Well Positioned For Growth

(1)

Tony Comper

Chairman & CEO

Scotia Capital

Financials Summit

2002

September 10, 2002

Well Positioned For Growth

• Exiting unprofitable, profit or

low-potential businesses and branches

• Re-deploying capital and resources

to higher-potential businesses

• Shifting its business mix in favor of

high-return businesses

Since 1999, BMO has been:

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S C O T I A C A P I T A L F I N A N C I A L S S U M M I T 2 0 0 2

Moving Up The Canadian Bank Scorecard

SCORECARD

Source: Q3 2002 Canadian bank financial results

Cash ROE & EPS

BMO

Low Tier

Mid Tier

Top Tier

Rank

BMO

Q3 2002

F2001

Specific Provision for

Credit Losses As a Percent

of Average Net Loans and Acceptances

(including Reverse Repos)

Relative Credit Advantage Continues In F2002

0.00% 0.25% 0.50% 0.75% 1.00% 1.25% 1.50% 1.75% 2.00% '90 '91 '92 '93 '94 '95 '96 '97 '98 '99 '00 '01 Q3 Historical Averages: BMO Cdn. Peers 1990 to 2001: 0.41% 0.64%

* Annualized YTD based on Q3 Supplementary Financial Information Packages

(3)

4

Strong Dividend Track Record

$0.53 $0.56

$0.60

$0.66

$0.74

$0.88

$0.94

$1.00

$1.12

$0.82

92

93

94

95

96

97

98

99

00

01 Dividends Declared Per Share

(C$)

Growing P&C Revenue While Staying

Focused On Expense Management

0

200

400

600

800 1000

1200

Q3 '01

Q3 '02

P&C Revenue 6%

P&C Expenses – Stable

(4)

6 S C O T I A C A P I T A L F I N A N C I A L S S U M M I T 2 0 0 2

8.72%

Minimum 8.0%

Tier 1 Capital

60 bps

Annualized

40 - 50 bps

(2)

Provision For Credit Losses

13.9%

Annualized

14 – 15%

Cash ROE

(15.2%)

8 – 12%

Cash EPS Growth

(1)

2002

YTD Actual

2002

Target

Excluding Non-Recurring Items

(2) On April 25, 2002, PCL target for fiscal 2002 was revised to $775 - $825 MM, or in a range about 55 bps. (1) Growth based on fiscal 2001 cash EPS of $2.68 per share.

Affirming Our 2002 Financial Targets

Focused Transnational

Growth Strategy

• Expand in the U.S.

• Invest in core Canadian franchise

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8

Uniquely Positioned On The

Canada-U.S. Landscape

• Transformed Harris from small wholesale bank

to one of top three retail banks in Chicagoland

• Tripled strength of franchise since 1994

• Well-integrated retail, U.S. Midwest

mid-market, and wealth management platforms

• Harris’ well established reputation and brand

name is synonymous with high quality

S C O T I A C A P I T A L F I N A N C I A L S S U M M I T

Optimizing Our Overall Business Mix

P&C 56.8%

PCG 7.7%

IBG

35.5%

Operating Group

Contribution to Net Income

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S C O T I A C A P I T A L F I N A N C I A L S S U M M I T 2 0 0 2S C O T I A C A P I T A L F I N A N C I A L S S U M M I T

Strengthening Our

Canadian Retail Franchise

Year-over-year performance

• Loans and acceptances (owned and

managed) up 9% (after adding back

effect of securitizations)

• Retail and commercial deposits

grew $7 billion or 24%

Determined To Grow

P&C Market Share

Market share improvement

- Q3 2002 vs. Q3 2001

• Retail banking market share

48 basis points to 13.5 %

• Retail operating deposits up

63 basis points to 15.4%

• Residential mortgages

(owned and managed)

34 basis points to 14.8%

Addition of 1,000 new

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12

Closing In On #1 In Small Business Banking

Loan Balances $0 - $5MM

(Canada)

12% 14% 16% 18% 20% 22% 24% 26% 28% 30%

Mar'98 Sep'98 Mar'99 Sept'99 Mar'00 Sep'00 Mar'01 Sep'01 Mar'02

Bank Average

Source: CBA Business Statistics

Largest Technology

Investment In BMO History

• Implementation of Pathway Connect

targeted for completion January 2003

• Technology offers the industry’s best

sales and productivity tools

• New platform enhances our ability to

identify and meet customers’ needs

Short-listed for the

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S C O T I A C A P I T A L F I N A N C I A L S S U M M I T 2 0 0 2S C O T I A C A P I T A L ’ S F I N A N C I A L S S U M M I TS C O T I A C A P I T A L F I N A N C I A L S S U M M I T

Benefiting From Technology

• Optimizer software captures and

shares customer information

• Industry-leading data base and decision

engine offers customized solutions

• Enhanced technology key factor in

sales productivity growth in 2002

Chicagoland Business

and Earnings Momentum

49 20 25 28 38 47

0

10

20

30

40

50 Q1/01

Q2/01

Q3/01

Q4/01

Q1/02

Q2/02

Net Income

Q1/01 Through Q2/02

(Harris Fiscal/Calendar Year)

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16

• 3rd largest metropolitan market in U.S.

– 8 million people

• Most fragmented market in U.S. with

more than 250 banks

• Top three banks combine for 30%

market share of retail deposits

Greater

Chicago

has GDP of

approx. 40% of

Canadian GDP

Illinois

Capitalizing On

Chicagoland Opportunity

Competitive Advantages

Fuel BMO’s U.S. Retail Banking Growth

• Brand image and reputation

• Multi-channel distribution platform

• Customer satisfaction/loyalty

• Low loan-to-deposit ratio

• Unique community banking model

• Wealth management partnership

• BMO cross-border synergies

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S C O T I A C A P I T A L F I N A N C I A L S S U M M I T 2 0 0 2S C O T I A C A P I T A L ’ S F I N A N C I A L S S U M M I TS C O T I A C A P I T A L F I N A N C I A L S S U M M I T

Chicagoland Banking

County Branch

Distribution Network

• Harris has 145 locations across

Chicagoland

• 50 additional attractive sub-markets

identified for branch distribution over

the next five years

• Looking at retail banking expansion

opportunities radiating out from Illinois

Expansion Is Key To U.S.

Retail Growth Strategy

Lake Michigan

Wealth Management

Poised For Market Turnaround

• Ranked 6

th

_{in North America in direct}

investing based on combined number of

Harrisdirect & BMO InvestorLine accounts

• Possess technology, high-end clients and

critical mass required for profitable growth

• Serve serious investors who require

superior products and service

Ranked #1

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20

• Purchased CSFBdirect for US$520 million

• Average assets per account, revenue per trade,

and cost reductions are all ahead of expectations

• Annualized trades per account and account

attrition are in line with peer group averages

• Acquisition is aligned with BMO’s U.S. growth

and expansion strategy

Strategic Acquisition

Integrated Into

Strategically Expanding

In The U.S.

• Acquisitions must be a good strategic and

cultural fit and pass the following hurdles:

• IRR of at least 15%

• Accretive to cash EPS within 2-3 years

• Focused primarily on U.S. expansion

• Retail acquisitions

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22

Continuing Strength

In Corporate Governance

August 2002

• CEO and CFO signed voluntary

certifications of BMO’s third quarter

results under Sarbanes-Oxley Act

• BMO certifications will be filed with

SEC this month as part of 6K filing

• On August 14

th

_{, Harris Bank CEO and}

CFO certified Harris Q2 2002 results

pursuant to the new legislation

May 2002

• BMO announced its intention to

expense stock options

2001

National Award

in Governance

(for Private Sector)

2000

Annual Report

Gold Award

Financial Institutions Category

Overall Award

of Excellence

Excellence for

Corporate Governance

- Sponsored by

The Conference Board of

Canada and Spencer Stuart

- Sponsored by

CICA and Financial Post

S C O T I A C A P I T A L F I N A N C I A L S S U M M I T

Tony Comper

Chairman & CEO

Scotia Capital

Financials Summit

2002

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24

Forward-Looking Statements

Caution Regarding Forward-looking Statements

This financial presentation includes forward-looking statements, which are made pursuant to the ‘safe harbor’ provisions of the United States Private Securities Litigation Reform Act of 1995. These forward-looking statements include, but are not limited to, comments with respect to our objectives, targets, strategies, financial condition, the results of our operations and our businesses, our outlook for our businesses and for the Canadian and U.S. economies, and risk management.

By their very nature, forward-looking statements involve numerous assumptions, inherent risks and uncertainties, both general and specific, and the risk that predictions and other forward-looking statements will not prove to be accurate. We caution readers of this report not to place undue reliance on these forward-looking statements as a number of important factors could cause actual future results to differ materially from the plans, objectives, targets, expectations, estimates and intentions expressed in such forward-looking statements.

The future outcomes that relate to forward-looking statements may be influenced by the following factors: fluctuations in interest rates and currency values; regulatory developments; statutory changes; the effects of competition in the geographic and business areas in which we operate, including continued pricing pressure on loan and deposit products; and changes in political and economic conditions including, among other things, inflation and technological changes. We caution that the foregoing list of important factors is not exhaustive and that when relying on forward-looking statements to make decisions with respect to Bank of Montreal, investors and others should carefully consider the foregoing factors as well as other uncertainties and potential events. The Bank does not undertake to update any forward-looking statement, whether written or oral, that may be made from time to time by or on behalf of the Bank.

Investor Relations Phone: 416-867-6656 Fax: 416-867-3367

Email: [email protected]