New Products and Services

Our commitment to excellent customer service means continuing to introduce products that meet the needs of our customers. Recently, we introduced an exciting new way for our personal banking customers to collect AIR MILES^®4 reward miles on purchases made with their debit cards. BMO is now leading the industry in Canada by rewarding customers with reward miles for purchases made on debit cards, in addition to existing rewards on credit cards. Customers also receive additional reward miles when they do more of their business with us.

Simplifying and Improving Processes

We are also focused on shortening the time it takes to make decisions, answer our customers’ questions and get things done. That means less red tape, simpler, improved processes and shorter wait times. It means more of our customer-facing employees with the skill sets and decision-making abilities to help our customers and communities with their financial needs. In Canada, we added 55 new mortgage specialists last year. And we are planning to hire another 80 in 2008. We understand the importance of buying a home. For Canadian customers who apply for a loan or mortgage online or by telephone, we shortened the wait time for a decision by 88%. In the U.S., approval wait times were cut in half for qualified Harris^®† mortgage customers.

Our top-ranked BMO InvestorLine^® continues to respond to clients’ direct investing needs. In 2007, we streamlined our online application process to allow clients to open trading accounts more quickly and help reduce approval wait times. Currently, 80% of online applicants receive swift approval and immediate access to their accounts. We also introduce MyLink^TM in 2007, making us the first online brokerage in Canada to offer a service that sends personalized messages directly to individual shareholders. This industry-leading secure online service gives our clients access to relevant and timely information specific to their investment holdings, enabling them to make better investing decisions.

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Understanding Business Customers’ Needs

Focus on Our Commercial Customers

This year, we created three new commercial districts led by senior, experienced bankers in Toronto, Vancouver and Montreal to focus exclusively on business customers. We offer our customers, from small businesses to medium-sized enterprises and mid-market banking clients, a single source for business solutions, including banking expertise and advice, and a meaningful line-up of products and services to assist with banking, managing cash flow, investment and financing.

By partnering with our colleagues within the bank, BMO Harris Private Banking expertise is also available, as are banking services for business customers’ employees. Last year, we eliminated FirstBank^® Commercial Transfer Service fees for commercial customers. Our business customers have always been able to enjoy the flexibility and convenience of doing their banking at any BMO location – now they can do it for free.

In cooperation with both the federal government and the provincial government of Ontario, we began offering loans under the federal Advanced Payments Program to customers currently utilizing the Ontario Feeder Cattle Loan Guarantee Program. The new offering allows producers access to interest-free capital. For customers, that means improved cash flow throughout the year. BMO is one of only three financial institutions participating in the Ontario Feeder Cattle Loan Guarantee Program and has made approximately 75% of all loans under the program. In partnership with Export Development Canada, we also introduced the Export Guarantee Program, which is designed to help smaller exporters compete for larger contracts by providing more financing to small and medium-sized exporters across Canada.

Increased Efficiency

In response to a growing demand for business solutions that increase profitability, productivity and efficiency, we introduced an enhanced Corporate MasterCard in 2006. The new card helps businesses take care of all their corporate purchasing needs – from day-to-day purchases to travel and entertainment expenses. The enhanced Corporate MasterCard also makes it easy to consolidate tracking, managing and analysing purchasing activities using BMO details Online^®, a service that allows customers to access, manipulate, export and integrate purchasing data into their company’s own existing data management systems.

Small Business Customers

Last year, we enhanced our Small Business Line of Credit. The new enhancements provide greater flexibility by offering clients the option to have either a secured or an unsecured line of credit, with increased limits of up to $250,000 for a secured line and $100,000 for an unsecured line.

Creating a more customer-friendly experience was our motivation for simplifying the application process for small business financing products. BMO now offers one no-fee application for credit products, including Small Business Line of Credit, Small Business Homeowners Line of Credit, Small Business Homeowners ReadiLine and Small Business Instalment Loan.

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Providing Information our Customers Need

We are committed to giving our customers the information and advice they need to make the right decisions about their money – and their financial futures. Our Retirement Your Way^® podcasts, hosted by Pamela Wallin, a respected journalist and member of BMO Financial Group’s Retirement Advisory Council, offer valuable information and insights on a variety of issues that impact Canadians approaching retirement.

Our first video podcast features Dr. Sherry Cooper, Chief Economist, BMO Capital Markets and the author of The New Retirement: How It Will Change our Future, and addresses the impact retiring baby boomers will have on the labour market and the economy.

We have also launched a new series of audio podcasts aimed at providing valuable information and advice to those entering the real estate market for the first time. The free podcast series, available for download on our web site at www.bmo.com, as well as on iTunes and other podcast distributors, takes listeners through the decisions faced by those new to the home-buying process, educating them on big-picture issues while providing critical information and investigating some common myths.

At Times of Loss

Each year, many of our clients experience the loss of someone close to them. For those facing bereavement, this difficult time can be more challenging if they have been named executor for the estate of the deceased. To assist those customers, we recently developed a brochure, With you, when you may need us most – In a time of loss, which provides clients with the important information they need as an executor.

Aboriginal Banking

At BMO, we have long had an interest in developing the financial capability of the Aboriginal peoples of Canada. Since the creation of BMO Bank of Montreal’s Aboriginal Banking Unit in 1992, we have opened 11 full-service branches, three community banking outlets and one instore branch within Aboriginal communities. The total amount of business we are doing with Aboriginal people, businesses and communities has grown from $100,000 in 1992 to more than $1 billion. Working with Aboriginal communities, we are committed to designing and delivering a meaningful and comprehensive range of financial products and services. Among these is BMO Bank of Montreal’s On-Reserve Housing Loan Program, an innovative alternative for First Nations to help provide affordable housing for their members without government guarantees. In 2007, 12 new programs were launched within First Nations communities, offering 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 renovations to existing homes. To date, 33 First Nations have implemented an on-reserve housing loan program, with BMO providing more than $70 million in loans.

BMO also offers an On-Reserve Home Renovation Loan Program, which provides personal loans of up to $25,000 for minor upgrades to existing housing. Currently the program operates in 10 communities with more than $2.5 million authorized for personal loans. In February 2007, the Canadian Council for Aboriginal Business honoured BMO with a gold-level Progressive Aboriginal Relations (PAR) award for our efforts to build a mutually beneficial, sustainable relationship with Aboriginal communities, businesses and individuals. BMO has been working for more than a decade to become an employer of choice and business partner for Aboriginal individuals and communities. The PAR recognition is not only an honour but also an opportunity to promote further dialogue while raising awareness of the growing contribution of Aboriginal businesses to the Canadian economy.

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Banking for New Canadians

In Canada, between 19% and 23% of the population will consist of visible minorities by 2017. In Toronto and Vancouver, that number will be closer to 50%. Meanwhile, in the United States, minorities make up one-third of the population and will make up almost one-half by 2050. Clearly, to achieve our business growth strategy, we must focus our efforts on ensuring that our products and services are accessible in an increasingly diverse marketplace. We want to ensure that we understand and serve all of our customers regardless of gender, race, age, ethnicity, disability or sexual orientation.

At BMO, meeting the needs of Canadians of many origins continues to be a business priority. Helping newcomers make a successful transition to their new homeland is the best way to serve new immigrants as well as our business and our country. In 2007, we completed the integration of bcpbank Canada. With a network of eight branches in Toronto, Brampton, Hamilton and Mississauga and a customer base of 28,000, this community bank has an established reputation for being the first choice for financial services amongst the Greater Toronto Area’s sizable Portuguese-Canadian community. To mark the occasion, we also launched the Luso Card, a BMO Mosaik MasterCard designed specifically for the Portuguese-Canadian community. The conversion provides former bcpbank Canada customers with access to BMO products and services at all branch locations across Canada. It also provides BMO with the opportunity to support the greater Portuguese-Canadian community through maintaining involvement in local initiatives such as the Portugal Day Parade, Casa dos Açores and the Portuguese Disabled Persons Building Fund.

BMO has also focused on meeting the needs of newcomers to Canada from Asia. 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. More recently, we added a simplified Chinese-character option on our web site to assist recent arrivals from mainland China. BMO’s online banking web site also provides Chinese, Korean and Punjabi glossaries. We have introduced a “Newcomers to Canada” web page at www.bmo.com that lists banking services of interest to new residents of our country. For the convenience of communities that require language assistance, we display “Multi-language spoken in the branch” signage. And we continue to enhance our Newcomers credit policies to enable more newcomers to qualify for loans and mortgages.

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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 2007, we provided these services to approximately 874,000 customers aged 60 and above and approximately 415,000 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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