Delivering Innovative Products and Services

In 2008, we introduced a kit to help first-time homebuyers deal with the complexities of making the biggest purchase of their lives. BMO First Home Essentials is a step-by-step guide for entering the real estate market. Retailing for $24.95 and free to anyone arranging a mortgage or Homeowner ReadiLine^® with BMO, the kit includes helpful tips, worksheets and access to an online planning tool. BMO also partnered with Toronto real estate expert Nick Thompson to launch the Happy Homeowner podcast, a 21-minute audio segment that provides expert advice on effective home renovations and tips on home staging.

As part of our commitment to helping our student customers make sense of it all, BMO launched a new podcast called BMO Head of the Class in October. Hosted by Lesley Scorgie, author of Rich by Thirty: A Young Adult’s Guide to Financial Success and featuring a panel of university students, the podcast covers issues that include managing money and debt and getting a head start on saving for retirement.

In order to make the right decisions about their financial futures, our customers need relevant information, sound advice and innovative products and services that deliver what they want. BMO is committed to providing exactly that. For instance, Harris introduced an online account application that takes about eight minutes to complete. As a result, online account openings increased 160% in 2008. As of October 2008, Canadian customers were also able to apply online to BMO Bank of Montreal for a personal banking account. We have also invested in an industry-leading financial planning tool that will be used by all financial planning professionals across our company. Regardless of customer location or point of contact, the financial planning software will help ensure consistency and portability in clients’ plans.

We are working hard across BMO to meet every customer’s expectations. To help achieve this goal, we have been adding and redeveloping branches in prime locations across Canada, where there are now more than 980 BMO Bank of Montreal branches. And to provide our customers with a more comprehensive offering, we have been placing more retail and commercial bankers, as well as wealth management professionals, in more of our locations. Similarly, at Harris we are enhancing the customer experience and improving front-line and operating efficiency. Under the Harris banner, we have grown 44% over the past three years and now operate more than 280 branches in three states in the U.S. Midwest.

For more information about our personal banking products, visit BMO Personal Finances.

Understanding Business Customers’ Needs

BMO provides small and medium-sized businesses with the tools, resources and market offers they need to succeed throughout the life cycle of their companies. BMO provides business owners with help in growing their businesses. Our global treasury management service enables business customers to manage their cash flow in Europe, the United States and Canada, all online.

We also offer free business tools and savings when business customers signed up for payroll services, merchant accounts, bank accounts or credit cards. These incentives were delivered on a portable USB drive and included a one-year membership to BizAssist Online, as well as a package of discount coupons, tools and templates with a value of up to $2,100.

We continued to provide advice to business customers through regular updates to our BMO Business Coach podcasts and Business Coach brochures that provide tips on managing a business. Our Business Coach podcasts, which we offer in conjunction with PROFIT magazine, provide insight on a wide range of topics, including strategic planning, recession proofing and managing cash flow. BMO was awarded the gold medal for best use of communications tools (Internet, AV) for the Business Coach podcast series by the Canadian Public Relations Society.

BMO is focused on providing support for business owners as they prepare to pass the torch to the next generation of leaders. Whether they intend to sell their business or hand it on to a family member, it’s important that business owners begin planning as early as possible. Yet, according to a Harris/Decima study commissioned by BMO Bank of Montreal, only 19% of business owners have an identified successor and just under one-third of those have a transition plan in place. To provide advice and information about best practices to those companies facing succession planning decisions, BMO developed a nationwide campaign that included free succession planning seminars in nine major centres across Canada, featuring Sean Foran, co-author of the book Succession Stories from the Front Line: Insights and Advice for Canadian Business Owners.

For more details, see our succession planning website.

At BMO, we have a long history of being there for our customers in both good times and bad. Certainly, we remain committed to working with our business customers during these difficult economic times. Along with other Canadian banks and the federal government, we are working to ensure the orderly functioning of our financial markets. As reported in the fourth quarter of fiscal 2008, BMO ranks second in Canadian business banking lending market share at 19.84%, an increase of 67 basis points year-over-year in business loans under $5 million. We intend to become the bank of choice for businesses across Canada and as part of that effort we continue to make credit available to small and medium-sized business clients. In fiscal 2008, we increased our business debt financing by 13.2% year-over-year to $142 billion. Customer advocacy scores for our commercial business were also up in 2008.

Helping Chinese-Canadian Customers Deal with Uncertain Times There was standing room only at our BMO symposium for the Chinese business community, held at our Institute for Learning in Toronto last October in partnership with three key Chinese professional and business associations. Emily Qu, one of 250 entrepreneurs and small business owners who attended the gathering, understands why. “The event provided useful information for business owners who were new to Canada or just starting out,” says Qu, co-owner of Parkhaven Industries, a 22-year-old company that imports industrial equipment from China to the North American marketplace. “But it also proved to be very helpful for more experienced business people like myself, who were eager to hear what top economic experts from BMO had to say about the emerging global economic crisis.” Qu, a long-time BMO customer, notes that she particularly welcomed advice from BMO Capital Markets Senior Economist Sal Guatieri. “At a time of great uncertainty, he spoke about the strength of the Canadian banking system and emphasized that despite the uncertainty BMO remained committed to helping us grow our businesses,” she says. “It was good to hear.”

For more information about our Business Banking Solutions, visit our BMO Business website.

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Aboriginal Banking

Helping address the unique challenges and providing customized financial solutions to meet the needs of theAboriginal peoples of Canada continues to be a priority. Since the creation of our Aboriginal Banking Unit in 1992, the total amount of business we are doing with Aboriginal peoples, businesses and communities has grown from $100,000 in the first year to more than $1.4 billion in 2008.

Working in partnership with Aboriginal communities, we are committed to designing and delivering a meaningful and comprehensive range of financial products and services to finance many significant and varied projects, such as schools, health care centres and sewer and water infrastructure.

Among these is our On-Reserve Housing Loan Program, an innovative program for First Nations to help provide affordable housing for their members without government guarantees. The program offers qualified members the opportunity to own their own homes through access to housing loans for the construction or purchase of owner-occupied, single-family dwellings or to finance major renovations to existing homes.

In 2008, the Tsawout First Nation, located on Vancouver Island, joined 35 other communities across Canada in participating in our BMO On-Reserve Housing Loan Program. Tsawout Chief Allan Claxton was among the first to make use of the initiative. “My wife and I have used the loan program to make major renovations to the house where we raised our children,” he says. “We’ve replaced floors and decks and repaired our kitchen and bathroom. This program presents new opportunities for us and many of our people.”

In May 2008, BMO became the first financial institution to participate in the First Nations Market Housing Fund, a new initiative of the government of Canada. This fund expands the opportunity for First Nations families to obtain loans from financial institutions to build, buy or renovate a house on-reserve.

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Serving Multicultural Canadians

According to the 2006 Census, one in five Canadian residents was born outside the country. A 2003 census report states that almost 12% of residents of the United States are foreign born. Clearly, the arrival of newcomers continues to play a significant role in shaping North America’s social, cultural and economic development.

We have particularly endeavoured to meet the needs of new Canadians from Southeast Asia. We have been assisting immigrants from mainland China and Hong Kong to gain access to financial services for more than 25 years. We are the only Canadian bank with branches in Beijing, Shanghai, Guangzhou and Hong Kong providing advisory services for new immigrants.

We were one of the first Canadian banks to provide a Chinese language option on our ABMs and for telephone banking, and to offer a Chinese language web site. We also offer a simplified Chinese-character option on our web site to assist recent arrivals from mainland China. Our online banking site provides traditional Chinese-character, Korean and Punjabi glossaries.

Additionally, we have a Newcomers to Canada website that lists banking services of interest to individuals contemplating immigrating to Canada, as well as residents who have recently arrived in our country.

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Providing Affordable Banking

We believe that all Canadians should have access to a banking plan that’s affordable. For our customers with very straightforward banking needs, we offer our Practical Plan. It offers 10 monthly transactions for a low monthly fee of $4.00. The fee is waived if a minimum monthly balance of $1,500 is maintained. We also offer our Performance Plan, which provides unlimited monthly transactions and is ideal for those customers who perform frequent transactions using more than one account. BMO is the only bank to offer a banking plan that allows customers to access multiple personal accounts under one plan fee.

Meeting the Banking Needs of Seniors and Youth

Understanding that older and younger Canadians have unique financial needs, we have extended our offer of free banking services to these age groups for the next three years. In 2008, we provided these services to approximately 906,000 customers aged 60 and above and approximately 427,000 students, youths and young adults.

Seniors who take advantage of our Performance Plan can bank without paying a monthly fee as part of our Senior Discount Program – a savings of $13.95 per month. The plan includes unlimited transactions through any BMO channel.

We continue to be one of the few banks to offer students free banking. With BMO’s Student Discount Program, students have access to our Plus Plan for free – a savings of $8.50 per month. The plan includes up to 30 transactions each month, cheque return and one Interac^® e-mail money transfer. We have extended our offer to include recent graduates, who are entitled to an extra 12 months of free banking with the Plus Plan.

Last year, we also became the first and only major bank to offer seniors enrolled in our free banking plans one free ABM withdrawal at another financial institution’s ABM per month.

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