of lean processes supported by clear accountabilities and reporting, teams spending more time on value-added activities and less time on things that can be automated. We added new lending platforms to support seamless workflow across roles. I'm excited about this. 25% more time with clients, 30% faster loan fulfillment. This is how we will achieve the market share growth we're targeting and our revenue growth projections. It's still early days, but we expect to start realizing the benefits this year. The outcome for clients is more value-added guidance from their account manager and faster access to better solutions for their business. I've given you a view of our strengths and objectives, our growth opportunities and our strategies, and how we're going to execute on them. I would now like to introduce Carolyn Booth, head of our Atlantic Division, to demonstrate how it all plays out with employees and our clients to drive real growth and efficiencies. Thank you, Steve, and good morning, everyone. I'm delighted to be here to be able to talk a little bit about my piece of the business. As Senior Leader of Atlantic Provinces Division for both Personal and Commercial Banking, my primary objective is to ensure that our customers get a great client experience every time that they engage with us, whether it's through our branches, our relationship managers, or through any of our online or digital channels. My team in Atlantic Canada consists of 860 people, of which approximately 150 support the commercial bank. We have a network of 76 branches across the four provinces. We have seven commercial banking centers in Halifax, Moncton, Saint John, Fredericton, Charlottetown, Corner Brook, and Saint John's, Newfoundland. We also have commercial experts in select rural markets that we use to support our strategic growth objectives. The Atlantic provinces is a very dynamic market, and our people have really been the strength behind the growth of our business. They've enabled us to achieve a strong number 2 position in commercial lending market share, and they've spurred consistent growth in commercial deposit share growth, where we're currently number 3 and rapidly closing the gap on number 2. This is my second tour of duty in Atlantic Canada since I joined BMO in 1991 as a teller in Montreal. Over the past 23 years, I've literally had the opportunity and the privilege to do every frontline customer-facing job in both personal and commercial banking. While each of the markets that I worked in was distinctly unique, our go-to-market approach that's really grounded in strong local leadership has been consistent. Clients have the confidence that the people working for them know their market, know their business, and have the authority to get things done. What I'd like to do for the next couple of minutes is really give you a glimpse of how my team in Atlantic Canada and other teams like it across the Canadian Bank execute on all of the strategic objectives that Steve outlined for the commercial segment. I'd also like to give you a flavor of what that looks like and what that feels like from both a client and an employee perspective. Let's start with the client and our goal to be number 1 on the Bond Loyalty survey. Bond is a national survey, and those results are not available down to the regional level. To ensure that we're contributing positively to our goal of being number 1 in the Bond survey, at the division level, we really focus primarily on two things. As Steve mentioned, we have a framework that supports our relationships managers in building great client experiences known as Relationship Management the BMO Way. This framework provides a roadmap for managing client relationships that our employees can follow with a great deal of confidence. We measure our progress in building exceptional client relationships through transactional net promoter score. These surveys allow us to assess the overall client experience and, at the same time, drill down into real moments of truth that we know have the greatest impact on the overall client experience. We receive these surveys within a couple of days of the key moment of truth or the transaction. If a client does raise a concern, we can take action immediately and ensure that we're not at risk of losing that client relationship or seeing it deteriorate. The insights from these surveys are really comprehensive, they're robust, they're timely, and good or bad, our relationship managers are acutely interested in hearing exactly what their clients had to say. These surveys enable line leaders like myself to take action in the moment, to provide coaching in the moment, and at the same time, they inform all of us on the strategic opportunities that we have to focus on in order to get to number 1 in the Bond survey. I can't emphasize enough how much our proactive value-added approach to relationship management differentiates us in the marketplace. Overall client feedback tells us that it works, and employees like it too, because it takes the guesswork out of the process and out of their roles. I can say with confidence that our strength in client loyalty is driving performance, and we see that reflected in market share. As I said earlier, we're currently second in commercial lending market share in Atlantic Canada. If you actually drill down into those results, we're number one in the mid-market segment, and we're number two in the small business banking segment. In fact, there's less than CAD 100 million or 100 basis points separating us from first place overall. Let me tell you a little bit about what we're doing to close that gap. Our commercial strategy, as Steve said, is to target select industries where we know and we see opportunity. The two I'd like to talk to you about today that we're focusing on in Atlantic Canada are agriculture and healthcare. In 2012, Canadian agriculture generated CAD 103.5 billion, accounting for 6.7% of Canadian GDP. Employment in most agriculture industries continues to rise and is one of the largest employers in Atlantic Canada. Approximately 9% is given over to farming in Atlantic, and the credit market size is CAD 2 billion, of which BMO currently holds 14%. We've traditionally been very strong on the agriculture production side, which includes key crops like potatoes, other vegetables, and fruits. We see the opportunity to achieve a leading position on the supply managed side. We've hired a senior leader of agriculture and added additional agrologists in the markets where we see specific opportunity to make sure that we fully take advantage of it. Clients in this industry see our commitment to their industry, to their business, and they have confidence that we have people and roles that can help them succeed. We're also actively targeting healthcare. Total healthcare expenditures in Canada during 2013 were approximately CAD 211 billion. Hospitals account for the highest healthcare expenditure at 30% of total spending. We see a lot of opportunity across all of Atlantic for the healthcare sector, and that's anywhere from physicians to pharmacists to medical clinics or medical office buildings. With the aging population of the region, that opportunity is only likely to grow. Our national industry program team provides us in the region with a regular cadence of leads, opportunity, marketing material, as well as information sessions and training. With the dedicated support of this national healthcare team, we've been able to build our own local network of subject matter experts that allow us to focus on growing share of wallet with existing clients in this sector, as well as acquiring new relationships. These are just two examples of our focus on growth, and we're seeing good evidence of progress, and I feel confident our strategies are working. We have strong local leadership, we have the right people in the right role, and we're well-supported by Steve's team. We've also got a fantastic story to tell in Atlantic Canada with respect to commercial deposit market share. We're currently third in the market, but our year-over-year balance and market share growth is growing faster than any of our competitors. In the last three years, the commercial deposit market in Atlantic has grown by CAD 2.5 billion, and our team has captured 45% of that growth. How are we doing that? We are targeting many of the deposit-rich industries that Steve alluded to in his comments, and we are leveraging innovative products that make it easier for customers to bank with us wherever they are. In Atlantic, where we have a relatively small population dispersed over four provinces, dominated by a few urban centers and abundance of small rural communities, this is a real competitive advantage. We recently won a new client relationship with a foundation in Cape Breton, Nova Scotia. This client was traveling 40 minutes in order to make their deposits at a branch. With our new BMO DepositEdge product, our strong online banking for business solutions, the client can now deposit checks, process payroll, manage payables, all from the comfort of his office. The value proposition to the client was clear, and a new BMO relationship was born. This is a delivery model and a solution that can assist any business anywhere, whether it is in Cape Breton, Nova Scotia or the congested market of downtown Toronto. I believe that it is a model for the future of banking. But you still need people to put the right solutions together for clients. Keeping our employees engaged is important and essential to the success of our business. At 89% employee engagements in Atlantic, our scores in Atlantic are among the highest in commercial banking and within the industry. I believe this is because we have the best employee offer in the market. We have strong entry-level roles where individuals can come into the commercial bank and learn the business from the ground up. We create our own pool to hire from as employees gain experience and move into customer-facing and leadership roles. With BMO, you can have a really long and fulfilling career right in a region like Atlantic, or alternatively, if you want to move to another part of the country, that transition is seamless as we standardize the roles across the Canadian bank. We have low turnover because people know with confidence that they can be successful at BMO. Their confidence is only growing as a result of all the investments that we have made in the business to streamline roles, processes, and transition to a new lending platform. This represents a lot of change, and our people are adapting well. While we are still early days in our transition, we have already seen about half of the time savings that Steve spoke to. Throughout the process, our employees have remained engaged, they are on board with our vision, and our productivity has remained high. I am very proud and excited by the changes that we have made to the commercial bank. To sum it up, our success is founded on knowing where to focus our growth strategy, understanding our market and our clients through the support of data analytics, having the best innovative solutions, and bringing it all together with engaged employees and execution excellence. Thank you very much. Steve, I will pass it back to you. Thanks very much, Carolyn. I hope we've painted a clear picture for you of our strong commercial banking franchise and our great momentum. We have four key takeaways that we want to share with you before a break. First, our Canadian commercial banking business is large and profitable. Client relationship management and our targeted priorities are driving our growth. Our expert bankers are our core strength, and we will sustain the momentum we've built with an all-encompassing focus on execution excellence. I am confident we have the right priorities in place to take full advantage of market opportunities today, to adjust as they evolve, and to seize new opportunities that emerge. Thank you very much for your attention. Now we're going to take a 10-minute break. Thank you. I'm a little bit sheltered. I'm a little bit scared. I'm a little bit nervous. I'm going nowhere. I'm a little bit jealous. I'm a little bit slow. I'm a little bit hurtful, and I don't want to let it go. No, and I don't want to let it go. I'm a little bit angry when everyone's around. But I get a little lonely when no one's out. I feel my demons when it's leading to me. I'm just believing the things that get better. Sometimes believing, but I don't want to let it go. I'm just believing the things will get better. Sometimes believing, but I don't want to let it go. Maybe when I get older I'm always looking for something but I hate changes. Time fades. There's no space. As life breaks new ground. I'm just a believer that things will get better. Some take it or leave it, but I don't want to let it go. I'm just a believer that things will get better. Some take it or leave it, but I don't want to let it go. It doesn't matter what is out there. My head is spinning and I want better. It doesn't matter what is out there. Because time fades. There's no space. As life breaks new ground. I'm just a believer that things will get better. Some take it or leave it, but I don't want to let it go. I'm just a believer that things will get better. Some take it or leave it, but I don't want to let it go. I'm just a believer that things will get better. Some take it or leave it, but I don't want to let it go. I don't want to let it go. 'Cause you're a sky, 'cause you're a sky full of stars. I'm gonna give you my heart. 'Cause you're a sky, 'cause you're a sky full of stars. 'Cause you light up the path. I don't care, go on and tear me apart. I don't care if you do. 'Cause in a sky, 'cause in a sky full of stars. I think I saw you. 'Cause you're a sky, 'cause you're a sky full of stars. I wanna die in your arms. 'Cause you get lighter the more it gets dark. I'm gonna give you my heart. I don't care, go on and tear me apart. I don't care if you do. 'Cause in a sky, 'cause in a sky full of stars. I think I see you. I think I see you. 'Cause you're a sky, you're a sky full of stars. It's a heavenly view. Yes, it's a heavenly view. Turn around, open your eyes, look at me now. Turn around, girl I got you, we won't fall down. Yeah. We can see forever from up here. As long as we're together have no fear. No fear. Turn around, floating so high above the ground. Floating so high. Turn around, together nothing can stop us now. Come baby, turn around, floating so high above the ground. Floating so high. Turn around, together nothing can stop us now. Turn around. Turn around. Turn around, outer space we can go there now. Yeah. Ooh, turn around, there's no limits to what we've found. Oh, yeah. Ooh, music up, I want to feel it all tonight. Maybe we'll stay up 'cause there's no way for us to fall. To fall. Turn around, floating so high above the ground. Floating so high. Turn around, together nothing can stop us now. Come baby, turn around, floating so high above the ground. Floating so high. Turn around, together nothing can stop us now. Turn around. Ooh baby, we're so high now. Oh. Let our worries and our pain goodbye now. Oh, yeah. Our home is the sky now. Oh, yeah. Said we're never coming down, down. Oh. Turn around, floating so high above the ground. Above the ground. Floating so high. Turn around, together nothing can stop us now. Baby nothing can stop us now. So baby turn around, floating so high above the ground. Oh, yeah. Turn around, together nothing can stop us now. Turn around. Turn around. Turn around. Nothing can stop us now. Lately, I've been, I've been losing sleep. Dreaming about the things that we could be. But baby, I've been, I've been praying hard. Said no more counting dollars, we'll be counting stars. Yeah, we'll be counting stars. I see this life, like a swinging vine. Swing my heart across the line. In my face is flashing signs. Seek it out and ye shall find. Old, but I'm not that old. Young, but I'm not that bold. I don't think the world is sold. On just doing what we're told. I feel something so right doing the wrong thing. I feel something so wrong doing the right thing. I could lie, could lie, could lie. Everything that kills me makes me feel alive. Lately, I've been, I've been losing sleep. Dreaming about the things that we could be. But baby, I've been, I've been praying hard. Said no more counting dollars, we'll be counting stars. Lately, I've been, I've been losing sleep. Dreaming about the things that we could be. But baby, I've been, I've been praying hard. Said no more counting dollars, we'll be, we'll be counting stars. Down this river, every turn Hope is our four-letter word Take that money, watch it burn Old, but I'm not that old Young, but I'm not that bold I don't think the world is sold I'm just doing what we're told I feel something so wrong Doing the right thing I couldn't lie, couldn't lie, couldn't lie Everything that drowns me makes me wanna fly Lately, I've been, I've been losing sleep Dreaming about the things that we could be Lately, I've been, I've been praying hard Said no more counting dollars We'll be counting stars Lately, I've been, I've been losing sleep Dreaming about the things that we could be Lately, I've been, I've been praying hard Said no more counting dollars We'll be, we'll be counting stars Oh, take that money, watch it burn Sink in the river the lessons I learned Take that money, watch it burn Sink in the river the lessons I learned Take that money, watch it burn Sink in the river the lessons I learned Take that money, watch it burn Sink in the river the lessons I learned Everything that kills me Makes me feel alive Lately, I've been, I've been losing sleep Dreaming about the things that we could be Lately, I've been, I've been praying hard Said no more counting dollars We'll be counting stars Lately, I've been, I've been losing sleep Dreaming about the things that we could be Lately, I've been, I've been praying hard Said no more counting dollars We'll be, we'll be counting stars Take that money, watch it burn Sink in the river the lessons I learned Take that money, watch it burn Sink in the river the lessons I learned Take that money, watch it burn Sink in the river the lessons I learned Take that money, watch it burn Sink in the river the lessons I learned I'm a little bit sheltered I'm a little bit scared I'm a little bit nervous I'm going nowhere I'm a little bit jealous I'm a little bit slow I'm a little bit hurtful I don't wanna let it go I don't wanna let it go I'm a little bit angry When everyone's around But I get a little lonely when no one's out I feel my demons misleading me I'm just a believer that things will get better Some can take it or leave it, but I don't wanna let it go I'm just a believer that things will get better Some can take it or leave it, but I don't wanna let it go Maybe when I get older I'm in the ground The weight's off my shoulders It was bringing me down I've never been that lucky I've never tasted fame I'm always looking for something But I ain't changing Time fades, there's no space As life breaks new ground I'm just a believer that things will get better Some can take it or leave it, but I don't wanna let it go I'm just a believer that things will get better Some can take it or leave it, but I don't wanna let it go It doesn't matter what is out there Not anything that I want there It doesn't matter what is out there 'Cause time fades, there's no space As life breaks new ground I'm just a believer that things will get better Some can take it or leave it, but I don't wanna let it go I'm just a believer that things will get better Some can take it or leave it, but I don't wanna let it go I'm just a believer that things will get better Some can take it or leave it, but I don't wanna let it go I don't wanna let it go 'Cause you're a sky, 'cause you're a sky full of stars I'm gonna give you my heart 'Cause you're a sky, 'cause you're a sky Welcome back, everyone. Hope you enjoyed your break. We'll now turn to the next part of our Canadian banking presentations, and we'll hear from Ernie Johannson, who is the Head of our Canadian personal banking business. Ernie? Thanks, Sharon, and good morning, everybody. For those of you on the webcast, don't adjust your set. I am Ernie Johannson, and I am female. It is a nickname, so I hope you can bear with that. It's a great opportunity to be able to share with you the personal banking business. I have three objectives for our time together. The first is to provide you with a review of the business itself and our results, then get into an overview of what has taken place to revitalize this business and the momentum that we've had. Lastly, to lay out our strategic priorities as we go forward to leverage that renewed foundation and that momentum that I mentioned. Let's get started. First, a quick overview of the business itself. At the BMO Financial Group level, the personal bank represents 25% of earnings and revenue. At the Canadian banking level, we are 65% of revenue and 53% of earnings. Our total market share performance has improved significantly over the past three years, and we are at 11.5. in 2014 alone, we added 11 basis points of market share to our business. With over 7 million customers, we are a key distribution channel for many of our PCG, our wealth colleagues, including our mutual fund business, our creditor insurance, and BMO InvestorLine. As well, we provide an incredible referral source to our private banking and also Nesbitt Burns. Let's turn to our financial performance this past year. As I mentioned, we've had momentum. If you look at our performance financially, we've had consistent improvements in both the absolute and relative organic revenue growth. In 2013, we were fourth in the industry for revenue growth. In 2014, through 6% achievement on revenue growth, we moved into second position. We achieved this growth while we were improving our efficiency ratio. As you can see, it has been reduced by 130 basis points as a result of effective expense management and also prudent investments in the business. We've also had leading growth in our balances. In particular, you can see lending has grown by 7% and deposits by 10%, ranking us number one and number two respectively in the industry. Over the second half of 2014, our lending balance growth slowed as we were taking a more cautious approach on longer-term auto loans and also our unsecured lending businesses. This will continue to be reflected in our results in our year-over-year personal loan growth in the first half of 2015. We expect that our mortgage growth overall will be above market. As well, in deposit growth, we expect that to remain healthy as we continue to see expansion opportunities in both our product mix and our channels. Our loan portfolio is well-diversified from both a product mix perspective as well as a geographic perspective. 89% of the portfolio is secured and 62% of it is in mortgages. Our auto business is 7% and cards is 6%. The PCLs in our 2014 were at 31 basis points and very well aligned to our overall risk appetite. We have seen consistent year-over-year reductions in our PCLs over the past three years, and this is just a reflection of our prudent approach to growth and also the disciplined risk management capabilities that we have in the personal business. On a product-by-product basis, looking at our loan PCLs versus our peers, we are consistently lower. Over 60% of our mortgage book is insured, and in our uninsured business, the average mortgage loan-to-value is around 58%. Lastly, the diversification of our book across market further provides us some stability in times of regional economic fluctuations. Alberta represents 15% of our total loans, of which 90% are secured. Of the mortgage portfolio, 73% of it is insured. Another key measure of our performance and the strength of our key customer franchise in the business is really the growth of our primary customers. Primary customers hold multiple products with us with high levels of engagement on a daily basis through products such as their checking account. Primary customers generate 3.5 times more revenue than the rest of the customer franchise, and they also have stronger loyalty with us. Over the past year, we have built significant momentum in our customer franchise as a result of this laser-focused attention we've been giving to primary customers. We have grown both the absolute number of primary customers in our franchise as well as their share of wallet with us. This past year, results demonstrate our ability to generate value from loyalty through the effective customer conversations that we have every day with our customers and through multiple channels. We have increased the absolute number of primary customers to a record high for us at BMO due to this high conversion rate. We've increased our conversion rate by 5 times in 2014 from 2013. As well, our share of wallet with primary customers has increased 450 basis points, really closing the gap to number one in terms of share of wallet with primary customers. You must be asking what has been driving these results. Let's take a moment to review what has been the underpinning of our growth. Many of you know the retail business is a complex ecosystem, large employee population, millions of customer interactions across multiple channels, and complex products, processes, and systems. To drive outcomes with pace requires, as Cam mentioned, a really clear focus and disciplined execution and strong integration. Our multi-year strategy focused on these three pillars have been really focused on revitalizing the business. The order of execution against each one of these pillars, the initiatives in each one, have been in a disciplined manner that build upon one another, and putting the three together created a compounding effect for the personal business. Our renewed platforms were focused on, first, expanding our product capabilities and growth, which we began in mortgages and then shifted over to deposits. We strengthened our customer sales force, the heart of the retail business. Lastly, to enable our strategy, we invested in core technologies that were aligned to our objectives. Let's start with our product renewal and specifically with mortgages. Our mortgage strategy has been focused on growing primary customers. We've achieved this growth through both product development and the capabilities builds that we've had both in our branch network as well as with our mobile mortgage specialists. Over the past three years, we've achieved a 10% annual growth rate while holding our spread stable. The key catalyst for this success was our launch of the innovative and responsible 25-year, five-year fixed AM product in January of 2012. Leading the market and encouraging Canadians to lock in on pricing and focus on a shorter AM saved Canadians millions of dollars and provided them peace of mind through certainty of payment. Our leadership in this mortgage product created strong brand awareness for us as a bank to come to get a mortgage. It did indeed. It brought in thousands of customers new to our franchise that became primary with us by buying not just their mortgage, but at least two other products with us. The product also really brought in a customer franchise that had even a higher credit quality than we normally saw. Lastly, during this timeframe, we shifted our mobile commissions mortgage specialist sales team to become externally focused, bringing new customers into our franchise. Today, our mortgage specialists are a leading source of new-to-BMO primary customers. Having started to build momentum in our mortgage business, we shifted our focus to driving deposits. Over the past three years, we have grown deposits by 6% annually, and this year alone, 10%, as many of our initiatives took full flight. Our checking and saving accounts success has really been driven by a combination of successful digital and mass media acquisition campaigns that had valuable offers for Canadians and that optimized our performance of our promotions. Our targeted programs against key customer segments, such as newcomers to Canada and our exclusive banking relationship with the Canadian military through the Canadian Defence Community, really added further growth for us. Our deposit growth was also stimulated by our sharpened branch team focus on driving primary customers, and as well by our lead generation capability, which I will speak to in a moment. Lastly, we expanded our term product sales as a result of expanding channels and also our product mix to grow our term business further. The next platform of renewal that I will speak to is really how we revitalized our business through our sales forces, and in particular, our sales force productivity. We have focused on three areas, the first being how do we strengthen the capabilities of our people? Second, introducing a new sales management structure. Thirdly, building out our performance management capabilities to better align to our new business and our customer objectives. We started in 2012 with our key relationship general banker role to more effectively ask for the business from our loyal customers and grow share of wallet. To do so required us to retrain 2,300 general bankers to have what we would call holistic financial conversation. That is really about having an offering that they are able to communicate the entire full suite of financial services needs, lending, savings, mortgages, and the more challenging investment conversations. In late 2013, with that strength in general banker, we made a large-scale change to our leadership structure and our performance management system. We eliminated one layer of management. We increased spans of control through 70 regional vice presidents that were dedicated to the personal banking business. We brought leadership closer to our customers, our branch teams, and the market opportunities. Our performance management system was retooled in a number of ways to release management capacity to more directly coach to outcomes. Our branch performance goals were realigned to create a tighter connection between customer loyalty drivers and revenue. Coaching and management tools were enhanced to increase the line of sight to performance and accountability. The change was profound and impactful. Andrew will talk more about our sales and service model in his presentation, but let me share the outcomes of the culmination of these changes. As I mentioned, we trained 2,300 general bankers and did so in half the time that we normally did before. We tripled gross mutual fund sales per general banker in this timeframe, a real testament to the growth of what was possible in our mutual fund business. Overall, our general bankers increased their productivity by 7%. Technology was a key underpinning in all of this, enabling us to drive our product and our sales force successes, as well as growing share of wallet with our customers. We built what I was mentioning before on our leads capability, a really in-depth customer insight and lead generation engine that is key in all of our customer touch points. Our insights and engine are based on sophisticated analytics and data. Our deployment provided sales and service teams, as well as our digital channels, with relevant and proactive cross-sell opportunities and conversation starters to ensure that we're driving referrals and appointments. Many of you this morning saw that, or discussed that at FCP. in 2014 alone, it generated over 700,000 appointments from simple conversation starters that happened either at the teller wicket or in our call centers, a 25% improvement over the year prior. In addition, we sold half a billion product units as a result of offering our customers the right product at the right time and starting great conversations. Ongoing and initial investments that we have placed in our data and leads management capability have typically paid out within 12 months. Secondly, we shifted our retail lending platform. We created what we call a new front door to a very complex lending system. It allowed us to increase or accelerate the time to productivity of our people, particularly new hires, reduce errors, and also make the lending experience overall just more intuitive. This was foundational to our mortgage growth and also our sales force productivity. The next two platforms on this slide speak specifically to what we invested in in 2014 that would accelerate our growth moving into this year, and I'll talk about them in a minute. I've talked about how we've revitalized the Canadian Personal Banking business, and now it's really time to talk about what are we doing going forward. There's no better place than to start with our brand. Frank gave a great overview of what our brand is and represents. I believe personally that it is extremely powerful. It is very fresh, and perhaps more importantly, it's incredibly relevant to both customers and our employees. Our external positioning, We're Here to Help, it's not a shift for us in Personal Banking. We have many examples and proof points every day of how our incredible front line go the distance for our customers. We also have grassroots engagement in our communities to make a difference where we live, a real testament to that positioning. There is a strong connection between who we are as people first, bankers second, and the hopes and expectations of Canadians for their banking. This is incredibly differentiating in retail. With brand as a filter for our strategy going forward, we have four strategic priorities that align to the Canadian business that Cam mentioned and Steve referenced as well. First is to continue our strong loyalty with our customers and growth. Particularly, we are going to focus in on those primary customers and also with our payments business. Second, we are going to accelerate our digital channels for our customers and also for our employees, ensuring that we have a seamless experience across all of our channels, and that this is a clear proof point for our brand. Thirdly, we want to strengthen our high-performing sales force even further in support of that customer brand that we talked about, and as well as our growth aspirations. Lastly, strong operating disciplines to allow us to make sure that we are growing in a very dynamic market environment and ensuring that we are creating long-term sustainable advantages for us. Let's turn to the first of these priorities, which is our customer. While we have made significant progress in expanding our primary customer share of wallet over the past year, there remains a clear opportunity between ourselves and the market leader that we plan to close over the medium term. We are well-positioned to do so, as we have seen that our primary customers who have amazing experience with us are ready to give us their business. Perhaps more importantly, our front line is ready and has never been more prepared to ask for the business, to have those great customer conversations. Our key customer share of wallet growth opportunities are, as Cam mentioned, in mortgages, lending, and BMO Mutual Funds, products that we have seen some growth in already. These are products that require advice conversations and also have larger balances overall. With that improved sales force productivity, we are selectively growing our sales forces in these key specialist areas, in particular financial planners and our mortgage specialists. Multi-channel leads and that leads engine and insight capability I referred to are also going to be important for us moving forward, and we are going to continue to expand our data to be able to ensure that we are driving the right conversations and also that we are making choices in credit and pricing optimization disciplines that are really necessary for us to grow share of wallet. In addition to share of wallet opportunities with our existing customers, we have a great opportunity to better capitalize on the strength that we have in acquiring new customers. In particular, we want to ensure more of them become primary customers with us as quickly as possible. The annual Canadian Financial Services Switching Study that you see here on this slide gives us some insight into the market opportunity for new customer acquisition and how well we perform. Annually, there is an estimated 4 million Canadians in the marketplace for purchasing banking services. We rank number 1 and number 2 in the industry in the two largest segments: Canadians purchasing additional product outside of their current FI and Canadians who are switching their entire banking relationship. This acquisition strength provides us with the opportunity to improve our onboarding experience across all our channels and processes that touch new customers. Payments is a key source of customers for us, and it also is important to driving our loyalty and engagement with customers, as well as retention. Our growth strategy is to leverage our unique partnerships, expand upon our leading premium franchise, as well as ensuring that we leverage strong portfolio management capabilities through the new platform we introduced in 2014. As well, we want to participate in emerging payments opportunities. Let's start with partnerships. Partnerships provide us with a unique customer value proposition and rewards. Rewards continue to be a strong driver of credit card acquisition and usage decisions every day. It will also further drive the decisions on e-wallet selection. We are MasterCard's number one issuer in Canada and the leading issuer of Canada's premier loyalty program, AIR MILES. As Cam mentioned, two-thirds of Canadian households have the AIR MILES product, and every minute of every day, 1,000 Canadians are swiping their blue card with AIR MILES. It's not surprising that they also redeem 9 million awards every year. It's not surprising that this is the highest loyalty rating program in Canada from a rewards and has top-of-mind awareness. Sobeys and Shell are also issuers of the program and are number two and number three in the AIR MILES program. We also provide their credit cards. The combination of our common payment vehicle and our loyalty program creates a formidable customer value proposition and a customer base for us to mine. Recently, given the opportunities that market disruption has created, we've aggressively focused on growing our award-winning World Elite product. Our total counts in 2014 grew by over 200%, a combination of both our marketing and our sales force engagement. Moving forward, we continue to see opportunities to expand new-to-BMO customers through this offering, as well as cross-selling within our own franchise, and in particular with our wealth management colleagues. Our new card platform accelerates our portfolio management capabilities. It allows us to more effectively address the changing interchange market. We now have expanded rewards and program and product functionality and also pricing and credit management disciplines as a result of this platform, which will allow us to balance the customer value proposition as well as our profitability. Lastly, this technology allows us to readily participate in emerging e-payment capabilities, such as e-wallets in both proprietary and industry solutions because there's foundational elements in that product, such as tokenization, that we can leverage immediately. Digital payments is not new to BMO. In 2011, we launched what we would call our mobile tags. You've probably seen many of us with these, and you probably saw them outside our tech group. This is the first evolution of digital payments in the marketplace, and we have an enormous engagement level with our customers because it's simple and it's flexible. We also were the first this year to launch Masterpass in Canada. That's an e-wallet capability that allows online shopping to be faster and safe by storing a customer's payment and shipping information in one convenient and secure location. Last quarter, we doubled the number of customers who are engaged in this offering, as well as our Masterpass over the past quarter, so doubled quarter-over-quarter. We believe success in these kinds of emerging payment capability is all about customer adoption. Our approach will be to ensure that we participate in digital payments evolutions that align both stabilized technology with the consumer's ability to use it and the simplicity of the offering. As such, we believe we will continue to explore industry and proprietary solutions. We also have a unique opportunity here in Canadian banking to learn from our U.S. colleagues at BMO Harris as they participate in Apple Pay. Our second priority for growth is accelerating our digital channels. As Cam mentioned, our channel strategy is to focus specifically on expanding mobile capabilities. While there will always be optimization around our branch placement and renovations of our branches, such as you saw this morning at FCP, we are very comfortable with the size and the very nature of our network. As we turn to our leading digital platform capabilities and our strategy moving forward, it's important to reflect on what we accomplished in 2014, which was significant in terms of advancing our capabilities and our customers' ability to use those. We were first in the industry to launch what we call responsive design platform. This allows our customers to access the wealth of BMO's rich content on any platform they hold anytime they like. Responsive design in digital interface is the ability for us or the flexibility for us to scale and size the experience, collapse content to fit any device, whether it be your mobile, your iPad, or your online screen, so that we are speaking to customers on their terms and when they need us. We launched our new mobile app, as Cam mentioned, with both success from the industry and from customers. We are number one across our various mobile digital providers in terms of its app's functionality. Forrester, who rates us on an ongoing basis, ranks us as number two in the industry. Recently, we integrated our everyday banking and InvestorLine app, hopefully you saw that this morning outside, which provides our customers with the ability to seamlessly transition between everyday banking and investing. The launch was a clear proof point of our brand and is the number one integrated Apple iPad app, and it has been acknowledged best-in-class for personal financial management. The app provides us with the opportunity to cross-sell more efficiently and effectively between the product lines, which you'll hear more about, I'm sure, from Julie this afternoon. The principles of ensuring the digital experience is intuitive and connected to other channels is really foundational for our strategy moving forward. In 2013, we led the market with online branch appointment booking capabilities on our online site that is now integrated across all of our digital channels. Appointment bookings continue to grow. We are up 45% year-over-year as we streamlined our public sites and improved the customer experience and conversion rates. Our strategy moving forward is to continue to increase that digital adoption, lead in digital sales, and create momentum in our channel usage. In terms of our digital engagement, Cam mentioned we've already had over 4 million downloads of our new app. We will continue to drive that adoption through our branch teams, introducing more of our customers to new digital capabilities, particularly through our onboarding process. We view digital channels as our ninth virtual division, providing significant growth and ongoing sales volumes. Currently, we are ranked number two in the industry in terms of digital originations. As Cam mentioned, we are going to double that over the medium term. Creating momentum in our channel usage is all about adding relevant customer functionality to release sales capacity in our call centers in particular. To date, we've increased the proportion of our service transactions happening through digital, allowing our call centers to focus on higher-value transactions. Recently, in November, we launched the ability for customers, particularly snowbirds, to easily transfer funds between their Canadian BMO account to their U.S. BMO Harris account, providing the first integrated cross-border capability. As our digital functionality increases for customers, the nature of our customer conversations in the branch and in our call centers is shifting. Service issues are becoming more complex, and there's a higher level of expectation and demand for increased advice and guidance in our conversations. Key to addressing that elevated customer expectation is the strength of our people. There's no better way to understand our people strategy than to hear it directly from one of our division heads, who leads the largest team in personal banking. I'm going to turn it over to Andrew now. Well, good morning, everybody. Thank you very much, Ernie. It's a great pleasure to be here and represent the divisional perspective. I've been with BMO for 15 years, mostly in wealth management. Assumed this role in 2012. What I'd like to do in our time together is take the strategy that Ernie has articulated and describe how it comes to life in our local markets. Let me first start by describing the GTA market. GTA is a highly attractive market, many of you likely live in this market, given the size of the population and also the continued population growth that exists here. It's the largest division in Canada, as you've heard, amongst our eight divisions, and my team consists of 2,300 people who work in personal, commercial, and financial planning. The market is unique with the significant concentration of the geography, as well as the significant household income growth that we enjoy in GTA. We have tremendous diversity in the GTA, with a mix of suburban and urban markets, as well as a broad range of customers that include newcomers to Canada, small business owners, and a high concentration of high-net worth and ultra-high-net-worth families. We also have very strong partnerships here with our internal partners that include commercial, corporate finance, wealth, and the customer contact centers all being located in the market. We're the face of the company to our customers, and our job is to ensure that we're providing our customers with solutions that reach across BMO. The Greater Toronto Division continues to have strong, balanced growth momentum with a leadership team that has deep sales disciplines and a consistent track record of performance. Ernie and Steve like to remind me weekly, daily, sometimes hourly, about the Battle of Ontario, and we're very proud of the strong balance growth we enjoyed last year, 12% balance growth in commercial and 9% balance growth in our personal business. The sales model that Ernie has described has had a profound impact on our success in 2014. We have a leaner, more productive structure for our branches. The sales model changes and the redefining of our frontline leadership roles has shifted our focus into our community, with our branch managers and our regional vice presidents truly being the leaders within their markets. All of the roles on our teams align to provide a great customer experience in the most streamlined way possible. The channels and the partners all work together. Our branch teams partner across the bank to ensure that our customers are getting the right solution to meet their full financial needs. Within the branch, the roles that you see here all work closely together to ensure that customers are getting a great experience. As you've heard, we are very focused on our employee experience. We want to continually build on a highly engaged team. This is a very competitive market, and we know that engaged teams stay for the long term, and most importantly, are passionate to look after our customers extremely well. We measure our employee engagement annually, and we compare ourselves not just to financial institutions, but to exemplar companies in other industries. Our employee engagement score last year was 85%, which is relatively high within the company, and almost 10% higher than other financial institutions. Equally important, the engagement has improved year-over-year over the past four years, based on a strong commitment to adopt changes based on the feedback of our teams. Managing our employee talent is also a top priority. We have structured performance and career conversations, and we invest significant time in talent profiles that outline specific capabilities as well as career aspirations. Our teams are truly energized by the brand. Employees at every level feel empowered and engaged to deliver a great experience to our customers. The brand is straightforward and has really tapped into the collective purpose of all of our employees. Employees co-created many of the brand messages, and there's a groundswell of pride in its development. I'd like to talk a little bit about the market expansion in GTA. Working collaboratively with Ernie's team, we've made targeted investments in increasing resources. Cam's leadership team consists of field and center leaders, and we work as one team to determine where the best investments in people can occur. We've made significant investments in growing our teams in GTA. We've seen improved productivity in our sales force, and we're making investments where we have the highest growth opportunities. In our market, this includes expanding our financial planners, adding FSMs, financial services managers, in high-opportunity branches, and increasing our mobile mortgage specialist presence by about 25%. We also continually assess and invest in our branch network. Each year, we renovate many of our critical branches. I'm delighted you had the opportunity to tour First Canadian Place Branch this morning. We also open new branches in growing markets. For example, we've recently opened in King City and in Brampton. In terms of capacity, there's a lot of work underway with Ernie's team and here in the market to accelerate the speed to productivity for new hires. The recruiting and the training of our employees has been streamlined in order to expedite the filling of vacancies with high-quality individuals. We've also centralized the hiring of our frontline roles, and we're continuously improving the training programs. A wonderful symbol of our commitment to training is our award-winning world-class learning facility in Toronto called the Institute for Learning, which last year celebrated its 20th anniversary. Investments in technology have also been delivered to the sales teams. This includes a new lending platform. These new platforms enable us to train new employees faster and enable more efficient change adoption in the future as policies and procedures are increasingly automated. There's also work underway to evolve our digitization capabilities and move toward a paperless branch. This will bring big gains in productivity as well as our customer and employee experience. Our teams are really excited about the progress with the digital capabilities as well, and it's shaping our relationship and conversation with our customers. There's immense pride in our mobile app, and there's focus in ensuring that our customers leave appointments aware of these great tools. In fact, we're now measuring the digital activation of customers on the branch scorecard. So far in 2015, we've digitally activated in GTA 6,000 customers, which means that these are customers that have been newly registered on bmo.com or on our mobile app. You've heard from Ernie about the importance of leads generation, and we continue to increase our focus on generating and acting on customer leads. As our customer patterns evolve, this is a critical channel for us to be proactive and fill our calendars with appointments. The branches are receiving relevant, effective leads that enable proactive contact to continue to build primary customers. We monitor our leads activities to drive consistent customer outreach by our employees. I'll give you one example. A recent outreach activity ahead of the investment season generated over 12,000 appointments in GTA in one week alone. In 2014, we generated significant activities through this proactive outreach. Our customer service representatives used these leads to make 2 million additional suggestions to customers in GTA, and 900,000 times customers agreed to them. Our financial services managers used these leads 250,000 times last year, and our customers agreed to the suggestions 150,000 times. It highlights the ongoing evolution of our sales teams in being more proactive and providing guidance to our customers. It's also noteworthy that our customer contact center booked 18,000 appointments in GTA in our branches, and customers booked 6,000 appointments directly on bmo.com. There's consistency in our sales activities across the country and within each branch that rolls up to the branch manager, the regional vice president, and ultimately to my role. Every day, there's a team huddle in every branch to plan the day. In addition, appointments are previewed with the manager to ensure that we're well prepared for our customers when they come to see us. Managers are also observing their teams in side-by-side interactions and providing real-time coaching and feedback. Ernie's team has developed a scorecard, which allows the front line at all levels to measure their activities and coach to their results each week. The scorecard is a system. It contains the targets and results right down to an individual level. Our sales teams love the scorecard, and it's a tremendous tool to ensure strong and disciplined execution week after week throughout the year. Within the scorecard, we're also measuring complete conversations with our customers to make sure that we're meeting all of our customers' financial needs. Targets in a branch are set at the beginning of the year, and they're based on local market opportunity. Each leader has created a market-level plan for their branches, and that includes milestones that will enable the targets to be met. It's embedded within our coaching tool and also attached with very specific sales plays that link to these market plans. We continue to also have a very strong focus on customer loyalty, and our plans always include actions to respond to the feedback of our customers gained through the Net Promoter Score surveys. In conclusion, this is the most exciting time that I've experienced at BMO. The teams are executing extremely well. We're all very energized by the brand and by our ambitions. I'd now like to turn the podium back to Ernie. Thank you. Thanks, Andrew. Let's spend a few moments on our fourth priority, which really speaks to how we run the personal banking business. Our segment-led organizing structure that Cam mentioned provides us with an opportunity to create clear focus on both strategy and execution. It also allows us to shift and reallocate resources necessary for us to deliver the business outcomes in the changing environments that we live in. It also ensures that we have consistency in the customer and the employee experience. It also allows us to leverage insights on customers and our products in a way that we will drive pricing optimization and credit optimization decisions at a customer level rather than at a product level, which is really key for us to continue to drive share of wallet. Our process management is key to many parts of our strategy, but in particular, our employee and our customer objectives. We continue to refine our processes through the brand lens and, in particular, advancing our digitization infrastructure to ensure that we're going to have end-to-end full fulfillment of products and services, as well as eliminating paper in our branches. Our strong risk management capabilities will continue to be a key component of our operating disciplines, ensuring that risk-reward optimization takes place, our growth is stable, as well as we're maintaining our strong controls in our business. These operating disciplines are foundational for our strategy execution and our medium-term objectives. In terms of our medium-term objectives, we are focused on these four priorities. In particular, we will grow primary customers on an annual basis by 4%-5%. We will double our digital sales to 14% in the medium term. We're also going to improve our sales force productivity each year between 3% and 5%. As a result of strong operating principles and expense management, we'll be looking at approximately a 100 basis points improvement in our productivity ratio every year. I want to leave you with a few closing thoughts. We have revitalized the personal Canadian business, and we have momentum. Our opportunities are very clear to us. Continue to grow primary customers, drive our payments business, accelerate our digital channels. Our highly engaged and passionate teams know specifically what they need to do and how to be successful. It really is an exciting time to be part of the personal banking business. It's been a pleasure to speak with you this morning. Look forward to your questions. I'll now turn over the meeting to Cam. Thank you. Okay. Let's change gears. I think we're ready to take questions. Pleasant team, come up and join. I think what we'll do here is, I'll act as coordinator for the questions. If you can raise your hand, a microphone will be brought to you. If you can introduce yourself at the start, and we'll take your questions from there. Okay. Thank you. Jason Gill from Macquarie. I think the first one will be for Steve. Back on slide 32, the breakdown of the commercial loan book. What I'm interested in is how do you think about the ultimate source of risk in that book? Specifically, Western Canada, not direct energy lending, but lending to sort of the secondary industries and infrastructure that supports sort of the energy patch, a small machine shop that does a bunch of work for P&P guys. Would that risk get captured in your energy book, or is it sort of dispersed throughout the rest? What would happen in that particular case if they're sort of down in terms of the supply chain, if we would put it like that. We're looking at that portfolio very closely. We're monitoring it weekly insofar as just what's happening with the portfolio. What we found is that in that particular marketplace, the portfolio is actually still performing very well. And many of these companies have had the capacity and some of the staying power to still stay very buoyant. But of course, we're watching it on a regular basis to stay on top of it. Well, maybe just a question for a little more color. Even if geographically your commercial book is pretty dispersed, does that mean it's in proportion to the relative economic contribution of Western Canada, or do you That's right. There would not be an over-indexation, say, in Alberta or Saskatchewan. The geographic dispersion is pretty even relative to what we'd have, say, on the personal business. Thanks. Another one, I think for Ernie and Cam on the technology. A lot of great products rolling out, a lot of great statistics on adoption, et cetera. I'm curious, do you think these types of platforms are a viable competitive advantage for a bank? Or is this now just becoming table stakes that everybody has to have this stuff in order to be there? Or do you think you can really take share and take customers because of your technology? I'll take that one, Jason. Thanks. I think it's both, but if played well, it's a competitive advantage for sure. I think it depends on your outlook for the role of each channel. I've said, and we've said we believe pretty strongly that the core, the branch will always be there and increasingly become important for acquisition and advice-based sales. But the way in which you're able to integrate the channel so it's a consistent brand and experience across all is where I think there's an opportunity to take share. There will be a few places where the opportunity is greater than others. But I think for an organization like ours, with our physical distribution set up the way it is, being optimized as it is, and moving as quickly as we are on mobile adoption specifically, I would say for us it's more the latter. We see it as an advantage. Thanks. Okay, next question. We've got one here and one here. Thanks very much. Steve Theriault from Bank of America Merrill Lynch. For Ernie, maybe number one, number two in revenues, loans, and deposits, pretty exceptional, but also hearing you be a bit more cautious on auto lending and unsecured. A couple of questions against that backdrop. Being more cautious, does that make it too difficult to repeat number one, number two next year? And why being more cautious in those two particular segments? Great. Thanks for the question, Steve. A comment on the unsecured book in terms of the auto lending, we made a conscious choice to be able to reduce our exposure around the longer AM products as well as in our unsecured lending. That will take place. That slowdown that we had will manifest itself in the first half of this year. We do see a pickup happening towards the latter part to return back to our normal levels. That was a choice that we made in our portfolio mix at the time. But we're encouraged by what we're seeing right now in terms of our growth and where we have the diversification in the portfolio. If I might just add, Steve, your question was really about relative performance. The market's going to do what the market's going to do. What we're focused on is the foundation we have now, and your question was do you think you can stay out towards the front? I think we can. Yeah, we can. I think we're here first and then over to John. Sumit Malhotra, Scotia Capital. I'll direct this to you, Cam, and it's specifically about interest rate sensitivity. I think it's fair to say part of the success that the bank had or that your segment had in terms of revenue growth last year was that the net interest margin trend was much more stable than we'd seen in previous years. As of late, we've heard a lot about cuts on the short end of the curve. You talked about the special program you're running in small business. Fixed rate mortgages have come down. Are we thinking too much about the asset side of the business and not considering the improvement on your funding? I guess I'd put this bigger picture, how would you think about your revenue outlook in the face of what we're seeing interest rate-wise in the last little while? Yeah. Thanks for the question. On the NIM point specifically, we are today where we were a little bit before. I'm expecting stable NIM through the course of the year. Now, there might be some ups and downs, but at the margin, it will be stable. With respect to our revenue performance, we still feel that there's a strong opportunity. The expectation is that the back half of the year, if you believe economic expectations as I do, will be a little bit stronger than the first, but I think mid-single digits is still the place where we'd like to be. Just to be clear on that, so even with this change in asset yields, your net interest margin view hasn't changed that much. Correct. Why is that? Is it your funding? Is it deposit success? Just kind of to Sumit, it is a mix of things that we have been focused on. I think one would be growing strength in products such as payments. Another, I think Ernie and Steve did a good job of emphasizing how well we have done on the deposit side. Then we are always conscious of ensuring that we are in a competitive position on the pricing side. So there are a few contributors. I think we are coming over to John here. John Aiken with Barclays. Ernie, I wanted to touch upon something you highlighted in your presentation. Your team did a very good job when we went through the branch tour talking about how agnostic the branches are in terms of cross-selling to the various different regions within the bank. But you touched on the cross-border opportunity that you have with the U.S., and that is something that is reasonably unique for Bank of Montreal in terms of being able to do the North American personal and commercial banking side. Are there regulatory and technological hurdles still for making that cross-border for somebody who is based in the GTA like myself, being able to do banking down in the U.S.? How big of an opportunity is this, and how is that incented like it is for within the Canadian operations? Thanks for that question. In terms of the opportunity, obviously, there are snowbirds as well as folks that are moving back and forth between the two countries. We have a great relationship with our BMO Harris colleagues, so the first approach is always to make the referral over to our colleagues. To overcome the obstacles of any technological capabilities, I think what we have built recently is getting at some of the core foundational elements of what a Canadian who is going down south for long extended stays needs, which is the transferability of funds, and being able to enable that has been key in our strategy. As well as I think this morning, many of you at FCP heard the conversation around how do we just take a customer and refer them entirely, and that guided relationship transfer, that warm transfer facilitates a better customer experience on both ends. We are fulfilling their needs on both sides of the equation. John, I would just add a couple things. I think your specific point was, are there regulatory problems. I think the way we view the opportunity is less about the regulatory challenges and more getting ourselves organized organizationally to behave as though the border is not there, so that we can behave the way our customers do. That manifests itself in a few ways around here, but the most important one is the North American mandates in a few of those key jobs where you need to be able to set up north-south infrastructure. Steven Wouters in the front row here has a North American retail cards mandate. His job is to ensure that the border is not getting in the way of our customer's experience. Andrew Irvin, the next one over, is on the commercial card and treasury, a huge opportunity for us for our clients who are working both sides. Less about the regulatory obstacles, more about the organizational ones that you need to get over and mobilize quickly. I think we have done a good job on those. That is why we are so bullish on the opportunity. We have got one here and then My turn? Yes. Okay, thanks. It is Darko from RBC. I am going to ask you a couple of unfair questions in light of your- Then some fair ones after? We will see, depending on the answer. In light of your answer to Sumit's question about your sensitivities and your NIM outlook. Thinking about Bank of Montreal, I can remember the 2.99 mortgage offering and thinking to myself, just the amount of chitter chatter and noise that it made. The question then is, why didn't we take the opportunity here to cut prime by 25 after all the other banks did 15? Secondary to that is, what if there is another cut? The question, I guess, is: what is the impact to your NIM outlook if you have to cut again? Again, why didn't you take the opportunity here to be different and make a splash and call yourself out? Okay. That is unfair number one or two. The first thing is, with respect to the move, I don't know if anyone in this room called it. I don't know anyone who called it. It was a bit of a surprise. We are here clear on what the objective of the exercise was, business growth, job creation, et cetera. The overnight rate is one of the things that we think about in all of these things. We have our own cost of funds. We have the competitive environment. We have macroeconomic. We have all of these things to consider. So, when this particular move happened as quickly as it happened, we did our work to give consideration to the balanced response here, which is jobs and business growth and consumer leverage. We did that assessment, and we landed at a spot that we landed at, which you're familiar with, and we think it's appropriate for now. That's point number one. That's how we handle that topic. We don't make these moves to make a splash. We make these moves to run the business well and support our clients. If the rate moves again, I think we'll do the exact same thing, which is step back and reflect on the balanced approach and we'll act accordingly. I think we're I'll ask easier ones. Rob Sedran from CIBC. The question on the role of the branch and how the branch transformation is happening, I may have misunderstood, but it seemed like a lot of that discussion was in the past tense in terms of it's already done. Can you give us a sense of how far along the branch network you are in these transformations, how much that spending is happening now, how much is still to come in the future? Yeah, great question. It's not done. I don't actually think it'll ever be done because we're going to learn as we go in terms of consumer behavior and adoption. Remember, the way these things have worked through time, I was talking to someone in the room, I can't remember who it was, who was there when the first ATM was opened. That was going to be the end of branches. Then contact centers came along. That was going to be the end of branches. I think we learned when online banking came along that it wasn't going to be the end of branches, and we've learned now that mobile and tablet aren't going to mean the end of branches because every single one of these has been an end. What is different, though, is the relationship between the branch and the digital network. We're going to learn as we go on this. We've put a line in the sand on a few things, which is if you're going to have a branch, make sure it's in a good spot. If you're going to have a branch, make sure it's set up as tailored as possible for the market in which you're participating. Another point is they don't need to be as big as they used to be. The fourth thing is find a way to bring the whole company under one roof. You saw it downstairs, where possible, where required, bring it under one roof. We're using those principles right now and it's working. Our stats in 2014, to use an example of the We're being very steady about how we're going through this. Because there are so many things to be focused on, now is not the time to be erratic on the capital side of branches, I don't think. I think we opened 8 or 9 in 2014. We closed 7 or 8. We renovated probably 50 and relocated 7 or 8 or 9, in that range. I would say that is about where we've been the last couple of years. Sometimes we go a bit up and sometimes we go a bit down. Just as we're really disciplined on where we're putting our next resource in terms of customer-facing, client-facing role, we're as data-driven and clear on where the next branch goes or gets moved or gets adjusted in terms of size. I think the specific answer is we won't ever be done. We should think of this as maintenance spending, not really something that'll fall off when we're thinking about those productivity improvements that you're talking about. It comes down to these expenses are just a run rate number that are going to be there for as far as the eye can see. There will be a number that will be there for as long as the eye can see. But remember the numbers I was quoting, for example, on the smaller format, 15% or 16% more efficient, more revenue per square foot, lower capital costs. The nature of the number will change through time as customer behavior does, but it's going to be in there because the branch will always be important. Okay, and just a quick question on the payment system. I was interested to hear that it's a North American mandate that's being run. I'm curious if you can talk a little bit about the threat versus opportunity, I guess, of a market disruptor. It seems like perhaps the threat of disruption isn't as large as we might have thought it was a couple of years ago, and that Apple Pay feels more like a collaborative thing with the financial system. Wondering if that experience is different in the U.S. versus Canada as well. I don't think it should be considered as a different threat, north or south of the border or anywhere else, first of all. Our number one priority in the payments business is doing a fantastic job with the core platform and the core business. We did do two things in 2014, which is get the new platform in so that we'd have consistency between Canada and the U.S. and corporate, so one platform. We have a major provider that supports us in all of. We have a network partner that supports us in all of those. And ensure that we're running that platform well and efficiently north and south. Priority two was pushing very hard on the premium segment because we have very loyal customers who should be with us in this segment. So we emphasize that. I think the stats, you heard them, 300% increase in origination, double the book, et cetera. We think about payments disruption as a real thing, but for the next five years, the core of our payments revenue and loyalty and growth will come from the main book. We don't think about it north and south differently. We think about it as a unified threat and opportunity. With respect to Apple Pay specifically, I'm a bit where you are. This is something that we need to be mindful of. It will be one part of what our digital payments approach will be. You saw the tag. You know that we're in Masterpass. We will be in other shared digital ventures that are good for our clients, but we're totally guided by what our customers want. If our customers are ready to be partially hooked up with Apple Pay because it's the way they want to move, and it's the device they use, then we'll be there. We're there in the U.S., as you know, and they'll need to make a decision about how they want to participate in Canada, and if it's what our customers want, we'll be there. Hi, Meny Grauman from Cormark Securities. Hi there. Just a question about the rate cuts again. I'm just wondering what kind of client feedback conversations you've had so far. What are you hearing from your customers in terms of that 15 basis point move. Is that something that needs to be explained to customers. Looking forward, is this rate cut something that you believe is going to change your outlook in terms of demand for loans, specifically mortgages, as we head into the spring housing season. Just as a follow-on question, in terms of that 15 basis point move and your overall view in terms of risk to the system, the housing market in particular, is it your view that these types of rate cuts are adding an element of risk that you view as unhelpful, but are these kinds of rate cuts something that you're worried about in terms of the additional risk to the housing market as you see them. Okay. I know I remember your first and your third question, and I've forgotten the second, so I'll start with the first. There's very little interaction going on on the customer or client side in terms of feedback on the moves. You can imagine it's a different kind of a conversation between a retail customer, maybe a core commercial customer, and more in the corporate finance upper end. I think on the core and upper end, people understand what's going on. We're very close, given the economic environment, very close to our clients, and these conversations are happening daily. Through our branch and social listening, which we do all day, all night, all the time, there's very little chatter. Skipping to the third question. I can comment on the market. I can't comment on what the others will do. Our own housing portfolio is one that is very stable, highly secured, highly fixed, well-balanced geographically, and a large portion of it is in 25 year AM, which is exactly where we would like it to be. Our approach to the market as we move into that season will be consistent with what we have done in the past. Will the recent changes affect the pricing that is out there? You can see from those competitors that it already has. Ours will be focused on the 25 year, not the number associated with the 25 year. We will be out there, and we will be competitive. Just filling in the second question, just in terms of your outlook for demand. Does what happened last week change your view of loan demand, mortgage demand? I think it will remain to be seen. It is not going to slow it down, and my hope is that everyone out there is taking a responsible approach to it. That is, sorry, on the residential side. On the commercial side, I really hope it does just that. I expect that it will, and we are feeling well-positioned on that side. In particular, we feel like we have more to do in the micro and small business segment, and we are really committed to helping live up to the spirit of the rate change on that side and do everything possible for new small businesses. So that is why we are out with the offer that Steve mentioned. Was there one over here or just straight over to Sue? Can I just jump in just for a minute? Yeah. Manny, just on your third question about the impact that the rates are going to have on the market and in debt. It is just a couple of things. The governor was pretty clear about saying he made the move because he was trying to weigh the risk to consumers and businesses with the energy price decline. When we were evaluating what to do, we were taking that balanced approach, and I think Cam's right. We will see what happens. We will see what the market brings. The point I really want to make is that we also have tools that we use all the time to mitigate the risk of too much exuberance with respect to consumer indebtedness. You heard Ernie talk about the fact that we have been cautious in a couple of places, and we have done that over the last three or four years on a number of occasions. It is not like this is just going to happen to all of us without our ability to intervene. I just want to make that point. The governor made the move. We will see how the market reacts. We are early into it, but we have controls. We are going to be prudent in our underwriting as we move forward, and our expectation is the quality of the portfolio is not going to deteriorate over time. Samir. Samit Malhotra with Scotia Capital. You have talked a lot about what you want to do with alternative channels and doubling digital sales. There is some cost savings associated with that. What you have not mentioned too much about is security. Again, just like there has been more disruptive technology in the U.S., I think we have also heard more about high-profile security breaches in the banking system in the U.S. I do not know how specific you can get here, but can you talk to us a little bit about how you are thinking about security as you push more into digital channels and what the spend is there, especially related to some of the savings you have discussed more fulsomely? Yeah. Thanks for the question. A good one. This is top of the house and top of the list consideration for us. I would suffice it to say that we feel confident that through board and senior management engagement on the topic, we have an appropriate budget and focus, and more importantly, perhaps the most important partners at our side to help make sure that we are as safe as we possibly can be. It is a consideration that is part and parcel of every decision we make on the digital channel side and on the infrastructure side. I feel that we are handling it appropriately. And one more while I'm here. It seems like it's something we don't talk about too much even though we've had five or six straight years of improvement in the credit cycle. We know what's happened in the energy sector. GDP growth is slower. What's the risk that we're overlooking? Again, we haven't talked about it much this morning, the fact that loan losses have bottomed and it's a risk to many different parts of the portfolio, especially at a time where you yourself are saying revenue growth is almost certainly going to slow. Is there any early warning signs you're seeing in parts of your portfolio that lead you to believe that a more pronounced credit cycle is a risk here? I say that sitting right behind the Chief Risk Officer. Yeah, he's staring right at me with these amazing eyes. I'm going to start talking, and then he's going to grab the mic. Maybe I should give this to you. I'll say the specific answer is no, we've not seen any early signs of deterioration. We're watching very closely. I think we've used Alberta as an example. We're pretty balanced. It's in the range of 15% of our personal commercial book on the mortgage side. It's actually a similar number on the credit card, on the retail card side. That's a portfolio that performs very well, actually ahead of most of the nation in good times, and it actually performs well in difficult cycles. I can't predict the future. I couldn't have predicted last week or this really. But we're on top of this one. We feel very confident in our underwriting standards, and there are no early signs as of yet. We've got about two minutes left for fair and unfair questions. Oh, what have we got here folks? Okay. I think mine's going to be fair. There's three parts to it. I've demonstrated I can only handle two. There was lots of background, there was lots of conversation in the branch and in the presentations about customer prompts and guided conversations and that kind of thing. The first of the three questions is, to me, that sounds a lot like when I buy something online and the algorithm says, "People that buy this also buy that." Is that a fair that you're kind of There's algorithms in the background driving suggestions to the frontline staff. So you're not excellence. Yes. We use data to drive insights, and we add then the human element, in these types of conversations you're describing, which we hope come across as tailored, appropriate conversations. Great. Okay. The two real questions then. One is, what impact does that have on the frontline staff? Does that change how you hire? Because they're now having a more guided experience in their job as opposed to dealing with intuition. Has there been a turnover impact, that kind of thing? Well, what I hear- I can start and Andrew and Carol, if you want to weigh in as well. I would say our leads engine, what I call is providing centralized intelligence to our field. The field make it brilliant. They decide in the moment, "Are you ready to have this conversation? How should I frame this in the conversation?" Then they're trained to be very empathetic. They live the brand, and then they frame it in the conversation for its relevancy. I think that's the power of the system. Otherwise, we're going to become robotic. For us, it's the power of centralized intelligence with localized brilliance. That's our power play with our lead capability. I would say we've been phenomenally successful in this space because we brought the two together at the same time. We trained our people how to have holistic financial conversations, how to have a great conversation. We measure it through our NPS system. The whole system is aligned for this to really work well, from a customer experience and a revenue generation and our share of wallet aspirations. I would just add, it's very powerful for our teams, because what we're looking for is people that are passionate about customers. This is all about that customer experience. What we're able to do, if you're a customer service representative, for example, is we're able to guide you towards a great conversation. A conversation you might not have had the confidence or comfort level because it will take time to get that expertise in all of these areas. We have lots of experts that can look after in these various areas. This gets the conversation going, and we'll find somebody that could have a great conversation with the customer. The leads are very powerful in terms of this proactivity, and we know that guidance drives loyalty scores, that the more proactive we are, the more we offer suggestions to customers beyond what they came in for as a transaction. That's how we boost our loyalty. It's very positive in the branch system. Okay. The third question is, I'm not asking for details, but I guess I'm curious as to what extent you can see if your algorithms or data collection are different from your friends across the street? Yeah. We can't see that necessarily. I have one important anecdote, though, to share, which is one of your colleagues in the room, who I won't name, did take the opportunity to say this morning unprompted that what has impressed him most about his interactions with us in the last couple of years is the tailored, appropriate, proactive conversations that we're having with him versus the experience he's having with one other specific player not to be named. We see that as a positive thing. I think we're going to wrap up the question period there. Thank you for your questions and for your input. I think that we've carried you from breakfast to lunch, and it's time to actually have that lunch. I would just close with a couple of thoughts, if I may. The first is I trust that with the time we've had together going through each of the businesses and the questions as well, you have a good sense of our business and our outlook and our strength. We have a strong foundation and clear strategy going forward. We're confident. We think we're very well positioned for the future. I hope you've seen that as well. We do very much appreciate you taking the time with us this morning, and let's enjoy lunch together. Thanks again. I'm changing conversations. I'm changing boring songs and lies. I'm changing all of the stations. I'd like to think that we had it all. We drove off to a better place. But on that road, I suffered falls. Oh, baby, why did you run away? I was there for you in your darkest times. I was there for you in your darkest times. But I wonder where were you? When I was on my, on my knees. You stood behind my back. I wonder where were you? When I was just looking back at me. I'm following the map that leads to you. The map that leads to you. Ain't nothing I can do. The map that leads to you. Following, following to you. The map that leads to you. Ain't nothing I can do. The map that leads to you. Following, following. I hear your voice in my sleep at night. Hard to resist the temptation. Because I'm addicted to more of me. Now I can't get over you. No, I just can't get over you. I was there for you in your darkest times. I was there for you in your darkest times. But I wonder where were you? When I was on my, on my knees. You stood behind my back. I wonder where were you? When I was just looking back at me. I'm following the map that leads to you. The map that leads to you. Ain't nothing I can do. The map that leads to you. Following, following to you. The map that leads to you. Ain't nothing I can do. The map that leads to you. Oh, oh. Oh, oh. Yeah, yeah. Oh, oh. Oh, I was there for you, oh, in your darkest times. Oh, I was there for you, oh, in your darkest times. Oh, I was there for you, oh, in your darkest times. Oh, I was there for you, oh, in your darkest times. But I wonder where were you? When I was on my, on my knees. You stood behind my back. I wonder where were you? When I was just looking back at me. I'm following the map that leads to you. The map that leads to you. Ain't nothing I can do. The map that leads to you. Following, following to you. The map that leads to you. Ain't nothing I can do. The map that leads to you. Following, following. Hey, baby, won't you look my way? I can be your new addiction. Hey, baby, what you gotta say? All you are giving me is fiction. I am a sucker and this happens all the time. I find out that everybody talks, everybody talks, everybody talks. It started with a whisper. That was when I kissed her. Then she made my lips hurt. I could hear the chit-chat. Baby, to your love shack. Mama has always got a back track. When everybody talks back. Hey, honey, you could be my drug. You could be my new addiction. Too much of me and all my flaws. All this trash talk make me itchy. Oh my, shit, everybody talks, everybody talks, everybody talks too much. It started with a whisper. That was when I kissed her. Then she made my lips hurt. I could hear the chit-chat. Baby, to your love shack. Mama has always got a back track When everybody's words got in the way. Oh! Hey sugar, show me all your love. All you are giving me is precious. Hey sugar, what you got to say? It started with a whisper. That was when I kissed her. Then she made my lips hurt. I could hear the chit-chat. Take me to your love shack. Mama has always got a back track. When everybody talks back. Everybody talks, everybody talks. Everybody talks, everybody talks. Everybody talks, everybody talks shit. It started with a whisper. That was when I kissed her. Everybody talks, everybody talks shit. Ship to the west, we fall into the river. Cover your eyes so you do not know the secret. I have been trying to hide. We held our breath to see our names on return. On the record they say. That was the year I knew the panic was over. Yeah, since we found out, since we found out that anything could happen. Anything could happen. Anything could happen. Anything could happen. Anything could happen. Anything could happen. Anything could After the war we said we would fight together. I guess we forgot that is just what humans do. Letting darkness grow. They said we need space and we need this color. Now I have seen it through, and now I know the truth. That anything could happen. Anything could happen. Anything could happen. Anything could happen. Anything could happen. Anything could happen. Anything could I will give you everything you need. I will give you everything you need, oh. I will give you everything you need. But I do not think I need you. Ship to the west, we fall into the river. Cover your eyes so you do not know the secret. I have been trying to hide. We held our breath to see our names on return. On the record they say. That was the year I knew the panic was over. Yeah, since we found out, since we found out that anything could happen. Anything could happen. Anything could happen. Anything could happen. Anything could happen. Anything could happen. Anything could I know it is going to be. I know it is going to be. I know it is going to be. I know it is going to be. I know it is going to be. I know it is going to be. I know it is going to be. I know it is going to be, oh well. I do not think I need you. I don't think I need you. I don't think I need you. I'll be your light, your match, your burning sun. I'll be the bright in black that's making you run. We'll feel all right. We'll feel all right. 'Cause we'll work it out. Yeah, we'll work it out. I'll be doing this if you're ever down. Till the love runs out. Till the love runs out. I'll be your ghost, your game, your stadium. I'll be your 50,000 tapping like one. I feel all right. I feel all right. 'Cause I worked it out. Yeah, I worked it out. I'll be doing this if you're ever down. Till the love runs out. Till the love runs out. I got my mind made up and I can't let go. I'm killing every second till it saves my soul. Woo. I've been running. Woo. I've been running. Till the love runs out. Till the love runs out. We'll start a fire, and we'll shut it down. Till the love runs out. Till the love runs out. There's a maniac out in front of me. Got an angel on one shoulder and Mephistopheles. The memories were good, memories were right. Mistakes are what you want say prayers at night. We'll say none 'cause we're so devout. Till the love runs out. Till the love runs out, yeah. I got my mind made up and I can't let go. I'm killing every second till it saves my soul. Woo. I've been running. Woo. I've been running. Till the love runs out. Till the love runs out. We'll start a fire, and we'll shut it down. Till the love runs out. Till the love runs out. Oh, we all want the same thing. Oh, we all run for something. For God, for faith, for love, for hate. For gold and rust, for diamonds or dirt. I'll be your light, your match, your burning sun. I'll be the bright in black that's making you run. I got my mind made up and I can't let go. I'm killing every second till it saves my soul. Woo. I've been running. Woo. I've been running. Till the love runs out. Till the love runs out. We'll start a fire, and we'll shut it down. Till the love runs out. Till the love runs out. I'll be your light, your match, your burning sun. I'll be the bright in black that's making you run. We'll feel all right. We'll feel all right. 'Cause we'll work it out. Yeah, we'll work it out. We'll start a fire, and we'll shut it down. Till the love runs out. Till the love runs out. Till the love runs out. I'm here for the sweet life. I'm here for conversation. I'm sick of all those songs at night. I'm changing all of the stations. I'd like to think that we had it all. We drove off to a better place. But on that road, I took a fall. Oh, baby, why did you run away? I was there for you in your darkest times. I was there for you in your darkest nights. But I wonder where were you when I was on my worst, down on my knees. You turned your back, so I wonder where were you? I was just looking after me. I'm following the map that leads to you. The map that leads to you. Ain't nothing I can do. The map that leads to you. I'm falling, falling to you. The map that leads to you. Ain't nothing I can do. The map that leads to you. I'm falling, falling. I hear your voice in my sleep at night. Hard to resist temptation. All this time, you still want me. Now I can't get over you. No, I just can't get over you. I was there for you in your darkest times. I was there for you in your darkest nights. But I wonder where were you when I was on my worst, down on my knees. You turned your back, so I wonder where were you? I was just looking after me. I'm following the map that leads to you. The map that leads to you. Ain't nothing I can do. The map that leads to you. I'm falling, falling to you. The map that leads to you. Ain't nothing I can do. The map that leads to you. Oh, oh. Oh, oh. Yeah, yeah. Oh, oh. Oh, oh Oh, I was there for you. Oh, in your darkest night. But I wonder where are you? Now that I'm out, I'm not needing you. And you stand behind my back, so I wonder where are you? All at once, you're looking back at me. So I'm following the map that leads to you. A map that leads to you. A map thing I can do. A map that leads to you. Following, following to you. A map that leads to you. A map thing I can do. A map that leads to you. Following, following. Hey, baby, won't you look my way? I can be your new addiction. Hey, baby, what you gotta say? All you're giving me is fiction. I'm a sorry sucker and this happens all the time. I find out that everybody talks, everybody talks, everybody talks. It started with a whisper, and that was when I kissed her. And then she made my lips hurt. I could hear the chit-chat. Take me to your love shack. Mama's always gotta backtrack when everybody talks back. Hey, honey, you could be my drug. You could be my new prescription. Too much at the end, overdose. All this chat talk make me itchy. Oh my my, everybody talks, everybody talks, everybody talks too much. It started with a whisper, and that was when I kissed her. And then she made my lips hurt. I could hear the chit-chat. Take me to your love shack. Mama's always gotta backtrack when everybody talks back. Never thought I'd live to see the day. When everybody's words got in the way. Oh! Hey, sugar, show me all your love. All you're giving me is friction. Hey, sugar, what you gotta say? It started with a whisper, and that was when I kissed her. And then she made my lips hurt. I could hear the chit-chat. Take me to your love shack. Mama's always gotta backtrack when everybody talks back. Everybody talks, everybody talks. Everybody talks, everybody talks. Everybody talks, everybody talks back. It started with a whisper. And that was when I kissed her. Everybody talks, everybody talks back. Ooh. Deep to the waist, we fall into the river. Cover your eyes so you won't know the secret. I've been trying to hide. We held our breath to see our names in return. On the wreck of '86. That was the year I knew the panic was over. Yeah, since we found out, since we found out. That anything could happen. Anything could happen. Anything could happen. Anything could happen. Anything could happen. Anything could happen. Anything could After the war, we said we'd fight together. I guess we thought that's just what humans do. Letting darkness grow. Since we need its violence and we need its color. And now I've seen it through, and now I know the truth. That anything could happen. Anything could happen. Anything could happen. Anything could happen. Anything could happen. Anything could happen. Anything could I'll give you everything you need. I'll give you everything you need. Oh, I'll give you everything you need. But I don't think I need you. Drift to the west, we fall into the river. Cover your eyes so you don't know the secret. I've been trying to hide. We held our breath to see our names in return. On the record they say. That was the year I knew the panic was over. Yeah, since we found out, since we found out. That anything could happen. Anything could happen. Anything could happen. Anything could happen. Anything could happen. Anything could happen. Anything could I know it's gonna be. I know it's gonna be. I know it's gonna be. I know it's gonna be. I know it's gonna be. I know it's gonna be. I know it's gonna be. I know it's gonna be. Oh. Ooh. Oh yeah. Ooh. I don't think I need you. Ooh, yeah. Ooh. I don't think I need you. Ooh. Oh. Oh. I don't think I need you. Ooh. Oh. I don't think I need you. I'll be your light, your match, your burning sun. I'll be the bright in black that's making you run. And we feel all right. We feel all right. 'Cause we'll work it out. Yeah, we'll work it out. And I'll be doing this if you ever doubt. Till the love runs out. Till the love runs out. I'll be your ghost, your game, your stadium. I'll be your 50,000 clapping like one. And I feel all right. And I feel all right. 'Cause I worked it out. Yeah, I worked it out. I'll be doing this if you ever doubt. Till the love runs out. Till the love runs out. I got my mind made up and I can't let go. I'm killing every second till it saves my soul. Woo. I've been running. Woo. I've been running. Till the love runs out. Till the love runs out. We start a fire, and we shut it down. Till the love runs out. Till the love runs out. There's a maniac out in front of me. Got an angel on one shoulder and Mephistopheles. But mama raised me good. Mama raised me right. Mama said, "Do what you want, say prayers at night." I'm saying them 'cause he's so devout. Till the love runs out. Till the love runs out, yeah. I got my mind made up and I can't let go. I'm killing every second till it saves my soul. Woo. I've been running. Woo. I've been running. Till the love runs out. Till the love runs out. We start a fire, and we shut it down. Till the love runs out. Till the love runs out. Oh, we all want the same thing. Oh, we all run for something. Oh, for God, for fame, for love, for hate. For gold, and rust, for diamonds or dirt. I'll be your light, your match, your burning sun. I'll be the bright in black that's making you run. I got my mind made up and I can't let go. I'm killing every second till it saves my soul. Woo. I've been running. Woo. I've been running. Till the love runs out. Till the love runs out. We start a fire, and we shut it down. Till the love runs out. Till the love runs out. I'll be your light, your match, your burning sun. I'll be the bright in black that's making you run. I feel all right. We feel all right. 'Cause we'll work it out. Yeah, we'll work it out. We start a fire, and we shut it down. Till the love runs out. Till the love runs out. Till the love runs out. I'm in the desert of sweet I'm changing all of the stations. I like to think that we had it all. We drove off to a better place. But on that road, I suffered loss. Oh, baby, why did you run away? I was there for you in your darkest times. I was there for you in your darkest times. But I wonder, where were you when I was down bad, down on my knees? You said you had my back. So wonder, where were you? When I was just looking after me. So I'm following the map that leads to you. The map that leads to you. Ain't nothing I can do. The map that leads to you. Following, following to you. The map that leads to you. Ain't nothing I can do. The map that leads to you. Following, following. I hear your voice in my sleep at night. Hard to resist temptation. Something strange has come over me. Now I can't get over you. No, I just can't get over you. I was there for you in your darkest times. I was there for you in your darkest nights. But I wonder, where were you when I was down bad, down on my knees? You said you had my back. So wonder, where were you? When I was just looking after me. I'm following the map that leads to you. The map that leads to you. Ain't nothing I can do. The map that leads to you. Following, following to you. The map that leads to you. Ain't nothing I can do. The map that leads to you. Oh, oh. Oh, oh. Yeah, yeah. Oh, oh. I was there for you, in your darkest times. I was there for you, in your darkest nights. I was there for you, in your darkest times. I was there for you, in your darkest nights. But I wonder, where were you when I was down bad, down on my knees? You said you had my back. So wonder, where were you? When I was just looking after me. I'm following the map that leads to you. The map that leads to you. Ain't nothing I can do. The map that leads to you. Following, following to you. The map that leads to you. Ain't nothing I can do. The map that leads to you. Following, following. Hey, baby, won't you look my way? I can be your new addiction. Hey, baby, what you gotta say? All you're giving me is fiction. I was a right sucker and this happens all the time. I found out that everybody talks, everybody talks, everybody talks. It started with a whisper, and that was when I kissed her. She made my lips hurt. I could hear the chit-chat. Take me to your love shack. Mama's always got a back track. When everybody talks back. Hey, honey, you could be my drug. You could be my new prescription. Too much of me, I know about dolls. All this chat talk make me itching. Oh my, shit. Everybody talks, everybody talks, everybody talks too much. It started with a whisper, and that was when I kissed her. She made my lips hurt. I could hear the chit-chat. Take me to your love shack. Mama's always got a back track. When everybody talks back. Never thought I'd live to see the day. When everybody's word got in the way. Oh. Hey, sugar, show me all your love. All you're giving me is friction. Hey, sugar, what you gotta say? It started with a whisper, and that was when I kissed her. She made my lips hurt. I could hear the chit-chat. Take me to your love shack. Mama's always got a back track. When everybody talks back. Everybody talks, everybody talks. Everybody talks, everybody talks. Everybody talks, everybody talks back. It started with a whisper. That was when I kissed her. Everybody talks, everybody talks back. Ooh. Into the river. Cover your eyes so you won't know the secret I've been trying to hide. We held our breath to see our names in return on the record they set. That was the year I knew the panic was over. Yeah, since we found out, since we found out. That anything could happen, anything could happen, anything could happen, anything could happen, anything could happen, anything could happen, anything could. Outside the walls we said we'd fight together. I guess we thought that's just what humans do, letting darkness grow. Since we need its power less than we need its color. But now I've seen it through, and now I know the truth. That anything could happen, anything could happen, anything could happen, anything could happen, anything could happen, anything could happen, anything could. Baby, I'll give you everything you need. I'll give you everything you need. Oh, I'll give you everything you need. But I don't think I need you. Swim to the waist, we fall into the river. Cover your eyes so you won't know the secret I've been trying to hide. We held our breath to see our names in return on the record they set. That was the year I knew the panic was over. Yeah, since we found out, since we found out. That anything could happen, anything could happen, anything could happen, anything could happen, anything could happen, anything could happen, anything. I know it's gonna be, I know it's gonna be, I know it's gonna be, I know it's gonna be, I know it's gonna be, I know it's gonna be, I know it's gonna be, I know it's gonna be, oh. Ooh, ooh. I don't think I need you. Ooh, ooh. I don't think I need you. Ooh, ooh. I don't think I need you. I'll be your light, your match, your burning sun. I'll be the bright in black that's making you run. And we'll feel all right, and we'll feel all right. 'Cause we'll work it out, yeah, we'll work it out. And I'll be doing this if you're ever down. Till the love runs out, till the love runs out. I'll be your ghost, your game, your stadium. I'll be your 50,000 clapping like one. And I feel all right, and I feel all right. 'Cause I worked it out, yeah, I worked it out. I'll be doing this if you're ever down. Till the love runs out, till the love runs out. I got my mind made up and I can't let go. I'm killing every second till it's seen my soul. Whoo. I've been running. Whoo. I've been running till the love runs out, till the love runs out. And we'll start a fire, and we'll shut it down. Till the love runs out, till the love runs out. There's a And my staff will leave. But mama raised me good, mama raised me right. Mama said, "Do what you want, say prayers at night. Do not say amen, because it's so devout. Till the love runs out, till the love runs out." Yeah. I got my mind made up and I can't let go. I'm killing every second till it sees my soul. Ooh, hey. I've been running. Ooh, hey. I've been running. Till the love runs out, till the love runs out. And we start a fire, and we shut it down. Till the love runs out, till the love runs out. Oh, we all want the same thing. Oh, we all run to something. Run for God, for fame, for love, for hate. For gold, or rust, for diamonds or dirt. I'll be your light, your match, your burning sun. I'll be the bright in black that's making you run. I got my mind made up and I can't let go. I'm killing every second till it sees my soul. Ooh, hey. I've been running. Ooh, hey. I've been running. Till the love runs out, till the love runs out. And we start a fire, and we shut it down. Till the love runs out, till the love runs out. I'll be your light, your match, your burning sun. I'll be the bright in black that's making you run. I feel all right, and you feel all right. 'Cause we'll work it out, yeah, we'll work it out. And we start a fire, and we shut it down. Till the love runs out, till the love runs out. Till the love runs out. I miss the taste of a sweeter life. I miss the conversation. I search for old songs and I'm changing all of the stations. I like to think that we had it all. We drove off to a better place. But on that road, I was so small. Oh, baby, why did you run away? I was there for you in your darkest times. I was there for you in your darkest night. But I wonder where were you? When I was down on my, down on my knees. You said you had my back. So I wonder where were you? 'Cause all I want is you looking after me. So I'm following the map that leads to you. The map that leads to you. Ain't nothing I can do. The map that leads to you. Falling, falling to you. The map that leads to you. Ain't nothing I can do. The map that leads to you. Falling, falling. I hear your voice in my sleep at night. Hard to resist temptation. 'Cause something strange has come over me. Now I can't get over you. No, I just can't get over you. Ooh. I was there for you in your darkest times. I was there for you in your darkest night. But I wonder where were you? When I was down on my, down on my knees. You said you had my back. So I wonder where were you? 'Cause all I want is you looking after me. So I'm following the map that leads to you. The map that leads to you. Ain't nothing I can do. The map that leads to you. Oh, oh. Oh, oh. Yeah, yeah. Oh, oh, ooh. Oh, I was there for you, oh, in your darkest time. Oh, I was there for you, oh, in your darkest night. Oh, I was there for you, oh, in your darkest time. Oh, I was there for you, oh, in your darkest night. But I wonder where were you? When I was down on my, down on my knees. You said you had my back. So I wonder where were you? All I want is you looking after me. So I'm following the map that leads to you. The map that leads to you. Ain't nothing I can do. The map that leads to you. Falling, falling to you. The map that leads to you. Ain't nothing I can do. The map that leads to you. Falling, falling. Hey baby, won't you look my way? I can be your new addiction. Hey baby, what you gotta say? All you're giving me is fiction. I'm a sucker and this happens all the time. I find out that everybody talks, everybody talks, everybody talks. It started with a whisper. Then I was in her kisses. Then she made my list of "I can have Hey honey, you could be my drug. You could be my new prescription. Too much could be an overdose. All this sharp talk make me itching. Oh my, shit, everybody talks, everybody talks, everybody talks too much. It started with a whisper, and that was when I kissed her. Then she made my lips hurt. I could hear the chit-chat. Take me to your love shack. Mama's always got her back track, when everybody talks back. I never thought I'd live to see the day. When everybody's words got in the way, oh. Hey sugar, show me all your love. All you're giving me is precious. Hey sugar, what you gotta say? It started with a whisper, and that was when I kissed her. Then she made my lips hurt. I could hear the chit-chat. Take me to your love shack. Mama's always got her back track. When everybody talks back. Everybody talks, everybody talks. Everybody talks, everybody talks. Everybody talks, everybody talks back. It started with a whisper, and that was when I kissed her. Everybody talks, everybody talks back. Drift to the west, we fall into the river. Cover your eyes so you won't know the secret I've been trying to hide. We held our breath to see our names in return on the wreck of '86. That was the year I knew the panic was over. Yeah, since we found out, since we found out that anything could happen. Anything could happen. Anything could happen. Anything could happen. Anything could happen. Anything could happen. Anything could. After the war we said we'd fight together. I guess we forgot that's just what humans do. Letting darkness grow since we need its violence and we need its color. Now I've seen it through, and now I know the truth. That anything could happen. Anything could happen. Anything could happen. Anything could happen. Anything could happen. Anything could happen. Anything could. I'll give. I'll give you everything you need. I'll give you everything you need, oh. I'll give you everything you need. But I don't think I need you. Drift to the west, we fall into the river. Cover your eyes so you won't know the secret I've been trying to hide. We held our breath to see our names in return on the wreck of '86. That was the year I knew the panic was over. Yeah, since we found out, since we found out that anything could happen. Anything could happen. Anything could happen. Anything could happen. Anything could happen. Anything could happen. Anything could. I know it's gonna be. I know it's gonna be. I know it's gonna be. Oh, it's gonna be all right. Ooh. Ooh. Ooh. I feel nothing. Ooh. Ooh. Ooh. I feel nothing. Ooh. Ooh. Ooh. I feel nothing. Ooh. Ooh. Ooh. I feel nothing. I'll be your light, your match, your burning sun. I'll be the bright in black that's making you run. We feel all right, we feel all right. 'Cause we'll work it out, yeah, we'll work it out. I'll be doing this if you ever doubt. Till the love runs out, till the love runs out. I'll be your ghost, your game, your stadium. I'll be your 50,000 tapping like one. I feel all right, and I feel all right. 'Cause I worked it out, yeah, I worked it out. I'll be doing this if you ever doubt. Till the love runs out, till the love runs out. I got my mind made up and I can't let go. I'm killing every second till it saves my soul. Whoo. I've been running. Whoo. I've been running. Till the love runs out, till the love runs out. We'll start a fire, and we'll shut it down. Till the love runs out, till the love runs out. There's a maniac out in front of me. Got an angel on one shoulder and Balthazar please. But mama raised me good, mama raised me right. Mama said, "Do what you want, say prayers at night." I'm saying them because I'm so devoured. Till the love runs out, till the love runs out, yeah. I got my mind made up and I can't let go. I'm killing every second till it saves my soul. Whoo. I've been running. Whoo. I've been running. Till the love runs out, till the love runs out. We'll start a fire, and we'll shut it down. Till the love runs out, till the love runs out. Oh, we all want the same thing. Oh, we all run to something. Oh, for God, for fame, for love, for hate. For gold, for rust, your dimes, your dust. I'll be your light, your match, your burning sun. I'll be the bright in black that's making you run. I got my mind made up and I can't let go. I'm killing every second till it saves my soul. Whoo. I've been running. Whoo. I've been running. Till the love runs out, till the love runs out. We'll start a fire, and we'll shut it down. Till the love runs out, till the love runs out. I'll be your light, your match, your burning sun. I'll be the bright in black that's making you run. We feel all right, and we feel all right. 'Cause we'll work it out, yeah, we'll work it out. We'll start a fire, and we'll shut it down. Till the love runs out, till the love runs out. Till the love runs out. I miss the taste of the sweet life. I miss the conversation. I search for old songs and I search for old songs and I'm changing all of the stations. I liked to think that we had it all. We grew them up to a better place. But on that road I was looking for. Oh, baby, why did you run away? I was there for you in your darkest times. I was there for you in your darkest times. But I wonder where were you when I was at my worst down on my knees. There behind my back. So wonder where were you? When all the roads you took came back to me. So I'm following the map that leads to you. The map that leads to you. Ain't nothing I can't do. The map that leads to you. Following, following to you. The map that leads to you. Ain't nothing I can't do. The map that leads to you. Following, following. I hear your voice in my sleep at night. Hard to resist temptation. 'Cause all these dreams just come over me. Now I can't get over you. No, I just can't get over you. Darkest night. I wonder where were you when I was on my worst, down on my knees. You said behind my back. I wonder where were you? All I want is you looking after me. I'm following the map that leads to you. A map that leads to you. Ain't nothing I can do. A map that leads to you. Following, following to you. The map that leads to you. Ain't nothing I can do. The map that leads to you. Oh, oh. Oh, oh. Yeah, yeah. Oh, oh. I was there for you, oh, in your darkest time. I was there for you, oh, in your darkest night. I was there for you, oh, in your darkest time. I was there for you, oh, in your darkest night. I wonder where were you when I was on my worst, down on my knees. You said behind my back. I wonder where were you? All I want is you looking after me. I'm following the map that leads to you. A map that leads to you. Ain't nothing I can do. A map that leads to you. Following, following to you. The map that leads to you. Ain't nothing I can do. The map that leads to you. Following, following. Hey baby, won't you look my way? I can be your new addiction. Hey baby, what you gotta say? All you're giving me is fiction. I'm a sorry sucker and this happens all the time. I find out that everybody talks, everybody talks, everybody talks. It started with a whisper. That was when I kissed her. Then she made my lips hurt. I can hear the chit-chat. Take me to your love shack. Mama's always gotta backtrack. When everybody talks back. Hey honey, you could be my drug. You could be my new prescription. Too much can be an overdose. All this trash talk make me itching. Oh my, shit. Everybody talks, everybody talks, everybody talks too much. It started with a whisper. That was when I kissed her. Then she made my lips hurt. I can hear the chit-chat. Take me to your love shack. Mama's always gotta backtrack. When everybody talks back. Never thought I'd live to see the day. When everybody's words got in the way. Oh! Hey sugar, show me all your love. All you're giving me is friction. Hey sugar, what you gotta say? It started with a whisper. That was when I kissed her. Then she made my lips hurt. I can hear the chit-chat. Take me to your love shack. Mama's always gotta backtrack. When everybody talks back. Everybody talks, everybody talks. Everybody talks, everybody talks. Everybody talks, everybody talks back. It started with a whisper. That was when I kissed her. Everybody talks, everybody talks back. Ooh. Drift through the waves, we fall into the river. Cover your eyes so you don't know the secret. I've been trying to hide. We held our breath to see our names on return. On the wreck of '86. That was the year I knew the panic was over. Yeah, since we found out, since we found out that anything could happen, anything could happen, anything could happen, anything could happen, anything could happen, anything could happen, anything could. After the war we said we'd fight together. Letting darkness grow since we need its violence and we need its color. I've seen it through, and now I know the truth. That anything could happen, anything could happen, anything could happen, anything could happen, anything could happen, anything could happen, anything could. I'll give you everything you need. I'll give you everything you need. Oh. I'll give you everything you need. But I don't think I need you. Drift to the west, we fall into the river. Cover your eyes so you don't know the secret. I've been trying to hide. We held our breath to see our names in return. On the record that he says that was the year I knew the panic was over. Since we found out, since we found out. That anything could happen, anything could happen, anything could happen, anything could happen, anything could happen, anything could happen, anything could. I know it's gonna be, I know it's gonna be, I know it's gonna be, I know it's gonna be, I know it's gonna be, I know it's gonna be, I know it's gonna be, I know it's gonna be, oh. Oh. Oh. Oh. But I don't think I need you. Oh. Oh. Oh. But I don't think I need you. Oh. Oh. Oh. But I don't think I need you. I'll be your light, your match, your burning sun. I'll be the bright in black that's making you run. We feel all right, and we feel all right. 'Cause we'll work it out, yeah, we'll work it out. I'll be doing this if you ever doubt. 'Til the love runs out, 'til the love runs out. I'll be your ghost, your game, your stadium. I'll be your 50,000 clapping like one. I feel all right, and I feel all right. 'Cause I worked it out, yeah, I worked it out. I'll be doing this if you ever doubt. 'Til the love runs out, 'til the love runs out. I got my mind made up and I can't let go. I'm killing every second 'til it sees my soul. Woo. I've been running. Woo. I've been running. 'Til the love runs out, 'til the love runs out. And we start a fire, and we shut it down. Til the love runs out, til the love runs out. Hey. There's a maniac out in front of me. Got an angel on one shoulder and Mephistopheles. But mama raised me good, mama raised me right. Mama said, "Do what you want, say prayers at night." I'm saying them cause I'm so devout. Til the love runs out, til the love runs out, hey. I got my mind made up and I can't let go. I'm killing every second til it sees my soul. Woo, hey. I've been running. Woo, hey. I've been running. Til the love runs out, til the love runs out. And we start a fire, and we shut it down. Til the love runs out, til the love runs out. Whoa, we are the same thing. Whoa, we all run for something. Oh, for God, for fame, for love, for hate. For gold, or rust, for diamonds or dirt. I'll be your light, your match, your burning sun. I'll be the bright in black that's making you run. I got my mind made up and I can't let go. Til the love runs out. We start a fire, and we shut it down. Til the love runs out. Til the love runs out. I'll be your light, your match, your burning sun. I'll be the fright, the laugh, the sneak and the run. It'll be all right, it'll be all right. Cause we'll work it out, yeah, we'll work it out. We start a fire, and we shut it down. Til the love runs out. Til the love runs out. Til the love runs out. I'm used to this sweet life. I'm used to conversation. I'm changing vocal songs tonight. I'm changing all of the stations. I'd like to think that we had it all. We drove off to a better place. But on that road, I suffered more. Oh, baby, why did you run away? I was there for you in your darkest times. I was there for you in your darkest nights. But I wonder where were you when I was at my worst, down on my knees. You stared behind my back. I wonder where were you when I was just looking after me. I'm following the map that leads to you. The map that leads to you. Ain't nothing I can do. The map that leads to you. Falling, falling to you. The map that leads to you. Ain't nothing I can do. The map that leads to you. Falling, falling. I hear your voice in my sleep at night. Hard to resist the temptation. Cause all these feelings come over me. Now I can't get over you. No, I just can't get over you. I was there for you in your darkest times. I was there for you in your darkest nights. But I wonder where were you when I was at my worst, down on my knees. You stared behind my back. I wonder where were you when I was just looking after me. I'm following the map that leads to you. The map that leads to you. Ain't nothing I can do. The map that leads to you. Falling, falling to you. The map that leads to you. Ain't nothing I can do. The map that leads to you. Oh, oh. Oh, oh. Yeah, yeah. Oh, oh. Oh, I was there for you, oh, in your darkest times. Oh, I was there for you, oh, in your darkest nights. Oh, I was there for you, oh, in your darkest times. Oh, I was there for you, oh, in your darkest nights. But I wonder where were you when I was at my worst, down on my knees. And you stared behind my back. I wonder where were you when I was just looking after me. I'm following the map that leads to you. The map that leads to you. Ain't nothing I can do. The map that leads to you. Falling, falling to you. The map that leads to you. Ain't nothing I can do. The map that leads to you. Falling, falling. Hey, baby, won't you look my way? I can be your new addiction. Hey, baby, what you gotta say? All you're giving me is fiction. I'm a sucker and this happens all the time. I find out that everybody talks, everybody talks, everybody talks. It started with a whisper, and that was when I kissed her. And then she made my lips hurt. I could hear the chit-chat. Take me to your love shack. Mama's always got a back track. When everybody talks back. Hey, honey, you could be my drug. You could be my new prescription. Too much of me and all my flaws. All these flashbacks make me itching. Oh my, shit, everybody talks, everybody talks, everybody talks too much. It started with a whisper, and that was when I kissed her. And then she made my lips hurt. I could hear the chit-chat. Take me to your love shack. Mama's always got a back track. When everybody talks back. Never thought I'd live to see the day. When everybody's words got in the way. Oh. Hey, sugar, show me all your love. All you're giving me is friction. Hey, sugar, what you gotta say? It started with a whisper Take me to your love ship. Mama's always got a bad trip. We never thought it'd stop there. Everybody stops, everybody stops. Everybody stops, everybody stops. Everybody stops, everybody stops there. It started with a whisper. And now it's a righteous roar. Everybody stops, everybody stops there. Ship to the west, we fall into the river. Cover your eyes so you don't know the secret. I've been trying to hide. We held our breath to see our names in return. On the record that he says. That was the year I knew the panic was over. Yeah, since we found out, since we found out. That anything could happen. Anything could happen. Anything could happen. Anything could happen. Anything could happen. Anything could happen. Anything could. After the war we said we'd fight together. I guess we thought that's just what humans do. Letting darkness grow since we need its solace and we need its color. But now I've seen it through. Now I know the truth. Anything could happen. Anything could happen. Anything could happen. Anything could happen. Anything could happen. Anything could happen. Anything could. Baby, I'll give you everything you need. I'll give you everything you need, oh. I'll give you everything you need. But I don't think I need you. Ship to the west, we fall into the river. Cover your eyes so you don't know the secret. I've been trying to hide. We held our breath to see our names in return. On the record that he says. That was the year I knew the panic was over. Yeah, since we found out, since we found out. Anything could happen. Anything could happen. Anything could happen. Anything could happen. Anything could happen. Anything could happen. Anything could. I know it's gonna be. I know it's gonna be. I know it's gonna be. I know it's gonna be. I know it's gonna be. I know it's gonna be. I know it's gonna be. I know it's gonna be. Oh. I'll be your light, your match, your burning sun. I'll be the bright and black that's making you run. We'll feel all right, we'll feel all right. 'Cause we'll work it out, yeah, we'll work it out. Now we're doing this if you have a doubt. Till the love runs out, till the love runs out. I'll be your ghost, your gift. 2,000 tapping like one. I feel all right. I feel all right. 'Cause I worked it out. Yeah, I worked it out. I'll be doing this if you're ever down. Till the love runs out. Till the love runs out. I got my mind made up and I can't let go. I'm killing every second till it sees my soul. I've been running, I've been running. Till the love runs out. Till the love runs out. We start a fire and we shut it down. Till the love runs out. Till the love runs out. There's a maniac out in front of me. Got an angel on one shoulder and Mephistopheles. But mama raised me good. Mama raised me right. Mama said, "Do what you want." Say prayers at night. I'm saying them 'cause I'm so devout. Till the love runs out. Till the love runs out. I got my mind made up and I can't let go. I'm killing every second till it sees my soul. I've been running, I've been running. Till the love runs out. Till the love runs out. We start a fire and we shut it down. Till the love runs out. Till the love runs out. Oh, we all want the same thing. Oh, we all run for something. Oh, for God, for fame, for love, for hate. For gold and rust, for diamonds or dirt. I'll be your light, your match, your burning sun. I'll be the bright and black that's making you run. I got my mind made up and I can't let go. I'm killing every second till it sees my soul. I've been running, I've been running. Till the love runs out. Till the love runs out. We start a fire and we shut it down. Till the love runs out. Till the love runs out. I'll be your light, your match, your burning sun. I'll be the bright and black that's making you run. I feel all right. I feel all right. 'Cause we'll work it out. Yes, we'll work it out. We start a fire and we shut it down. Till the love runs out. Till the love runs out. Till the love runs out. I miss the bittersweet life. I miss our conversations. I change the borrowed songs and lies. I'm changing all of the stations. I liked to think that we had it all. We drove off to a better place. But on that road, our sucker fell. Oh, baby, why did you run away? I was there for you in your darkest times I was there for you in your darkest night But I wonder where were you When I was on my worst, down on my knees And you stabbed behind my back So I wonder where were you 'Cause all the roads you took came back to me So I'm following the map that leads to you The map that leads to you Ain't nothing I can do The map that leads to you I'm falling, falling, falling to you The map that leads to you Ain't nothing I can do The map that leads to you I'm falling, falling, falling I hear your voice in my sleep at night Hard to resist temptation 'Cause all my senses come over me And now I can't get over you No, I just can't get over you I was there for you in your darkest times I was there for you in your darkest night But I wonder where were you When I was on my worst, down on my knees And you stabbed behind my back So I wonder where were you 'Cause all the roads you took came back to me So I'm following the map that leads to you The map that leads to you Ain't nothing I can do The map that leads to you I'm falling, falling, falling to you The map that leads to you Ain't nothing I can do The map that leads to you Oh, oh, oh Oh, oh, oh Yeah, yeah, yeah Oh, oh, oh I was there for you in your darkest times I was there for you in your darkest night I was there for you in your darkest times I was there for you in your darkest night But I wonder where were you When I was on my worst, down on my knees And you stabbed behind my back So I wonder where were you 'Cause all the roads you took came back to me So I'm following the map that leads to you The map that leads to you Ain't nothing I can do The map that leads to you I'm falling, falling, falling to you Hey, baby, won't you look my way? I can be your new addiction. Hey, baby, what you got to say? All you're giving me is fiction. I'm a sucker and this happens all the time. I find out that everybody talks, everybody talks, everybody talks. It started with a whisper, and that was when I kissed her. Then she made my lips hurt. I can hear the chit-chat. Take me to your lust trap. Mama's always got a back track when everybody talks back. Hey, honey, you could be my drug. You could be my new prescription. Too much can be an overdose. All this fast talk make me itching. Oh, my, shit. Everybody talks, everybody talks, everybody talks too much. It started with a whisper, and that was when I kissed her. Then she made my lips hurt. I can hear the chit-chat. Take me to your lust trap. Mama's always got a back track when everybody talks back. Never thought I'd live to see the day when everybody's words got in the way. Oh! Welcome back, everyone. We will now begin the afternoon session of our investor day today. Very pleased to introduce Gilles Ouellette, who will provide a strategic overview of our BMO Wealth Management business. Then we'll be joined by members of his management team. Hope you enjoy the afternoon session. Thank you, Sharon. Good afternoon, and thank you for joining us today. I am here to speak about wealth management and I am sure I will find a home for this. In particular, I am going to speak specifically about our Canadian and international businesses. BMO Wealth Management is performing extremely well. It is a rapidly growing business, and it is the fastest-growing operating group at BMO. in 2014, we posted nearly $850 million in earnings. Each of our businesses is making gains in client loyalty and market share. It is a very exciting time, and we are well-positioned to continue our positive momentum. Today, I will give you an overview of our businesses, and I will introduce you to our leadership team. I am going to review the progress we have made in the past five years. I will discuss our strategy. I will demonstrate why we have confidence that wealth management will continue to deliver strong results. Following my remarks, each of our leaders will provide an overview of their business, and we are going to leave some time for Q&A after the presentations are complete. The wealth management business at BMO serves a full range of client segments from mass retail to high net worth to ultra-high net worth and institutional. We operate in Canada, U.S., we are in Asia, Europe, and in Australia. The wealth management has performed very well over the last five years. We have had 14% annual revenue growth and 18% annual net income growth. During the last five years, we have also improved our efficiency ratio by 588 basis points, and we expect to make continued improvements over the next five years. We have demonstrated strong growth while at the same time we are significantly investing in the business, including investments in distribution, financial planning, product manufacturing, technology, and regulatory compliance, all of which position us very well for continued growth. We are focused on our strategy and on building momentum. We have three strategic priorities. First one is to enhance the client experience. Secondly, to improve productivity, and the third is to invest for future growth. Our clients are at the center of our business. We strive to understand what they value and to respond to their needs. It is pretty clear that if our clients are not happy, we are not going to be able to grow our business. We spend a lot of time trying to figure exactly what it is that they want. We are also focused on improving productivity, and we are trying to maximize the net income from every incremental dollar of revenue. We do this in large part by continuing to simplify our processes, taking low-value work away from the front lines so we can spend more time with clients. In our future growth, we are continuing to make investments in technology, including upgrading our systems, platforms, and digital channels, and we continue to invest in people. We have great products, but we know we can be even more successful if we have more feet on the ground. As it relates to acquisitions, we have been very successful, and we continue to look for opportunities to acquire businesses that are complementary, where we can add some value. Over the past number of years, we have made significant investments in our businesses. The heavy lifting is behind us and we are well positioned to see the benefits, which you will hear about today. Excuse me. Wealth management has been the fastest-growing operating group in BMO Financial Group over the last five years. We have grown from 17% of the bank's revenues to 22% today. We expect to continue to increase our overall contribution to the bank as we benefit from a full year of revenues from F&C and as well as our natural business growth. The global asset management and the private banking businesses are the two businesses that we believe that we have the skill set to grow globally, and we expect that they will be the largest contributors to wealth management growth. In Canada, we are focused on growing and gaining market share with full service, direct investing, as well as insurance. We have tremendous strength in our manufacturing capabilities. Our investment performance has been strong with more than 80% of our AUM outperforming benchmarks. BMO Wealth Management is a global business with over a third of our revenues coming from outside of Canada. We have a proven track record of complementing our existing businesses through strategic acquisitions, and most recently, F&C and M&I, which added significant assets under management. When we acquired F&C, we did so because we had confidence in our ability to execute because of our success with Pyrford, which is a London-based asset management firm that we purchased seven years ago. Since then, the AUM has grown from $3 billion to $15 billion, and we have created a lot of value. Sorry. Barry will tell you more about the success we have had with recent acquisitions. Our acquisitions have given us valuable experience in, first, integrating cultures, navigating complex regulatory environments, diversifying products, and expanding distribution in new markets. They have also provided access to new distribution channels so that we are well-positioned to cross-sell products across North America and Europe. More and more financial institutions want to be in the wealth management space. Believe me, there are no bargains out there. Everything is fully priced. We are always interested in acquisitions, but only if we can add value for our clients and for our shareholders. You see here a breakdown of the wealth management revenue, as well as our leadership team who you will have a chance to hear from shortly. Our leaders are experts in their field. They are exceptional. They are highly motivated leaders, and they are committed to achieving excellence. The global asset management business is co-led by Rajiv Silgardo and Barry McInerney, and it manufactures and distributes a range of products and solutions, including mutual funds, ETFs, pool funds, and segregated institutional accounts. We have a product breadth and performance that rivals the top global asset managers. Charyl Galpin leads Nesbitt Burns, our full-service brokerage, and the biggest contributor revenue with 1,300 investment advisors across Canada. Julie Barker-Merz heads BMO InvestorLine, our award-winning online investing business in Canada. Peter McCarthy leads insurance, which offers life, annuity, and credit insurance products. The business has had very strong growth and continues to develop new products and capabilities. That, coupled with an extensive distribution network, which rivals the biggest insurance companies in Canada, positions them very well in the future. Private banking is led by Darrel Hackett in the U.S. and Myra Cridland in Canada and Asia. Given today's focus on wealth management in Canada and international, Myra will make the presentation. Our Canadian and Asia Private Banking offers a comprehensive range of financial services, planning, and advice-based value proposition to high-net worth and ultra-high-net-worth clients. This business is award-winning and has grown at a very impressive rate. As you will hear from our leaders, our businesses have each been recognized for providing outstanding service and solutions. As a group, we won the award from Global Banking and Finance Review for the Best Wealth Management in Canada for 2014. These awards and recognitions are important because they drive client acquisition, and they also provide third-party validation of what we already know, that we are a top wealth manager across our footprint. Strong client loyalty also supports this conclusion. Our research tells us that clients with high NPS scores stay with us longer, they make more referrals, they hold more of their assets with BMO, and they generate more revenue. We have had great success here with Ipsos Reid naming BMO InvestorLine the number one bank-owned online brokerage. For the second year in a row, BMO Nesbitt Burns received the highest client loyalty score among bank-owned, full-service brokerages. Our focus on the client experience as one of our strategic priorities is critical. Our leaders are held accountable for loyalty scores. It is part of their compensation. The wealth management business in Canada is growing rapidly. We are focused on acquiring new clients and gaining market share. Over the past five years, we have had great success in growing. We have taken market share from our competitors. InvestorLine has gained 206 basis points of market share. In full service, we have gained 130 basis points of retail assets since 2011. BMO Mutual Funds and ETFs have gained 314 basis points, and the BMO Private Bank has gained 253 basis points. Our strengths have translated into attractive returns for BMO shareholders. We finished another good year in 2014. Excluding the security gain in the previous year, FY 2014 earnings were up 15%. Client assets grew to CAD 794 billion, up 44%, or up 17% if you exclude the F&C acquisition. Our strong FY 2014 helped us maintain momentum. Over the past five years, as I mentioned earlier, our net income has grown by 18% per year. In particular, the global asset management business, private banking, and BMO Nesbitt Burns have all registered more than 20% annual growth in net income. In total, the traditional wealth business, excluding insurance, has grown at a 24% CAGR over the five-year period. We have achieved top-tier revenue growth compared to our peers, with revenue up 14% per annum since 2009. Over the last three years, traditional wealth has grown faster than our peers in both net income and revenue. Client AUA and AUM has grown at 27% a year over the last five years, driven by strong organic growth, market returns, and acquisitions. We continue to invest in the business to maintain our trajectory. As I mentioned earlier, in recent years, we have invested in new technology, financial planning capabilities, product manufacturing, regulatory compliance, and distribution. This past year, we have added more people, primarily in sales roles in BMO Global Asset Management and in private banking in high-growth markets. Even with these investments, our efficiency ratio has improved by 588 basis points since 2009. Given our success over the past few years, we are focused on our strategy and our priorities: enhance the client experience, improve their productivity, and invest for future growth. Our near-term priorities are fully integrating our expanded European platform and capitalizing on cross-sell opportunities. Secondly, we're continuing to strengthen our distribution. By executing our strategy over the medium term, we believe that we can grow our net income at a CAGR of anywhere between 15%-20% a year and deliver above 2% operating leverage. Before I hand off to Barry, I'd like to leave you with a few thoughts. Our strategy is working, the leadership team is committed and passionate, and our people are second to none. What you'll hear from our leaders is that we're focused on delivering exceptional client experience, providing world-class products and services, expanding our distribution, and with strong internal collaboration within wealth management and across the bank. One of our key differentiators is how our business work together. Each of them leverage internal partnerships to drive the strategies and financial performance forward. With the strategy outlined today, we plan to build on our already strong momentum. With that, I'd like to introduce you to Barry McInerney, who's the co-head of our BMO Global Asset Management business. Thank you, Gilles, and good afternoon, everyone. Rajiv and I are very pleased to be here today to share with you BMO Global Asset Management and its story. BMO Global Asset Management is a global asset management firm with on-the-ground presence, 24 offices in 14 countries, serving a diverse clientele across five continents with over 250 investment strategies. We are now among the top 50 money managers worldwide and the most global Canadian bank-owned firm with over half of our $300 billion in assets under management being managed by our investment professionals located outside of North America for clients residing outside North America. Approximately three-quarters outside of our home country, Canada. We have built our business through both strong organic growth and several strategic acquisitions, with a five-year annual growth rate of 39%. As Gilles mentioned, our investment performance has been very strong, with 80% of our assets we manage globally exceeding their benchmarks over a weighted one, three, and five-year period. Our business in Canada is strong and growing market share. Our successful ETF business has a market share in Canada of 24.3%, up 450 basis points year-over-year, and we're now ranked in the top 20 ETF providers globally. Our mutual fund business is also growing in Canada with an 11.5% market share, up 30 basis points year-over-year. We're well-positioned for future growth. We have a proven track record of strong investment performance, high client retention, attracting and retaining top talents, product innovation, combined with a doubling of our sales force in each of our major geographies and a successful cross-border global sales model. In the coming slides, Rajiv and I will review BMO Global Asset Management's performance to date and explain the key strategic priorities that will drive our continued strong growth going forward. Let's first review our global financial performance. Needless to say, it has been impressive. Over the past five years, we have tripled revenue, and we have tripled net income, and we have grown assets under management fivefold. Organic growth has contributed a fulsome 35% of revenue growth and 50% of the net income growth. The remaining growth has been fueled by our successful acquisitions, which themselves have exhibited strong growth post-acquisition. Based on our proven history of strong performance and execution of our strategic priorities, which Rajiv will cover in a bit, we expect to continue to deliver double-digit growth in assets, revenue, and net income over the next five years. Global map. We have global in our name, we need a global map. This global map demonstrates the wide geographic footprints of the asset management business for BMO. We feel few companies can match our global reach and breadth of investment capabilities, spanning all the asset classes, using both active and passive products and strategies. As mentioned, we have built out our business through strong organic growth, a number of strategic initiatives to expand on-the-ground distribution in new geographies such as the Middle East and Australia, and a series of successful strategic acquisitions. All five of our acquisitions provided us with expanded investment capabilities. Pyrford with global equities, Lloyd George Management with frontier and emerging market equities. CTC, access to third-party alternative investment manager research for our growing global alternatives offering. M&I, U.S. fixed income and U.S. equities. And F&C, European fixed income, European equities, and alternative investments. M&I and F&C also provided us with greater scale and distribution, and I will touch on F&C in just a moment. We have a proven history of making very complementary acquisitions and integrating and growing these businesses. Key to this growth has been a successful implementation of our cross-border global sales model, where our regional sales teams sell all of our global capabilities around the world into their respective regions. For instance, our U.S. and Canadian sales teams have sold over $3 billion combined in new mandates for Pyrford in 2013 and 2014, and two-thirds of Pyrford's AUM now resides outside of its home market in the U.K. Now, let me give you an update on F&C. Since we closed the transaction mid-2014, we are already building strong momentum for new business within a re-energized F&C. Gross and net inflows for F&C over the last six months of fiscal 2014 as part of the BMO family were the same as the flows for all of 2013, and these flows are further accelerating during the early parts of fiscal 2015. Since the acquisition, the F&C team has delivered a number of notable wins in the institutional marketplace, adding over €6 billion in diverse strategies, including liability-driven investing or LDI, European equities, fiduciary outsourcing, and ethical equities and fixed income. Many of these wins have yet to be onboarded. Finally, F&C's U.K. property fund and REIT strategy experienced record inflows during 2014. Momentum is also building and developing new opportunities for cross-selling of broader BMO Global Asset Management capabilities into Europe, and the same for F&C capabilities into North America. For example, F&C now sub-advises two of our mutual funds here in Canada, representing almost CAD 1 billion in assets. On the institutional side, F&C's sales team in Germany just won a CAD 100 million mandate for our U.S. fixed income team. It's early days, but the cross-border pipeline is building quickly. We've had tremendous success with Pyrford, where we've more than tripled AUM over the past three years, as Gilles noted. With M&I, we more than doubled the fixed income and equity mutual fund assets for M&I over the same time period. We expect similar results for F&C in the future. This is how our business stands today. We have four main hubs, Canada, United States, Europe, and Asia, along with world-class investment boutiques strategically located around the globe. We differentiate ourselves as follows. Number one, we have a breadth of global capabilities that provide us with the unique ability to create investment solutions to meeting evolving client needs in each region, retail and institutional. Second, we're located on the ground in servicing our current and future clients throughout the world. Thirdly, as previously mentioned, we have strong investment performance with 80% of our assets outperforming their benchmarks. Fourth, we have accelerated our distribution resources in doubling our sales force in both Canada and U.S. last year, and we have plans already underway to double our sales force in Europe over the next couple of years. Fifth, we have a proven history of innovation. Frontier equities, low volatility global equities, dynamic LDI, and a full array of commercially successful smart beta ETFs are just a few examples. Finally, as part of the BMO Financial Group, we have strong financial stability and strong brand recognition. Now on to some pie charts. These pie charts demonstrate our broad diversification by AUM, the pie chart on the left, and by client base, both geographically, the pie chart in the middle, and by type and channel, the pie chart on the right. Again, as part of our global sales and relationship management model, we bring this diverse asset class capability to all of our clients around the world, both retail in Canada, U.K., Europe, and United States, and institutional in all of our regions, including the Middle East and Australia and Asia. Those institutional investors would span the spectrum of pension plans, defined benefit and defined contribution, sovereign wealth funds, foundations, and endowments and insurance companies. We could deliver these products and solutions to an expanding global client base in all five continents, either through our strategically located fund complexes in Canada, U.S., the U.K., and continental Europe, as well as our offshore vehicles. Our wide array of ETFs, regional and global now, 65 in total in both Canada and Hong Kong, or separate accounts and commingled funds available for institutional investors. Overall, we believe our broad and diversified set of products and strategies makes us more relevant to clients, and our global reach and overall global capabilities differentiates ourselves in the marketplace. Now I'd like to turn it over to my partner, Rajiv. Thank you. Thank you, Barry. Good afternoon, everyone. For my part, I am going to focus on two key areas. First, a couple of slides on our Canadian business, and then I am going to finish up with a few global themes. Turning to Canada, as you can see from the slide, we have experienced top-tier growth across each of our BMO Mutual Funds and ETF businesses. We believe that this clearly demonstrates our unique ability to have thriving active and passively focused strategies and businesses that fully complement each other. If you look at the graph on the bottom left, it shows that our Canadian mutual fund business has almost doubled in assets from five years ago, with roughly half of that growth coming from net new sales and the other half coming from market movement. Just as the graph on the top left shows, over the same period, we have gained 83 basis points in market share, which actually makes us the number one bank in organic growth over this time period. One of the key drivers of this success has been our ongoing partnership with our colleagues in P&C. That partnership has been outstanding and has delivered great results for us. Last year alone, we experienced a 41% increase in net sales through that retail channel. Some of the reasons for the success in the bank branches has been the fact that we have simplified our product offer for use by our bankers with mid and smaller-sized customers. We have enhanced training for those bankers so that they can maximize that opportunity. We have also targeted specific customers with specific products and created specific materials for certain client segments, such as Asian language materials or RESP products for our RESP customers. While the partnership with P&C has been strong, we have not ignored the other channels. As Barry mentioned, we have been growing our sales force significantly, and particularly in the IIROC and the MFDA advisor channels. As a result of that, we have seen a significant pickup in activity over the last 18 months or so, and we continue to see growth in sales as well. As you can see, our mutual fund business has been strong and is still the lion's share of our business in Canada. But we have had simply phenomenal success in the ETF business that we launched just about five years ago. The graphs in the middle of the page show you what the businesses look like. We have gone from zero to 24% market share over this five-year period in ETFs. A few additional facts for you. For each of the last four years, we have been the fastest-growing ETF provider in Canada in absolute dollar terms. Our success is not just limited to asset growth. We have also been number one in customer loyalty for three years in a row. As Barry mentioned, with this growth, we are now in the top 20 worldwide at number 18. Last year, two of the BMO ETFs that we launched were in the top 15 asset gatherers worldwide. Only BMO and Deutsche had more than one ETF on that list. The success that we have had with the ETFs, we would attribute it to two main factors. One is the fact that we have launched very innovative ETFs, BMO Mutual Funds, and managed solutions that invest in those ETFs. And the other thing has been our relentless focus on top-notch customer service. Now when you look at all of these products, the new ETFs, the new mutual funds that invest in these ETFs, and the managed solutions, they make up approximately 35% of our assets in Canada, and they account for approximately 40% of the revenue that we generate from this business. Speaking of ETFs, let me take a minute to address a couple of questions that sometimes come up with respect to this business. Those questions typically along the lines of why are you in the ETF business, and how are you going to drive growth in this? If you look at the bottom half of the slide, we've listed a few of the reasons why we think this is an important business for BMO Global Asset Management. First and foremost, ETFs bring a compelling differentiation of our offer to our clients and our prospects, and thus they expand our marketplace and our opportunity set. Secondly, our ETF strategies tend to be very scalable and have the potential to expand quite easily into different markets, which is our plan. Thirdly, with advances in technology, new types of investors worldwide can access these products much more easily than other retail-oriented products. ETFs have also helped us to attract and retain strong talent. To them, this is evidence that we understand how the marketplace is evolving, and in fact, are driving some of that evolution. Last but not least, this is a very good margin business for us, and it's growing in profitability. As to how do we see future growth coming, we've put that in the three circles that you see at the top. There are three key levers here. While ETFs as a whole have grown strongly, there are certain segments within that industry, segments that are popularly known as smart beta or specialty, that are growing even faster. We have quite thoughtfully positioned ourselves in those segments. Our approach is to anticipate investor needs for certain investment outcomes, say diversified income, lower risk equity, and then research, build, and deliver those investment outcomes in ETF form. As the marketplace continues to better understand the advantages of these types of ETFs, we have the capability and the credibility to continue capturing share with our existing suite of products. The second lever is going to be continued innovation. As I said, BMO ETFs focus on the smart beta and specialty categories. While we've made several advances in this area, for example, two-thirds of our BMO ETFs would be classified as smart beta, there's still a vast number of strategies that we believe that we can bring to this market. The third dimension is going to be new client segments. If you look at it traditionally, do-it-yourselfers and advisors in North America and institutional investors outside of North America have been the main customers of ETFs. Those segments are still growing strongly, which is good. However, there are newer segments arising. One example would be more types of institutions, pension funds, hedge funds, other asset managers, bank trading desks. The list really does go on and on. We have positioned ourselves to capture growth in these new segments in our existing markets. In addition to the new client segments, for us, there's really an opportunity in new geographies as well. We've been in Canada for five years. As Barry mentioned, we've just listed ETFs in Hong Kong. That was last November. Now with F&C Asset Management, we have a terrific platform with which to explore similar opportunities in Europe. I trust this gives you a bit of an overview as to our ETF growth strategy. I'm going to turn on to the next slide here. This slide highlights some of the organizations and awards that have recently recognized our asset management business around the world. As you know, in our business, third-party recognition is important to drive new client acquisition as well as client loyalty. Awards help with our branding and position us as a leading asset manager with a proven track record of performance. For example, the Morningstar Best Specialty ETF Award speaks to our differentiated suite of ETFs. The Lipper awards that we won in Canada highlight the diverse range of investment capabilities that we have at BMO. In the highly competitive U.S. market, BMO has been included in Barron's Best Mutual Fund Families for 2012 and 2013. In fact, we've just been informed that we've qualified to be included in 2014 again. That report comes out next month. Lastly, in 2014, our F&C funds won 25 awards, many in categories that are very distinct from our North American capabilities, which, as you've heard us say, is what makes F&C a very complementary acquisition for our asset management business. So let me turn to our priorities over the next few years. Barry and I firmly believe that amongst all of the asset management firms in Canada, that we have a truly unique opportunity to build a very powerful business. To do that, we are going to focus on the same themes that Gilles mentioned in his remarks. First and foremost, we want to continue to enhance our client experience. Given our strong and varied investment capabilities, we intend to primarily offer our products on a total solutions basis in order to meet client needs. For example, in Canada, we have created and launched several very successful hybrid funds, which combine our fundamental active and our beta and smart beta skills to create more optimal investment outcomes. This solutions-focused approach enables us to be much more relevant and much more differentiated than smaller regional competitors who typically focus on single products. The second priority is to continue improving productivity. We want to do that by driving top-line growth. As I mentioned before, bringing investment and other global capabilities to our clients in different regions will enhance our clients' investment experience, but it also has the added benefit of driving AUM assets and revenue growth for each of our businesses in those regions. Last but not least, we continue to invest for future growth. This has been mentioned by both Gilles and Barry, but we are investing to double our sales force between 2014 and 2019 across all of our primary markets, Canada, the U.S., and Europe. We have already hired approximately 80 salespeople across North America in the last 12, 18 months. The hiring in Europe has just begun and will be phased in between now and 2019. Investing in the sales force is one thing, but we also want to add selectively to our investment capabilities. We are growing our ETF businesses in Asia and Europe. Building out an alternatives capability from the foundation that F&C Asset Management provides, and also looking at LDI strategies as a potential additional plank to our global business. What would Barry and I like for you to most remember about our business? There are four key items. First, we have a very diverse client base. It is diversified by type and by geography. This gives us the ability to bring proven solutions from one marketplace to another in a very timely and competitive manner. It also insulates our business somewhat from dislocations in particular client segments. Two, we have broad and deep investment capabilities, and these are a key competitive advantage and differentiator for us. We want to use these to continuously deliver relevant investment innovations and solutions that meet the needs of our clients. Three, strong investment performance. Our singular focus has been to deliver value to our increasingly global client base. We want to outperform benchmarks and competitors, but most of all, we want to ensure that our clients get the outcomes that they want and need. Lastly, we have scalable distribution. With the doubling of our sales forces, coupled with the acquisition of some of our newer fund complexes, we now have scalable distribution capabilities to continue to drive asset accumulation. In summary, we believe that we have built a business that is differentiated, that is scalable, and that is poised for growth over time and through different market cycles. We are deeply committed to our clients and to our investors. We have a clear idea and plan of how we will build BMO Global Asset Management, and that is what makes us most enthusiastic about being part of this business. Thank you for your attention. Let me now invite Charyl Galpin to come and speak about full service investing. Thank you, Rajiv. It is now my pleasure to talk to you about Nesbitt Burns. As you know, Nesbitt Burns is a full service investment business in Canada. We are the largest revenue driver, contributing 31% of Wealth Management's total revenue. We are an established business in a mature market and have been providing wealth advisory advice for 102 years. Today, we have 1,300 investment advisors in 50 branches and 30 estate and insurance advisors who work with our advisors to support our clients' life insurance needs. We manage CAD 138 billion in assets, which ranks us third largest in the industry. A high proportion of these assets are in fee-based programs, and we rank number one versus other bank-owned dealers on this measure. We are growing our fee-based business faster than our competitors. Fee-based is a good solution for our clients as decisions around portfolio changes are not made on the cost to trade, and for us, provides greater stability in our revenue stream. As we think about our future, our vision is to build an iconic brand, anchored in our ability to deliver a distinctive and consistent client experience that drives client loyalty. Nesbitt Burns has a track record for strong financial performance. Over the last five years, we achieved annual revenue growth of 7%, annual asset growth of 9%, and annual revenue per advisor growth of 9%. Nesbitt's productivity ratio consistently ranks either first or second in the industry, and it has improved annually by 1.6% over the past five years, which has driven annual earnings growth of 21%. Our competitors sell many of the same products and services, and our opportunity to grow market share is to differentiate on the client experience. We have done significant work to define the Nesbitt Burns client experience. Our clients have told us what matters most to them: insightful financial plans, regular portfolio reviews, and ongoing customized contact. Our focus is paying off. In 2014, we won the Global Banking and Finance Review's award for Best Full Service Investment Advisory in Canada. We achieved industry-leading net promoter scores from Ipsos Reid in 2013 and 2014. Our strategic priorities are consistent with what Gilles outlined: enhance our client experience, improve productivity, and invest for future growth. Today, I will discuss three specific initiatives. One, to focus on target clients. Two, to attract, develop and retain top investment advisors. Three, to enhance collaboration across BMO to drive future growth. We are well-positioned to deliver on these priorities. Full service investing has actually evolved significantly since I joined the brokerage side of the business 29 years ago. At that time, the business was purely transaction-based. Majority of our revenue came from commissions earned on individual stock and bond trading. We made the decision 20 years ago to enter the fee-based business after analyzing the changing marketplace and identified this opportunity much sooner than our competitors. Our clients' needs, again, have evolved considerably in recent years. Today, their expectations of us go beyond investment management and are driven by the outcomes of our strong financial planning capabilities. Outcomes including insurance, estate planning, and business succession, to name a few. As a business, we'd evolved to a point where we needed different leadership to ensure we deliver on our strategic priorities and adapt to these changing client needs. In the last 18 months, we restructured and re-energized our sales leadership team with individuals who clearly understand how to provide a distinctive, consistent client experience to drive loyalty. Our financial results have been excellent despite these leadership changes. One of our key priorities is to focus on target clients. 75% of our clients generate 98% of our revenue. Of those 75% of clients, we do a great job providing the first 25% with that distinctive, consistent experience, and these clients are generating 80% of our revenue. We're getting it right with these clients and meeting their expectations. We are now focusing on the next 50%, who look and feel like the first 25%, but are not always receiving regular portfolio reviews, ongoing customized contact, and a financial plan. This is where our growth is going to come from. When we provide these services consistently, it results in a better client experience and an increase in share of wallet. We also recognize that some of our clients are not well-served through an advisory relationship, and we are working with these clients to determine if their needs could be better served in another bank channel. Our second area of our focus is to attract, develop, and retain top investment advisors. Successful Nesbitt Burns advisors are growing and on strategy, which means they are providing the financial plans, those regular portfolio reviews, and the ongoing contact with their clients. They are delivering that consistent experience to all clients, and they are growing their books faster than their peers. Our top advisors are growing their revenue 13% annually versus 8% on average for other advisors. We also know what we need to provide in order to attract and retain the best advisors. We must have a best-in-class platform and tools. We continually invest in advisor desktop technology to improve their productivity and free up their time, which allows them to spend more time with clients. This allows the firm to improve our productivity as we grow our business without adding more advisors or increasing our operating costs. We need to deliver strong coaching and practice management capabilities. Our investments in salesforce.com, PriceMetrix, and practice management consultants provide advisors with tools and individual coaching to grow their practices. Finally, we have to provide a compensation structure that is competitive and rewards the right behavior. The third priority that I will speak to you today is to enhance collaboration and cross-sell across BMO by developing deeper relationships with our clients. We have heard from our clients that they want to be served by one bank. Therefore, our biggest opportunity is to leverage our relationships with our colleagues across BMO to deliver the full value of BMO Financial Group to our clients. Deeper planning conversations uncover multiple opportunities for us to expand share of wallet. We have a strong program in place today with our resident investment advisors. There are 282 of them sitting side by side in our bank branches with their P&C partners. The resident investment advisor, along with the financial planner, form the bank branch investment team. Together, they partner on activities that drive wealth, lending, everyday banking business, and this kind of partnership drives significant results. For example, the average value of referred assets to Nesbitt Burns over the past five years is CAD 6.1 billion. The value is captured as year-end assets and reflects a consistent pattern of growing the original referred amount by three to one. Put another way, on average, we have received CAD 2 billion in actual assets and grown them to CAD 6 billion by the end of the year with additional external funds. The average amount of business referred by Nesbitt Burns advisors to partners is CAD 1.6 billion, and these are actual referred amounts and not adjusted for in-year growth. This is a powerful relationship, and I would like to share a story with you to demonstrate the opportunity it presents for growth, but more importantly, for one bank. One of our resident investment advisors found himself with a flat tire and time on his hands at a local tire store while he waited for the tire to be fixed. He started up a conversation with the owner, explained what he did, but also shared that as part of the wealth management division of BMO Financial Group, he has so much more to offer clients above and beyond wealth management needs. He could assist with both personal and commercial credit and everyday banking needs as well. The next day, the owner walked into the BMO branch and asked to see the RIA about a mortgage for his son, who had already been pre-approved at the local credit union, but actually thought he'd like to give BMO a shot. He met with our banker, and she quickly completed a pre-approved mortgage application and was able to match the rate. She also opened a new checking and a new savings account, and the son is now a new primary customer. A few days later, another one of his sons met with the banker and discussed moving his mortgage from the credit union to BMO. The banker recommended a few refinancing options, and that business has now moved to BMO. A week later, the owner came back into the branch with his son and met with the banker to finalize some of those mortgage details, and our banker asked the owner, where did he do his business banking? Advised that BMO had a strong commercial banking business. To be clear, the owner was not a client of either our wealth or banking businesses. A simple conversation while waiting for a tire to be fixed resulted in multiple new business relationships for BMO, two personal mortgages, two primary accounts, and a new commercial account relationship. We have so many examples just like this one. As Ernie said this morning, great customer conversations and great collaboration between partners. This year, we will implement a similar strategy with a private bank and have private bankers located in Nesbitt Burns branches to provide banking and lending services to high-net-worth clients. In closing, we have a strong platform to attract, develop, and retain top talent. We are enhancing collaboration and cross-sell across BMO. We've optimized and strengthened our sales leadership team, and this new energy in management is creating capacity in our system to deliver on our strategic priorities. We are focused on target clients with a differentiated client experience. It's one thing to say that we are focused on clients, but quite another to hear about it through their own voice. I would like to conclude my presentation by sharing a short client video which speaks to the power of providing a distinctive and consistent client experience. Please turn your attention to the screen. I'm Hélène Bergeron. I'm a dentist in Sherbrooke for 30 years. I start my business from nothing, and now I have a successful dental clinic and I'm very proud of it. Hélène is an entrepreneur. It's always nice to deal with somebody that is concerned about the quality of what they do, and that's why she's having success. Luc is helping me with my personal and professional goals. I want to thank Luc and his team because of their availability. I can call anytime. Luc is here to help. She's at a point in her life where she's also looking into down the road, not right now, but retirement, and that's what we're working on for her then. Luc gives me confidence, and I feel secure with him. My future is in good hands. Thank you, and it is now my pleasure to tell you that we will have a 10-minute break. Thank you. Lately, I've been losing sleep. Dreaming about the things that we could be. But baby, I've been praying hard. Said no more counting dollars, we'll be counting stars. Yeah, we'll be counting stars. I see this life, like a swinging vine. Swing my heart across the line. In my face is flashing signs. Seek it out and ye shall find. Old, but I'm not that old. Young, but I'm not that bold. I don't think the world is sold. On just doing what we're told. I feel something so right doing the wrong thing. I feel something so wrong doing the right thing. I could lie, could lie, could lie. Everything that kills me makes me feel alive. Lately, I've been losing sleep. Dreaming about the things that we could be. But baby, I've been praying hard. Said no more counting dollars, we'll be counting stars. Lately, I've been losing sleep. Dreaming about the things that we could be. But baby, I've been praying hard. Said no more counting dollars, we'll be, we'll be counting stars. Pretty you. I feel your love and I feel it burn. Down this river, every turn. Hope is a four-letter word. Make that money, watch it burn. Old, but I'm not that old. Young, but I'm not that bold. I don't think the world is sold. On just doing what we're told. I feel something so wrong doing the right thing. I could lie, could lie, could lie. Everything that drowns me makes me wanna fly. Lately, I've been losing sleep. Dreaming about the things that we could be. But baby, I've been praying hard. Said no more counting dollars, we'll be counting stars. Lately, I've been, I've been losing sleep. Dreaming about the things that we could be. But baby, I've been, I've been praying hard. Said no more counting dollars, we'll be, we'll be counting stars. Oh, take that money, watch it burn. Sink in the river the lessons I learned. Take that money, watch it burn. Sink in the river the lessons I learned. Take that money, watch it burn. Sink in the river the lessons I learned. Take that money, watch it burn. Sink in the river the lessons I learned. Everything that kills me makes me feel alive. Lately, I've been, I've been losing sleep. Dreaming about the things that we could be. But baby, I've been, I've been praying hard. Said no more counting dollars, we'll be counting stars. Lately, I've been, I've been losing sleep. Dreaming about the things that we could be. But baby, I've been, I've been praying hard. Said no more counting dollars, we'll be, we'll be counting stars. Watch it burn, sink in the river the lessons I learned. Take that money, watch it burn. Sink in the river the lessons I learned. Take that money, watch it burn. Sink in the river the lessons I learned. Take that money, watch it burn. Sink in the river the lessons I learned. Open your eyes, look at me now. Turn around. Girl, I've got you, we won't fall down. Yeah. We can see forever from up here. Yeah. As long as we're together, have no fear. No fear. So turn around. Floating so high above the ground. Floating so high. Turn around. Together, nothing can stop us now. Come baby, turn around. Floating so high above the ground. Floating so high. Turn around. Together, nothing can stop us now. Turn around. Turn around. Turn around, outer space. We can go there now. Yeah. Ooh, turn around. There's no limit to what we found. Oh, yeah. Ooh, music up. I want to feel it all. Yeah. And baby, we'll stay up. There's no way for us to fall. To fall. So turn around. Floating so high above the ground. Floating so high. Turn around. Together, nothing can stop us now. Come baby, turn around. Floating so high above the ground. Floating so high. Turn around. Together, nothing can stop us now. Turn around. Ooh baby, we're so high now. Oh. Let our worries end up saying goodbye now. Oh, hey. Our home is the sky now. Oh, yeah. Said we're never coming down, down. Oh. Turn around. Floating so high above the ground. Above the ground. Floating so high. Turn around. Together, nothing can stop us now. Baby, nothing can stop us now. Baby, turn around. Floating so high above the ground. Oh. Floating so high. Turn around. Together, nothing can stop us now. Turn around. Turn around. Turn around. Nothing can stop us now. 'Cause you're a sky, 'cause you're a sky full of stars. I'm going to give you my heart. 'Cause you're a sky, 'cause you're a sky full of stars. 'Cause you light up the path. I don't care, go on and tear me apart. I don't care if you do. Ooh. 'Cause in a sky, 'cause in a sky full of stars, I think I saw you. 'Cause you're a sky, 'cause you're a sky full of- Okay, folks, we're going to start. Great. Welcome back, everybody. We will now start the last part of today's program. Our next presenter is Julie Barker-Merz, who is the Head of BMO InvestorLine. Thank you. Thank you, Sharon, and good afternoon, everyone. Thanks for coming back from break despite the snowstorm. I'm here to talk to you a little bit about my business. I'd like to start by providing you with a brief overview of BMO InvestorLine. We have an award-winning online investing service that provides clients with two ways to invest online. A top-ranked self-directed service that provides tools to help investors make independent decisions on how to invest, and a Canadian first adviceDirect. adviceDirect is an alternative investment tool that delivers personalized, values-based, full-service investment advice online. adviceDirect is a tool that helps investors choose what to invest in and when, while maintaining full control over their investment decisions. I hope you all had a chance to check out our demo earlier this morning. If you didn't, and for those of you online, you can go to BMO InvestorLine and click on a demo to learn more. For those of you who got sold during the demo, I can open up your account at the end of the day, so stick around. Both online platforms are offered in English, French, traditional, and simplified Chinese, all straight through to our trading engine. We also mentioned four channels on this slide, and by this we mean the call center, desktop computer, mobile, and tablet. This past year, we expanded our digital access to include both mobile and tablet applications in the self-directed service, offering a best-in-class user experience. We did this because Canadians are asking for it. There are 7.8 million tablet users in Canada alone, and that's 37% over the year before. 43% of Canadians expect to be conducting their banking using mobile devices in the near future. We need to keep pace. This pace of innovation and delivery has earned us third place in market share with $43 billion in assets under administration. Assets have grown at a compound rate of 13% over the past five years. We outrank our competitors in average account size, and we continue to capture market share year-over-year. We know it's important to get the basics right in this business. Tools, research, simple and easy-to-access trade execution, while innovating in areas such as advice-led services like adviceDirect, and digital transformation such as our recently launched and already much talked about integrated banking and online investing app. Of course, our active trader platform. Each of these are examples of offerings that help clients make better financial decisions all in one place. As one client recently shared in the App Store following the launch of our recent app, and I quote, "Wow. This is a fantastic app for my banking and investing in one spot. Easy to use and very intuitive. Thank you for making my life easier, BMO." That's exactly what we're going for. It's not just our customers telling us we're getting it right. Our client experience has translated into solid financial performance despite market volatility and competitive pricing pressures. When it comes to market volatility, it's worth noting that this business is impacted by interest rates. Spread revenue on deposits and margin loans has declined over the past five years, impacting our five-year CAGR on both revenue and net income. Due to pricing pressures, trading commissions also decreased in the mid-20s price range down to under $10 a trade. This has affected the entire industry. Despite these headwinds, we continue to have strong growth in new accounts and in assets under administration. We're all ahead of industry averages across all measures. Trading volumes are a great example of this. Industry trade volumes have declined 2% between September 2009 and September 2014. Whereas at InvestorLine, we saw a 5% growth rate. Trading volumes reached an all-time high in 2014, with a 17% year-over-year increase due to good growth in our client base and strong client engagement in our platforms and through our channels. Further proof of the leading-edge online brokerage capabilities that we offer. I've already talked about how we're growing our market share. This is one proof point that demonstrates how consumers feel about us as they continue to bring over accounts and assets. Equally important is how we compete in our sales and service rankings, where we have won top honors at the Morningstar Canadian Investment Awards, and top firm for online discount brokerage services in Canada by Surviscor in 2014, just to name a couple of what you see on the slide. These rankings are really important to us. They get broad attention in the marketplace. In a business where PR, advertising, and the blogosphere go a really long way in telling our story. It secures our existing client base, our price point, and invites prospects to consider switching firms, bringing over their business, and giving us a shot. Our success in the online brokerage is a reflection of our strategic discipline, our deep commitment to staying in tune with our clients, our pace of innovation, and our strength in execution. adviceDirect is a great example of this strategic discipline. Two years into its life cycle, adviceDirect continues to exceed client expectations and fill a space in the market unmatched by our competitors. We continue to define the category. Both account and asset growth have been consistent since inception, and client feedback has been very positive. This differentiated offer has also brought in new BMO clients to P&C. Clients are opening up adviceDirect accounts, and they are bringing their banking with them. It has been a great acquisition vehicle, not only for InvestorLine, but for BMO Financial Group as well. Now I would like to take a moment to dive deeper into our strategic priorities. As my colleagues before me clearly articulated, we think about our business along three key planks: client experience, productivity, and future growth. While we measure our success against our online brokerage competitors, we know that it is not always the case for clients. In the online space, we compete with the Googles and the Amazons of the world. This leads us to think differently about our business and innovate to keep pace with digital change. The launch of our recent iPad app is a great example of how we execute and how we think about this space. We took our time to listen to our clients to get it right, leading to a best-in-class app that Ernie talked about this morning that our clients love and continue to talk about. Understanding what our clients want is also about understanding who they are today, tomorrow, and into the future. We are focused on getting it right with women and young investors to name a couple of growing segments. We are focused on key segments that we believe will be the new face of online investing in the years to come. One example of this is our end-to-end Chinese website. It has been very successful in the Chinese community and attracted new clients to BMO as a result. We have on average 30,000 hits to our Chinese pages every month, and this is growing month-over-month. We also recognize that we cannot drive acquisitions through the digital space alone. We have clients walking through our branch doors every day, and this is an important opportunity to better leverage the sales force, not just in helping fulfillment and finding client forms, but also in acquisition. In fact, we have been doing it the hard way up until now, sourcing our clients from the street. We know that our penetration rate in our own BMO client base is low relative to our peers. We've built an award-winning business with clients who have no other affinity to BMO, and we've satisfied those clients. We have a compelling opportunity to better tap into loyal BMO clients, and we're going to do just that. We are working closely with our P&C partners to build better sales tools, training, and support to foster expansion and growth through the branch channel, and Ernie made mention of that already this morning. The integrated iPad app I mentioned earlier is all part of bridging the banking and the investing divide. As we grow, we're also working through scalability of the business. This includes spending time on our processes and ensuring we simplify and automate where we can, both on the front end and the back end. This will improve productivity and the client experience. For future growth, we are focused on driving P&C client penetration and offering our clients a full suite of digital investing solutions that will simplify things for employees and clients alike. Of course, we haven't forgotten about our core client base, our active traders. For those clients, we've recently launched a state-of-the-art active trader platform to offer them tools to enable them to trade in a more robust way. Feedback again has confirmed that we got it right. As Canadians become more savvy in the online space, InvestorLine has a unique opportunity to shape the online investing space and open it up to new users. With both self-directed and adviceDirect in our arsenal, as well as the active trader platform and our multi-channel strategy, we're well-positioned to continue to capture market share and meet the needs of all online investors in this digital space. As I close off my presentation, I would like to emphasize three key messages. First, we are the leading online brokerage business with an innovative offering and an award-winning platform. Second, we have a deep-rooted commitment to providing an exceptional client experience. Third, we are focused on increasing cross-sell opportunities through strong partnerships across the bank to continue to capture market share, onboard new clients, and increase assets. We have a strong record, and we're well-positioned to continue delivering on a world-class offering. Now I'd like to invite Peter McCarthy up to talk about the investment business. Thank you. Good afternoon. Actually, I'm going to talk about the insurance business. I'm very pleased to be here to talk to you about BMO's insurance businesses and how we complement what happens at the bank in our wealth divisions and how we help serve our customers across the bank. BMO Insurance is a growing and diversified business. As you can see here, we've had very strong net premium growth and a CAGR of 15% growth, as well as strong asset growth over the last five years. With BMO's focus, which you've heard about today, on financial planning both in wealth and in banking, insurance and insurance savings products form an integral part of any financial plan and therefore a strong complement to our BMO products and services. There are three parts to the business. We have a life insurance business that was acquired from AIG in 2009. This business focuses on traditional life insurance and accident health products and savings and retirement products. There are two channels: independent advisors, which includes Nesbitt Burns, and a direct-to-consumer channel. This has been a high-growth business. We've had 16% revenue CAGR over the last five years. The second part of the business is the creditor insurance business. This insures loans, credit cards, mortgages, and small commercial borrowers of the bank. It is a profitable, stable, and low-cost business. We also have a reinsurance business that does international property and casualty reinsurance. It is a small but growing part of the business. As a reminder, we are not in the property and casualty business in Canada. We've had, as you can see here, strong financial performance, very steady revenue growth with a five-year CAGR of 8%, driven, as I said, primarily by the retail life insurance business, which has had very steady growth in net premiums. Our net income growth has been a strong 9% CAGR. We have a very solid efficiency ratio and operating leverage. Like other Canadian life insurance companies with long-term liabilities, our results are impacted by changes in long-term interest rates. When rates eventually rise we will see a benefit to our revenue. Actually, I should add, Gilles and I were chatting about this earlier, that over the last five years, almost six years actually since I've joined the bank, we've moved our exposure or our sensitivity to interest rate movements down quite a lot, over 50%. Today, a 100 basis point movement in long-term interest rates has a CAD 63 million after-tax impact on our earnings in the insurance company. That's down over 50% from where it was six years ago. Though watching rates the last week and a half, I wish it was down over 75%, but it's not. The life insurance business in Canada, as you know, is broad and deep. In total size, the life business in Canada is about half the size of the five big Canadian banks combined. BMO Insurance is obviously we're a midsize player in this market, so we strategically choose very carefully where we can compete effectively with the three large domestic players. In the insurance business, about 50% of the life insurance sales are from managing general agents or MGAs. Think of them as insurance dealers. In our life insurance business, we have the same access to the managing general agent network, the IIROC firms, and the MFDA firms as the Big Three. We have contracts with over 24,000 independent brokers. We have strong and long-term relationships with our distribution groups and have leveraged our strong BMO brand for success. In addition to that, we have privileged access to BMO Nesbitt Burns Estate and Investment Advisors. This is a key area of growth for BMO Insurance, and we're benefiting from BMO Nesbitt Burns and BMO's strong focus on financial planning, which of course, adequate life insurance retirement savings are an integral part. There are approximately 1,300 investment advisors at Nesbitt Burns. Along with BMO's brand strength, we're able to leverage investment, administrative expertise, and infrastructure at the bank to gain instant scale in many of our markets. For example, and I am particularly proud of this example actually, we launched seg funds in December 2013, as some of you know. When we did that, we leveraged BMO GAM to provide us the underlying investments, BMO GAM's wholesalers to wholesale the product in conjunction with our life insurance wholesalers. Our mutual fund group at the bank does the administration of the funds. BMO Capital Markets provides risk management and hedging expertise. So our product had all the advantages of scale with our big three competitors on the launch date. In the markets we want to compete in, we are a strong player. For example, in the MGA and what we refer to as the national accounts channel or the IIROC channel, we hold down the number five or six market share spot for universal life and term insurance. We are a top two player in the payout annuity business in Canada. I would add to remember that a life insurance policy is effectively a long-term promise to pay a claim. Financial strength and brand promise are both very important when advisors, consumers consider paying someone to keep such a long-term promise that our products offer. So in those cases, certainly our brand promise is very important. In addition, we have a strong to leading position in the direct-to-consumer insurance business with a state-of-the-art marketing database with a growing focus on online marketing to meet the demands of consumers researching and buying their insurance products online. You may have seen a demo of our website outside this morning with the screens next to the nice adviceDirect application. Our creditor insurance business is profitable and very complementary to the efforts of personal and commercial bankers selling and issuing loans. There is a continued focus on financial planning and P&C as well, and our products are simple to purchase, easy to understand, protect our consumers against death, critical illness, disability, and job loss. We have the broadest portfolio of creditor products amongst the Canadian banks. Our goal within P&C is to create a culture of insured loans using our dedicated sales support team to work with and train and support our branch staff. We have invested heavily over the last three years in systems to actually to broaden our portfolio, enhance the customer and the employee experience in the branches, and make it easier to do business. Our reinsurance business is a traditional international reinsurer that focus on very diversified risks, has very strong underwriting discipline, and helps us diversify our insurance businesses. Focus on a few of our strategic priorities that will drive future growth. The first is continuous review and adjustment to our advisor and direct consumer product lineups to adapt to changing market conditions and consumer and advisor trends. It is really important to be nimble and innovative in this space. So far in fiscal 2015, we have repriced our structured settlement annuities, our single premium immediate annuities, one of our universal life products, and launched a new direct-to-consumer product. We expect to continue to adjust our product suite to take advantage of opportunities as we see them. We are always assessing distribution methods and recently improved or upgraded our features on our website, as I mentioned, and launched a new product called insureNOW. This is a combination product of life, critical illness, and disability insurance that can be purchased online. So no blood test, no visit from a nurse, no full paper application. This is actually quite innovative. They only have to answer some questions, of course, and then they can do an instant purchase. It's met with very strong early success. It's only been in market actually just about three months now. We've had strong early success, and there's clearly a propensity for clients to search and buy insurance products online that we're trying to take advantage of. We continue to invest in systems to improve ease of purchase, enhancing the customer experience, and shorten turnaround times. Collaboration across BMO entities will continue to be important to our insurance company and the bank. I've already mentioned our segregated fund product as an example of the collaboration, but there are many other examples I could point to. We have leveraged BMO Capital Markets to create what is now our best-selling investment product inside our universal life product. We've added a number of BMO ETFs as investment options in our universal life product with success. Another example that I like, which I refer to personally as the Bank of the MGA, so don't write that down. That's what I call it. It's not an official name. What that is we use our insurance wholesalers who have great distribution relationships with life insurance brokers across the country to work with our investment lending specialists at P&C, make introductions, have the investment lending specialists help the life insurance brokers make referrals to give mortgages, lines of credits, and other loans for their customers. We piloted that in 2013 with two sort of small MGAs, one in St. John's and one in Calgary. Then we branched out in 2014 because the pilot worked pretty well and have started adding MGAs one at a time across the country. In the last three months, last year, the fiscal year, we referred CAD 12 million in loans per month to P&C. We think this is going to continue to grow and become a significant referral source for P&C, and builds a fence around our brokers and keeps them loyal to BMO. That's the advantage for us at the insurance company. As I look ahead to the future for BMO Insurance, I see us continuing our positive momentum to grow each of our insurance businesses. With life insurance, the retail life business continuing to be the most important part of that growth. We will use our broad external and internal distribution points available to us as being part of BMO, and we'll leverage that broad expertise of BMO to drive future growth while enhancing the financial planning experience of BMO customers by protecting their assets and providing peace of mind. My team and I are very excited to continue to leverage the best of BMO to grow and expand our insurance business and better serve our customers. Thank you. Now I'm going to turn it over to Myra Cridland, who's going to talk about the private bank. All right. Thank you, Peter, and good afternoon, everyone. Thank you for hanging in to being the last presentation. I am very happy to be here and share with you more about the BMO Private Bank. It is really a very exciting business. We have talented professionals and exceptional products and services. The BMO Private Bank is an established business. In Canada, we have demonstrated strong organic growth and are well-positioned to continue our momentum. We aspire to stay on top and to lead in market share, client loyalty and revenue growth. I am happy to walk through our plans with you this afternoon. In the BMO Private Bank, we focus our efforts on serving high net worth and ultra-high net worth clients and their families. We define high net worth clients as those who have investable assets over CAD 1 million and ultra-high net worth at CAD 25 million and above. We have deep personal relationships with our clients, which often span generations. We operate in all major cities across Canada, as well as we have operations in Hong Kong and in Singapore. As you have heard throughout the day, wealth planning is an essential part of our business. Ensuring our clients have customized wealth plans is core to our client experience, and we consider all aspects of their lives as we build their plans. We have a full range of products and services targeted to our specific client needs, and that would include wealth planning, banking, investments, estates and trusts, as well as philanthropy. We are uniquely positioned in that we have strong internal collaborative environment within BMO. Many of our target clients have business with other parts of the bank. For example, in the retail bank or the commercial bank or corporate finance or BMO Capital Markets. These are important referral sources for us, and we have been very successful in partnering and expanding existing BMO relationships. For example, in personal banking, clients are often introduced to the BMO Private Bank through their banking relationship, and we have had a very successful referral program over the past five years. When clients have transitioned from the personal bank into the BMO Private Bank, what we see is increased loyalty scores with those clients, as well as we are able to double the revenue of those clients within three years. This year, we are ramping up our referrals with P&C, and we are targeting 2,000 personal referrals from the retail part of the bank, and this is double from what we did last year. Last year, we also added 40 client-facing individuals to support our growth, and we can see the major improvement in our lending process. We are seeing early benefits from this process improvement. We saw a 15% increased capacity with our private bankers. We are freeing up that time to help build relationships and grow share of wallet with our clients. Our Asia business was recently acquired. It is a relatively small business that is aligned to our operations. We see Asia as a great source of future revenue growth, and plans are underway to expand our products and services, as well as attract additional experienced relationship managers into our business. We have generated strong financial results. Over the past five years, revenue and funds managed and administered in Canada have grown at a CAGR of 12% and 13% respectively. Our efficiency ratio has steadily improved and is down 10% over the past five years. We have achieved this primarily through team structuring, centralization of some of our functions, as well as driving our top-line revenue. This has resulted in earnings growth at a 20% CAGR. Proof that our model is working, when we look at our market share position relative to the big six banks based on latest data, we rank number one in our investment management business. We are number two in banking, and we are number one in growth of revenue per FTE. As a relationship business, these strong results are dependent, of course, on having great people. We are really a people business. We have committed to great employee experience. We have very high employee engagement scores, and that has been successful in attracting and retaining top talent within our business, as well as translating to very strong client retention. Our Canadian business, similar to many of our other wealth businesses, is award-winning. We have been named the best private bank by two independent sources for the past four years, and this year we also received recognition as the best new private bank in Hong Kong and Singapore. This external recognition helps our brand and drives new account acquisition. The success is a part of our differentiated business model. We believe we are differentiated because we have a unique team-based approach, and our compensation structure is aligned to reward this team behavior. In 2012, we conducted extensive client research, and we learned what do clients really value with their private bank. We better aligned our teams to ensure our clients experience the full breadth of our capabilities. We implemented extensive client relationship management training, new tools, and processes, all to better serve the client and adapt to their changing needs. The implementation of our new team structure is behind us, and now we are focused on the consistent execution of this new model across the country. We go to the client, not the other way around. The client has a dedicated relationship manager who is part of a team of five to six wealth professionals, all of whom get to know the client's needs and aspirations and who bring a specific area of expertise to the client. We know that by offering a full-service solution for our clients and earning their trust, that they reward us with additional business as well as they advocate to their friends and family. Again, strong collaboration within BMO is an important part of our success and key to our growth. Many of our offices are co-located with our partners in commercial banking or in corporate finance, for example, which enables us an easier identification for potential clients. I will talk about collaboration throughout my remarks. We are deliberate about it at BMO. Teams from across BMO are incented to refer clients to the most appropriate place, and we work together to capture all of our clients' business. If I could just share a quick story to demonstrate a recent success we had. We had an ultra-high-net-worth family in Canada present a new opportunity to us. It was a very large, very complex deal, and the client specifically requested one proposal sheet from the bank. We were the only bank on the street that was able to present, come to the client as one bank with one proposal sheet, and as a result, we won the business. Let me just turn now to talk a little bit about our three strategic priorities. First, as we focus on enhancing our client experience, we continue to add salespeople in high-growth markets. We also have a dedicated wealth planner in each of our client teams now. We know that one of the ways to broaden our relationships and to make gains in loyalty is by providing quality wealth plans. We are also strengthening our technology platform and our digital capabilities. For example, we are building a new online client portal, and we are also upgrading our investment management systems to ensure that we are well-equipped to manage the growth that we are experiencing. We are also very focused on simplifying our processes to make it easier for our clients to deal with us as well as reduce costs. As I mentioned earlier, we last year implemented our new lending process, and this year we are targeting our new client onboarding process. Second, as we improve our productivity, we are using client analytics to help us. For example, we have implemented tools for client relationship management that puts the information all in one place for our relationship managers. They provide a view of our clients and a clear picture of the pipeline of their opportunities so that our teams can focus on the high-value activities. As a result of these tools and other analytics, we have seen 4% growth this year, sorry, excuse me, last year in clients having multi-products with us. On average, our revenue per household has grown by 8% as a result of using these specific analytical tools. We are also transitioning clients whose needs we have better met in different channels, that we can dedicate our expertise specifically to the high-net-worth and ultra-high-net-worth segment. Third, as we invest for future growth, we know our clients go through different life stages. As a result, we are developing innovative products and services to meet their changing needs. For example, in this coming month in February, we are launching a new product called BMO Continuity, and it is targeted to clients over the age of 70. It provides a full suite of investment and trust services. It ensures the continuity of their financial affairs in the event of mental or physical illness and ultimately transitions to estate management. We are going to be the first to market with this kind of product, and we feel that with Canada's aging demographic, we are confident that this is addressing a very important need for our client base. Another example of investing in growth is our commitment to continue to collaborate across BMO Financial Group. Our P&C partners have referred more than 11,000 relationships to the BMO Private Bank. In 2014, CAD 2.4 billion in assets were referred to the BMO Private Bank from all of our BMO partners, which is up 42% from last year, and the BMO Private Bank in turn referred CAD 2.1 billion to our partners. Also, as Charyl mentioned, we have a new opportunity, and we are testing to provide private banking to our high-net-worth BMO Nesbitt Burns clients as we go into 2015, which we are very excited about. I would like to just wrap up with a few key points. Our go-to-market model has been very successful, and it sets us apart from our competitors, as evidenced by our market share gains as well as by our clients and employee retention. We have very strong internal partnerships and collaboration, and this has been very key. It has been a key driver of our success, and we expect to continue with this strong momentum. We have a solid track record of results and a clear game plan for how we will delight our clients and, as a result, grow our business. I'm going to leave you with a client testimonial that'll help bring our story to life. This story supports Steve Murphy's earlier comments this morning regarding our focus on women entrepreneurs and how we can help. Please watch. My name is Echo. When my son and I first came to Canada, it was an overwhelming experience, to say the least. I feel very lucky to have met Mabel and her team. We understand the challenges of moving to a new country. Our job is to take the financial difficulty out of that transition so our clients can focus on other things. When I felt settled, I told Mabel about my business idea to create digital storybooks for kids. She had a great idea but didn't know where to start. Mabel and her team helped to put everything in motion. She brought in experts to create the business, to organize my investments. Most of all, she gave me confidence. We are in the business of helping clients achieve their goals, even when those goals are constantly changing. Mabel has been there with advice and encouragement all along. She's much more than a financial advisor. She's a friend. With that, I'll turn it back to Gilles. Join me up for the question period? Yep. Okay. Okay, where's the first question? Just regarding the ETF business, obviously a real source of growth for you. To what extent are you worried about the ETF product cannibalizing your mutual fund product? Can you give us a flavor of the different profitability profiles of each? Just as a third part, how much do you direct some profitability to generate for the BMO Capital Markets business, and is that through service and offset? Thank you. Just before, Rajiv Silgardo starts. This is going back, I guess, five years ago, when there were the changes to the income trust business. We had, obviously, a mutual fund complex that did a lot of income trust, and we started looking around at what it is that what's next? That's when we started realizing how fast this ETF business was growing, and that there was a strong intellectual argument for ETFs. When we were sitting around the table, this was one of the first questions that somebody popped is like: "What's that going to do to our mutual fund business?" As a group, I think we came to the conclusion that we're either going to cannibalize ourselves or somebody else is going to do it. We decided to kind of cannibalize ourselves. But Rajiv Silgardo can tell you that's not what's happened. Thank you, Gilles. Let me try to address all three questions for you. In terms of the cannibalization, as Gilles said, we did think about this at the outset. Again, the question for us was where is the market going to, and what do we need to do to be there alongside of it? If you look at institutional investing since the 1970s, what you will see with most pension funds is that they always have a blend of active and passive management in their portfolios. It may be a particular asset class or a particular investment strategy that is managed more passively, and others that are managed more actively. So where you have more opportunity to create alpha, you manage those assets actively, otherwise you put them in a passive situation. That is what we are trying to do with our ETF business. We want to have the ability to offer both passive and active strategies into the market. What is great about having ETFs and mutual funds is they are both just delivery mechanisms. Underlying each of these delivery mechanisms is an investment strategy, whether it is an S&P 500 index fund or an actively managed U.S. equity portfolio. We can choose to deliver either of them in either form. We have chosen to do it in ETF form because, as we were saying, with advances in technology the ETF form is easy to bring to market. There are lower distribution costs. It is very scalable. So the same ETF can be bought, for example, by institutional investors, by retail investors. Unlike other investment products, they are not restricted to a particular segment of the market. So this is why we have both ETFs and mutual funds. In terms of cannibalization, we showed you some numbers during our presentations, and you saw that when you look at the growth of our funds business alongside of the growth of our ETFs business, that we have actually been the number one bank in terms of growing our share of mutual funds in Canada as we have built and grown an ETF business. So I am sure there has been some cannibalization, but it is hard to see in the numbers itself how much it is. In terms of the profitability, no question that the top-line revenue numbers are different for mutual funds and ETFs, but so is the cost of manufacturing and delivering each of those types of product into the market. So in terms of the percentage of revenue that is left over after you account for all of the costs is actually the same, if not better for ETFs. Okay. And so the third question was? Just what kind of contribution does it generate indirectly for the capital markets business? Yes. In terms of the capital markets business, they would trade our ETFs, and they would help us trade with some of the rebalancing that we do for the ETFs, just as they do for our mutual funds and other investment products. I don't have a sense of dollars and cents in terms of- But what Rajiv tells us it's too much. Yes. That's actually right. Yeah. Yeah. Hi, it's Doug Young from Desjardins Capital Markets. The first question, obviously in the retail mutual fund side in Canada, a lot of regulatory change coming down the pipe with CRM. Just curious, your thoughts on how that impacts your business. Is it a positive or is it a negative? If you want to take that. Sure. With CRM, as you know, there are different phases, and CRM2 is coming into the marketplace in the next 12 months or so. What CRM2 means is that there's got to be more disclosure by advisors, whether they're within the brokerage channel or even in the private banking channels, about the fees that they earn from their client assets. What that means is that these advisors will now have to prove to their clients that they have a value proposition that is more than the fees that the client is paying them. Essentially, what CRM2 means is that the advisor community has to get ready for it, one, to be able to disclose the fees and two, to be able to articulate a strong value proposition against it. In terms of our own businesses, I would say that we're well-positioned for this kind of initiative from an asset management point of view. I suspect my colleagues on the distribution side would say that they're strongly positioned when it comes to being able to articulate a strong value proposition as well. From our own perspective, we feel that we'll be in a very good place when CRM2 rolls in. I think as Cheryl mentioned earlier, that we've transitioned the Nesbitt Burns book a lot to the fee business where all the fees are very transparent, et cetera. The mutual fund book is obviously quite a bit smaller. Over time, it has gotten smaller. I mean, I can speak with Cheryl, but we do not see that as being an issue at Nesbitt Burns. Yeah, I guess I am more specifically looking at your ability to sell through the branch network, and are you impacted as much through that distribution network as the independent advisor community? In the branch, I do not think that the regulators have made clear exactly where they want to take the embedded fee part of this thing. For now, all we are talking about is the disclosure, and we are very clear on what the disclosure needs to be. There is a separate discussion going on in terms of mutual fund fees, the embedded portion for advice, and what the regulators in Canada want to do about that. We have had the discussion in the U.K. and in Australia and in a couple of other jurisdictions, and they have actually split the fee for advice separate from the fee for asset management purely. We have seen the reaction in those markets or what has gone on in those markets. In Canada, it is still not clear how the regulator wants to proceed. In fact, they are currently engaged in a study of the fees across the industry and fund flows across the industry, and that is just getting underway. I think it is going to be a few months yet. We don't really know yet. We don't really know yet. Peter, sorry, on the insurance side, did you say you're number two in payout? Sorry, I didn't catch that number. Number two in payout annuity business. Is that in Canada? Yes, in Canada. What's your appetite for growth in that? Because it's obviously a very different risk set there. Well, it's a very good question. I mean, there's three elements to the annuity business. One is single premium immediate annuities, which are buyouts of an RSP. Someone converts their RSP to a retirement annuity. That market is highly commoditized, and our market share is lower there. It's very high in our other two markets, which are structured settlement annuities, which are annuities as a result of a car accident, someone is catastrophically injured. There are only four players in that market, so the margins are very good. In fact, there'll soon be three because Standard Life and Manulife are going to become one anytime now when OSFI approves that acquisition. We like that market a lot. Now it's not that large. The total market is CAD 650 million, CAD 750 million a year, so divided by three, let's say. We were number one in that market last year at the end of the third quarter. The other market is terminal funding annuities, and that's the largest one. That is the buyout of defined benefit pension plans. Last year, the market exceeded CAD 1 billion, and the total market for potential buyouts is CAD 1.4 trillion. So there's a lot of run rate there. I would say it also in the insurance business, we sell lots of life insurance, lots of annuity insurance or natural hedges, right? Especially if there's ever a pandemic, there's lots of reasons why they're natural hedges. It's good for investments as well. The annuities tend to be shorter duration than our life business, so it helps lower our interest rate mix and sensitivity, as I mentioned earlier. We have a lot of appetite for that. We think that the appetite for TFAs for buying out annuities and buying out pension plans is going to continue for some time. Our appetite's relatively high, and the margins are good. Thanks. Sumit Malhotra, Scotia Capital. For Silgardo or Rajiv. The acquisition strategy on the asset management side. If we go back over the last seven years, I think there has been three acquisitions that you have made across geographies. I wanted to know, as you look at the future of this business outside of Canada going forward, is there a specific product or geographic capabilities you are looking to add? Because I think each of these have been spread out over time and obviously in different areas. What is it that you are looking to add to this business as you continue to grow by acquisition? Yeah. Thank you. As I mentioned earlier, there are two businesses that we want to take global. One is the asset management business, and the other is the private banking business. And with the acquisition of F&C, what we got there was really a European platform. We also kind of lucked out because with that platform, F&C's business was exclusively in Europe, and our asset management business was exclusively North America. So what we have started doing, and Barry talked about this a little bit, is that we now start marketing their products in North America, and they are marketing our products in Europe. As far as for the certainly for the time being, job one is obviously to have the full integration of F&C. And so there is really nothing in that space over the horizon. In terms of capabilities, we have got really broad sweeps. So we do not need more capabilities. One of the things we did acquire with F&C was not just a new geography, but also some capabilities. And if there is anything left out there, it would be pretty small. Over time, we may be looking at other geographies. Asia is one where we already have a kind of a light footprint, and it would be nice to be able to bulk up. The other business in private banking, we have scale in North America, in both Canada and the U.S. We have, as Myra mentioned, a small footprint in Asia, which we would like to be able to bulk up over time. But everybody realizes the Asian market is growing very rapidly. We got lucky again with this one, and so we are able to buy. Well, whether we will be able to scale in the next little while could be difficult. But one of the obvious white spots is Europe for private banking. And we are looking, and I think over time, we will be able to get a bit of a platform, but there is really nothing imminent. So we are trying to scale both of these businesses globally. It's not so much capabilities that we need, it's more in the way of geographies. I know we touched more in detail on the U.S. on the 2012 trip to Chicago. I am sure we will cover that again at a different event. As you think about your U.S. footprint, is the wealth management growth in that region, in your view, more likely to be organic on the back of the BMO Harris brand, or is there some scale you need to add via an acquisition there as well, in your view? Yeah. I do not think in the U.S., we do not need more scale. The businesses that we have, which are largely the Midwest, have scale. I do think as we expand in the U.S., we are going to have to go in areas where we do not have the benefit of P&C, because we can expand faster than P&C. Having said that, Myra's talked about this, there's no question that expanding wealth management with personal commercial is a much, much easier job than going out there alone. I think that one of the advantages that we bring to any future acquisition, any P&C acquisition in the U.S., is that we know how to extract high net worth and ultra-high net worth revenues from a P&C base. We have very deep wealth management private banking capabilities in the U.S. that not many of our competitors have. We see that going forward as a real advantage in a future acquisition. With respect to the asset management business, we would like to be able to bulk up. We know that we are in the top 50 globally. The U.S. is a large business, and there are a lot of things in play, and I think we will be able to kind of bulk up in the U.S. We would like to be larger in the U.S. Hi, thank you. It's Darko again from RBC. Just a question, Gilles. Greater than 2% operating leverage is one of your goals. It seems aggressive. Which business leader up there is going to shoulder most of that difficult lifting? Yeah. Inform it. Yeah. No. We have pretty aggressive plans for all the businesses. In the last couple of years, and I've said that on a number of occasions, we've made some quite large investments in our platform, in spite of the fact that we've had good financial results. Technology, and certainly we've added a lot of distribution. Rajiv mentioned it, Myra mentioned it. I think that all of these businesses should be able to operate with a 2% operating leverage. Because I think going forward, although we see the opportunities, we're going to be able to get some benefit from the investments that we've made. I think that in the last couple of years, the leverage hasn't been as much as we want it to, and partly it's because we could see the opportunities. We're focused really more on net income and growth and so on. I think going forward, certainly for the next little while, we are focused very much on operating leverage. Which means that we may not be investing as much as we have in the last three years and just take a bit of a breather and start reaping some of the benefits. That's kind of the mode we're in. There is a business reason to take a bit of a pause too, because you need to be able to absorb all these people. It takes a little while for them to ramp up, et cetera. You just don't want to have a lot of people, certainly on the distribution, new to the business, going out there at the same time. So we've made these investments in the last couple of years, and we're kind of slowly letting them ramp up. That's why we feel pretty confident that we're going to be able to get that 2% across all the businesses. If I can add, not that Rajiv and I are going to shoulder all this responsibility, but the asset management business is very scalable. As Gilles mentioned, we put a lot of investment into it the last several years, acquisition obviously, doubling up our sales force. But as Gilles mentioned, our manufacturing plant is really essentially set. We have a lot of capabilities around the world and are performing well. So really the name of the game now is with that expanded distribution resources we have in each of our regions, just bring the assets on the platform. That's obviously very accretive because the fact matters as the assets come on the platform, we don't have to add costs. So that's something that we're working towards very hard over the next three to five years. You may remember as part of my presentation, I spoke to the work that we're doing to free up the time of our investment advisors and the focus that we have on really serving the right clients in the full-service advisory channel. As we do that, we can have our advisors spending more time with clients and growing their practices, but we don't actually increase our operating costs in any significant way. So that's where we will get our leverage. Everybody a little tired? Okay, well it looks like that's it for the questions. You guys got off easy. Okay. Just as a kind of closing note, I just hope that all of you now have a better understanding of the strength of our business performance and the leadership teams and why we're confident that we're going to be able to continue to deliver strong results. We've strategically invested in the business and we've also delivered strong financial performance. You've heard, and I just mentioned a few seconds ago, we've done a lot of the heavy lifting and over the next one to three years, we expect to see the benefits of our investments. Strong internal partnerships have contributed to our success, and we expect to maintain that momentum. We'll continue to look for acquisition opportunities in high-potential markets. Since 2009, we have increased our contribution to BMO's revenues from 17% to 22%, and we can see that wealth management increasing by another 5% in the next five years. We in wealth management have a big 30 we are striving for here. By growing our distribution, collaborating with our partners, delivering innovative products and services, expanding our global footprint, we are poised to build on our growth trajectory. Thank you for your time today, and I will now turn things over to Frank Techar. Thanks, Gilles. Home stretch. I have only got 20 or 30 more slides to go through for everyone. They just seem long. Look, I hope you have an appreciation for these two businesses and the power that we think are embedded in the businesses and the strength of the leaders and our confidence in moving them forward. It has been a good day for us. As you can imagine, preparing for something like this, you get the opportunity to examine some of your long-held beliefs about your own businesses. It has been good for our teams to do that. I think in reflecting over the last few days, everybody would come to the same conclusion. Everyone has come to the same conclusion that we are more excited about where we are and what we have accomplished over the last few years than maybe even we thought before we started preparing for this. I hope you have an appreciation for that, spending a few hours with us. I want to say thanks for that. Thank you for spending some time. I do just have a couple of comments, just key takeaways for each one of the businesses. They've been said before, but just to wrap up. In Canadian Personal and Commercial Banking, we do have a strong foundation, and we have renewed the business platform in many of the areas of the business. We have multi-channel points of contact, and we do have some unique strategic partnerships that are really important for the business. We've focused on superior customer loyalty and growth. We're accelerating our digital channel investment and program. We're building all of these things on the back of a very high-performing workforce at this point. We do have strong operating discipline in the business. As Cam said, over the medium term, we expect to continue delivering above-market organic growth, and we hope to drive in excess of 7% earnings growth and continuing to improve our efficiency into the mid-40s. In Wealth Management, as you've just heard, we do have a strong track record of proven financial performance. Maybe one thing to reinforce for the wealth business is it's a big business for us. Over $800 million in earnings and growing rapidly. This is a big business for the BMO Financial Group. The growth has been outstanding across all of our businesses over the last few years. We've strategically invested in the business. We've grown our distribution. Our products are outstanding. We now have an expanding global footprint. As Gilles said, we're well-positioned to continue that growth over the next few years. Earnings in the range of 15%-20% and that operating leverage target of 2% we believe are achievable. As I said this morning, we are a different bank today. Clearly, we're not just a different bank, but we're a much stronger competitor. We're a much stronger competitor in these businesses, and we think we have the results and the plans to prove it. I'll leave you with that thought. Thank you again for joining us. I really do appreciate it. Until next time, we're adjourned. Thanks.

Data Source: Quartr Last updated: Jan 29, 2015

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