What’s Next?

RBC CAPITAL MARKETS CANADIAN ' CEO CONFERENCE

TONY COMPER President and Chief Executive Officer

JANUARY 19 • 05

0 1 I N V E S T O R C O M M U N I T Y P R E S E N T A T I O N – J A N U A R Y 2 0 0 5

FORWARD-LOOKING STATEMENTS

CAUTION REGARDING FORWARD-LOOKING STATEMENTS of Montreal's public communications often include written or oral forward-looking statements. Statements of this type are included in this presentation, and may be included in filings with Canadian securities regulators or the U.S. Securities and Exchange Commission, or in other communications. All such statements are made pursuant to the 'safe harbor' provisions of the United States Private Securities Litigation Reform Act of 1995. Forward-looking statements may involve, but are not limited to, comments with respect to our objectives for 2005 and beyond, our strategies or future actions, our targets, expectations for our financial condition or share price, and the results of or outlook for our operations or for the Canadian and U.S. economies.

By their nature, forward-looking statements require us to make assumptions and are subject to inherent risks and uncertainties. There is significant risk that predictions and other forward-looking statements will not prove to be accurate. We caution readers of this document not to place undue reliance on our forward-looking statements as a number of factors could cause actual future results, conditions, actions or events to differ materially from the targets, expectations, estimates or intentions expressed in the forward-looking statements.

The future outcomes that relate to forward-looking statements may be influenced by many factors, including but not limited to: global capital market activities; interest rate and currency value fluctuations; the effects of war or terrorist activities; the effects of disease or illness that impact on local, national or international economies; the effects of disruptions to public infrastructure, such as transportation, communications, power or water supply disruptions; industry and worldwide economic and political conditions; regulatory and statutory developments; the effects of competition in the geographic and business areas in which we operate; management actions; and technological changes. We caution that the foregoing list of factors is not exhaustive and that when relying on forward-looking statements to make decisions with respect to , investors and others should carefully consider these factors, as well as other uncertainties and potential events, and the inherent uncertainty of forward-looking statements. Bank of Montreal does not undertake to update any forward-looking statement, whether written or oral, that may be made, from time to time, by the organization or on its behalf.

Investor Relations Susan Payne 416-867-6656 [email protected] Steven Bonin 416-867-5452 [email protected] Fax 416-867-3367 Email: [email protected] 2 I N V E S T O R C O M M U N I T Y P R E S E N T A T I O N – J A N U A R Y 2 0 0 5

FISCAL 2004 TARGETS All Targets Met or Exceeded

Performance Measure F2004 Target F2004 Actual

EPS Growth 10-15% 29%

$500MM or less $67MM Provision for Credit Losses (before $170MM reduction (revised to $100MM or less) to General Allowance)

150-200 bps 155 bps Cash Productivity Ratio improvement improvement

Return On Equity 16-18% 19.4%

Tier 1 Capital Minimum 8% 9.81% 3 I N V E S T O R C O M M U N I T Y P R E S E N T A T I O N – J A N U A R Y 2 0 0 5

PERFORMANCE SCORECARD

Reported basis Canadian North American (i.e. including non-recurring items) Peer Group Peer Group Primary Performance Fiscal Fiscal Fiscal Fiscal Measure B/W Average 2004 2003 2004 2003 Diluted EPS Growth T 2 W 5 T 2 B 8 Return on Equity T 2 B 5 B 5 B 9 Net Economic Profit Growth T 2 W 3 T 2 B 7 Revenue Growth B 3 B 3 B 10 B 9 Cash Productivity T 2 T 2 W 8 W 12 Provisions / (Loans+Acceptances) T 2 T 2 T 2 T 2 Total Shareholder Return (5 year) W 4 W 6 T 3 B 6 Number of Banks Included 6 15 17

T = Top Tier; B = Better than Average; W = Worse than Average 4 I N V E S T O R C O M M U N I T Y P R E S E N T A T I O N – J A N U A R Y 2 0 0 5

STRONG RETURNS TO SHAREHOLDERS Share Price ($) 5 year TSR 57.55 CAGR = 15% 49.33 18.9%

38.10 12.9% 35.25 33.86

28.33

99 00 01 02 03 04 Year-end Year-end F2003 F2004 5 I N V E S T O R C O M M U N I T Y P R E S E N T A T I O N – J A N U A R Y 2 0 0 5

20 YEARS OF SUPERIOR RETURNS

20 Year TSR* Dividends as % of 18.5% 20 Year TSR

17.5% BMO 31.2% 17.0% 16.6% RBC 29.2% 16.3% 16.1% CIBC 28.2% 9.2% BNS 25.7% TSX TD 22.7% National 31.1% BMO Nat'l RBC CIBC TD BNS

* Calculated using compound growth rates 6 I N V E S T O R C O M M U N I T Y P R E S E N T A T I O N – J A N U A R Y 2 0 0 5

BMO IS A HIGH-RETURN, LOW-RISK BANK

RRTSR* (%) 1999 – 2003 2003 HSBC Holding 21.1

Lehman Bros. 11.7 Fleet Boston 13.4

HSBC Holding 10.1 Hang Seng 9.2 10.1 BMO 9.1 BNS 8.6 Westpac 6.9 Barclays 8.5 6.7 BMO 8.5 U.S. Bancorp 5.3 Royal Bank of Scot. 8.3

Sociètè Gènèrale 7.8 Bank One 4.1

ANZ Banking Group 7.4 Banca Intesa 3.9 Lynch 7.3 Sun Trust 3.4

* Risk-adjusted Relative Total Shareholder Return (RRTSR) adjusts for risk and the impact of national markets

Sources: TF Datastream; Boston Consulting Group Analysis 7 I N V E S T O R C O M M U N I T Y P R E S E N T A T I O N – J A N U A R Y 2 0 0 5

ECONOMIC AND TRENDS  Firm consumer spending and business investment, but weak exports due to strong C$  Short-term interest rates, though up modestly in 2005, will continue to stimulate the economy  Economic expansion to support personal loans and business banking  Stable-to-higher rates will flatten the yield curve U.S.  Economy should perform well in 2005, though growth will moderate amid rising interest rates  Interest rates will continue to increase at a modest pace, flattening the yield curve  Housing market will cool as rates rise, but strong capital spending will support business loans  Consolidation will continue in response to deregulation 8 I N V E S T O R C O M M U N I T Y P R E S E N T A T I O N – J A N U A R Y 2 0 0 5

FISCAL 2005 TARGETS

Performance Measure F2005 Target F2004 Actual

EPS Growth 3-8%* 29%

$400 MM or less $67 MM Provision for Credit Losses (before $170 MM reduction to General Allowance)

150-200 bps 155 bps Cash Productivity Ratio improvement improvement

Return On Equity 17-18% 19.4%

Tier 1 Capital Minimum 8% 9.81%

* 2004 EPS Base of $4.21 9 I N V E S T O R C O M M U N I T Y P R E S E N T A T I O N – J A N U A R Y 2 0 0 5

($MM) Net Income NET INCOME SOURCES (excl. 2,240 2,307 2,419 general) ↑ 23% ↑ 3% ↑ 8% 2,679  Continued volume growth and focus on 2,567 2,284 expense management in P&C Canada  Impact of improving economic climate, acquisitions, branch expansion and ↑ ↑ ↑ ↑ continued organic growth 9% 8% $300 $400 12% 17%  Revenue and expense initiatives and an improved lending environment in IBG

 Sustained revenue growth and strong (44) (260) emphasis on costs in PCG (260) 04 05 Target 05 Target  Expense management leadership from our 3% EPS 8% EPS corporate groups growth growth

Net Income (ex. PCL) Specific Provision for Credit Losses (Tax Effected at 35%) 10 I N V E S T O R C O M M U N I T Y P R E S E N T A T I O N – J A N U A R Y 2 0 0 5

BMO’S GROWTH STRATEGY

Grow profits in our core Canadian franchise AND Improve and selectively expand our U.S. franchise 11 I N V E S T O R C O M M U N I T Y P R E S E N T A T I O N – J A N U A R Y 2 0 0 5

2005 STRATEGIC PRIORITIES

1. Achieve Financial Targets with a particular focus on productivity 2. Drive revenue growth by providing a superior client experience, earning a larger share of customers’ business 3. Continue to improve U.S. performance 4. Accelerate growth in the U.S. both organically and through acquisitions 5. Grow Net Income in Canada through operational efficiency and improved market share, accelerating our growth in commercial banking and wealth management 6. Build a high-performance organization by developing our people, living our values and being an employer of choice 7. Maintain our world-class foundation of leading governance, sound risk management, productive systems and excellent after sales service 12 I N V E S T O R C O M M U N I T Y P R E S E N T A T I O N – J A N U A R Y 2 0 0 5

Cash Productivity P&C CANADA 61.0% Priorities for 2005 60.1%  Continue to focus on revenue growth while building our distribution capabilities

 Improve the group cash productivity ratio by at 03 04 least 150 basis points Q4/04 Market Share

 Continue to improve customer loyalty in both 19.1% the personal and commercial banking segments 14.3%  Maintain our personal banking market share 13.1% Personal and increase our business banking market 11.4% Loans

share relative to our major competitors Personal Deposits  Introduce further enhancements to our sales Mortgages and service delivery model to better meet the needs of our customers Business Banking 13 I N V E S T O R C O M M U N I T Y P R E S E N T A T I O N – J A N U A R Y 2 0 0 5

Cash Productivity P&C U.S. 73.5% Priorities for 2005 70.8%  Expand our branch network by opening five new branches and continuing to pursue acquisitions in Illinois, surrounding states and other high-growth markets 03 04

 Improve the group productivity ratio by at least 150 basis points

 Provide more seamless customer service and achieve cost efficiencies through the consolidation of the Harris bank charter structure 14 I N V E S T O R C O M M U N I T Y P R E S E N T A T I O N – J A N U A R Y 2 0 0 5

THE BEST OF TWO BANKING MODELS

Network Banks  Focused on convenience, Harris is a customer-focused regional bank consistency with the productivity, resources, and back  Use process, control to office processing scale of a big national drive efficiency bank:  Highly centralized model  Superior customer experience of the focused on volume to community banks realize scale benefits  Convenience and product breadth of the Community Banks network banks  Differentiate based on local presence, relationships  Leverage scale to achieve superior financial returns  Focus on relationship, flexibility over process  Tend to have simple product offerings 15 I N V E S T O R C O M M U N I T Y P R E S E N T A T I O N – J A N U A R Y 2 0 0 5

SEASONED AND DISCIPLINED Approach to U.S. Acquisitions

 Target small and mid-sized banks in Chicago, Illinois, and contiguous states  Advantages include: deep market knowledge, Harris Brand and reputation as community-focused acquirer of choice  Three key questions:

 Is it a good strategic fit?

 Is it a good cultural fit?

 Is it a good financial fit?

 Internal hurdle rate > 15%

 Must be cash accretive by year three 16 I N V E S T O R C O M M U N I T Y P R E S E N T A T I O N – J A N U A R Y 2 0 0 5

Cash Productivity PRIVATE CLIENT GROUP 82.3% Priorities for 2005 77.7%  Continue to enhance client offerings and deepen client relationships

 Improve cash productivity ratio by at 03 04 least 150 bps

 Optimize our business model through specific revenue-generating initiatives BMO Harris Private Bank voted top Private Bank in and ongoing expense management Canada - Euromoney Magazine  Continue to focus on the effectiveness of st Harrisdirect ranked #1 in our sales force customer service - SmartMoney’s survey of online brokers 17 I N V E S T O R C O M M U N I T Y P R E S E N T A T I O N – J A N U A R Y 2 0 0 5

Cash Productivity

INVESTMENT BANKING GROUP 51.5% Priorities for 2005 50.4%  Improve the integrated delivery of our capabilities to our clients to optimize revenue opportunities 03 04  Improve cash productivity ratio by at least 150 bps

 Optimize risk-taking to maximize returns Top Overall Research Team -Brendan Wood Int’l  Drive new product development Ranked first inst Canadian equity block trading Ranked first in Canadian Securitization market share 18 I N V E S T O R C O M M U N I T Y P R E S E N T A T I O N – J A N U A R Y 2 0 0 5

Specific PCL’s as a % of Average Net Loans and Acceptances INGRAINED CREDIT CULTURE (including Reverse Repos) & Superior Asset Quality 1.8% % BMO Canadian Peers 1.5% F2003 .30 .53 1.2% Q4/04 .09 .27 0.9% F2004 .04 .29 0.6% 0.3% 15 year .39 .61 average 0.0% 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 BMO’s Canadian peers are: RBC, BNS, CIBC, TD and National.

BMO Peer average excludes the impact of Canadian Competitors Weighted Average TD’s sectoral provisions in F2002 and 15 Year Average (BMO) subsequent transfers/ drawdowns.

15 year average - 1990 to 2004 19 I N V E S T O R C O M M U N I T Y P R E S E N T A T I O N – J A N U A R Y 2 0 0 5

INGRAINED PRODUCTIVITY CULTURE

Cash Productivity  Improved 410 bps since 2002 67.1%  Committed to improving 150-200 bps each year 64.5%  Compensation tied to success in 63.0% achieving targets

02 03 04 20 I N V E S T O R C O M M U N I T Y P R E S E N T A T I O N – J A N U A R Y 2 0 0 5

SHAREHOLDER-FRIENDLY COMPENSATION MODEL

Short-Term Mid-Term Long-Term Determined by: •Productivity goals and • Reflects commitment three-year TSR vs. to ‘price performance • Enterprise Business competitors options’ Performance Measures (e.g. •Higher pool if goals • Some share options growth in cash EPS are exceeded — vest over time and are and revenue) reduced if goals are worthless unless share not met price growth exceeds • Banking Group certain hurdles during Measures (e.g. the vesting period growth in cash net income and revenue) 21 I N V E S T O R C O M M U N I T Y P R E S E N T A T I O N – J A N U A R Y 2 0 0 5

EFFECTIVE CAPITAL MANAGEMENT Pays Dividends

Dividends Declared Per Share Priorities for use of (C$) 1.59 capital: 1.34 1.20  Organic Growth 1.12 0.94 1.00  Acquisitions 0.88 0.82 0.74 0.66  Dividends: 0.56 0.60 0.53 Target payout ratio of 35-45%

 Share repurchases

92 93 94 95 96 97 98 99 00 01 02 03 04 22 I N V E S T O R C O M M U N I T Y P R E S E N T A T I O N – J A N U A R Y 2 0 0 5 WHY BUY/HOLD BMO?  Viewed as a high-return, low-risk stock — 19% ROE  Good track record for stability, earnings consistency and strong dividend growth  Consistent and focused North American growth strategy that is clearly working

 Proven capacity to achieve targeted growth from our existing solid U.S. platform and strong Harris brand

 Strong franchise in some of the most lucrative markets in the U.S.  Commitment to ongoing productivity improvement  Prudence and expertise in credit risk management  Balanced approach to capital management  Shareholder friendly compensation model  Longtime leadership in Corporate Governance