Glossary of Financial Terms
| A-E | F-N | O-S | T-Z |
Operating Leverage
Operating Leverage is the difference between revenue and expense growth rates. Cash operating leverage is the difference between revenue and cash-based expense growth rates.
See Our Financial Objectives in the Who We Are (PDF, 47 KB) section of the MD&A
Operational Risk
Operational Risk is the potential for loss resulting from inadequate or failed internal processes or systems, human interactions or external events, but excludes business risk.
See Operational Risk in the Enterprise-Wide Risk Management (PDF 829 KB) section of the MD&A.
Options
Options are contractual agreements that convey to the buyer the right but not the obligation to either buy or sell a specified amount of a currency, commodity, interest-rate-sensitive financial instrument or security at a fixed future date or at any time within a fixed future period.
Productivity Ratio (or Expense-to-Revenue Ratio)
Productivity Ratio (or Expense-to-Revenue Ratio) is our key measure of productivity. It is calculated as non-interest expense divided by total revenues, expressed as a percentage. The cash productivity ratio is calculated in the same manner, after removing the amortization of intangible assets from non-interest expenses.
See Non-Interest Expense in the 2008 Financial Performance Review (PDF 404 KB) section and the Non-GAAP Measures (PDF 53 KB) section of the MD&A.
Provision for Credit Losses
Provision for Credit Losses is a charge to income that represents an amount deemed adequate by management to fully provide for impairment in loans and acceptances and other credit instruments, given the composition of the portfolios, the probability of default, the economic environment and the allowance for credit losses already established.
See Provision for Credit Losses in the 2008 Financial Performance Review (PDF 404 KB) and Credit and Counterparty Risk in the Enterprise-Wide Risk Management (PDF 829 KB) sections of the MD&A. See also Note 4 (PDF 72 KB).
Reputation Risk
Reputation Risk is the risk of negative impacts resulting from the deterioration of BMO’s reputation with key stakeholders. These impacts include revenue loss, reductions in our customer or client base and declines in BMO’s share price.
See Reputation Risk in the Enterprise-Wide Risk Management (PDF 829 KB) section of the MD&A.
Return on Equity or Return on Common Shareholders’ Equity (ROE)
Return on Equity or Return on Common Shareholders’ Equity (ROE) is calculated as net income, less preferred dividends, as a percentage of average common shareholders’ equity. Common shareholders’ equity is comprised of common share capital, contributed surplus, accumulated other comprehensive income (loss) and retained earnings.
See Return on Equity in the Value Measures (PDF 222 KB) section of the MD&A.
Securities Borrowed or Purchased under Resale Agreements
Securities Borrowed or Purchased under Resale Agreements are low-cost, low-risk loans, often supported by the pledge of cash collateral, which arise from transactions that involve the borrowing or purchasing of securities.
Securities Lent or Sold under Repurchase Agreements
Securities Lent or Sold under Repurchase Agreements are low-cost, low-risk liabilities, often supported by cash collateral, which arise from transactions that involve the lending or selling of securities.
Specific Allowances
Specific Allowances reduce the carrying value of specific credit assets to the amount we expect to recover if there is evidence of deterioration in credit quality.
See Provision for Credit Losses in the 2008 Financial Performance Review (PDF 404 KB) and Credit and Counterparty Risk in the Enterprise-Wide Risk Management (PDF 829 KB) sections of the MD&A. See also Note 4 (PDF 72 KB).
Swaps
Swaps are contractual agreements between two parties to exchange a series of cash flows.
See Note 10 (PDF, 107 KB)
Previous
