BMO: Wealth management and insurance end 2021 on positive note

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By Aurélia Morvan | Dec. 14, 2021, 10:30 a.m.

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BMO Financial Group reported net income of $2.2 billion for the fourth quarter of 2021, which ran from August 1 to October 31. Net income thus rose by 36.3 per cent or $575 million from Q4 2020.

For the full year 2021, the financial institution reported net income of $7.8 billion, up from $5.1 billion in 2020. The increase of 52.1 per cent or $2.7 billion reflects “a recovery from the significant adverse impacts of the COVID-19 pandemic on the global economy, our customers and our 2020 financial results,” BMO says.

Four of BMO’s five operating groups advanced in 2021, including BMO Wealth Management.

This group reported net income of $1.5 billion in 2021, versus $1.1 billion in 2020. This growth of 34.5 per cent or $378 million is “driven by higher revenue, partially offset by an increase in expenses.”

In the fourth quarter of 2021 alone, net income in this group was $369 million. It increased by 15.3 per cent or $49 million compared with Q4 2020.

Traditional Wealth

BMO Wealth Management is made up of two businesses, Insurance and Traditional Wealth, both of which advanced in 2021.

Traditional Wealth passed the $1 billion mark this year. BMO reported net income of $1.2 billion in 2021, up from $893 million in 2020. This equals an increase of 37.5 per cent or $335 million.

For the fourth quarter alone, Traditional Wealth posted net income of $318 million, up 25.7 per cent or $65 million from Q4 2020.

Insurance

For its insurance business, BMO reported net income of $246 million in 2021, up 21.2 per cent or $43 million from $203 million in 2020.

For the fourth quarter alone, Insurance recorded net income of $51 million, down 23.9 per cent or $16 million from Q4 2020.

Revenue

Net of claims, commissions and changes in policy benefit liabilities (CCPB), BMO Wealth Management’s net revenue for both businesses was $5.7 billion in 2021, up from $5 billion in 2020. This represents an increase of 13.1 per cent or $654 million.

For the fourth quarter of 2021 alone, revenue was $1.4 billion, up 9.9 per cent or $129 million from Q4 2020.

BMO Wealth Management’s two sub-groups saw revenue increase in 2021:

Traditional Wealth revenue, net of CCPB, was $5.2 billion in 2021. This growth of 12.7 per cent or $585 million from 2020 is “due to higher noninterest revenue of $503 million resulting from growth in client assets, including the favourable effects of stronger global markets, an increase in online brokerage revenue and the impact of a legal provision in the prior year,” BMO explains. These factors were “partially offset by the impact of the weaker U.S. dollar.”

For the fourth quarter of 2021 alone, revenue was $1.3 billion, up 12.7 per cent or $150 million from Q4 2020.

Insurance revenue, net of CCPB, was $476 million in 2021. This increase of 17 per cent or $69 million versus 2020 is “primarily due to the impact of more favourable market movements in the current year, and business growth,” BMO notes. These factors were “partially offset by lower benefits from changes in investments to improve asset liability management and the unfavourable impact of actuarial assumption changes in the current year.”

For the fourth quarter of 2021 alone, revenue was $106 million, down 16.5 per cent or $21 million from Q4 2020.

CCPB were $1.4 billion in 2021, compared with $1.7 billion in 2020. They decreased primarily due to changes in the fair value of benefit liabilities, partially offset by the impact of increased annuity sales. The changes were largely offset by revenue.