BMO Financial Group Reports Third Quarter Net Income Of $660 Million



    -------------------------------------------------------------------------
    BMO Financial Group Reports Third Quarter Net Income Of $660 Million
    Including $97 Million In After-Tax Losses, Largely Related To Reducing
    Risk In Our Commodities Business

    Net Income Down 7.1% ($50 Million) But Up 6.6% ($47 Million) Excluding
    Commodities Losses As Other Businesses Performed Well
    -------------------------------------------------------------------------

    
    Performance Highlights:

    Third Quarter 2007 Compared with Third Quarter 2006:

    -   Net income of $660 million, down $50 million or 7.1%
    -   EPS(1) of $1.28 and cash EPS(2) of $1.30, both down $0.10 or 7.2% and
        7.1%, respectively
    -   ROE of 18.0%, compared with 20.3% last year
    -   Revenue up $6 million or 0.2% and non-interest expense up $59 million
        or 3.6%
    -   Provision for credit losses up $49 million to $91 million
    -   Effective tax rate down 3.1 percentage points to 21.0%
    -   Results in the quarter were affected by losses in our commodities
        business of $149 million ($97 million after tax and $0.19 per share),
        as we reduced the size and risk of the commodities portfolio. Our
        other businesses performed well, overall, generating a $47 million(3)
        or 6.6% increase in net income and revenue growth of $155 million or
        5.9%
    -   Announced on August 28, 2007 a $0.02 per share dividend increase,
        raising quarterly common share dividends to $0.70 per share, up 2.9%
        from the third quarter and 12.9% from a year ago, reflecting our
        policy of maintaining a 45% to 55% dividend payout ratio over time

    Operating Group Net Income:

    -   Personal and Commercial Banking, Canada (P&C Canada) up $3 million or
        1.0% to a record $350 million. Excluding P&C Canada's MasterCard gain
        in the prior year and income tax recoveries in both periods, net
        income increased $40 million or 14%, driven by broad-based volume
        growth across our personal and commercial businesses and a stable net
        interest margin
    -   Personal and Commercial Banking, U.S. (P&C U.S.) down $4 million or
        17% to $26 million, including acquisition integration costs, as
        margin declined in a difficult economic and competitive environment
    -   Private Client Group up $22 million or 26% to $105 million, driven by
        strong revenue growth in full-service investing and mutual funds
    -   BMO Capital Markets down $7 million or 3.4% to $196 million,
        including losses in our commodities business. Our other businesses
        performed well, with broad-based growth. Those businesses increased
        net income by $90 million or 45%, generating $293 million of net
        income
    -   Corporate Services net income fell $64 million to a loss of
        $17 million on lower revenue and higher provisions for credit losses

    Year-to-Date 2007 Compared with a Year Ago:

    -   Net income of $1,679 million, down $288 million or 15%
    -   EPS of $3.24 and cash EPS of $3.29, down $0.56 or 15% and $0.57 or
        15%, respectively
    -   ROE of 15.1%, compared with 19.2% last year
    -   Net income and EPS were reduced by the year-to-date net impact of
        $829 million ($424 million after tax and $0.83 per share) of losses
        in our commodities business and a $135 million restructuring charge
        ($88 million after tax and $0.17 per share)
    -   Tier 1 Capital Ratio remains strong at 9.29%

    (1) All Earnings per Share (EPS) measures in this document refer to
        diluted EPS unless specified otherwise.
    (2) The adjustments that change results under generally accepted
        accounting principles (GAAP) to cash results and GAAP revenue and
        income taxes to a taxable equivalent basis (teb) are outlined in the
        Non-GAAP Measures section in the Financial Performance Review, where
        all non-GAAP measures and their closest GAAP counterparts are
        outlined. Revenues and income taxes in the financial statements are
        stated in accordance with GAAP. Otherwise, all revenues and income
        taxes and measures that include revenues or income taxes in this
        document are stated on a taxable equivalent basis.
    (3) Results stated on a basis that excludes commodities losses and/or the
        first quarter restructuring charge are non-GAAP measures. Please see
        the non-GAAP Measures section.


    TORONTO, Aug. 28 /CNW/ -

    -------------------------------------------------------------------------
            Underlying Performance Was Good in the Third Quarter
    -------------------------------------------------------------------------
    

    BMO Financial Group reported net income of $660 million for the third
quarter ended July 31, 2007, or $1.28 per share.
    Results included after-tax losses of $97 million, or $0.19 a share, in
our commodities business. Our other businesses performed well, overall, as
they generated net income of $757 million or $1.47 per share. In those
businesses, revenue grew 5.9% from a year ago and net income rose by
$47 million, or 6.6%.
    Earnings in P&C Canada rose 1% to a record $350 million. Excluding the
impact of a $38 million ($25 million after tax) gain on the MasterCard
International Inc. (MCI) IPO and a $26 million recovery of prior years' income
taxes in the third quarter a year ago, as well as a $14 million recovery of
prior years' income taxes in the current quarter, P&C Canada's earning rose
14%. BMO Capital Markets earnings grew 45%, excluding the impact of the
commodities losses, driven by broad-based revenue growth and a lower effective
tax rate. Net income increased 26% in Private Client Group, driven by strong
revenue growth in full-service investing and mutual funds. P&C U.S. earnings
decreased 17% as margin has declined in a difficult economic and competitive
environment. P&C U.S. net income would have increased quarter-over-quarter in
each period in fiscal 2007 in the absence of acquisition integration costs.
    "P&C Canada performed well," said Bill Downe, President and Chief
Executive Officer of BMO Financial Group. "Its operating performance improved
more than the reported results might suggest, as there was a substantial
investment gain and tax recovery in the third quarter a year ago. It also
performed well relative to the second quarter with higher volumes across most
products, strong improvement in personal and commercial loan market share and
better net interest margin. Our focus on serving customers and profitably
growing the business is paying off.
    "With the exception of the commodities business, we had good results in
BMO Capital Markets, with revenues in some of our investment banking
businesses doubling from a year ago. Private Client Group also performed well,
increasing its income by 26% on strength in full-service investing and mutual
funds.
    "P&C U.S. loan and deposit volumes were up both year-over-year and
relative to the second quarter. Although revenue growth has been affected by
the weak U.S. dollar and lower net interest margins relative to last year, our
margins were stable in the quarter and we expect them to remain so in the
coming quarter."

    
    Net Income Summary

    (Canadian $ in millions)                   Q3-2007    Q2-2007   YTD-2007
    -------------------------------------------------------------------------
    Net income as reported                         660        671      1,679
    Commodities trading losses (after tax)          97         90        424
    Restructuring charge (after tax)                 -          -         88
    -------------------------------------------------------------------------
    Net income excluding commodities trading
     losses and restructuring charge               757        761      2,191
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Amounts in the above table are non-GAAP amounts. Please see footnote 2
    to the preceding Operating Highlights and the Non-GAAP Measures section
    that follows, which outline the use of non-GAAP measures in this
    document.
    

    During the quarter we recorded losses in our commodities business. We
completed a number of significant steps to reduce the size of the portfolio
and its risk. Approximately 50% of the loss on the portfolio in the quarter
related to certain large proprietary positions that we eliminated by entering
into offsetting contracts with a counterparty. The other 50% was largely
attributable to other trading activities, which included actions related to
managing and reducing the risk in the remainder of the portfolio. During the
quarter, we reduced the fair market value of commodity derivative contracts
assets from $22.7 billion to $11.5 billion. The actions taken in the third
quarter significantly reduced our proprietary positions, the amount of profit
and loss volatility, and the complexity of the portfolio as well as the fair
market value of assets.

    
    Other activities during the quarter included:
    -   appointing a new head of energy trading and hiring additional key
        personnel;
    -   investing in the infrastructure of our back office processes;
    -   lowering our risk exposure to stress events such as hurricanes; and
    -   completing the implementation of new risk limits and reductions to
        existing limits.
    

    BMO has received inquiries, requests for documents and subpoenas
pertaining to the commodities trading losses from securities, commodities,
banking and law enforcement authorities. As these inquiries are in the early
stages, we are unable to determine whether any proceedings against the Bank
will result. We are cooperating with all of these authorities.
    "We made significant progress in reducing our trading book during the
quarter and while further reduction is still intended, it will occur within
the ongoing trading activity of the business," added Mr. Downe. "We expect
this process to occur over the next two quarters."
    The foregoing losses in the commodities business were recorded in BMO
Capital Markets, primarily in its U.S. operations. As a result, BMO Capital
Markets net income for the third quarter was $196 million (including
$97 million after-tax losses on commodities) compared with $203 million a year
ago and net income of $199 million (including $90 million after-tax losses on
commodities) in the second quarter. Its net income for the year to date was
$377 million (including $424 million after-tax losses on commodities),
compared with $672 million a year ago.
    As previously reported, we recorded a charge of $135 million in the first
quarter for restructuring, including the elimination of approximately
1,000 jobs in primarily non-customer-facing areas across all the support
functions and business groups. We continue to make good progress on our
initiatives to improve the efficiency and effectiveness of the organization.
The expected run- rate savings of $300 million will assist our revenue growth
and customer service initiatives, supporting our productivity targets,
specifically in P&C Canada where we expect the majority of the savings to be
realized and reinvested. To date, we have eliminated roughly 700 positions
with significant reductions in Corporate Services, including Technology and
Operations, while adding to our front-line personnel, especially in P&C
Canada, Private Client Group and BMO Capital Markets. We remain on track to
achieve our objectives by the end of the fiscal year.

    Operating Segment Overview

    P&C Canada

    Net income rose $3 million or 1.0% from a year ago to a record
$350 million. Results in the third quarter a year ago included a $38 million
($25 million after tax) gain on the MasterCard International Inc. (MCI) IPO
and a $26 million recovery of prior years' income taxes. The current quarter
included a $14 million recovery of prior years' income taxes. Excluding these
items, net income rose $40 million or 14%. Revenue rose $25 million or 2.0%,
but increased $63 million or 5.2% excluding the MCI gain in the third quarter
of the prior year. There was solid top-line growth in each of the personal,
commercial and cards businesses. Expenses declined from a year ago due to
lower capital tax expense and cost efficiencies.
    Relative to the second quarter, net income increased $26 million or 8.0%.
The second quarter included the $32 million after-tax combined benefit of an
insurance gain and a gain on an investment security. Excluding those items and
this quarter's $14 million income tax recovery, net income increased
$44 million or 15%. There was good revenue growth, due to having three more
days in the current quarter, higher net interest margin and volume growth.
Expenses increased due to the impact of more days in the current quarter as
well as increased employee costs and higher depreciation related to completed
initiatives.
    In personal banking, there was growth in most products, particularly
higher-spread loans and cards as we continue to focus on improving the
customer experience and strengthening relationships. Personal loans grew a
strong 11.6% from a year ago and market share improved year-over-year and
relative to the second quarter. Mortgage growth slowed with third party and
broker mortgages declining from the second quarter as anticipated, as we re-
focus our efforts on proprietary channels and building relationships with
customers. We have been building our mortgage sales force this year with
further expansion expected in 2008. We are aggressively targeting growth in
personal deposits through simplified products, streamlined account opening and
an improved customer experience.
    In commercial banking, there was continued good growth in loans and
deposits. Loans grew 7.7% from a year ago with growth in all regions. Our
Canadian business banking market share, at 19.20%, increased strongly for the
second quarter in a row, rising 40 basis points relative to the second quarter
and 56 basis points relative to a year ago. With our integrated approach to
client service and broad spectrum of products, we are building on our
competitive strength to be a market leader in commercial lending.

    P&C U.S.

    Net income decreased $4 million from a year ago to $26 million. Revenue
increased on a U.S. dollar basis but reported revenues included in Canadian
consolidated results declined because of the weaker U.S. dollar. Increased
revenues were attributable to the inclusion of First National Bank and Trust
(FNBT), effective in the second quarter, as well as loan and deposit growth.
Revenue growth was lowered by reduced net interest margin.
    Relative to the second quarter, net income fell by $1 million or 5.7%. On
a U.S. dollar basis, excluding acquisition integration costs, net income
increased by $2 million or 6.7%. Revenue declined, but increased on a U.S.
dollar basis, largely due to loan and deposit growth and a stable margin.
    Quarterly results in 2007 have been affected by ongoing acquisition
integration costs. In the absence of these costs, earnings would have
increased quarter-over-quarter in each period in 2007, growing from
US$23.8 million in the fourth quarter of 2006 to US$28.4 million in the
current quarter. Acquisition integration costs of FNBT are substantially
complete.
    We continue to operate under somewhat difficult economic and market
conditions. In this environment, growing revenue is challenging and we have
chosen to manage costs by actions such as reducing personnel costs and slowing
down new branch openings.
    P&C U.S. does not originate subprime mortgage programs and has very
little retail exposure with subprime characteristics. Please see the following
Economic Outlook & Market Environment section.
    We recently announced a definitive agreement to purchase Ozaukee Bank, a
community bank with six full-service and two limited-service locations in the
affluent northern part of the greater Milwaukee area. With US$694 million in
assets and US$561 million in deposits, Ozaukee Bank has a leading share of
deposits in its market, significantly ahead of its nearest competitor.
    We also announced signing a definitive agreement to purchase Merchants
and Manufacturers Bancorporation, Inc., a holding company with six bank
subsidiaries operating 34 full-service and 11 limited-service locations in an
area concentrated in Milwaukee, and extending into Green Bay to the north and
LaCrosse to the west. Merchants and Manufacturers' banks have a combined
US$1.5 billion in assets and US$1.2 billion in deposits, holding more than
half of their deposits in the Milwaukee area.

    Private Client Group

    Net income increased $22 million or 26% from a year ago to $105 million.
Revenue increased $43 million or 8.8% on broad-based growth, particularly in
Full-Service Investing and Mutual Funds. Expenses also increased but at a
slower pace.
    Relative to the second quarter, net income increased $4 million or 2.9%.
Revenue was relatively unchanged but grew $14 million excluding the impact of
a gain on sale of Montreal Stock Exchange common shares in the prior quarter
and the impact of the weaker U.S. dollar. The growth was primarily due to an
increase in mutual fund revenue. Expenses declined marginally.
    The group continues to be recognized for its products and services.
Harris Private Bank was ranked among the Top 5 local private banks in the
United States in Euromoney Magazine's 2007 Global Survey on the delivery of
locally based wealth management services.
    BMO Mutual Funds successfully launched BMO LifeStage Plus Funds. This
product automatically adjusts the asset mix based on an investor's time
horizon. A unique attribute of the funds is a daily lock-in feature that
allows investors to receive the highest daily value during the life of the
fund if they remain fully invested in the fund until its target end date.

    BMO Capital Markets

    As explained, results were affected by losses in our commodities
business. Our other businesses increased net income in the third quarter by
$90 million or 45% from a year ago. In those businesses, revenue increased
$163 million or 24%. There was favourable performance in many product areas.
There were strong increases in equity underwriting activity and merger and
acquisition fees, each of which more than doubled from a year ago, while debt
underwriting revenues were up 95%. There was also strong growth in trading
revenues and commission revenues and higher revenues from increased corporate
banking assets. Growth was lowered by reduced net investment securities gains
and the impact of the weaker U.S. dollar.
    Adjusted for the impact of the losses in our commodities business in both
periods, net income rose $4 million or 1.5% from the second quarter on good
revenue growth in other product areas including trading revenues, merger and
acquisition fees and debt underwriting activity. Growth was lowered by
reductions in collections on previously-impaired loans, equity underwriting
and net investment securities gains as well as the impact of the weaker U.S.
dollar.
    During the quarter, BMO Capital Markets continued to demonstrate its
Canadian leadership in high-return fee businesses. Although volumes were down
slightly from previous quarters, our market share increased. We participated
in 112 new issues including 19 corporate debt deals, 2 issues of preferred
shares, 69 common equity transactions and 22 government debt issues, raising a
total of $34.2 billion. We also acted as financial advisor on several
significant M&A transactions.

    Performance Targets

    Given the significance of the losses incurred in our commodities business
this year, it will be extremely challenging to achieve most of our annual
financial targets. We will continue to monitor our performance relative to our
annual targets, but will also monitor performance on a basis that excludes the
impact of the announced commodities losses, to provide a checkpoint on the
success of growing our businesses and meeting our strategic objectives.

    
    -------------------------------------------------------------------------
    Annual Targets for 2007(*)              Performance to July 31, 2007(*)
    -   5% to 10% EPS growth from a base    -   EPS of $3.41, down 10.3%
        of $5.11 (excluding changes in          from $3.80 a year ago
        the general allowance)
    -   ROE of 18% to 20%                   -   ROE of 15.9% annualized
    -   Specific provision for credit       -   Specific provision for
        losses of $400 million or less          credit losses of $202 million

    -   We continue to anticipate
        specific provisions of
        $300 million or less in fiscal
        2007, as estimated at the end
        of the second quarter.

    -   Improve our cash productivity       -   Cash productivity ratio
        ratio by 100 to 150 basis points        deteriorated 376 basis points
                                                year-over-year

    (*) Excluding restructuring charge      (*) Excluding a restructuring
                                                charge of $135 million
                                                ($88 million after tax and
                                                $0.17 per share)
    

    In the absence of losses in our commodities business, all financial
    targets would be on track. EPS growth would be 11.6%, ROE would be 19.8%
    and the cash productivity ratio would have improved by 146 basis points.
    -------------------------------------------------------------------------
    The data in the above table are non-GAAP amounts or non-GAAP measures,
    except provision for credit losses data. Please see footnote 2 to the
    preceding Operating Highlights and the Non-GAAP Measures section that
    follows, which outline the use of non-GAAP measures in this document.

    The preceding section and above table contain forward-looking statements.
    Please see the Caution Regarding Forward-Looking Statements.

    Economic Outlook & Market Environment

    We now anticipate that the Canadian economy will grow at a moderate rate
of 2.4% in 2007, though recent volatility in financial markets and stress in
credit markets raise the risk of weaker growth. Relatively low interest rates
and high resource prices should continue to support consumer and business
spending, while the strong Canadian dollar and softer U.S. economy will likely
weigh on exports. Housing market activity is expected to remain healthy,
though it will likely moderate in response to past increases in interest
rates. Growth in consumer spending and personal credit should be supported by
recent solid gains in employment. Companies will likely continue to invest to
expand productive capacity, which should support business loan growth.
Canadian interest rates are not expected to change significantly in the year
ahead, presuming the current turbulence in capital markets subsides.
    The economies of central and eastern Canada should continue to lag the
resource-producing western provinces as the strong Canadian dollar restrains
manufacturing activity. The Canadian dollar had appreciated 9% against the
U.S. dollar in 2007 through the end of July, and we expect it to remain strong
over the balance of the year.
    The U.S. economy is now projected to grow at a modest rate of 1.9% in
2007. The implementation of tighter lending practices has prolonged the
correction in housing markets and will likely continue to dampen demand for
residential mortgages. Consumer spending remains moderate, though it is at
risk of weakening if home prices continue to fall. Business investment has
picked up recently and exports remain strong. The Federal Reserve could reduce
rates if the recent stress in capital markets persists. The Midwest economy is
anticipated to strengthen modestly as manufacturers should benefit from a weak
U.S. dollar and strong global demand.
    There has been significant volatility in capital markets recently.
Concerns over U.S. subprime mortgages, non-bank-sponsored asset-backed
commercial paper and other factors have contributed to a shift toward lower
risk financial products and reduced liquidity. BMO Financial Group has very
little direct retail exposure with subprime characteristics and our exposure
through bonds, where the underlying assets are collateralized debt
obligations, is not material. We have in our trading portfolio approximately
$400 million of Canadian third- party asset-backed commercial paper, or
approximately 0.1% of our assets, which may result in some mark-to-market
exposure. None of the Canadian money market funds offered by BMO Mutual Funds
and GGOF Guardian Group of Funds has exposure in their portfolios to asset-
backed commercial paper issued by non- bank-sponsored conduits.
    BMO has significant expertise in the management of bank-sponsored asset-
backed commercial paper programs. We have good knowledge of the assets in the
conduits that support the commercial paper issued. They are very high quality
and are managed with the same rigour applied to BMO's assets. During the
recent disruption in the third-party-sponsored asset-backed commercial paper
market, we have supported our BMO-sponsored conduits and have facilitated
trading to ensure the market for bank-sponsored asset-backed commercial paper
continues to perform satisfactorily.
    Recent market developments may impact our BMO Capital Markets group in
the short term, potentially lowering equity underwriting and merger and
acquisition activities, while market volatility and wider credit spreads may
benefit our trading operations and corporate loan book. Subject to the effect
that market volatility may have on the economy, we do not expect any impact on
our other operating groups.
    This Economic Outlook & Market Environment section contains forward-
looking statements. Please see the Caution Regarding Forward-Looking
Statements.


    
                    Management's Discussion and Analysis

    MD&A commentary is as of August 28, 2007. Unless otherwise indicated, all
amounts are in Canadian dollars and have been derived from financial
statements prepared in accordance with Canadian generally accepted accounting
principles (GAAP). The MD&A should be read in conjunction with the unaudited
consolidated financial statements for the period ended July 31, 2007, included
in this document, and the annual MD&A for the year ended October 31, 2006,
included in BMO's 2006 Annual Report. The material that precedes this section
comprises part of this MD&A.

    -------------------------------------------------------------------------
    Bank of Montreal uses a unified branding approach that links all of the
    organization's member companies. Bank of Montreal, together with its
    subsidiaries, is known as BMO Financial Group. As such, in this document,
    the names BMO and BMO Financial Group mean Bank of Montreal, together
    with its subsidiaries.
    -------------------------------------------------------------------------

    Summary Data


                                                Increase/           Increase/
    (Canadian $ in millions,                   (Decrease)          (Decrease)
     except as noted)        Q3-2007         vs. Q3-2006         vs. Q2-2007
    -------------------------------------------------------------------------
    Revenue per financial
     statements                2,555       (15)      (1%)       27        1%
    Taxable equivalent basis
     (teb) adjustment             54        21       67%        11       26%
    -------------------------------------------------------------------------
    Revenue (teb)(1)           2,609         6         -        38        2%
    Specific provision for
     credit losses                91        49     +100%        32       54%
    Reduction of the general
     allowance                     -         -         -         -         -
    -------------------------------------------------------------------------
    Total provision for
     credit losses                91        49     +100%        32       54%
    Non-interest expense       1,659        59        4%        45        3%
    Restructuring charge           -         -         -         -         -
    -------------------------------------------------------------------------
    Total non-interest
     expense                   1,659        59        4%        45        3%
    Income taxes per
     financial statements        127       (72)     (36%)      (38)     (24%)
    Taxable equivalent basis
     adjustment                   54        21       67%        11       26%
    -------------------------------------------------------------------------
    Income taxes (teb)(1)        181       (51)     (22%)      (27)     (14%)
    Non-controlling interest
     in subsidiaries              18        (1)      (1%)       (1)      (2%)
    Net income                   660       (50)      (7%)      (11)      (2%)

    Amortization of
     intangible assets
     (after tax)                  10         1        7%         -         -
    Cash net income(1)           670       (49)      (7%)      (11)      (2%)
    Earnings per share
     - basic ($)                1.30     (0.11)      (8%)    (0.01)      (1%)
    Earnings per share
     - diluted ($)              1.28     (0.10)      (7%)    (0.01)      (1%)
    Cash earnings per share
     - diluted ($)(1)           1.30     (0.10)      (7%)    (0.01)      (1%)
    Return on equity (ROE)     18.0%               (2.3%)              (0.3%)
    Cash ROE(1)                18.2%               (2.4%)              (0.3%)
    Productivity ratio         64.9%                2.6%                1.1%
    Productivity (teb)
     ratio(1)                  63.6%                2.1%                0.8%
    Cash productivity (teb)
     ratio(1)                  63.2%                2.1%                0.9%
    Net interest margin on
     earning assets            1.61%              (0.23%)             (0.04%)
    Net interest margin on
     earning assets (teb)(1)   1.68%              (0.21%)             (0.03%)
    Effective tax rate         15.7%               (5.7%)              (3.7%)
    Effective tax rate
     (teb)(1)                  21.0%               (3.1%)              (2.2%)

    Net income:
    Personal and
     Commercial Banking          376        (1)      (1%)       25        7%
      P&C Canada                 350         3        1%        26        8%
      P&C U.S.                    26        (4)     (17%)       (1)      (6%)
    Private Client Group         105        22       26%         4        3%
    BMO Capital Markets          196        (7)      (3%)       (3)      (1%)
    Corporate Services,
     including Technology
     and Operations (T&O)        (17)      (64)   (+100%)      (37)   (+100%)
    -------------------------------------------------------------------------
    BMO Financial Group          660       (50)      (7%)      (11)      (2%)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



    (Unaudited)                                 Increase/
    (Canadian $ in millions,                   (Decrease)
     except as noted)       YTD-2007        vs. YTD-2006
    -----------------------------------------------------
    Revenue per financial
     statements                7,149      (375)      (5%)
    Taxable equivalent basis
     (teb) adjustment            136        42       46%
    -----------------------------------------------------
    Revenue (teb)(1)           7,285      (333)      (4%)
    Specific provision for
     credit losses               202        42       26%
    Reduction of the general
     allowance                     -         -         -
    -----------------------------------------------------
    Total provision for
     credit losses               202        42       26%
    Non-interest expense       4,811        71        1%
    Restructuring charge         135       135     +100%
    -----------------------------------------------------
    Total non-interest
     expense                   4,946       206        4%
    Income taxes per
     financial statements        266      (334)     (56%)
    Taxable equivalent basis
     adjustment                  136        42       46%
    -----------------------------------------------------
    Income taxes (teb)(1)        402      (292)     (42%)
    Non-controlling interest
     in subsidiaries              56        (1)        -
    Net income                 1,679      (288)     (15%)

    Amortization of
     intangible assets
     (after tax)                  29         2        4%
    Cash net income(1)         1,708      (286)     (14%)
    Earnings per share
     - basic ($)                3.29     (0.59)     (15%)
    Earnings per share
     - diluted ($)              3.24     (0.56)     (15%)
    Cash earnings per share
     - diluted ($)(1)           3.29     (0.57)     (15%)
    Return on equity (ROE)     15.1%               (4.1%)
    Cash ROE(1)                15.4%               (4.0%)
    Productivity ratio         69.2%                6.2%
    Productivity (teb)
     ratio(1)                  67.9%                5.7%
    Cash productivity (teb)
     ratio(1)                  67.4%                5.6%
    Net interest margin on
     earning assets            1.63%              (0.20%)
    Net interest margin on
     earning assets (teb)(1)   1.69%              (0.18%)
    Effective tax rate         13.3%               (9.6%)
    Effective tax rate
     (teb)(1)                  18.8%               (6.7%)

    Net income:
    Personal and
     Commercial Banking        1,048        87        9%
      P&C Canada                 966        96       11%
      P&C U.S.                    82        (9)     (10%)
    Private Client Group         301        30       11%
    BMO Capital Markets          377      (295)     (44%)
    Corporate Services,
     including Technology
     and Operations (T&O)        (47)     (110)   (+100%)
    -----------------------------------------------------
    BMO Financial Group        1,679      (288)     (15%)
    -----------------------------------------------------
    -----------------------------------------------------
    (1) These are non-GAAP amounts or non-GAAP measures. Please see footnote
        2 to the preceding Operating Highlights and the Non-GAAP Measures
        section that follows, which outline the use of non-GAAP measures in
        this document.
    

    Management's Responsibility for Financial Information

    BMO's CEO and CFAO have certified the appropriateness of the financial
disclosures in our interim MD&A and unaudited interim consolidated financial
statements for the period ended July 31, 2007. They have also certified that
they are responsible for the design of disclosure controls and procedures and
internal control over financial reporting.
    BMO's internal control over financial reporting includes policies and
procedures that: pertain to the maintenance of records that in reasonable
detail accurately and fairly reflect the transactions and dispositions of the
assets of BMO; provide reasonable assurance that transactions are recorded as
necessary to permit preparation of the financial statements in accordance with
Canadian generally accepted accounting principles and the requirements of the
Securities and Exchange Commission in the United States, as applicable, and
that receipts and expenditures of BMO are being made only in accordance with
authorizations of management and directors of BMO; and provide reasonable
assurance regarding prevention or timely detection of unauthorized
acquisition, use or disposition of BMO's assets that could have a material
effect on the financial statements.
    Because of its inherent limitations, internal control over financial
reporting can provide only reasonable assurance and may not prevent or detect
misstatements. Further, projections of any evaluation of effectiveness to
future periods are subject to the risk that controls may become inadequate
because of changes in conditions, or that the degree of compliance with the
policies or procedures may deteriorate.
    In connection with BMO Financial Group's review of its losses in its
commodities business, BMO determined at the end of the second quarter that a
more appropriate market-based methodology should be used for valuing the
commodities portfolio and that the independent price verification processes
previously performed by BMO failed to identify price discrepancies. These
factors, together with increased concerns with the reliability of quotes from
BMO's principal broker used in the first quarter valuation resulted in the
restatement of BMO's previously reported financial statements for the quarter
ended January 31, 2007.

    
    In light of the foregoing, BMO took the following remedial actions in the
second and third quarters:
    -   placed two of our commodities professionals on leave. Those
        individuals are no longer employed by BMO;
    -   changed reporting lines within BMO Capital Markets for the
        commodities business, appointed a new head of energy trading and
        hired additional key personnel;
    -   suspended our business relationship with the principal broker used in
        the first quarter valuation;
    -   changed our independent price verification process to incorporate a
        more appropriate market-based valuation methodology for determining
        ongoing mark-to-market valuation of the commodities portfolio; and
    -   increased management oversight, implemented new risk limits and
        reduced existing risk limits.
    

    Except for the above remedial actions, there were no changes in our
internal control over financial reporting during the quarter ended July 31,
2007 that materially affected, or are reasonably likely to materially affect,
our internal control over financial reporting.
    As in prior quarters, BMO's audit committee reviewed this document,
including the attached unaudited interim consolidated financial statements,
and BMO's Board of Directors approved the document prior to its release.
    A comprehensive discussion of our businesses, strategies and objectives
can be found in Management's Discussion and Analysis in BMO's 2006 Annual
Report, which can be accessed on our web site at
www.bmo.com/investorrelations. Readers are also encouraged to visit the site
to view other quarterly financial information.

    -------------------------------------------------------------------------
    Caution Regarding Forward-Looking Statements

    Bank of Montreal's public communications often include written or oral
forward-looking statements. Statements of this type are included in this
document, and may be included in other 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, and are intended to be forward-looking statements under, the
United States Private Securities Litigation Reform Act of 1995 and any
applicable Canadian securities legislation. Forward-looking statements may
involve, but are not limited to, comments with respect to our objectives and
priorities for 2007 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, forecasts, conclusions or projections will
not prove to be accurate, that our assumptions may not be correct and that
actual results may differ materially from such predictions, forecasts,
conclusions or projections. 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: general economic
conditions in the countries in which we operate; interest rate and currency
value fluctuations; changes in monetary policy; the degree of competition in
the geographic and business areas in which we operate; changes in laws;
judicial or regulatory proceedings; the accuracy and completeness of the
information we obtain with respect to our customers and counterparties; our
ability to execute our strategic plans and to complete and integrate
acquisitions; critical accounting estimates; operational and infrastructure
risks; general political conditions; global capital market activities; the
possible effects on our business of war or terrorist activities; disease or
illness that impacts on local, national or international economies;
disruptions to public infrastructure, such as transportation, communications,
power or water supply; and technological changes.
    We caution that the foregoing list is not exhaustive of all possible
factors. Other factors could adversely affect our results. For more
information, please see the discussion on pages 28 and 29 of BMO's 2006 Annual
Report, which outlines in detail certain key factors that may affect BMO's
future results. When relying on forward-looking statements to make decisions
with respect to Bank of Montreal, 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.
    Assumptions about the future performance of the Canadian and U.S.
economies and how that will affect our businesses were material factors we
considered when setting our strategic priorities and objectives and in
determining our financial targets, including provisions for credit losses. Key
assumptions included that the Canadian and U.S. economies would expand at a
moderate pace in 2007 and that inflation would remain low. We also assumed
that interest rates in 2007 would remain little changed in Canada but decline
in the United States and that the Canadian dollar would hold onto its value
relative to the U.S. dollar. The Canadian dollar has strengthened relative to
the U.S. dollar and interest rates have increased in the United States, but we
believe that our other assumptions remain valid. We have continued to rely
upon those assumptions and the views outlined in the preceding Economic
Outlook & Market Environment section in considering our ability to achieve our
2007 targets. In determining our expectations for economic growth, both
broadly and in the financial services sector, we primarily consider historical
economic data provided by the Canadian and U.S. governments and their
agencies. Tax laws in the countries in which we operate, primarily Canada and
the United States, are material factors we consider when determining our
sustainable effective tax rate.
    Assumptions about the performance of the natural gas and crude oil
commodities markets and how that will affect the performance of our
commodities business were material factors we considered in making the
forward- looking statements regarding the commodities portfolio set out in
this document. Key assumptions included that commodities prices and implied
volatility would be stable and our positions would continue to be managed with
a view to lowering the size and risk level of the portfolio.
    -------------------------------------------------------------------------

    Regulatory Filings

    Our continuous disclosure materials, including our interim filings,
annual MD&A and audited consolidated financial statements, our Annual
Information Form and the Notice of Annual Meeting of Shareholders and Proxy
Circular are available on our web site at www.bmo.com/investorrelations, on
the Canadian Securities Administrators' web site at www.sedar.com and on the
EDGAR section of the SEC's web site at www.sec.gov.

    Non-GAAP Measures

    BMO uses both GAAP and certain non-GAAP measures to assess performance.
Securities regulators require that companies caution readers that earnings and
other measures adjusted to a basis other than GAAP do not have standardized
meanings under GAAP and are unlikely to be comparable to similar measures used
by other companies. The following table reconciles the non-GAAP measures,
which management regularly monitors, to their GAAP counterparts.
    Management discloses amounts on a basis that adjusts for the impact of
significant losses in our commodities business in each quarter of 2007 and
related performance-based compensation in the first and second quarters, as
well as a restructuring charge recorded in the first quarter. The
restructuring charge related to severance costs for the planned elimination of
approximately 1,000 primarily non-customer-facing positions and other non-
employee-related costs. Amounts and measures stated on a basis that excludes
the foregoing items are considered useful as they would be expected to be more
reflective of ongoing operating results.
    Cash earnings and cash productivity measures may enhance comparisons
between periods when there has been an acquisition, particularly because the
purchase decision may not consider the amortization of intangible assets to be
a relevant expense. Cash EPS measures are also disclosed because analysts
often focus on this measure, and cash EPS is used by Thomson First Call to
track third-party earnings estimates that are frequently reported in the
media. Cash measures add the after-tax amortization of intangible assets to
GAAP earnings to derive cash net income (and associated cash EPS) and deduct
the amortization of intangible assets from non-interest expense to derive cash
productivity measures.
    BMO, like many banks, analyzes revenue, and ratios computed using
revenue, on a taxable equivalent basis (teb). This basis includes an
adjustment that increases GAAP revenues and the GAAP provision for income
taxes by an amount that would raise revenues on certain tax-exempt securities
to a level equivalent to amounts that would incur tax at the statutory rate.
The effective income tax rate is also analyzed on a taxable equivalent basis
for consistency of approach. Analysis on a taxable equivalent basis
neutralizes the impact on ratios of investing in tax exempt or tax-advantaged
securities rather than fully-taxable securities with higher yields. It reduces
distortions in ratios between periods and between institutions related to the
choice of tax-advantaged and taxable investments. In this MD&A, all revenues
and tax amounts and related ratios are stated on a taxable equivalent basis,
unless indicated otherwise.
    Net economic profit represents cash net income available to common
shareholders, less a charge for capital, and is considered an effective
measure of economic value added.

    
    GAAP and Related Non-GAAP Measures used in the MD&A

    (Canadian $ in millions,
     except as noted)    Q3-2007    Q2-2007    Q3-2006   YTD-2007   YTD-2006
    -------------------------------------------------------------------------
    Net interest income
     per financial
     statements(a)         1,247      1,204      1,234      3,647      3,529
    Non-interest revenue   1,308      1,324      1,336      3,502      3,995
    -------------------------------------------------------------------------
    Revenue per financial
     statements(b)         2,555      2,528      2,570      7,149      7,524
    Taxable equivalent
     basis (teb)
     adjustment(c)            54         43         33        136         94
    -------------------------------------------------------------------------
    Net interest income
     (teb) (a+c)(d)(1)     1,301      1,247      1,267      3,783      3,623
    Non-interest revenue   1,308      1,324      1,336      3,502      3,995
    -------------------------------------------------------------------------
    Revenue (teb)(e)(1)    2,609      2,571      2,603      7,285      7,618
    -------------------------------------------------------------------------

    Provision for income
     taxes per financial
     statements(f)           127        165        199        266        600
    Taxable equivalent
     basis adjustment         54         43         33        136         94
    -------------------------------------------------------------------------
    Provision for income
     taxes (teb)(g)(1)       181        208        232        402        694
    -------------------------------------------------------------------------

    Non-interest
     expense(h)            1,659      1,614      1,600      4,811      4,740
    Restructuring
     charge(i)                 -          -          -        135          -
    -------------------------------------------------------------------------
    Total non-interest
     expense(j)            1,659      1,614      1,600      4,946      4,740
    Amortization of
     intangible assets       (11)       (13)       (10)       (35)       (33)
    -------------------------------------------------------------------------
    Cash-based
     expense(k)(1)         1,648      1,601      1,590      4,911      4,707
    -------------------------------------------------------------------------

    Net income(l)            660        671        710      1,679      1,967
    Amortization of
     intangible assets,
     net of income taxes      10         10          9         29         27
    -------------------------------------------------------------------------
    Cash net
     income(m)(1)            670        681        719      1,708      1,994
    Preferred share
     dividends                (9)       (13)        (6)       (31)       (22)
    Charge for capital(1)   (381)      (379)      (364)    (1,145)    (1,067)
    -------------------------------------------------------------------------
    Net economic profit(1)   280        289        349        532        905
    -------------------------------------------------------------------------

    Productivity ratio (%)
     ((j/b) x 100)          64.9       63.8       62.3       69.2       63.0
    Productivity (teb)
     ratio(1) (%)
     ((j/e) x 100)          63.6       62.8       61.5       67.9       62.2
    Cash productivity
     (teb) ratio(1) (%)
     ((k/e) x 100)          63.2       62.3       61.1       67.4       61.8
    Net interest margin
     annualized (%)
     ((a/average earning
     assets) x 100)         1.61       1.65       1.84       1.63       1.83
    Net interest margin
     (teb) annualized(1)
     (%) ((d/average earning
     assets) x 100)         1.68       1.71       1.89       1.69       1.87
    EPS (uses net
     income) ($)            1.28       1.29       1.38       3.24       3.80
    Cash EPS(1), (uses
     cash net income) ($)   1.30       1.31       1.40       3.29       3.86
    Effective tax rate (%)
     (f/income before
     income taxes)          15.7       19.4       21.4       13.3       22.9
    Effective tax rate
     (teb) (%)(1)
     (g/income before
     income taxes plus
     teb adjustment)        21.0       23.2       24.1       18.8       25.5
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Restructuring
     charge(i)                 -          -          -        135          -
    Income taxes thereon       -          -          -         47          -
    -------------------------------------------------------------------------
    Net impact of
     restructuring(n)          -          -          -         88          -
    -------------------------------------------------------------------------

    Commodities trading
     losses(o)               149        171          -        829          -
    Performance-based
     compensation(p)           -        (33)         -       (120)         -
    Related income taxes      52         48          -        285          -
    -------------------------------------------------------------------------
    Net impact of
     Commodities trading
     losses(q)                97         90          -        424          -
    -------------------------------------------------------------------------
    Net impact of
     commodities losses,
     restructuring charge
     and income taxes
     (n+q)(1)                 97         90          -        512          -
    -------------------------------------------------------------------------

    Measures on a basis
     that excludes the
     impact of commodities
     trading losses and
     restructuring charge(1)
    Cash-based
     expense (k-i-p)       1,648      1,634      1,590      4,896      4,707
    Net income (l+n+q)       757        761        710      2,191      1,967
    Cash net income (m+n+q)  767        771        719      2,220      1,994
    Productivity ratio
     (teb) (%)
     ((j-i-p)/(e+o)) x100   60.2       60.1       61.5       60.8       62.2
    Cash productivity
     ratio (teb) (%)
     ((k-i-p)/(e+o)) x 100  59.7       59.6       61.1       60.3       61.8
    EPS (uses net income
     excluding net impact
     of commodities losses,
     restructuring charge
     and income taxes)      1.47       1.47       1.38       4.24       3.80
    Cash EPS (uses cash net
     income excluding
     commodities losses,
     restructuring charge
     and income taxes)      1.49       1.49       1.40       4.29       3.86
    ROE (%) (uses net
     income excluding
     commodities losses,
     restructuring charge
     and income taxes)      20.6       20.7       20.3       19.8       19.2
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (1) These are non-GAAP amounts or non-GAAP measures.


    Foreign Exchange

    The Canadian dollar strengthened by 7% in the third quarter after having
strengthened by almost 6% in the second quarter, increasing to a rate of $1.07
per U.S. dollar at the end of July, as the Canadian dollar reached a 30-year
high. The following table indicates the relevant average Canadian/U.S. dollar
exchange rates and the impact of changes in the rates. At the start of each
quarter, BMO enters into hedging transactions that are expected to partially
offset the pre-tax effects of exchange rate fluctuations in the quarter on our
U.S. dollar net income for that quarter. As such, these activities partially
mitigate the impact of exchange rate fluctuations within a single quarter;
hedging transactions are not, however, designed to offset the impact of year-
over-year fluctuations in exchange rates.
    The gain or loss from hedging transactions in future periods will be
determined by both future currency fluctuations and the amount of underlying
future hedging transactions, since the transactions are entered into each
quarter in relation to expected U.S. dollar denominated net income for the
next three months. The effect of currency fluctuations on our investments in
foreign operations is discussed in the Income Taxes section.

    Effects of U.S. Dollar Exchange Rate Fluctuations on BMO's Results

                                                          Q3-2007   YTD-2007
    (Canadian $ in millions,                        vs.        vs.        vs.
     except as noted)                          Q3-2006    Q2-2007   YTD-2006
    -------------------------------------------------------------------------
    Canadian/U.S. dollar exchange
     rate (average)
      Current period                            1.0673     1.0673     1.1243
      Prior period                              1.1164     1.1444     1.1379
    Decreased revenue                              (22)       (34)       (20)
    Decreased expense                               15         23         12
    Decreased provision for credit losses            2          2          2
    Increased income taxes                          (1)        (1)        (1)
    -------------------------------------------------------------------------

    Decreased net income before
     hedging gains                                  (6)       (10)        (7)
    Hedging gains                                    8          8          8
    Income taxes thereon                            (3)        (3)        (3)
    -------------------------------------------------------------------------

    Decreased net income                            (1)        (5)        (2)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    


    Other Value Measures

    Net economic profit (NEP) was $280 million (see the Non-GAAP Measures
section), compared with $349 million in the third quarter of 2006 and
$289 million in the second quarter of 2007. The reduction was attributable to
lower net income, largely due to the commodities losses. Year to date, NEP was
$532 million, down from $905 million in the first nine months of 2006. The
reduction was largely due to reduced net income associated with the
commodities losses and the restructuring charge, as well as a higher charge
for our increased capital.
    The total shareholder return (TSR) on an investment in BMO common shares
was -3.2% in the third quarter and 8.0% for the twelve months ended July 31,
2007. BMO's average annual TSR for the five-year period ended July 31, 2007
was 17.2%, below the comparable S&P/TSX Composite average annual total return
of 18.4%.

    Net Income

    Reported net income decreased $50 million from a year ago to
$660 million. There were $97 million in after-tax losses in our commodities
business. In our other businesses, net income increased $47 million or 6.6%.
P&C Canada net income increased $3 million to a record $350 million. Excluding
the MasterCard gain from the prior year and income tax recoveries in both
periods, P&C Canada's earnings increased $40 million or 14%. P&C U.S. net
income was $4 million or 17% lower as margin declined amid difficult economic
and market conditions. Private Client Group net income increased $22 million
or 26%. Broad-based revenue growth was only partially offset by higher
revenue- based costs and costs of investing to drive future revenue growth.
There was strong fee-based and commission revenue growth in full-service
investing, as well as higher revenue on increased mutual fund assets and
higher trust and investment revenue in North American private banking. BMO
Capital Markets net income fell by $7 million because of the losses in the
commodities business, but increased $90 million or 45% in its other
businesses. There was strong revenue growth in a number of product areas.
Corporate Services net income declined $64 million due to lower revenues and
higher provisions for credit losses.
    Reported net income decreased $11 million or 1.6% from the second
quarter. Adjusted for the $97 million after-tax impact of the commodities
losses recorded in the current quarter and the $90 million after-tax impact of
commodity losses net of reduced performance-based compensation in the second
quarter, net income fell $4 million from the second quarter. Results in the
current quarter included a $14 million income tax recovery in P&C Canada.
Results in the second quarter benefited from the $32 million combined after-
tax impact of an insurance gain and a gain on an investment security.
Adjusting for these items, P&C Canada net income increased $44 million or 15%.
The third quarter has three more calendar days than the second quarter, which
increases revenue, expense and net income. Corporate Services net income
declined $37 million due to lower revenues and higher provisions for credit
losses.
    Year to date, net income totalled $1,679 million, compared with
$1,967 million in the comparable period in 2006. Our commodities business
incurred $829 million ($424 million after tax and $120 million of reduced
performance-based compensation) in losses. We also recorded an $88 million
after-tax restructuring charge in the current year to date. Adjusted for the
foregoing items, net income rose $224 million or 11%. On this basis, BMO
Capital Markets net income was up on improved performance in a number of
product areas, despite particularly favourable trading revenues a year ago.
There was broad-based volume growth in P&C Canada and Private Client Group.
    The commodities losses that were recorded in net income for the first
quarter of 2007 included $203 million ($94 million after tax) of commodities
losses that relate to periods prior to fiscal 2007. Periods prior to fiscal
2007 were not restated as the amounts were not considered material. Please
refer to Note 2 to the unaudited interim consolidated financial statements for
the second quarter.
    The net income from U.S.-based businesses totalled US$3 million in the
third quarter of 2007, compared with net income of US$109 million a year ago
and US$9 million in the second quarter. Year to date, the net loss from U.S.-
based businesses totalled US$140 million, compared with net income of
US$326 million and 19% of BMO's income for the comparable period in 2006.
Current year results were affected by the losses in the commodities business,
the impact of which was recorded primarily in our U.S. businesses, as well as
the portion of the restructuring charge recorded in our U.S. results in the
first quarter. Excluding the commodities losses and restructuring charge, the
net income from U.S.-based businesses was US$103 million in the current
quarter, compared with US$99 million in the second quarter and US$109 million
a year ago. On this basis, net income from U.S. businesses was US$296 million
for the year to date, compared with net income of US$326 million a year ago.

    Revenue

    As explained in the preceding Non-GAAP Measures section, BMO, like many
banks, analyzes revenue on a taxable equivalent basis (teb) and all revenues
and ratios computed using revenue in this MD&A are stated on that basis.
    Total revenue in the third quarter increased $6 million or 0.2% from a
year ago. Results were affected by the $149 million of losses in the
commodities business in BMO Capital Markets. In our other businesses, revenue
increased $155 million or 5.9%. P&C Canada revenue increased due to volume
growth in each of the personal, commercial and card businesses, and improved
personal and commercial net interest margin, while prior year revenues
included a $38 million gain on the MCI IPO. Revenue was also higher in P&C
U.S., on a U.S. dollar basis, driven by the acquisition of FNBT. Private
Client Group also grew both net interest income and non-interest revenue. BMO
Capital Markets had strong revenue growth, adjusted for the commodities
losses, as both net interest income and non-interest revenue increased.
Corporate Services revenue was down due to reduced securitization revenue in
the current quarter and interest received on income tax refunds last year.
    Total revenue increased $38 million or 1.5% from the second quarter.
Adjusted for the $149 million of losses recorded in the commodities business
in the current quarter and the $171 million recorded in the second quarter,
revenue increased $16 million or 0.6% from the second quarter. There are three
more calendar days in the third quarter than in the second quarter, which
increases revenue, while the weaker U.S. dollar lowered revenue growth. There
was strong growth in P&C Canada as volume growth and improved net interest
margin more than offset the $40 million combined impact of a $26 million
insurance gain and a $14 million investment security gain in the second
quarter. Revenue was also higher in P&C U.S., on a U.S. dollar basis, driven
by loan and deposit growth and a stable margin. Private Client Group revenues
were relatively unchanged, although the prior quarter included a gain on sale
of Montreal Stock Exchange common shares. BMO Capital Markets revenue
increased due to higher trading revenues and increases in capital markets
fees. Total Corporate Services revenue was lower due to a reduction in
securitization revenues and lower foreign exchange gains.
    Year to date, total revenue decreased $333 million or 4.4% from a year
ago, but increased $496 million or 6.5% excluding the losses in the
commodities business. On this basis, revenue increased in P&C Canada, Private
Client Group and BMO Capital Markets due to broad-based volume growth. As
indicated previously, the commodities losses that were recorded as a reduction
to revenues in the first quarter of 2007 includes $203 million of commodities
losses that relate to periods prior to fiscal 2007. The prior periods were not
adjusted as the amounts were not considered material. Please refer to Note 2
to the unaudited interim consolidated financial statements for the second
quarter.

    

    Net Interest Margin            Increase   Increase              Increase
     (teb)(*)                     (Decrease) (Decrease)            (Decrease)
                                         vs.        vs.                   vs.
    (In basis points)    Q3-2007    Q3-2006    Q2-2007   YTD-2007   YTD-2006
    -------------------------------------------------------------------------
    P&C Canada               273          4          9        268          2
    P&C U.S.                 337        (30)        (1)       338        (33)
    -------------------------------------------------------------------------
    Personal and
     Commercial Client
     Group                   283         (1)         6        279         (3)
    Private Client Group     957        (67)       (68)       985        (21)
    BMO Capital Markets       61         (1)        (6)        63         (1)
    Corporate Services,
     including Technology
     and Operations (T&O)     nm         nm         nm         nm         nm
    -------------------------------------------------------------------------
    BMO Financial Group      168        (21)        (3)       169        (18)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Total Canadian
     Retail(xx)              308          2          5        304          3
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (*)  Net interest margin is disclosed and computed with reference to
         average earning assets, rather than total assets. This basis
         provides a more relevant measure of margins and changes in margins.
    (xx) Total Canadian retail margin represents the net interest margin of
         the combined Canadian business of P&C Canada and Private Client
         Group.
    nm - not meaningful
    


    Net Interest Income

    Net interest income increased $34 million or 2.7% from a year ago, driven
by volume growth in the client operating groups. Average earning assets
increased $42 billion or 16%, primarily due to lower-spread trading products
assets in BMO Capital Markets as its average earning assets increased
$37 billion. P&C Canada assets were higher due to loan growth and P&C U.S.
assets were higher due to loan growth and the acquisition of FNBT. There was
strong net interest income growth in BMO Capital Markets with moderate growth
in Private Client Group and P&C Canada. Corporate Services net interest income
declined, due to reductions in securitization revenue and interest received on
income tax refunds last year.
    Relative to the second quarter, net interest income increased $54 million
or 4.4%, in part due to three more calendar days in the current quarter.
Average earning assets increased $9 billion, again due primarily to an
increase in trading products and corporate banking assets in BMO Capital
Markets. Increased net interest income was largely attributable to P&C Canada
which had good asset and deposit growth and improved net interest margins.
    Year to date, net interest income increased $160 million or 4.4%, driven
by volume growth. Average earning assets increased $40 billion or 16%. There
were increases in trading and lending assets in BMO Capital Markets and
increased loans in P&C Canada and P&C U.S., driven by organic growth and
acquisitions. Corporate Services net interest income declined due to
reductions in securitization revenue and interest on income tax refunds
received last year.
    BMO's overall net interest margin on average earning assets for the third
quarter of 2007 was 1.68%, or 21 basis points lower than in the third quarter
of the prior year. There were lower net interest margins in P&C U.S. and
Private Client Group as well as a slight decline in BMO Capital Markets. Net
interest margin increased in P&C Canada due to higher mortgage spreads, a
focus on volume growth in products with higher margins and increased
commercial loan recoveries, partially offset by the effects of competitive
pressures and higher funding costs. Net interest margin in P&C U.S. has been
affected by the continued shifting of customers' preferences from higher-
spread to lower-spread loan and deposit products and by competitive pressures.
    The two main drivers of the change in total bank margin are the
individual group margins and the changes in the magnitude of each operating
group's assets. The year-over-year decrease of 21 basis points was mainly due
to growth in lower-spread trading assets in BMO Capital Markets. Both P&C U.S.
and Private Client Group had significant margin declines but they are
relatively smaller groups and their effect on the total bank margin change was
minimal.
    Relative to the second quarter, net interest margin decreased 3 basis
points. There were declines in Private Client Group and BMO Capital Markets,
while net interest margin improved in P&C Canada in part due to higher
mortgage refinancing fees, increased commercial loan recoveries and volume
growth in products with higher margins, partially offset by higher funding
costs. P&C U.S. margin was stable. Again, the decrease in the total bank
margin was due mainly to the growth in lower-spread assets in BMO Capital
Markets, mitigated by the strong margin improvement in P&C Canada.
    Year to date, BMO's overall net interest margin fell 18 basis points to
1.69%. The overall decline was mainly due to the significant lower-spread
asset growth in BMO Capital Markets, where average earning assets increased
$35 billion or 28%, with some offsetting benefit from higher net interest
margin in P&C Canada.

    Non-Interest Revenue

    Non-interest revenue decreased $28 million from a year ago to
$1,308 million, due to the $147 million non-interest revenue component of the
commodities losses. There was a $44 million increase in securitization revenue
and a $27 million reduction in card fee revenue. The decrease in card fee
revenue was driven by a credit card loan securitization in the fourth quarter
of 2006, resulting in card fee revenue being subsequently recognized as
securitization revenue. There were solid increases in equity underwriting
fees, merger and acquisition fees, mutual fund revenues, securities
commissions and lending fees. There was a $45 million decrease in net
investment securities gains, due largely to last year's $38 million gain on
the MasterCard IPO.
    Relative to the second quarter, non-interest revenue decreased
$16 million, or by $32 million excluding the non-interest revenue component of
the commodities losses in both periods. There were reductions in insurance
revenues, related to last quarter's $26 million insurance gain, as well as
securitization revenues, equity underwriting and investment securities gains.
Mutual fund revenues, lending fees and merger and acquisition fees increased.
    Year to date, non-interest revenue decreased $493 million or 12%, but
increased $326 million or 8.1% excluding the non-interest revenue component of
the commodities losses. There were significant increases in securitization
revenue, mutual fund fees, lending fees and securities commissions as well as
equity underwriting and merger and acquisition fees. Insurance revenues also
increased.

    Non-Interest Expense

    Non-interest expense increased $59 million or 3.6% from a year ago to
$1,659 million. There was a significant increase in performance-based
compensation, particularly in BMO Capital Markets where a number of businesses
had very strong revenue and net income growth. There were also increased
computer and equipment costs, while salaries and capital tax expense declined.
    BMO's productivity ratio was 63.6% in the quarter, compared with 61.5% a
year ago and 62.8% in the second quarter. The cash productivity ratio was
63.2%, a deterioration of 206 basis points from a year ago, because of the
commodities losses, and 86 basis points from the second quarter.
    Relative to the second quarter, non-interest expense increased
$45 million or 2.8%. Performance-based compensation increased, due in large
part to the reduced compensation in the second quarter associated with the
commodities business. Combined salaries and benefits were lower and there was
reduced capital tax expense.
    Year to date, non-interest expense increased $206 million or 4.3%. The
increase was attributable to the $135 million restructuring charge in the
first quarter, increased salary costs in respect of added front-line sales and
service staff in the latter half of 2006 and merit increases, as well as
higher computer and equipment costs. Performance-based compensation declined
as costs for the first six months of the year were lowered by $120 million in
respect of the losses in the commodities business. BMO's productivity ratio
was 67.9% for the year to date, compared with 62.2% a year ago.
    Excluding the commodities losses, associated performance-based
compensation and the restructuring charge, the cash productivity ratio was
59.7% in the current quarter, compared with 59.6% in the second quarter and
61.1% a year ago. On a similarly-adjusted basis, the cash productivity ratio
was 60.3% year to date and 61.8% in the comparable period of 2006.

    Risk Management

    The provision for credit losses was $91 million, up from $42 million a
year ago and $59 million in the second quarter. The increase was due to higher
new specific provisions on higher volumes as well as lower reversals and
recoveries, particularly relative to the prior year. Higher specific
provisions were in part attributable to a loss in our Canadian mortgage
business, unrelated to subprime mortgages.
    Specific provisions represented 18 basis points of average net loans and
acceptances, including securities borrowed or purchased under resale
agreements, up from a year ago and the second quarter, but below the 23 basis
point average of the past five fiscal years. Excluding the loss in our
Canadian mortgage business, specific provisions represented 15 basis points of
average net loans and acceptances.
    New impaired loan formations totalled $106 million in the quarter, down
$25 million from the second quarter but up $23 million from a year ago.
Formations are in line with expectations at this stage of the economic cycle.
There were no impaired loan sales during the current quarter, compared with
impaired loan sales of $8 million in the prior year with related reversals and
recoveries of $9 million. In the second quarter, impaired loan sales totalled
$17 million with resulting reversals and recoveries of $5 million.
    Gross impaired loans and acceptances were down from the second quarter
and remain at historically low levels. Factors contributing to the changes are
outlined in the accompanying table.
    The total allowance for credit losses of $1,045 million at the end of the
quarter was comprised of a specific allowance of $157 million and a general
allowance of $888 million. There was no significant change in the specific
allowance from the second quarter or a year ago. The general allowance is
maintained to absorb impairment in the existing credit portfolio that cannot
yet be associated with specific credit assets. It is assessed on a quarterly
basis and decreased $13 million from the end of the previous quarter due to
the change in the Canadian/U.S. dollar exchange rate. While there was no
overall general provision for credit losses in the quarter, we did reflect an
increase in the general provision of $19 million in our U.S. operations in the
quarter and a corresponding reduction of $19 million of the general provision
in our Canadian operations, reflecting the relative growth and inherent risk
in the portfolios. We continue to believe the total allowance for credit
losses fully addresses impairment in BMO's credit portfolio.
    BMO's loan book continues to be comprised largely of more stable consumer
and commercial portfolios, which, excluding securities borrowed or purchased
under resale agreements, represented 80.9% of the loan portfolio at the end of
the quarter, down from 81.2% at the end of the second quarter and 84.4% a year
ago. The declines were due to strong growth in corporate loans. Approximately
90% of the consumer portfolio, including credit cards and residential
mortgages, is comprised of secured loans. Excluding credit cards and
residential mortgages, approximately 80% of the consumer loans are secured.
    We expect the credit environment to remain somewhat volatile over the
balance of fiscal 2007, given current market concerns. Overall for fiscal
2007, we expect new specific provisions to be higher and reversals and
recoveries to be lower than in fiscal 2006. We continue to anticipate specific
provisions in fiscal 2007 to be $300 million or less, down from the fiscal
2007 target of $400 million or less established at the beginning of the year.
    BMO has no material exposure to U.S. subprime mortgages and we are
comfortable with the level of our exposure. Please see the preceding Economic
Outlook & Market Environment section.
    BMO's market risk and liquidity and funding management practices and key
measures are outlined on pages 69 to 72 of the 2006 Annual Report. Trading and
Underwriting Market Value Exposure has decreased quarter-over-quarter, mainly
due to reduced exposure in the accrual accounted, interest rate money market
portfolios. Earnings Volatility has increased quarter-over-quarter as a result
of higher equity and issuer risk exposure.
    There have been no significant changes to levels of structural market
risk and liquidity and funding risk over the quarter. As part of our ongoing
management of liquidity and funding, during the quarter we evolved certain of
our practices, continuing to strengthen our position. We remain satisfied that
our liquidity and funding management framework provides us with a sound
position despite recent market developments. There was no significant change
in our market risk management practices during the quarter. During the second
and third quarters, we changed our independent price verification process to
incorporate a more appropriate market-based valuation methodology for
determining ongoing mark-to- market valuation of the commodities portfolio and
reduced the risk limits for the portfolio.
    This Risk Management section and the following Income Taxes section
contain forward-looking statements. Please see the Caution Regarding Forward-
Looking Statements.


    
    Provisions for Credit Losses (PCL)

    (Canadian $ in
     millions, except
     as noted)               Q3-2007   Q2-2007   Q3-2006  YTD-2007  YTD-2006
    -------------------------------------------------------------------------
    New specific provisions      129        93       109       308       314
    Reversals of previously
     established allowances      (14)      (13)      (34)      (39)      (66)
    Recoveries of loans
     previously written-off      (24)      (21)      (33)      (67)      (88)
    -------------------------------------------------------------------------
    Specific provision for
     credit losses                91        59        42       202       160
    Reduction of the general
     allowance                     -         -         -         -         -
    -------------------------------------------------------------------------
    Provision for credit losses   91        59        42       202       160
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Specific PCL as a %
     of average net loans
     and acceptances
     (annualized)              0.18%     0.12%     0.09%     0.13%     0.12%
    PCL as a % of
     average net loans
     and acceptances
     (annualized)              0.18%     0.12%     0.09%     0.13%     0.12%


    Changes in Gross
     Impaired Loans and
     Acceptances (GIL)

    (Canadian $ in millions,
     except as noted)
    -------------------------------------------------------------------------
    GIL, Beginning of Period     688       748       771       666       804
    Additions to impaired
     loans & acceptances         106       131        83       350       334
    Reductions in impaired
     loans & acceptances(1)      (60)     (107)     (101)     (124)     (223)
    Write-offs                  (116)      (84)      (90)     (274)     (252)
    -------------------------------------------------------------------------
    GIL, End of Period           618       688       663       618       663
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    GIL as a % of gross
     loans & acceptances       0.30%     0.34%     0.35%     0.30%     0.35%
    GIL as a % of equity
     and allowances for
     credit losses             3.49%     3.86%     3.86%     3.49%     3.86%
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (1) Includes impaired amounts returned to performing status, loan sales,
        repayments, the impact of foreign exchange fluctuations and offsets
        for consumer write-offs which have not been recognized as formations
        (Q3-07 $76MM;Q2-07 $72MM; Q3-06 $66MM; YTD-07 $216MM; and
        YTD-06 $198MM).


    Aggregate Market Value Exposure and Earnings Volatility for Trading and
    Underwriting and Structural Positions ($ millions)(*)

    (After-tax
     Canadian                     Market value             12-month earnings
     equivalent)                 exposure (MVE)                   volatility
    -------------------------------------------------------------------------
                   Jul. 31   Apr. 30   Oct. 31   Jul. 31   Apr. 30   Oct. 31
                      2007      2007      2006      2007      2007      2006
    -------------------------------------------------------------------------
    Trading and
     Underwriting    (22.5)    (25.5)    (23.4)    (17.1)    (12.4)    (17.5)
    Structural      (258.6)   (304.2)   (267.0)    (28.7)    (26.3)    (24.1)
    -------------------------------------------------------------------------
    BMO Financial
     Group          (281.1)   (329.7)   (290.4)    (45.8)    (38.7)    (41.6)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (*) Measured at a 99% confidence interval. Losses are in brackets.


    Total Trading and Underwriting MVE Summary ($ millions)(*)


                                                             As at     As at
                                                          April 30,  October
                     For the quarter ended July 31, 2007      2007  31, 2006
    (Pre-tax
     Canadian      Quarter-                                Quarter-  Quarter-
     equivalent)       end   Average      High       Low       end       end
    ----------------------------------------------------- -------------------
    Commodities Risk  (3.3)     (4.7)     (6.8)     (3.2)     (3.4)     (8.4)
    Equity Risk      (12.6)    (11.5)    (17.7)     (6.2)     (9.5)     (9.8)
    Foreign exchange
     Risk             (1.0)     (0.6)     (1.2)     (0.2)     (0.3)     (3.3)
    Interest rate
     Risk (Mark-to-
     Market)          (3.9)     (5.1)     (7.9)     (2.3)     (7.2)     (7.1)
    Correlation        4.3       8.4      12.6       4.1       8.0      10.4
    ---------------------------------                     -------------------
    Comprehensive
     Risk            (16.5)    (13.5)    (19.3)     (8.0)    (12.4)    (18.2)
    Interest rate
     Risk (accrual)   (9.2)    (20.1)    (26.8)     (8.6)    (22.2)    (12.0)
    Issuer Risk       (8.9)     (5.5)     (9.0)     (3.9)     (4.7)     (5.8)
    ---------------------------------                     -------------------
    Total MVE        (34.6)    (39.1)    (47.6)    (27.9)    (39.3)    (36.0)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (*) One-day measure using a 99% confidence interval. Losses are in
        brackets and benefits are presented as positive numbers.


    Structural Balance Sheet Earnings and Value Sensitivity to Changes in
    Interest Rates ($ millions)(*)

    (After-tax
     Canadian                                           Earnings sensitivity
     equivalent)    Economic value sensitivity       over the next 12 months
    -------------------------------------------------------------------------
                   Jul. 31   Apr. 30   Oct. 31   Jul. 31   Apr. 30   Oct. 31
                      2007      2007      2006      2007      2007      2006
    -------------------------------------------------------------------------
    100 basis point
     increase       (252.8)   (286.5)   (237.4)     12.3     (16.3)     10.9
    100 basis point
     decrease        197.5     226.0     181.6     (26.7)      8.1     (10.5)

    200 basis point
     increase       (535.0)   (605.6)   (508.0)      7.9     (46.5)     12.1
    200 basis point
     decrease        333.7     405.7     318.3     (52.3)     34.9      (4.1)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (*) Losses are in brackets and benefits are presented as positive numbers
    


    Income Taxes

    As explained in the Non-GAAP Measures section, BMO adjusts revenue to a
taxable equivalent basis for analysis in this MD&A, with an offsetting
adjustment to the provision for income taxes. As such, the provisions for
income taxes and associated rates are stated on a taxable equivalent basis in
the MD&A.
    The provision for income taxes declined $51 million from the third
quarter a year ago and $27 million from the second quarter, to $181 million.
The effective tax rate for the quarter was 21.0%, compared with 24.1% in the
third quarter a year ago and 23.2% in the second quarter. The effective rate
for the year to date was 18.8%, compared with 25.5% a year ago. Excluding the
commodities losses and the first quarter restructuring charge, the effective
tax rate was 23.1% for the current quarter, 24.8% for the second quarter and
24.6% for the year to date. The decreases in the quarterly and year-to-date
tax rates were largely attributable to favourable resolution of certain tax
issues and a relatively higher proportion of income from lower-tax-rate
jurisdictions. We continue to expect a current sustainable tax rate of 25% to
28%. Our reported effective tax rate for the year will be lower than the
sustainable rate largely due to the reasons noted above.
    BMO hedges the foreign exchange risk arising from its investments in U.S.
operations by funding the investments in U.S. dollars. Under this program, the
gain or loss from hedging and the unrealized gain or loss from translation of
the investments in U.S. operations are charged or credited to shareholders'
equity. For income tax purposes, the gain or loss on the hedging activities
attracts an income tax charge or credit in the current period, which is
charged or credited to shareholders' equity, while the associated unrealized
gain or loss on the investments in U.S. operations does not attract income
taxes until the investments are liquidated. The income tax charge/benefit
arising from a hedging gain/loss is a function of the fluctuation in U.S.
rates from period to period. Hedging of the investments in U.S. operations has
given rise to an income tax charge in shareholders' equity of $135 million for
the quarter and $178 million for the year to date. Refer to the Consolidated
Statement of Changes in Shareholders' Equity included in the unaudited
consolidated financial statements for further details.


    
    Summary Quarterly Results Trends

    (Canadian $ in millions,
     except as noted)               Q3-2007    Q2-2007    Q1-2007    Q4-2006
    -------------------------------------------------------------------------
    Total revenue (teb)               2,609      2,571      2,105      2,494
    Provision for credit
     losses - specific                   91         59         52         51
    Provision for credit
     losses - general                     -          -          -        (35)
    Non-interest expense              1,659      1,614      1,538      1,613
    Restructuring charge                  -          -        135          -
    -------------------------------------------------------------------------
    Total non-interest expense        1,659      1,614      1,673      1,613
    Net income                          660        671        348        696
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Basic earnings per share ($)       1.30       1.31       0.68       1.37
    Diluted earnings per share ($)     1.28       1.29       0.67       1.35
    Net interest margin on
     earning assets (%)                1.68       1.71       1.70       1.83
    Effective income tax
     rate (teb) (%)                    21.0       23.2        3.3       17.4
    Canadian/U.S. dollar exchange
     rate (average)                    1.07       1.14       1.16       1.12

    Net income:
      P&C Canada                        350        324        292        272
      P&C U.S.                           26         27         29         24
    -------------------------------------------------------------------------
    Personal and Commercial Banking     376        351        321        296
    Private Client Group                105        101         95         84
    BMO Capital Markets                 196        199        (18)       188
    Corporate Services,
     including T&O                      (17)        20        (50)       128
    -------------------------------------------------------------------------
    BMO Financial Group                 660        671        348        696
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    (Canadian $ in millions,
     except as noted)               Q3-2006    Q2-2006    Q1-2006    Q4-2005
    -------------------------------------------------------------------------
    Total revenue (teb)               2,603      2,503      2,512      2,650
    Provision for credit
     losses - specific                   42         66         52         57
    Provision for credit
     losses - general                     -          -          -          -
    Non-interest expense              1,600      1,560      1,580      1,626
    Restructuring charge                  -          -          -          -
    -------------------------------------------------------------------------
    Total non-interest expense        1,600      1,560      1,580      1,626
    Net income                          710        651        606        664
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Basic earnings per share ($)       1.41       1.28       1.19       1.31
    Diluted earnings per share ($)     1.38       1.25       1.17       1.28
    Net interest margin on
     earning assets (%)                1.89       1.82       1.91       1.95
    Effective income tax
     rate (teb) (%)                    24.1       23.6       29.0       29.8
    Canadian/U.S. dollar exchange
     rate (average)                    1.12       1.14       1.16       1.18

    Net income:
      P&C Canada                        347        261        262        274
      P&C U.S.                           30         28         33         32
    -------------------------------------------------------------------------
    Personal and Commercial Banking     377        289        295        306
    Private Client Group                 83         97         91        106
    BMO Capital Markets                 203        247        222        226
    Corporate Services,
     including T&O                       47         18         (2)        26
    -------------------------------------------------------------------------
    BMO Financial Group                 710        651        606        664
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    

    BMO's quarterly earning trends were reviewed in detail on pages 75 and 76
of the 2006 Annual Report. Readers are encouraged to refer to that review for
a more complete discussion of trends and factors affecting past quarterly
results. The above table outlines summary results for the fourth quarter of
fiscal 2005 through the third quarter of fiscal 2007.
    Results in 2007 have been significantly affected by commodities losses:
$509 million ($237 million after tax and $0.46 per share) in the first
quarter; $171 million ($90 million after tax and $0.18 per share) in the
second quarter; and $149 million ($97 million after tax and $0.19 per share)
in the third quarter. Performance-based compensation was lowered in the first
two quarters by the commodities losses. Results in the first quarter of 2007
also included a $135 million ($88 million after tax and $0.17 per share)
restructuring charge recorded in Corporate Services. The Canadian dollar
strengthened significantly relative to the U.S. dollar in the most recent
quarter, an acceleration of the trend of the last three years. A strong
Canadian dollar is unfavourable for the translated value of BMO's results. BMO
Capital Markets trading revenues were particularly high in the first and
second quarters of 2006, in large part due to significant commodities trading
revenues. P&C Canada and Private Client Group continued to benefit from volume
growth in the quarter while P&C Canada's net interest margin held relatively
firm in the first half of fiscal 2007 and increased in the current quarter.
The decline in BMO's net interest margin in the first and third quarters of
2007 was largely due to strong asset growth in BMO Capital Markets, which has
lower net interest margin than other groups, and lower net interest income in
Corporate Services. The first quarter's effective income tax rate was lowered
by the impact of the commodities losses in the quarter, while the effective
rate was unusually low in the fourth quarter of 2006 due to the favourable
resolution of certain tax matters and a large number of initiatives all
generating a positive outcome.

    Balance Sheet

    Total assets of $359.2 billion increased $39.2 billion from October 31,
2006. The increase primarily reflects growth in securities ($18.8 billion),
loans ($12.8 billion), cash resources ($5.4 billion) and acceptances
($1.8 billion).
    The $18.8 billion increase in securities was attributable to higher
trading securities in BMO Capital Markets, consistent with its strategy to
expand trading activities and improve revenues, and to higher available-for-
sale securities.
    The $12.8 billion increase in net loans included a $7.8 billion increase
in business and government loans, a $2.6 billion increase in personal loans,
reflecting normal business growth, and a $0.7 billion increase in credit card
loans. Securities borrowed or purchased under resale agreements increased by
$2.8 billion as a result of increased customer demand and higher trading
activities. Residential mortgages decreased $1.0 billion due to securitization
activity combined with slower growth due to our decision to focus on
relationship-based branch originated mortgages rather than our third party
mortgage portfolio and broker balances. Derivative financial instruments were
relatively unchanged from October 31 but decreased by $8.7 billion from the
second quarter due in large part to lower levels of commodities derivatives.
    Liabilities and shareholders' equity increased $39.2 billion from
October 31, 2006. The increase primarily reflects growth in deposits
($25.2 billion), securities sold but not yet purchased ($13.2 billion), and
acceptances ($1.8 billion). Subordinated debt increased $0.7 billion due to
the issuance of $1.2 billion during the third quarter, offset on part by the
current year maturity of the 7.80% US$300 million note and the redemption of
the $150 million Series 22 debenture. Deposits by banks, which account for 13%
of total deposits, increased $3.9 billion and were used to fund securities
growth. Deposits by businesses and governments, which account for 53% of total
deposits, increased $19.9 billion and were used to fund growth in securities
and loans. Deposits from individuals, which account for the remaining 34% of
total deposits, increased $1.3 billion and were used to fund growth in loans.
The increase in securities sold but not yet purchased was used in trading
activities.
    Contractual obligations by year of maturity were outlined in Table 24 on
page 89 of BMO's 2006 Annual Report. There have been no material changes to
contractual obligations that are outside the ordinary course of business.

    Capital Management

    BMO's Tier 1 Capital Ratio was 9.29%, down from 9.67% at the end the
second quarter and 10.22% at the end of 2006. The ratio remains strong and is
well above our minimum target of 8.0%.
    BMO's Total Capital Ratio was 11.18%, up from 11.03% at the end of the
second quarter but down from 11.76% at the end of 2006.
    The quarter-over-quarter decrease in the Tier 1 Capital Ratio was
primarily attributable to growth in risk-weighted assets and the $200 million
redemption of Class B Preferred Shares, Series 4 which we redeemed on
August 27, 2007, as announced on July 24. Risk-weighted assets grew in part
due to loan growth in P&C Canada and loan and cash resources growth in
BMO Capital Markets. Market risk risk-weighted assets increased due to the
adoption of a more conservative translation of certain of our risk positions
to risk-weighted assets for regulatory capital purposes. Mortgage risk-
weighted assets in P&C Canada decreased quarter-over-quarter due to the
execution of initiatives to manage regulatory capital requirements on a cost-
effective basis.
    The quarter-over-quarter increase in the Total Capital Ratio was
primarily the result of the issuance of $1.2 billion of Series D Medium Term
Notes, Second Tranche on June 21, 2007, offset in part by the redemption of
the $150 million Series 22 7.92% debenture on July 31, 2007 and the impact of
the items noted above.
    The decreases in capital ratios relative to the end of 2006 were largely
attributable to risk-weighted asset growth in BMO Capital Markets and Personal
and Commercial Banking in the first two quarters and the items noted above, as
well as a higher goodwill deduction as a result of the acquisition of FNBT.
These factors were partially offset by the $350 million preferred share issue
in the first quarter and higher common shareholders' equity.
    During the quarter, we repurchased 2,809,900 Bank of Montreal common
shares under our common share repurchase program at an average cost of
$69.12 per share, for a total cost of $195 million. There have been
6,681,100 common shares repurchased under the current normal-course issuer bid
that expires on September 5, 2007 and pursuant to which BMO is permitted to
repurchase for cancellation up to 15 million common shares, representing
approximately 3% of BMO's public float. On July 24, 2007, we announced that we
intend to file a notice of intention with the Toronto Stock Exchange to make a
new normal course issuer bid, subject to regulatory approval and the approval
of the Exchange, that provides that we may purchase up to 25 million common
shares, being approximately 5% of the public float, between September 6, 2007
and September 5, 2008. We plan to increase the program from a maximum
15 million to 25 million shares to provide greater flexibility in managing
BMO's capital levels. Our share repurchase program is primarily used to
offset, over time, the impact of dilution caused by issuing shares through the
exercise of stock options, our dividend reinvestment plan and convertible
shares.
    On August 28, 2007, BMO's Board of Directors declared a quarterly
dividend payable to common shareholders of $0.70 per share, representing a
2.9% increase over the third quarter's dividend of $0.68 per share and a 12.9%
increase from $0.62 per share a year ago. The dividend increase reflects BMO's
policy of having a 45% to 55% dividend payout ratio over time. Since BMO's
dividend payout policy was increased in the third quarter of 2006 to 45% to
55% of net income available to shareholders, dividends paid have increased
$0.15 or 28% per share.

    
    Outstanding Shares and Securities Convertible into Common Shares

                                                         Number of shares or
    As of August 22, 2007                             Canadian dollar amount
    -------------------------------------------------------------------------
    Common shares                                                498,168,000
    Class B Preferred Shares
      Series 5                                           $           200,000
      Series 13                                          $           350,000
    Convertible into common shares:
    Class B Preferred Shares
      Series 4                                           $           200,000
      Series 6                                           $           250,000
      Series 10                                          $           396,000
    Stock options
      - vested                                                    17,825,000
      - non-vested                                                 3,342,000
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Details on share capital are outlined in Notes 20 and 21 to the audited
    financial statements on pages 118 and 119 and the table on page 59 in the
    Annual MD&A included in the 2006 Annual Report.
    Note that Series 4 preferred shares were redeemed on August 27, 2007.
    

    Eligible Dividends Designation

    For the purposes of the Income Tax Act (Canada) and any similar
provincial and territorial legislation, BMO designates all dividends
(including deemed dividends) paid on both its common and preferred shares
after January 1, 2006, including dividends paid in BMO's first, second and
third quarters of fiscal 2007, as "eligible dividends". Similarly, BMO
designates all dividends (including deemed dividends) paid thereafter on BMO's
common and preferred shares as "eligible dividends", unless BMO indicates
otherwise.

    Credit Rating

    On June 8, 2007, Standard & Poor's Ratings Services lowered its ratings
on Bank of Montreal (BMO) and its related subsidiaries, including the senior
debt rating, to A+ from AA-, citing concerns over our market risk governance
and other factors. During the second quarter, our credit rating as measured by
Moody's senior debt ratings was upgraded from Aa3 to Aa1 with a stable
outlook, due to a change in Moody's methodology. Both credit ratings are
indicative of high grade, high quality issues.

    Transactions with Related Parties

    In the ordinary course of business, we provide banking services to our
joint venture and equity accounted investments on the same terms that we offer
our customers. A select suite of customer loan and mortgage products is
offered to employees at rates normally available only to preferred customers.
    Preferred rate loan agreements were discussed in Note 26 of the audited
consolidated financial statements on page 128 of the 2006 Annual Report. There
have been no amounts advanced under these preferred rate loan agreements in
fiscal 2007, except for mortgage loans related to staff transfers we
initiated.

    Off-Balance-Sheet Arrangements

    BMO enters into a number of off-balance-sheet arrangements in the normal
course of operations. The most significant off-balance sheet arrangements that
we enter into are credit instruments and VIEs, which were described on
pages 60 and 61 of the 2006 Annual Report. There were no significant changes
to these off-balance-sheet arrangements during the nine months ended July 31,
2007.

    Accounting Policies and Critical Accounting Estimates

    The notes to BMO's October 31, 2006 audited consolidated financial
statements outline our significant accounting policies. Note 2 to the
unaudited interim consolidated financial statements for the period ended
July 31, 2007 describes changes to our accounting policies.
    Pages 62 to 64 of the 2006 Annual Report contain a discussion of certain
accounting estimates that are considered particularly important, as they
require management to make significant judgments, some of which relate to
matters that are inherently uncertain. Readers are encouraged to refer to the
Annual Report to review that discussion.

    Accounting Changes

    Financial Instruments, Hedges and Comprehensive Income

    On November 1, 2006, we adopted the CICA's new accounting requirements
for securities, hedging derivatives and certain other financial instruments.
Under these new rules, we are required to measure certain securities and
hedging derivatives at fair value and include a new section in Shareholders'
Equity, called Other Comprehensive Income (Loss), to report unrealized gains
or losses related to: certain available-for-sale securities, cash flow hedges
and foreign exchange gains or losses on our net investment in foreign
operations.
    Certain of our investment securities (referred to as available-for-sale
securities) are recorded at fair value under the new rules; however, the
requirements for recognizing gains or losses in net income are unchanged.
Unrealized gains or losses are deferred in Other Comprehensive Income until
the securities are sold or there is impairment that is other than temporary.
It is only at that time that any gain or loss is recorded in net income.
Securities whose sale is restricted or that are not traded in an active market
are also included in available-for-sale securities, but continue to be
recorded at cost.
    All of our hedging derivatives are recorded at fair value under the new
rules, but changes in fair value only impact net income to the extent that
they do not perfectly offset changes in the fair value of the item that we are
hedging, i.e. 'hedge ineffectiveness'. Any hedge ineffectiveness would be
recorded in net income. Our hedging programs are such that hedges should very
closely match the items that we hedge and, as a result, we would not expect a
significant amount of hedge ineffectiveness to arise.
    Unrealized gains and losses on equity securities included in Other
Comprehensive Income are now included in our Tier 1 and Total Capital ratios.
The impact was insignificant at July 31, 2007, April 30, 2007 and January 31,
2007. Foreign exchange gains or losses related to our net investment in
foreign operations, which were reported in Shareholders' Equity in prior
periods as well, continue to be included in the determination of our capital
ratios.
    Accumulated Other Comprehensive Income (Loss) is included in
Shareholders' Equity for purposes of calculating return on equity, resulting
in an insignificant increase in the return.
    For details of the specific accounting changes and related impacts, refer
to Note 2 in the attached unaudited interim consolidated financial statements.

    
    Review of Operating Groups' Performance

    Operating Groups' Summary Income Statements and Statistics for Q3-2007

                                                                     Q3-2007
                             ------------------------------------------------
                                                          Corporate
    (Canadian $ in millions,                              including    Total
     except as noted)            P&C       PCG       BCM       T&O       BMO
    -------------------------------------------------------------------------
    Net interest income (teb)    981       154       254       (88)    1,301
    Non-interest revenue         499       366       437         6     1,308
    -------------------------------------------------------------------------
    Total revenue (teb)        1,480       520       691       (82)    2,609
    Provision for (recovery
     of) credit losses            90         1        19       (19)       91
    Non-interest expense         847       357       445        10     1,659
    Restructuring charge           -         -         -         -         -
    -------------------------------------------------------------------------
    Total non-interest expense   847       357       445        10     1,659
    Income before income taxes
     and non-controlling
     interest in subsidiaries    543       162       227       (73)      859
    Income taxes (teb)           167        57        31       (74)      181
    Non-controlling interest
     in subsidiaries               -         -         -        18        18
    -------------------------------------------------------------------------
    Net income Q3-2007           376       105       196       (17)      660
    -------------------------------------------------------------------------
    Net income Q2-2007           351       101       199        20       671
    -------------------------------------------------------------------------
    Net income Q3-2006           377        83       203        47       710
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Other statistics
    -------------------------------------------------------------------------
    Net economic profit          198        74        54       (46)      280
    Return on equity           22.1%     35.7%     14.8%        nm     18.0%
    Cash return on equity      22.6%     36.0%     14.8%        nm     18.2%
    Productivity ratio (teb)   57.3%     68.7%     64.5%        nm     63.6%
    Cash productivity ratio
     (teb)                     56.6%     68.4%     64.4%        nm     63.2%
    Net interest margin on
     earning assets (teb)      2.83%     9.57%     0.61%        nm     1.68%
    Average common equity      6,572     1,150     4,998        nm    14,371
    Average earning assets
     ($ billions)              137.6       6.4     165.0      (1.1)    307.9
    Full-time
     equivalent staff         20,351     4,347     2,317     8,945    35,960
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


                                                                    YTD-2007
                             ------------------------------------------------
                                                          Corporate
    (Canadian $ in millions,                              including    Total
     except as noted)            P&C       PCG       BCM       T&O       BMO
    -------------------------------------------------------------------------
    Net interest income (teb)  2,853       458       741      (269)    3,783
    Non-interest revenue       1,466     1,086       807       143     3,502
    -------------------------------------------------------------------------
    Total revenue (teb)        4,319     1,544     1,548      (126)    7,285
    Provision for (recovery
     of) credit losses           269         2        58      (127)      202
    Non-interest expense       2,509     1,075     1,168        59     4,811
    Restructuring charge           -         -         -       135       135
    -------------------------------------------------------------------------
    Total non-interest expense 2,509     1,075     1,168       194     4,946
    Income before income taxes
     and non-controlling
     interest in subsidiaries  1,541       467       322      (193)    2,137
    Income taxes (teb)           493       166       (55)     (203)      402
    Non-controlling interest
     in subsidiaries               -         -         -        56        56
    -------------------------------------------------------------------------
    Net income Q3-2007         1,048       301       377       (47)    1,679
    -------------------------------------------------------------------------
    Net income Q2-2007
    -------------------------------------------------------------------------
    Net income Q3-2006           961       271       672        63     1,967
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Other statistics
    -------------------------------------------------------------------------
    Net economic profit          539       211       (37)     (182)      532
    Return on equity           21.4%     34.9%      9.5%        nm     15.1%
    Cash return on equity      22.0%     35.2%      9.5%        nm     15.4%
    Productivity ratio (teb)   58.1%     69.6%     75.4%        nm     67.9%
    Cash productivity ratio
     (teb)                     57.4%     69.4%     75.4%        nm     67.4%
    Net interest margin on
     earning assets (teb)      2.79%     9.85%     0.63%        nm     1.69%
    Average common equity      6,355     1,140     4,939        nm    14,584
    Average earning assets
     ($ billions)              136.5       6.2     157.0      (1.0)    298.7
    Full-time
     equivalent staff
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    nm - not meaningful


    The following sections review the financial results of our operating
segments and operating groups for the third quarter of 2007.
    Periodically, certain business lines and units within the business lines
are transferred between client groups to more closely align BMO's
organizational structure and its strategic priorities. All comparative figures
are reclassified to reflect these transfers.
    Note 10 to the attached unaudited interim consolidated financial
statements outlines how income statement items requiring allocation are
distributed among the operating groups, including the allocation of the
provision for credit losses. Corporate Services is generally charged (or
credited) with differences between the periodic provisions for credit losses
charged to the client groups under our expected loss provisioning methodology
and the periodic provisions required under GAAP.


    Personal and Commercial Banking
                                                Increase/           Increase/
    (Canadian $ in millions,                   (Decrease)          (Decrease)
     except as noted)        Q3-2007         vs. Q3-2006         vs. Q2-2007
    -------------------------------------------------------------------------
    Net interest income (teb)    981        37        4%        55        6%
    Non-interest revenue         499       (15)      (3%)      (20)      (4%)
    -------------------------------------------------------------------------
    Total revenue (teb)        1,480        22        2%        35        2%
    Provision for
     credit losses                90         4        4%         -         -
    Non-interest expense         847         5        1%         9        1%
    -------------------------------------------------------------------------
    Income before income
     taxes and
     non-controlling interest
     in subsidiaries             543        13        3%        26        5%
    Income taxes (teb)           167        14       10%         1        1%
    Non-controlling interest
     in subsidiaries               -         -         -         -         -
    -------------------------------------------------------------------------
    Net income                   376        (1)      (1%)       25        7%
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Amortization of
     intangible assets
     (after tax)                   9         1        8%         -         -
    -------------------------------------------------------------------------
    Cash net income              385         -         -        25        7%
    -------------------------------------------------------------------------

    Return on equity           22.1%               (2.5%)              (0.2%)
    Cash return on equity      22.6%               (2.5%)              (0.3%)
    Productivity ratio (teb)   57.3%               (0.5%)              (0.7%)
    Cash productivity
     ratio (teb)               56.6%               (0.6%)              (0.7%)
    Net interest margin on
     earning assets (teb)      2.83%              (0.01%)              0.06%
    Average earning assets   137,585     5,619        4%       540         -
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


                                                Increase/
    (Canadian $ in millions,                   (Decrease)
     except as noted)       YTD-2007        vs. YTD-2006
    -----------------------------------------------------
    Net interest income (teb)  2,853       111        4%
    Non-interest revenue       1,466       105        8%
    -----------------------------------------------------
    Total revenue (teb)        4,319       216        5%
    Provision for
     credit losses               269        11        4%
    Non-interest expense       2,509        84        3%
    -----------------------------------------------------
    Income before income
     taxes and
     non-controlling interest
     in subsidiaries           1,541       121        9%
    Income taxes (teb)           493        34        8%
    Non-controlling interest
     in subsidiaries               -         -         -
    -----------------------------------------------------
    Net income                 1,048        87        9%
    -----------------------------------------------------
    -----------------------------------------------------

    Amortization of
     intangible assets
     (after tax)                  26         3        9%
    -----------------------------------------------------
    Cash net income            1,074        90        9%
    -----------------------------------------------------

    Return on equity           21.4%                0.4%
    Cash return on equity      22.0%                0.5%
    Productivity ratio (teb)   58.1%               (1.0%)
    Cash productivity
     ratio (teb)               57.4%               (1.1%)
    Net interest margin on
     earning assets (teb)      2.79%              (0.03%)
    Average earning assets   136,481     6,661        5%
    -----------------------------------------------------
    -----------------------------------------------------


    Personal and Commercial Banking (P&C) represents the sum of our two retail
and business banking operating segments, Personal and Commercial Banking
Canada (P&C Canada) and Personal and Commercial Banking U.S. (P&C U.S.). These
operating segments are reviewed separately in the sections that follow.


    Personal and Commercial Banking Canada (P&C Canada)

                                                Increase/           Increase/
    (Canadian $ in millions,                   (Decrease)          (Decrease)
     except as noted)        Q3-2007         vs. Q3-2006         vs. Q2-2007
    -------------------------------------------------------------------------
    Net interest income (teb)    800        40        5%        65        9%
    Non-interest revenue         454       (15)      (3%)      (20)      (4%)
    -------------------------------------------------------------------------
    Total revenue (teb)        1,254        25        2%        45        4%
    Provision for
     credit losses                81         3        3%         -         -
    Non-interest expense         670        (4)      (1%)       15        2%
    -------------------------------------------------------------------------
    Income before income
     taxes and
     non-controlling
     interest in
     subsidiaries                503        26        5%        30        6%
    Income taxes (teb)           153        23       17%         4        2%
    Non-controlling interest
     in subsidiaries               -         -         -         -         -
    -------------------------------------------------------------------------
    Net income                   350         3        1%        26        8%
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Amortization of
     intangible assets
     (after tax)                   1         2        7%        (2)      (9%)
    -------------------------------------------------------------------------
    Cash net income              351         5        1%        24        8%
    -------------------------------------------------------------------------

    Personal, Insurance &
     Other revenue               639         9        1%         2         -
    Commercial revenue           348        23        7%        17        5%
    Cards revenue                267        (7)      (3%)       26       11%
    Productivity ratio (teb)   53.5%               (1.4%)              (0.7%)
    Cash productivity ratio
     (teb)                     53.3%               (1.4%)              (0.7%)
    Net interest margin on
     earning assets (teb)      2.73%               0.04%               0.09%
    Average earning assets   116,010     4,185        4%     1,947        2%
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


                                                Increase/
    (Canadian $ in millions,                   (Decrease)
     except as noted)       YTD-2007        vs. YTD-2006
    -----------------------------------------------------
    Net interest income (teb)  2,295       109        5%
    Non-interest revenue       1,334        98        8%
    -----------------------------------------------------
    Total revenue (teb)        3,629       207        6%
    Provision for
     credit losses               242         7        3%
    Non-interest expense       1,974        52        3%
    -----------------------------------------------------
    Income before income
     taxes and
     non-controlling
     interest in
     subsidiaries              1,413       148       12%
    Income taxes (teb)           447        52       13%
    Non-controlling interest
     in subsidiaries               -         -         -
    -----------------------------------------------------
    Net income                   966        96       11%
    -----------------------------------------------------
    -----------------------------------------------------

    Amortization of
     intangible assets
     (after tax)                   6         2       50%
    -----------------------------------------------------
    Cash net income              972        98       11%
    -----------------------------------------------------

    Personal, Insurance &
     Other revenue             1,866        93        5%
    Commercial revenue         1,016        63        7%
    Cards revenue                747        51        7%
    Productivity ratio (teb)   54.4%               (1.8%)
    Cash productivity ratio
     (teb)                     54.2%               (1.8%)
    Net interest margin on
     earning assets (teb)      2.68%               0.02%
    Average earning assets   114,413     4,646        4%
    -----------------------------------------------------
    -----------------------------------------------------
    


    Q3 2007 vs Q3 2006

    Net income increased $3 million or 1.0%. Results in the third quarter a
year ago included a $38 million ($25 million after tax) gain on the MasterCard
International Inc. (MCI) IPO and a $26 million recovery of prior years' income
taxes. The current quarter included a $14 million recovery of prior years'
income taxes. Excluding these items, net income rose $40 million or 14%.
Revenue rose $25 million or 2.0%, but increased $63 million or 5.2% excluding
the MCI gain of a year ago.
    In our personal business, revenue increased $9 million or 1.3%, driven by
growth in personal loans and branch originated mortgages, higher
securitization revenue and higher mortgage refinancing fees, as well as
increased sales of term investment products and mutual funds. Personal loans
increased 11.6% and we increased market share 34 basis points from a year ago
to 10.78%. Mortgage growth continued to slow due to our decision to focus on
relationship-based branch originated mortgages over our third party mortgage
portfolio and broker balances, which are declining. Mortgage market share
declined 113 basis points from a year ago to 12.68%. We anticipate market
share stabilizing and growing over time as we increase the size of our
specialized sales force. Personal deposits declined 1.1%, resulting in a
49 basis points loss of market share from the prior year to 11.73%. We are
targeting growth in personal deposits through simplified products, streamlined
account opening and an improved customer experience. These initiatives are
gaining traction as volumes began to improve during the quarter.
    In our commercial banking segment, revenues increased $23 million or
6.9%. The current quarter benefited from volume growth and higher loan
recoveries, partially offset by the impact of competitive pressures.
Commercial loans grew 7.7% from a year ago. BMO continues to rank second in
Canadian business banking market share and we increased our market share by 56
basis points from a year ago to 19.20%. Our objective is to be the market
leader. In the $1 to $5 million loan segment, there was loan growth of 8.7%
while market share increased 83 basis points.
    Cards & payment service revenues decreased $7 million or 2.5%, but
increased $31 million or 13.2% excluding the MCI gain in the previous year,
due to growth in card loans and transaction volumes.
    Net interest margin improved by 4 basis points due to higher mortgage
spreads, increased commercial loan recoveries and volume growth in products
with higher margins. The improvement was lowered by higher funding costs and
competitive pressures.
    Non-interest expense was down $4 million or 0.6%, due to lower allocated
costs related to a share of capital taxes and efficiency improvements,
partially offset by the expansion of the front-line workforce, higher cards
costs as a result of increased volumes, and bcpbank Canada costs. The cash
productivity ratio improved 137 basis points.
    Average loans and acceptances, including securitized loans, increased
$5.7 billion or 4.8% from a year ago, while personal and commercial deposits
increased $2.2 billion or 5.0%.

    Q3 2007 vs Q2 2007

    Net income increased $26 million or 8.0%. The current quarter benefited
from the $14 million income tax recovery, while the second quarter included a
$26 million ($23 million after tax) insurance gain and a $14 million
($9 million after tax) investment security gain. Adjusted for the foregoing
items, net income increased $44 million or 15% and revenue increased
$85 million or 7.2%.
    Revenue increased $45 million or 3.7%. Growth was attributable to the
$32 million impact of three more calendar days in the current quarter, volume
growth across most products, improved net interest margin, and increased card
and securitization revenues. Net interest margin rose by 9 basis points due to
higher mortgage refinancing fees, increased commercial loan recoveries and
volume growth in products with higher margins, partially offset by higher
funding costs.
    Non-interest expense increased $15 million or 2.4%, primarily due to the
$8 million impact of three more calendar days in the current quarter, higher
employee-related costs and higher depreciation related to completed
initiatives, partially offset by lower capital tax.
    Average loans and acceptances, including securitized loans, increased
$2.4 billion or 2.0% from the second quarter, while personal and commercial
deposits increased $1.4 billion or 3.0%.
    Personal loan market share increased 21 basis points from the second
quarter, while mortgage market share declined 40 basis points. Personal
deposits market share decreased by 11 basis points. Business banking loan
market share increased by 40 basis points while, in the $1 to $5 million loan
segment, there was market share growth of 56 basis points.

    Q3 YTD 2007 vs Q3 YTD 2006

    Net income increased $96 million or 11%, as revenue growth outpaced
expense growth by 3.3 percentage points.
    Revenue rose $207 million or 6.0%, led by volume-based growth in personal
and commercial loans, commercial deposits and cards. There were also higher
revenues from securitization, insurance and card transaction fees, as well as
increased sales of term investment products and mutual funds. The current year
also benefited from the insurance and investment security gains. Net interest
margin improved by 2 basis points due to volume growth in products with higher
margins.
    Non-interest expense increased $52 million or 2.7% due to higher
employee- related costs, resulting from an expansion of our front-line sales
and service staff in the latter half of 2006, as well as higher initiative
spending and bcpbank Canada costs. The cash productivity ratio improved 179
basis points.

    
    Personal and Commercial Banking U.S. (P&C U.S.)


                                                Increase/           Increase/
    (Canadian $ in millions,                   (Decrease)          (Decrease)
     except as noted)        Q3-2007         vs. Q3-2006         vs. Q2-2007
    -------------------------------------------------------------------------
    Net interest income (teb)    181        (3)      (2%)      (10)      (5%)
    Non-interest revenue          45         -         -         -         -
    -------------------------------------------------------------------------
    Total revenue (teb)          226        (3)      (1%)      (10)      (5%)
    Provision for
     credit losses                 9         1       19%         -         -
    Non-interest expense         177         9        5%        (6)      (4%)
    -------------------------------------------------------------------------
    Income before income taxes
     and non-controlling
     interest in subsidiaries     40       (13)     (23%)       (4)      (7%)
    Income taxes (teb)            14        (9)     (33%)       (3)      (9%)
    Non-controlling interest
     in subsidiaries               -         -         -         -         -
    -------------------------------------------------------------------------
    Net income                    26        (4)     (17%)       (1)      (6%)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Amortization of intangible
     assets (after tax)            8        (1)      (8%)        2        nm
    -------------------------------------------------------------------------
    Cash net income               34        (5)     (13%)        1        6%
    -------------------------------------------------------------------------

    Productivity ratio (teb)   78.3%                4.5%                0.6%
    Cash productivity
     ratio (teb)               74.7%                4.2%                0.6%
    Net interest margin on
     earning assets (teb)      3.37%              (0.30%)             (0.01%)
    Average earning assets    21,575     1,434        7%    (1,407)      (6%)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    U.S. Select Financial
     Data (US$ in millions)
    -------------------------------------------------------------------------
    Net interest income (teb)    169         4        3%         2        2%
    Non-interest revenue          42         2        7%         3        7%
    -------------------------------------------------------------------------
    Total revenue (teb)          211         6        4%         5        3%
    Non-interest expense         165        15       10%         4        3%
    Net Income                    24        (4)     (13%)        -         -
    Average assets            21,976     2,380       12%       277        1%
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


                                                Increase/
    (Canadian $ in millions,                   (Decrease)
     except as noted)       YTD-2007        vs. YTD-2006
    -----------------------------------------------------
    Net interest income (teb)    558         2         -
    Non-interest revenue         132         7        6%
    -----------------------------------------------------
    Total revenue (teb)          690         9        1%
    Provision for
     credit losses                27         4       19%
    Non-interest expense         535        32        6%
    -----------------------------------------------------
    Income before income taxes
     and non-controlling
     interest in subsidiaries    128       (27)     (17%)
    Income taxes (teb)            46       (18)     (28%)
    Non-controlling interest
     in subsidiaries               -         -         -
    -----------------------------------------------------
    Net income                    82        (9)     (10%)
    -----------------------------------------------------
    -----------------------------------------------------

    Amortization of intangible
     assets (after tax)           20         1        9%
    -----------------------------------------------------
    Cash net income              102        (8)      (7%)
    -----------------------------------------------------

    Productivity ratio (teb)   77.6%                3.7%
    Cash productivity
     ratio (teb)               74.1%                3.4%
    Net interest margin on
     earning assets (teb)      3.38%              (0.33%)
    Average earning assets    22,068     2,015       10%
    -----------------------------------------------------
    -----------------------------------------------------

    U.S. Select Financial
     Data (US$ in millions)
    -----------------------------------------------------
    Net interest income (teb)    496         7        2%
    Non-interest revenue         117         7        7%
    -----------------------------------------------------
    Total revenue (teb)          613        14        3%
    Non-interest expense         476        34        8%
    Net Income                    73        (8)     (10%)
    Average assets            21,298     2,124       11%
    -----------------------------------------------------
    -----------------------------------------------------
    


    Q3 2007 vs Q3 2006

    Net income decreased $4 million or 17% from a year ago. Revenue fell
$3 million or 1.1%. On a U.S. dollar basis, revenue increased US$6 million or
3.5%. The inclusion of results of First National Bank and Trust (FNBT) added
US$13 million to revenues. The impact of a 30 basis point decline in net
interest margin offset the effects of 12% growth in loans (8% excluding FNBT)
and 10% growth in deposits (4% excluding FNBT).
    Non-interest expense increased $9 million or 4.9%, but increased
US$15 million or 9.8% on a U.S. dollar basis. Expense included US$10 million
of FNBT operating costs and US$6 million of integration costs. Our cash
productivity ratio deteriorated 420 basis points to 74.7%. Management is
focused on controlling expense growth through reducing personnel costs,
slowing branch expansion and other initiatives.

    Q3 2007 vs Q2 2007

    Net income fell $1 million or 5.7%. On a U.S. dollar basis, excluding
acquisition integration costs in both periods, net income increased $2 million
or 6.7%.
    Quarterly results in 2007 have been affected by ongoing acquisition
integration costs. In the absence of these costs, earnings would have
increased quarter-over-quarter in each period in 2007, growing from
US$23.8 million in the fourth quarter of 2006 to US$28.4MM in the current
quarter.
    Revenue decreased $10 million or 4.5% from the second quarter. On a
U.S. dollar basis, revenue increased $5 million or 2.5%. The increase was
largely attributable to deposit growth of 1.2% and loan growth of 1.4%. Net
interest margin declined by only 1 basis point and is expected to remain
stable for the remainder of the year.
    Non-interest expense decreased $6 million or 3.8%. On a U.S. dollar
basis, non-interest expense was US$4 million or 3.2% higher, primarily due to
increased acquisition integration costs.
    Our Retail Net Promoter Score, a measure of the strength of customer
loyalty, was 41%, consistent with the second quarter.
    During the quarter, we successfully completed the conversion of FNBT into
our operating model and brand with minimal customer impact.

    Q3 YTD 2007 vs Q3 YTD 2006

    Net income decreased $9 million or 10%.
    Revenue rose $9 million or 1.3%. On a U.S. dollar basis, revenue
increased $14 million or 2.6%. The increase was driven by the $26 million
impact of the FNBT acquisition as well as loan and deposit growth, partially
offset by margin compression. Excluding FNBT, loans grew US$1.7 billion or
10.4% and deposits grew US$0.7 billion or 4.5%. Net interest margin was down
33 basis points due to competitive pressures on pricing and the continued
shifting of customers' preferences from higher-spread to lower-spread deposit
products.
    Non-interest expense increased $32 million or 6.3%. On a U.S. dollar
basis, expense increased US$34 million or 7.7%. Expenses included $19 million
of FNBT operating costs. Also contributing to the increase were operating
costs of our new branch technology platform, increased costs associated with
branches opened primarily during fiscal 2006 and higher business volumes.
These increases were partially offset by the impact of our expense management
initiatives. As a result of expense growth exceeding revenue growth, our cash
productivity ratio deteriorated by 340 basis points to 74.1%.


    
    Private Client Group (PCG)


                                                Increase/           Increase/
    (Canadian $ in millions,                   (Decrease)          (Decrease)
     except as noted)        Q3-2007         vs. Q3-2006         vs. Q2-2007
    -------------------------------------------------------------------------
    Net interest income (teb)    154         6        4%         1         -
    Non-interest revenue         366        37       11%         1         -
    -------------------------------------------------------------------------
    Total revenue (teb)          520        43        9%         2         -
    Provision for
     credit losses                 1         -         -         1      100%
    Non-interest expense         357        13        4%        (2)      (1%)
    -------------------------------------------------------------------------
    Income before income taxes   162        30       22%         3        2%
    Income taxes (teb)            57         8       14%        (1)        -
    -------------------------------------------------------------------------
    Net income                   105        22       26%         4        3%
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Amortization of intangible
     assets (after tax)            1         -         -         -         -
    -------------------------------------------------------------------------
    Cash net income              106        22       26%         4        3%
    -------------------------------------------------------------------------

    Return on equity           35.7%                7.3%               (0.4%)
    Cash return on equity      36.0%                7.3%               (0.5%)
    Productivity ratio (teb)   68.7%               (3.4%)              (0.6%)
    Cash productivity
     ratio (teb)               68.4%               (3.3%)              (0.6%)
    Net interest margin on
     earning assets (teb)      9.57%              (0.67%)             (0.68%)
    Average earning assets     6,353       622       11%       202        3%
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    U.S. Select Financial
     Data (US$ in millions)
    Total revenue (teb)           62        (2)      (4%)        2        3%
    Non-interest expense          59        (6)     (10%)        3        4%
    Net Income                     2         4     +100%         -         -
    Cash net income                3         4     +100%         -         -
    Average assets             2,103         8         -        32        2%
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


                                                Increase/
    (Canadian $ in millions,                   (Decrease)
     except as noted)       YTD-2007        vs. YTD-2006
    -----------------------------------------------------
    Net interest income (teb)    458        34        8%
    Non-interest revenue       1,086        82        8%
    -----------------------------------------------------
    Total revenue (teb)        1,544       116        8%
    Provision for
     credit losses                 2         -         -
    Non-interest expense       1,075        68        7%
    -----------------------------------------------------
    Income before income taxes   467        48       11%
    Income taxes (teb)           166        18       11%
    -----------------------------------------------------
    Net income                   301        30       11%
    -----------------------------------------------------
    -----------------------------------------------------

    Amortization of intangible
     assets (after tax)            3         -         -
    -----------------------------------------------------
    Cash net income              304        30       11%
    -----------------------------------------------------

    Return on equity           34.9%                3.7%
    Cash return on equity      35.2%                3.6%
    Productivity ratio (teb)   69.6%               (0.9%)
    Cash productivity
     ratio (teb)               69.4%               (0.8%)
    Net interest margin on
     earning assets (teb)      9.85%              (0.21%)
    Average earning assets     6,211       573       10%
    -----------------------------------------------------
    -----------------------------------------------------

    U.S. Select Financial
     Data (US$ in millions)
    Total revenue (teb)          181        (4)      (2%)
    Non-interest expense         175        (6)      (4%)
    Net Income                     4         1       30%
    Cash net income                6         1       19%
    Average assets             2,074       (40)      (2%)
    -----------------------------------------------------
    -----------------------------------------------------
    


    Q3 2007 vs Q3 2006

    Net income increased $22 million or 26%.
    Revenue increased $43 million or 8.8% and $46 million or 9.5% excluding
the impact of the weaker U.S. dollar. Non-interest revenue increased 11%,
primarily due to higher fee-based and commission revenue in Full-Service
Investing. Higher mutual fund revenue on increased client assets and higher
trust and investment revenue in North American Private Banking also
contributed to the growth. Net interest income increased 3.7% primarily due to
higher deposit balances in the brokerage businesses.
    Non-interest expense increased $13 million or 3.8% and $16 million or
4.6% excluding the benefit of the weaker U.S. dollar, primarily due to higher
revenue-based costs and continued investment in our client-facing sales force
and supporting technology to drive future revenue growth. The cash
productivity ratio improved 329 basis points over the prior year.
    The Group's $277 billion of assets under management and administration
and term deposits were affected by softer market conditions this quarter.
Assets increased $19 billion or 7.4% year-over-year, excluding the impact of
foreign exchange and the transfer of our U.S. Institutional Trust and Custody
business to P&C U.S. in the current quarter. The revenue associated with that
business is not significant to Private Client Group or to P&C U.S.

    Q3 2007 vs Q2 2007

    Net income increased $4 million or 2.9%.
    Revenue was relatively unchanged, but increased $14 million excluding a
gain on the sale of Montreal Stock Exchange common shares in the prior quarter
and the impact of the weaker U.S. dollar. The growth was primarily due to
higher mutual fund revenues as the brokerage businesses were affected by
seasonally lower third quarter client trade volumes.
    Non-interest expense was $2 million or 0.7% lower, but increased
$2 million or 0.5% excluding the impact of the weaker U.S. dollar. The growth
in expenses was primarily due to increased investment in the sales force and
supporting technology. The cash productivity ratio improved 55 basis points
over the prior quarter.

    Q3 YTD 2007 vs Q3 YTD 2006

    Net income increased $30 million or 11%.
    Revenue increased $116 million or 8.1%, with all lines of business
contributing to the growth.
    Non-interest expense increased $68 million or 6.7%. Expenses increased
primarily due to higher revenue-based costs and increased investment spending
to drive future revenue growth. The cash productivity ratio improved 82 basis
points over the prior year.

    
    BMO Capital Markets


                                                Increase/           Increase/
    (Canadian $ in millions,                   (Decrease)          (Decrease)
     except as noted)        Q3-2007         vs. Q3-2006         vs. Q2-2007
    -------------------------------------------------------------------------
    Net interest income (teb)    254        54       27%        (1)      (1%)
    Non-interest revenue         437       (40)      (9%)       42       11%
    -------------------------------------------------------------------------
    Total revenue (teb)          691        14        2%        41        6%
    Provision for
     credit losses                19        (1)      (3%)        -         -
    Non-interest expense         445        60       16%        50        13%
    -------------------------------------------------------------------------
    Income before income taxes   227       (45)     (17%)       (9)      (4%)
    Income taxes
     (recovery) (teb)             31       (38)     (57%)       (6)     (20%)
    -------------------------------------------------------------------------
    Net income                   196        (7)      (3%)       (3)      (1%)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Amortization of intangible
     assets (after tax)            -         -         -         -         -
    -------------------------------------------------------------------------
    Cash net income              196        (7)      (3%)       (3)      (1%)
    -------------------------------------------------------------------------

    Trading Products revenue     274       (77)     (22%)       89       48%
    Investment and Corporate
     Banking and Other revenue   417        91       28%       (48)     (10%)
    Return on equity           14.8%               (2.6%)              (1.1%)
    Cash return on equity      14.8%               (2.6%)              (1.1%)
    Productivity ratio (teb)   64.5%                7.8%                3.9%
    Cash productivity
     ratio (teb)               64.4%                7.7%                3.8%
    Net interest margin on
     earning assets (teb)      0.61%              (0.01%)             (0.06%)
    Average earning
     assets                  164,957    36,671       29%     8,213        5%
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    U.S. Select Financial
     Data (US$ in millions)
    Revenue                      147      (139)     (49%)       (6)      (4%)
    Non-interest expense         162        (7)      (4%)       12        8%
    Net Income                    (1)      (69)   (+100%)       (2)   (+100%)
    Average assets            75,869    20,141       36%     3,180        4%
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


                                                Increase/
    (Canadian $ in millions,                   (Decrease)
     except as noted)       YTD-2007        vs. YTD-2006
    -----------------------------------------------------
    Net interest income (teb)    741       159       27%
    Non-interest revenue         807      (758)     (48%)
    -----------------------------------------------------
    Total revenue (teb)        1,548      (599)     (28%)
    Provision for
     credit losses                58        (2)      (2%)
    Non-interest expense       1,168       (43)      (4%)
    -----------------------------------------------------
    Income before income taxes   322      (554)     (63%)
    Income taxes
     (recovery) (teb)            (55)     (259)   (+100%)
    -----------------------------------------------------
    Net income                   377      (295)     (44%)
    -----------------------------------------------------
    -----------------------------------------------------

    Amortization of intangible
     assets (after tax)            -        (1)         -
    -----------------------------------------------------
    Cash net income              377      (296)     (44%)
    -----------------------------------------------------

    Trading Products revenue     283      (811)     (74%)
    Investment and
     Corporate Banking
     and Other revenue         1,265       212       20%
    Return on equity            9.5%              (10.0%)
    Cash return on equity       9.5%              (10.1%)
    Productivity ratio (teb)   75.4%               19.0%
    Cash productivity
     ratio (teb)               75.4%               19.0%
    Net interest margin on
     earning assets (teb)      0.63%              (0.01%)
    Average earning assets   156,988    34,646       28%
    -----------------------------------------------------
    -----------------------------------------------------

    U.S. Select Financial
     Data (US$ in millions)
    Revenue                      128      (773)     (85%)
    Non-interest expense         450       (44)      (9%)
    Net Income                  (167)     (403)   (+100%)
    Average assets            71,643    20,075       39%
    -----------------------------------------------------
    -----------------------------------------------------
    


    Q3 2007 vs Q3 2006

    Net income decreased $7 million or 3.4%. Results were affected by
$149 million ($97 million after tax) of losses in our commodities business.
Adjusted for those losses, net income increased $90 million or 45%, driven by
revenue growth and a lower effective tax rate, partially offset by expense
growth albeit at a lower rate than revenue growth.
    Revenue rose $14 million or 1.8%. Trading Products revenue fell
$77 million or 22%. Adjusted for the commodities losses in the quarter,
Trading Products revenue rose $72 million or 21%, due to higher trading
revenues, equity underwriting fees, commission revenues and improvements in
interest-rate-sensitive businesses. Interest rate trading revenues were up
substantially, benefiting from a steeper yield curve, widening spreads and
increased volatility during the quarter.
    Investment and Corporate Banking and Other revenue increased strongly,
rising $91 million or 28%. Equity underwriting and merger and acquisitions
fees more than doubled and debt underwriting revenues almost doubled from a
year ago. There were also increased revenues from higher corporate banking
assets. Growth was negatively affected by lower investment securities gains,
strong commodity trading revenues a year ago and the weaker U.S. dollar.
    Net interest income improved due to higher trading net interest income
and the impact of higher corporate banking assets. Net interest margin
deteriorated 1 basis point.
    Non-interest expense increased $60 million or 16%. There was
significantly higher performance-based compensation as revenue and net income
grew strongly in a number of our businesses. The Group's cash productivity
ratio deteriorated due to the commodities losses.
    The effective tax rate was low in the third quarter. The commodities
losses were attributable to our U.S. business and, as such, are recoverable at
a relatively higher tax rate. The Group's other income attracts income taxes
at a lower tax rate overall, resulting in a lower effective tax rate.
    Results from U.S. operations deteriorated due to the commodities losses.

    Q3 2007 vs Q2 2007

    Net income decreased $3 million or 1.4%. Second quarter results were
affected by $171 million of commodities losses ($90 million after tax and
reduced performance-based compensation). Adjusted for the net impact of those
items in both periods, net income rose $4 million or 1.5%.
    Revenue increased $41 million on a reported basis, but by $19 million or
2.1% excluding the commodities losses in both periods. There were increases in
trading revenues, merger and acquisition fees and debt underwriting revenues.
There were reductions in cash collections on previously-impaired loans, net
investment securities gains and equity underwriting fees.
    Non-interest expense was $50 million or 13% higher, due to increased
performance-based compensation, which was reduced by $33 million in the prior
quarter by commodities losses.

    Q3 YTD 2007 vs Q3 YTD 2006

    Net income decreased $295 million or 44%. Adjusted for the net impact of
$829 million of losses in our commodities business ($424 million after tax and
associated performance-based compensation), net income rose $129 million or
19%.
    Revenue fell $599 million or 28% due to the commodities losses. Excluding
the commodities losses, revenue increased $230 million or 11%. There was
increased equity underwriting activity, higher merger and acquisitions fees,
increased lending fees and increased commissions. Income from corporate
banking assets also increased but that impact was partially offset by slightly
lower spreads.
    Net interest income increased due to higher trading net interest income
and higher corporate banking assets, partially offset by reduced spreads on
corporate loans in the competitive environment.
    Non-interest expense decreased $43 million or 3.6%, due to lower
performance-based compensation in the first half of the year. The Group earned
income before income taxes for the year to date; however, results include an
income tax recovery because of the taxation of the commodities portfolio
losses relative to the Group's other taxable income, as outlined in the
foregoing quarterly discussions.

    
    Corporate Services, Including Technology and Operations


                                                Increase/           Increase/
    (Canadian $ in millions,                   (Decrease)          (Decrease)
     except as noted)        Q3-2007         vs. Q3-2006         vs. Q2-2007
    -------------------------------------------------------------------------
    Net interest income (teb)    (88)      (63)   (+100%)       (1)       4%
    Non-interest revenue           6       (10)     (59%)      (39)     (86%)
    -------------------------------------------------------------------------
    Total revenue (teb)          (82)      (73)   (+100%)      (40)     (83%)
    Provision for (recovery of)
     credit losses               (19)       46       72%        31       65%
    Non-interest expense          10       (19)     (65%)      (12)     (52%)
    Restructuring charge           -         -         -         -         -
    -------------------------------------------------------------------------
    Total non-interest expense    10       (19)     (65%)      (12)     (52%)
    Income before income taxes
     and non-controlling
     interest in subsidiaries    (73)     (100)   (+100%)      (59)   (+100%)
    Income taxes
     (recovery) (teb)            (74)      (35)     (80%)      (21)     (43%)
    Non-controlling interest
     in subsidiaries              18        (1)      (1%)       (1)      (2%)
    -------------------------------------------------------------------------
    Net income (loss)            (17)      (64)   (+100%)      (37)   (+100%)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    U.S. Select Financial
     Data (US$ in millions)
    Revenue                      (31)       (9)     (42%)       (3)      (7%)
    Provision for (recovery of)
     credit losses                 9        41     +100%        25     +100%
    Non-interest expense         (10)      (22)   (+100%)      (11)   (+100%)
    Restructuring charge           -         -         -         -         -
    -------------------------------------------------------------------------
    Total non-interest expense   (10)      (22)   (+100%)      (11)   (+100%)
    Income taxes                 (13)        9       30%       (14)   (+100%)
    Net income (loss)            (22)      (37)   (+100%)       (4)     (25%)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


                                                Increase/
    (Canadian $ in millions,                   (Decrease)
     except as noted)       YTD-2007        vs. YTD-2006
    -----------------------------------------------------
    Net interest income (teb)   (269)     (144)   (+100%)
    Non-interest revenue         143        78     +100%
    -----------------------------------------------------
    Total revenue (teb)         (126)      (66)   (+100%)
    Provision for (recovery of)
     credit losses              (127)       33       20%
    Non-interest expense          59       (38)     (39%)
    Restructuring charge         135       135     +100%
    -----------------------------------------------------
    Total non-interest expense   194        97     +100%
    Income before income taxes
     and non-controlling
     interest in subsidiaries   (193)     (196)   (+100%)
    Income taxes
     (recovery) (teb)           (202)      (85)     (72%)
    Non-controlling interest
     in subsidiaries              56        (1)        -
    -----------------------------------------------------
    Net income (loss)            (47)     (110)   (+100%)
    -----------------------------------------------------
    -----------------------------------------------------

    U.S. Select Financial
     Data (US$ in millions)
    Revenue                      (72)      (10)     (18%)
    Provision for (recovery of)
     credit losses               (27)       32       55%
    Non-interest expense         (15)      (32)   (+100%)
    Restructuring charge          18        18      100%
    -----------------------------------------------------
    Total non-interest expense     3       (14)     (82%)
    Income taxes                 (12)       28       68%
    Net income (loss)            (50)      (56)   (+100%)
    -----------------------------------------------------
    -----------------------------------------------------
    


    Corporate Services

    Corporate Services includes the corporate units that provide expertise
and governance support to BMO Financial Group in areas such as strategic
planning, law, finance, internal audit, risk management, corporate
communications, human resources and learning. Operating results include
revenues and expenses associated with certain securitization activities, the
hedging of foreign-source earnings, and activities related to the management
of certain balance sheet positions and BMO's overall asset-liability
structure.
    Corporate Services is generally charged (or credited) with differences
between the periodic provisions for credit losses charged to the client groups
under our expected loss provisioning methodology and the required periodic
provisions charged by the consolidated organization under GAAP.

    Technology and Operations

    Technology and Operations (T&O) manages, maintains and provides
governance over information technology, operations services, real estate and
sourcing for BMO Financial Group. T&O focuses on enterprise-wide priorities
that improve service quality and efficiency to deliver an excellent customer
experience.

    Financial Performance Review

    Technology and Operations operating results are included with Corporate
Services for reporting purposes. Costs of T&O's services are transferred to
the client groups (P&C, PCG and BCM) and only relatively minor variance
amounts are retained within T&O. As such, results in this section largely
reflect the other corporate units outlined above.
    The net loss in the quarter was $17 million, compared with net income of
$47 million in the third quarter a year ago. Reduced earnings were due to
lower revenues, largely lower securitization revenues and interest received
last year on tax refunds, and higher provisions for credit losses, partially
offset by lower corporate costs.
    Net income decreased $37 million from the second quarter, due to reduced
revenues, in part the impact of lower securitization revenues, and an increase
in the provision for credit losses. The lower corporate securitization revenue
was largely attributable to higher interest rates reducing the value of
mortgages we had previously securitized. A portion of this lower revenue will
be reversed over time.
    The net loss for the year to date was $47 million, compared with net
income of $63 million for the comparable period in 2006. Excluding the
$135 million restructuring charge ($88 million after tax), net income fell
$22 million due to reduced revenues and a higher provision for credit losses,
partially offset by lower corporate expenses.

    INVESTOR AND MEDIA PRESENTATION

    Investor Presentation Materials

    Interested parties are invited to visit our web site at
www.bmo.com/investorrelations to review this quarterly news release,
presentation materials and a supplementary financial information package
online. Copies of these documents are also available at BMO Financial Group's
offices at 100 King Street West, 18th Floor, 1 First Canadian Place, Toronto,
Ontario, M5X 1A1.

    Quarterly Conference Call and Webcast Presentations

    Interested parties are also invited to listen to our quarterly conference
call on Tuesday, August 28, 2007 at 2:00 p.m. (EDT). At that time, senior BMO
executives will comment on results for the quarter and respond to questions
from the investor community. The call may be accessed by telephone at 416-695-
9753 (from within Toronto) or 1-888-789-0089 (toll-free outside Toronto). A
replay of the conference call can be accessed until Monday, November 26, 2007
by calling 416-641-2196 (from within Toronto) or 1-888-742-2491 (toll-free
outside Toronto) and entering passcode 7577.
    A live webcast of the call can be accessed on our web site at
www.bmo.com/investorrelations. A replay can be accessed on the site until
Monday, November 26, 2007.

    Media Relations Contacts

    Ralph Marranca, Toronto, ralph.marranca@bmo.com, 416-867-3996
    Ronald Monet, Montreal, ronald.monet@bmo.com, 514-877-1873

    Investor Relations Contacts

    Viki Lazaris, Senior Vice-President, viki.lazaris@bmo.com,
    416-867-6656
    Steven Bonin, Director, steven.bonin@bmo.com, 416-867-5452
    Krista White, Senior Manager, krista.white@bmo.com, 416-867-7019

    Chief Financial Officer

    Karen Maidment, Chief Financial and Administrative Officer,
    karen.maidment@bmo.com, 416-867-6776

    Corporate Secretary

    Sharon Sandall, Acting Secretary, Corporate and Legal Affairs
    corp.secretary@bmo.com, 416-867-6785

    
    Shareholder Dividend Reinvestment    For other shareholder information,
    and Share Purchase Plan              please contact

    Average market price                 Bank of Montreal
    May 2007 $ 70.94                     Shareholder Services
    June 2007 $ 67.58                    Corporate Secretary's Department
    July 2007 $ 68.15                    One First Canadian Place, 21st Floor
                                         Toronto, Ontario M5X 1A1
    For dividend information, change     Telephone: (416) 867-6785
    in shareholder address or to         Fax: (416) 867-6793
    advise of duplicate mailings,        E-mail: corp.secretary@bmo.com
    please contact
                                         For further information on this
    Computershare Trust Company          report, please contact
    of Canada
    100 University Avenue, 9th Floor     Bank of Montreal
    Toronto, Ontario M5J 2Y1             Investor Relations Department
    Telephone: 1-800-340-5021 (Canada    P.O. Box 1, One First Canadian
    and the United States)               Place, 18th Floor
    Telephone: (514) 982-7800            Toronto, Ontario M5X 1A1
    (international)
    Fax: 1-888-453-0330 (Canada          To review financial results online,
    and the United States)               please visit our web site at
    Fax: (416) 263-9394                  www.bmo.com
    (international)
    E-mail: service@computershare.com


    (R) Registered trade-mark of Bank of Montreal

    Annual Meeting 2008
    -------------------
    The next Annual Meeting of Shareholders will be held on Tuesday, March 4,
    2008 in Quebec City, Quebec.



                             Financial Highlights
    -------------------------------------------------------------------------

    (Unaudited)
    (Canadian $
     in millions,
     except as
     noted)                       For the three months ended
    -------------------------------------------------------------------------
                                                                      Change
                                                                        from
                      July     April   January   October      July      July
                  31, 2007  30, 2007  31, 2007  31, 2006  31, 2006  31, 2006
    -------------------------------------------------------------------------
    Income Statement
     Highlights
    Total revenue $  2,555  $  2,528  $  2,066  $  2,461  $  2,570     (0.6)%
    Total revenue
     (teb)(a)        2,609     2,571     2,105     2,494     2,603      0.2
    Provision for
     credit losses      91        59        52        16        42     +100
    Non-interest
     expense         1,659     1,614     1,673     1,613     1,600      3.6
    Net income         660       671       348       696       710     (7.1)
    -------------------------------------------------------------------------
    Common Share
     Data ($)
    Diluted
     earnings per
     share        $   1.28  $   1.29  $   0.67  $   1.35  $   1.38  $ (0.10)
    Diluted cash
     earnings per
     share(a)         1.30      1.31      0.68      1.37      1.40    (0.10)
    Dividends
     declared per
     share            0.68      0.68      0.65      0.62      0.62     0.06
    Book value
     per share       28.81     28.95     28.90     28.89     28.21     0.60
    Closing share
     price           66.59     69.46     70.01     69.45     63.95     2.64
    Total market
     value of
     common shares
     ($ billions)     33.2      34.7      35.1      34.8      32.0      1.2
    -------------------------------------------------------------------------



                                             As at
    -------------------------------------------------------------------------
                                                                      Change
                                                                        from
                      July     April   January   October      July      July
                  31, 2007  30, 2007  31, 2007  31, 2006  31, 2006  31, 2006
    -------------------------------------------------------------------------
    Balance Sheet
     Highlights
    Assets        $359,154  $356,527  $355,491  $319,978  $311,609     15.3 %
    Net loans and
     acceptances   205,612   203,210   205,472   190,994   189,893      8.3
    Deposits       229,027   221,615   217,114   203,848   202,094     13.3
    Common
     shareholders'
     equity         14,374    14,475    14,472    14,465    14,107      1.9
    -------------------------------------------------------------------------



                               For the three months ended
    -------------------------------------------------------------------------
                      July     April   January   October      July
                  31, 2007  30, 2007  31, 2007  31, 2006  31, 2006
    -------------------------------------------------------------------------
    Primary Financial
     Measures(%)(b)
    Average annual
     five year total
     shareholder
     return           17.2      16.6      17.8      19.1      12.8
    Diluted earnings
     per share
     growth           (7.2)      3.2     (42.7)      5.5      29.0
    Diluted cash
     earnings per
     share growth(a)  (7.1)      3.1     (42.9)      3.8      27.3
    Return on equity  18.0      18.3       9.2      19.4      20.3
    Cash return on
     equity(a)        18.2      18.5       9.5      19.6      20.6
    Net economic
     profit (NEP)
     growth(a)       (19.8)     (4.2)    (+100)     (1.0)     59.3
    Revenue growth    (0.6)      2.3     (16.7)     (6.1)      6.7
    Revenue growth
     (teb)(a)          0.2       2.8     (16.2)     (5.9)      6.7
    Non-interest
     expense-to-
     revenue ratio    64.9      63.8      81.0      65.5      62.3
    Non-interest
     expense-to-
     revenue ratio
     (teb)(a)         63.6      62.8      79.5      64.6      61.5
    Cash non-interest
     expense-to-
     revenue ratio
     (teb)(a)         63.2      62.3      78.9      64.2      61.1
    Provision for
     credit losses-
     to-average loans
     and acceptances
     (annualized)     0.18      0.12      0.10      0.03      0.09
    Gross impaired
     loans and
     acceptances-to-
     equity and
     allowance for
     credit losses    3.49      3.86      4.19      3.81      3.86
    Cash and
     securities-to-
     total assets
     ratio            31.0      28.6      28.4      27.2      25.2
    Tier 1 capital
     ratio            9.29      9.67      9.76     10.22     10.07
    Credit rating
      Standard &
       Poor's           A+       AA-       AA-       AA-       AA-
      Moody's          Aa1       Aa1       Aa3       Aa3       Aa3
    -------------------------------------------------------------------------
    Other Financial
     Ratios (% except
     as noted)(b)
    Twelve month
     total
     shareholder
     return            8.0      11.3       6.0      24.1       8.0
    Dividend yield    4.08      3.92      3.71      3.57      3.88
    Price-to-earnings
     ratio (times)    14.5      14.8      15.1      13.5      12.6
    Market-to-book
     value (times)    2.31      2.40      2.42      2.40      2.27
    Net economic
     profit
     ($ millions)(a)   280       289       (37)      325       349
    Return on
     average assets   0.72      0.77      0.40      0.86      0.90
    Net interest
     margin on
     average earning
     assets           1.61      1.65      1.64      1.78      1.84
    Net interest
     margin on
     average earning
     assets (teb)(a)  1.68      1.71      1.70      1.83      1.89
    Non-interest
     revenue-to-total
     revenue          51.2      52.4      42.1      50.6      52.0
    Non-interest
     revenue-to-total
     revenue (teb)(a) 50.1      51.5      41.3      49.9      51.3
    Non-interest
     expense growth    3.6       3.5       5.9      (0.9)      2.0
    Total capital
     ratio           11.18     11.03     11.20     11.76     11.59
    Equity-to-assets
     ratio             4.3       4.3       4.3       4.7       4.7
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



    -------------------------------------------
    (Unaudited)
    (Canadian $
     in millions,
     except as
     noted)         For the nine months ended
    -------------------------------------------
                                        Change
                                          from
                      July      July      July
                  31, 2007  31, 2006  31, 2006
    -------------------------------------------
    Income Statement
     Highlights
    Total revenue $  7,149  $  7,524     (5.0)%
    Total revenue
     (teb)(a)        7,285     7,618     (4.4)
    Provision for
     credit losses     202       160     26.3
    Non-interest
     expense         4,946     4,740      4.3
    Net income       1,679     1,967    (14.7)
    -------------------------------------------
    Common Share
     Data ($)
    Diluted
     earnings per
     share        $   3.24  $   3.80  $ (0.56)
    Diluted cash
     earnings per
     share(a)         3.29      3.86    (0.57)
    Dividends
     declared per
     share            2.01      1.64     0.37
    Book value
     per share       28.81     28.21     0.60
    Closing share
     price           66.59     63.95     2.64
    Total market
     value of
     common shares
     ($ billions)     33.2      32.0      1.2
    -------------------------------------------



                        For the
                   nine months ended
    ---------------------------------
                      July      July
                  31, 2007  31, 2006
    ---------------------------------
    Primary Financial
     Measures(%)(b)
    Average annual
     five year total
     shareholder
     return           17.2      12.8
    Diluted earnings
     per share
     growth          (14.7)     13.4
    Diluted cash
     earnings per
     share growth(a) (14.8)     11.6
    Return on equity  15.1      19.2
    Cash return on
     equity(a)        15.4      19.4
    Net economic
     profit (NEP)
     growth(a)       (41.3)     15.0
    Revenue growth    (5.0)      4.2
    Revenue growth
    (teb)(a)          (4.4)      4.3
    Non-interest
     expense-to-
     revenue ratio    69.2      63.0
    Non-interest
     expense-to-
     revenue ratio
     (teb)(a)         67.9      62.2
    Cash non-interest
     expense-to-
     revenue ratio
     (teb)(a)         67.4      61.8
    Provision for
     credit losses-
     to-average loans
     and acceptances
     (annualized)     0.13      0.12
    Gross impaired
     loans and
     acceptances-to-
     equity and
     allowance for
     credit losses    3.49      3.86
    Cash and
     securities-to-
     total assets
     ratio            31.0      25.2
    Tier 1 capital
     ratio            9.29     10.07
    Credit rating
      Standard &
       Poor's           A+       AA-
      Moody's          Aa1       Aa3
    ---------------------------------
    Other Financial
     Ratios (% except
     as noted)(b)
    Twelve month
     total
     shareholder
     return            8.0       8.0
    Dividend yield    4.02      3.42
    Price-to-earnings
     ratio (times)    14.5      12.6
    Market-to-book
     value (times)    2.31      2.27
    Net economic
     profit
     ($ millions)(a)   532       905
    Return on
     average assets   0.63      0.86
    Net interest
     margin on
     average earning
     assets           1.63      1.83
    Net interest
     margin on
     average earning
     assets (teb)(a)  1.69      1.87
    Non-interest
     revenue-to-total
     revenue          49.0      53.1
    Non-interest
     revenue-to-total
     revenue (teb)(a) 48.1      52.4
    Non-interest
     expense growth    4.3       0.7
    Total capital
     ratio           11.18     11.59
    Equity-to-assets
     ratio             4.3       4.7
    ---------------------------------
    ---------------------------------
    All ratios in this report are based on unrounded numbers.
    (a) Refer to the "Non-GAAP Measures" section of Management's Discussion
        and Analysis for an explanation of cash results, reporting on a
        taxable equivalent basis (teb) and net economic profit. Securities
        regulators require that companies caution readers that earnings and
        other measures adjusted to a basis other than generally accepted
        accounting principles (GAAP) do not have standardized meanings under
        GAAP and are unlikely to be comparable to similar measures used by
        other companies.
    (b) For the period ended, or as at, as appropriate.



                      Consolidated Financial Statements

                       Consolidated Statement of Income
    -------------------------------------------------------------------------

    (Unaudited)
    (Canadian $ in millions,
     except as noted)                 For the three months ended
    -------------------------------------------------------------------------
                                July     April   January   October      July
                            31, 2007  30, 2007  31, 2007  31, 2006  31, 2006
    -------------------------------------------------------------------------
    Interest, Dividend and
     Fee Income
    Loans (Note 2)          $  2,935  $  2,839  $  2,812  $  2,739  $  2,664
    Securities                   786       731       726       589       587
    Deposits with banks          291       230       220       214       216
    -------------------------------------------------------------------------
                               4,012     3,800     3,758     3,542     3,467
    -------------------------------------------------------------------------
    Interest Expense
    Deposits                   1,968     1,833     1,776     1,686     1,536
    Subordinated debt             46        40        43        43        43
    Preferred shares and
     capital trust securities     24        26        25        25        24
    Other liabilities            727       697       718       573       630
    -------------------------------------------------------------------------
                               2,765     2,596     2,562     2,327     2,233
    -------------------------------------------------------------------------
    Net Interest Income        1,247     1,204     1,196     1,215     1,234
    Provision for credit
     losses (Note 3)              91        59        52        16        42
    -------------------------------------------------------------------------
    Net Interest Income
     After Provision for
     Credit Losses             1,156     1,145     1,144     1,199     1,192
    -------------------------------------------------------------------------
    Non-Interest Revenue
    Securities commissions
     and fees                    299       303       278       247       260
    Deposit and payment
     service charges             180       182       183       183       187
    Trading revenues
     (losses) (Note 2)            40       (10)     (352)       90       186
    Lending fees                 102       100        99        90        92
    Card fees                     79        70        63       105       106
    Investment management
     and custodial fees           81        81        77        76        77
    Mutual fund revenues         151       140       137       130       128
    Securitization revenues       65        83        87        55        21
    Underwriting and
     advisory fees               160       159       106       104        92
    Securities gains, other
     than trading                  6        48        44        46        51
    Foreign exchange, other
     than trading                 30        33        21        27        24
    Insurance income              55        77        46        49        58
    Other (Note 2)                60        58        81        44        54
    -------------------------------------------------------------------------
                               1,308     1,324       870     1,246     1,336
    -------------------------------------------------------------------------
    Net Interest Income and
     Non-Interest Revenue      2,464     2,469     2,014     2,445     2,528
    -------------------------------------------------------------------------
    Non-Interest Expense
    Employee compensation
     (Note 6)                  1,024       969       931       934       958
    Premises and equipment       325       320       308       328       299
    Amortization of
     intangible assets            11        13        11        11        10
    Travel and business
     development                  72        64        59        76        64
    Communications                38        42        33        39        36
    Business and capital taxes     -        17        24        19        23
    Professional fees             62        67        64        92        65
    Other                        127       122       108       114       145
    -------------------------------------------------------------------------
                               1,659     1,614     1,538     1,613     1,600
    -------------------------------------------------------------------------
    Restructuring Charge
     (Note 7)                      -         -       135         -         -
    -------------------------------------------------------------------------
    Income Before Provision
     for (Recovery of)
     Income Taxes and
     Non-Controlling Interest
     in Subsidiaries             805       855       341       832       928
    Income taxes (Note 2)        127       165       (26)      117       199
    -------------------------------------------------------------------------
                                 678       690       367       715       729
    Non-controlling interest
     in subsidiaries              18        19        19        19        19
    -------------------------------------------------------------------------
    Net Income              $    660  $    671  $    348  $    696  $    710
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Preferred share
     dividends              $      9  $     13  $      9  $      8  $      6
    Net income available
     to common shareholders $    651  $    658  $    339  $    688  $    704
    Average common shares
     (in thousands)          499,793   500,510   501,136   500,432   500,762
    Average diluted common
     shares (in thousands)   507,913   509,943   510,320   510,166   509,991
    -------------------------------------------------------------------------
    Earnings Per Share
     (Canadian $)
    Basic                   $   1.30  $   1.31  $   0.68  $   1.37  $   1.41
    Diluted                     1.28      1.29      0.67      1.35      1.38
    Dividends Declared Per
     Common Share               0.68      0.68      0.65      0.62      0.62
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    (Unaudited)
    (Canadian $ in millions,      For the
     except as noted)        nine months ended
    -------------------------------------------
                                July      July
                            31, 2007  31, 2006
    -------------------------------------------
    Interest, Dividend and
     Fee Income
    Loans (Note 2)           $ 8,586  $  7,246
    Securities                 2,243     1,569
    Deposits with banks          741       555
    -------------------------------------------
                              11,570     9,370
    -------------------------------------------
    Interest Expense
    Deposits                   5,577     4,057
    Subordinated debt            129       126
    Preferred shares and
     capital trust securities     75        74
    Other liabilities          2,142     1,584
    -------------------------------------------
                               7,923     5,841
    -------------------------------------------
    Net Interest Income        3,647     3,529
    Provision for credit
     losses (Note 3)             202       160
    -------------------------------------------
    Net Interest Income
     After Provision for
     Credit Losses             3,445     3,369
    -------------------------------------------
    Non-Interest Revenue
    Securities commissions
     and fees                    880       804
    Deposit and payment
     service charges             545       546
    Trading revenues
     (losses) (Note 2)          (322)      628
    Lending fees                 301       247
    Card fees                    212       291
    Investment management
     and custodial fees          239       222
    Mutual fund revenues         428       369
    Securitization revenues      235        45
    Underwriting and
     advisory fees               425       303
    Securities gains, other
     than trading                 98        99
    Foreign exchange, other
     than trading                 84        75
    Insurance income             178       155
    Other (Note 2)               199       211
    -------------------------------------------
                               3,502     3,995
    -------------------------------------------
    Net Interest Income and
     Non-Interest Revenue      6,947     7,364
    -------------------------------------------
    Non-Interest Expense
    Employee compensation
     (Note 6)                  2,924     2,890
    Premises and equipment       953       883
    Amortization of
     intangible assets            35        33
    Travel and business
     development                 195       177
    Communications               113        92
    Business and capital taxes    41        75
    Professional fees            193       195
    Other                        357       395
    -------------------------------------------
                               4,811     4,740
    -------------------------------------------
    Restructuring Charge
     (Note 7)                    135         -
    -------------------------------------------
    Income Before Provision
     for (Recovery of)
     Income Taxes and
     Non-Controlling Interest
     in Subsidiaries           2,001     2,624
    Income taxes (Note 2)        266       600
    -------------------------------------------
                               1,735     2,024
    Non-controlling interest
     in subsidiaries              56        57
    -------------------------------------------
    Net Income              $  1,679  $  1,967
    -------------------------------------------
    -------------------------------------------
    Preferred share
     dividends              $     31  $     22
    Net income available
     to common shareholders $  1,648  $  1,945
    Average common shares
     (in thousands)          500,480   501,536
    Average diluted common
     shares (in thousands)   509,242   511,513
    -------------------------------------------
    Earnings Per Share
     (Canadian $)
    Basic                   $   3.29  $   3.88
    Diluted                     3.24      3.80
    Dividends Declared Per
     Common Share               2.01      1.64
    -------------------------------------------
    -------------------------------------------
    The accompanying notes to consolidated financial statements are an
    integral part of these statements. Certain comparative figures have been
    reclassified to conform with the current period's presentation.



                      Consolidated Financial Statements

                         Consolidated Balance Sheet
    -------------------------------------------------------------------------

    (Unaudited)
    (Canadian $ in millions)                       As at
    -------------------------------------------------------------------------
                                July     April   January   October      July
                            31, 2007  30, 2007  31, 2007  31, 2006  31, 2006
    -------------------------------------------------------------------------
    Assets
    Cash Resources          $ 25,041  $ 19,502  $ 22,873  $ 19,608  $ 20,160
    -------------------------------------------------------------------------
    Securities
    Investment (Note 2)            -         -         -    14,166    11,359
    Available-for-sale
     (Note 2)                 17,046    17,529    18,235         -         -
    Other (Note 2)             1,456     1,460     1,465     1,414     1,425
    Trading                   67,716    63,600    58,401    51,820    45,455
    Loan substitutes              11        11        11        11        11
    -------------------------------------------------------------------------
                              86,229    82,600    78,112    67,411    58,250
    -------------------------------------------------------------------------
    Loans (Note 2)
    Residential mortgages     62,297    62,908    63,109    63,321    63,591
    Consumer instalment and
     other personal           33,009    31,913    31,474    30,418    29,693
    Credit cards               4,347     3,899     3,764     3,631     5,049
    Businesses and
     governments              63,795    60,956    58,108    56,030    53,433
    Securities borrowed or
     purchased under resale
     agreements               34,216    35,063    41,843    31,429    31,865
    -------------------------------------------------------------------------
                             197,664   194,739   198,298   184,829   183,631
    Customers' liability
     under acceptances         8,993     9,530     8,252     7,223     7,369
    Allowance for credit
     losses (Note 3)          (1,045)   (1,059)   (1,078)   (1,058)   (1,107)
    -------------------------------------------------------------------------
                             205,612   203,210   205,472   190,994   189,893
    -------------------------------------------------------------------------
    Other Assets
    Derivative financial
     instruments (Note 2)     30,030    38,711    37,361    30,411    32,247
    Premises and equipment     2,015     2,047     2,057     2,047     1,942
    Goodwill                   1,232     1,252     1,306     1,098     1,104
    Intangible assets            149       174       207       152       163
    Other (Note 2)             8,846     9,031     8,103     8,257     7,850
    -------------------------------------------------------------------------
                              42,272    51,215    49,034    41,965    43,306
    -------------------------------------------------------------------------
    Total Assets            $359,154  $356,527  $355,491  $319,978  $311,609
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Liabilities and
     Shareholders' Equity
     Deposits (Note 2)
    Banks                   $ 30,561  $ 28,256  $ 33,811  $ 26,632  $ 26,362
    Businesses and
     governments             120,757   114,504   104,994   100,848    99,821
    Individuals               77,709    78,855    78,309    76,368    75,911
    -------------------------------------------------------------------------
                             229,027   221,615   217,114   203,848   202,094
    -------------------------------------------------------------------------
    Other Liabilities
    Derivative financial
     instruments (Note 2)     30,543    40,192    38,842    31,446    31,418
    Acceptances                8,993     9,530     8,252     7,223     7,369
    Securities sold but not
     yet purchased            28,551    24,692    19,472    15,398    14,271
    Securities lent or sold
     under repurchase
     agreements               30,992    31,027    40,965    31,918    28,148
    Other (Note 2)            10,682    10,055    11,083    10,758     9,277
    -------------------------------------------------------------------------
                             109,761   115,496   118,614    96,743    90,483
    -------------------------------------------------------------------------
    Subordinated Debt
     (Notes 2 and 8)           3,446     2,395     2,745     2,726     2,729
    -------------------------------------------------------------------------
    Preferred Share
     Liability (Note 9)          450       450       450       450       450
    -------------------------------------------------------------------------
    Capital Trust Securities   1,150     1,150     1,150     1,150     1,150
    -------------------------------------------------------------------------
    Shareholders' Equity
    Share capital (Note 9)     5,318     5,272     5,225     4,827     4,765
    Contributed surplus           56        55        55        49        47
    Retained earnings
     (Note 2)                 11,158    11,017    10,836    10,974    10,653
    Accumulated other
     comprehensive loss
     (Note 2)                 (1,212)     (923)     (698)     (789)     (762)
    -------------------------------------------------------------------------
                              15,320    15,421    15,418    15,061    14,703
    -------------------------------------------------------------------------
    Total Liabilities and
     Shareholders' Equity   $359,154  $356,527  $355,491  $319,978  $311,609
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    The accompanying notes to consolidated financial statements are an
    integral part of these statements. Certain comparative figures have been
    reclassified to conform with the current period's presentation.



                      Consolidated Financial Statements

               Consolidated Statement of Comprehensive Income
    -------------------------------------------------------------------------

    (Unaudited)                            For the             For the
    (Canadian $ in millions)          three months ended   nine months ended
    -------------------------------------------------------------------------
                                          July      July      July      July
                                      31, 2007  31, 2006  31, 2007  31, 2006
    -------------------------------------------------------------------------
    Net income                        $    660  $    710  $  1,679  $  1,967
    Other Comprehensive Income
      Net change in unrealized losses
       on available-for-sale securities    (59)        -       (55)        -
      Net change in cash flow hedges      (110)        -      (154)        -
      Net gain (loss) on translation
       of net foreign operations          (120)       44      (166)     (150)
    -------------------------------------------------------------------------
    Total Comprehensive Income        $    371  $    754  $  1,304  $  1,817
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



          Consolidated Statement of Changes in Shareholders' Equity
    -------------------------------------------------------------------------

    (Unaudited)                            For the             For the
    (Canadian $ in millions)          three months ended   nine months ended
    -------------------------------------------------------------------------
                                          July      July      July      July
                                      31, 2007  31, 2006  31, 2007  31, 2006
    -------------------------------------------------------------------------
    Preferred Shares
    Balance at beginning of period    $    946  $    596  $    596  $    596
    Issued during the period                 -         -       350         -
    -------------------------------------------------------------------------
    Balance at End of Period               946       596       946       596
    -------------------------------------------------------------------------
    Common Shares
    Balance at beginning of period       4,326     4,145     4,231     4,022
    Issued under the Shareholder
     Dividend Reinvestment and
     Share Purchase Plan                    30        22        85        62
    Issued under the Stock Option Plan      41        24       109       126
    Issued on the exchange of shares
     of a subsidiary corporation             -         -         1         -
    Repurchased for cancellation (Note 9)  (25)      (22)      (54)      (41)
    -------------------------------------------------------------------------
    Balance at End of Period             4,372     4,169     4,372     4,169
    -------------------------------------------------------------------------
    Contributed Surplus
    Balance at beginning of period          55        45        49        35
    Stock option expense                     1         2         7        12
    -------------------------------------------------------------------------
    Balance at End of Period                56        47        56        47
    -------------------------------------------------------------------------
    Retained Earnings
    Balance at beginning of period      11,017    10,395    10,974     9,801
    Cumulative impact of adopting new
     accounting requirements for
     financial instruments, net of
     income taxes of $39 (Note 2)            -         -       (71)        -
    Net income                             660       710     1,679     1,967
    Dividends - Preferred shares            (9)       (6)      (31)      (22)
              - Common shares             (340)     (310)   (1,005)     (822)
    Common shares repurchased for
     cancellation (Note 9)                (170)     (136)     (379)     (271)
    Share issue expense                      -         -        (9)        -
    -------------------------------------------------------------------------
    Balance at End of Period            11,158    10,653    11,158    10,653
    -------------------------------------------------------------------------
    Accumulated Other Comprehensive
     Loss on Available-for-Sale
     Securities
    Balance at beginning of period           7         -         -         -
    Impact of remeasuring
     available-for-sale securities to
     market value on November 1, 2006
     (net of income taxes of $1)             -         -         3         -
    Unrealized losses on
     available-for-sale securities
     arising during the period (net
     of income taxes of $39 and $35)       (73)        -       (65)        -
    Reclassification of realized
     losses to earnings in the period
     (net of income taxes of $10 and $8)    14         -        10         -
    -------------------------------------------------------------------------
    Balance at End of Period               (52)        -       (52)        -
    -------------------------------------------------------------------------
    Accumulated Other Comprehensive Loss
     on Cash Flow Hedges
    Balance at beginning of period         (95)        -         -         -
    Impact of new cash flow hedge
     accounting rules on November 1, 2006
     (net of income taxes of $28)            -         -       (51)        -
    Losses on cash flow hedges arising
     during the period (net of income
     taxes of $55 and $79)                (109)        -      (156)        -
    Reclassification to earnings of
     losses (gains) on cash flow hedges
     (net of income taxes of $1 and $1)     (1)        -         2         -
    -------------------------------------------------------------------------
    Balance at End of Period              (205)        -      (205)        -
    -------------------------------------------------------------------------
    Accumulated Other Comprehensive
     Loss on Translation of Net
     Foreign Operations
    Balance at beginning of period        (835)     (806)     (789)     (612)
    Unrealized gain (loss) on translation
     of net foreign operations            (375)      124      (501)     (400)
    Impact of hedging translation gains
     (losses) of net foreign operations
     (net of income taxes
     of $135, $41, $178 and $133)          255       (80)      335       250
    -------------------------------------------------------------------------
    Balance at End of Period              (955)     (762)     (955)     (762)
    -------------------------------------------------------------------------
    Total Accumulated Other
     Comprehensive Loss                 (1,212)     (762)   (1,212)     (762)
    -------------------------------------------------------------------------
    Total Shareholders' Equity        $ 15,320  $ 14,703  $ 15,320  $ 14,703
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    The accompanying notes to consolidated financial statements are an
    integral part of these statements. Certain comparative figures have been
    reclassified to conform with the current period's presentation.



                      Consolidated Financial Statements

                     Consolidated Statement of Cash Flows
    -------------------------------------------------------------------------

    (Unaudited)                            For the             For the
    (Canadian $ in millions)          three months ended   nine months ended
    -------------------------------------------------------------------------
                                          July      July      July      July
                                      31, 2007  31, 2006  31, 2007  31, 2006
    -------------------------------------------------------------------------
    Cash Flows from Operating
     Activities
    Net income                        $    660  $    710  $  1,679  $  1,967
    Adjustments to determine net
     cash flows provided by (used in)
     operating activities
      Write-down of securities,
       other than trading                    -         1         -         9
      Net gain on securities,
       other than trading                   (6)      (52)      (98)     (108)
      Net (increase) in trading
       securities                       (5,145)   (1,104)  (17,042)   (2,073)
      Provision for credit losses           91        42       202       160
      Gain on sale of securitized
       loans (Note 4)                      (41)      (13)     (155)      (25)
      Change in derivative financial
       instruments
        (Increase) decrease in
         derivative asset                9,064      (719)    1,016    (1,418)
        Increase (decrease) in
         derivative liability           (9,837)      974    (1,266)    3,277
      Amortization of premises and
       equipment                           100        88       291       265
      Amortization of intangible assets     11        10        35        33
      Net decrease in future income taxes  (61)      (69)     (140)      (68)
      Net increase (decrease) in
       current income taxes                 (5)      359      (589)      124
      Change in accrued interest
        (Increase) decrease in interest
         receivable                          1      (121)      126      (159)
        Increase in interest payable       126       106       159        96
      Changes in other items and
       accruals, net                      (139)    1,106       926     1,044
    -------------------------------------------------------------------------
    Net Cash Provided by (Used in)
     Operating Activities               (5,181)    1,318   (14,856)    3,124
    -------------------------------------------------------------------------
    Cash Flows from Financing
     Activities
    Net increase in deposits            11,192     6,367    28,296    10,849
    Net increase (decrease) in
     securities sold but not yet
     purchased                           3,974    (1,417)   13,309    (1,853)
    Net increase (decrease) in
     securities lent or sold under
     repurchase agreements                 631    (3,484)      (38)    6,142
    Net increase (decrease) in
     liabilities of subsidiaries           160      (369)      362       354
    Repayment of subordinated debt        (150)     (300)     (483)     (425)
    Proceeds from issuance of
     subordinated debt                   1,200         -     1,200       700
    Proceeds from issuance of
     preferred shares                        -         -       350         -
    Proceeds from issuance of
     common shares                          71        46       194       188
    Share issue expense                      -         -        (9)        -
    Common shares repurchased for
     cancellation (Note 9)                (195)     (158)     (433)     (312)
    Dividends paid                        (349)     (316)   (1,036)     (844)
    -------------------------------------------------------------------------
    Net Cash Provided by Financing
     Activities                         16,534       369    41,712    14,799
    -------------------------------------------------------------------------
    Cash Flows from Investing Activities
    Net (increase) decrease in interest
     bearing deposits with banks        (5,226)     (175)   (5,370)      716
    Purchases of securities, other
     than trading                      (13,133)   (4,947)  (32,650)  (11,322)
    Maturities of securities, other
     than trading                        6,885     3,509    20,899     6,878
    Proceeds from sales of securities,
     other than trading                  6,043     1,871     8,355     4,263
    Net (increase) in loans,
     customers' liability under
     acceptances and loan substitute
     securities                         (6,299)   (4,113)  (15,599)  (16,153)
    Proceeds from securitization
     of loans (Note 4)                   1,207       978     2,636     2,753
    Net (increase) decrease in
     securities borrowed or purchased
     under resale agreements               368     1,400    (3,544)   (4,067)
    Premises and equipment - net
     purchases                             (96)     (181)     (251)     (379)
    Acquisitions (Note 5)                   (2)        -      (387)      (76)
    -------------------------------------------------------------------------
    Net Cash Used in Investing
     Activities                        (10,253)   (1,658)  (25,911)  (17,387)
    -------------------------------------------------------------------------
    Effect of Exchange Rate Changes
     on Cash and Cash Equivalents         (210)       23      (460)     (146)
    -------------------------------------------------------------------------
    Net Increase in Cash and Cash
     Equivalents                           890        52       485       390
    Cash and Cash Equivalents at
     Beginning of Period                 2,053     2,750     2,458     2,412
    -------------------------------------------------------------------------
    Cash and Cash Equivalents at
     End of Period                    $  2,943  $  2,802  $  2,943  $  2,802
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    The accompanying notes to consolidated financial statements are an
    integral part of these statements. Certain comparative figures have been
    reclassified to conform with the current period's presentation.


                 Notes to Consolidated Financial Statements

             For the nine months ended July 31, 2007 (Unaudited)
    -------------------------------------------------------------------------

    Note 1 - Basis of Presentation

    These consolidated financial statements should be read in conjunction
    with the notes to our consolidated financial statements for the year
    ended October 31, 2006 as set out on pages 96 to 133 of our 2006 Annual
    Report. These consolidated financial statements have been prepared in
    accordance with Canadian generally accepted accounting principles
    ("GAAP") using the same accounting policies and methods of computation as
    were used for our consolidated financial statements for the year ended
    October 31, 2006, except as described in Note 2.

    Note 2 - Changes in Accounting Policy

    On November 1, 2006, we adopted the Canadian Institute of Chartered
    Accountants' ("CICA's") accounting requirements for securities, hedging
    derivatives, other comprehensive income and certain other financial
    instruments. Prior periods have not been restated.

    On November 1, 2006, we made the following adjustments to our balance
    sheet to adopt the new requirements:

    (Canadian $ in millions)                                           As at
    -------------------------------------------------------------------------
                                                            November 1, 2006
    -------------------------------------------------------------------------
    Increase (decrease)
    Consolidated Balance Sheet
    Available-for-sale securities(a)                                $      4
    Loans(b)(ii),(d)                                                     (87)
    Other assets                                                          51
    Derivative financial instruments - asset(b)                           70
    Deposits(b)(ii)                                                       38
    Derivative financial instruments - liability(b)                      110
    Subordinated debt (b)(ii)                                              9
    Retained earnings                                                    (71)
    Accumulated other comprehensive income -
      available-for-sale securities(a)                                     3
    Accumulated other comprehensive loss -
      cash flow hedges(b)(i)                                             (51)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    The impact of these changes on our Consolidated Statement of Income is as
    follows:

                                                           For the   For the
                                                             three      nine
                                                            months    months
    (Canadian $ in millions)                                 ended     ended
    -------------------------------------------------------------------------
                                                           July 31,  July 31,
                                                              2007      2007
    -------------------------------------------------------------------------
    Increase (decrease) in net income
    Consolidated Statement of Income
    Interest, Dividend and Fee Income - Loans(d)          $      4  $      7
    Non-Interest Revenue - Trading revenues (losses)(c)         12        15
    Non-Interest Revenue - Other(b)(i)(ii)                       -        (3)
    Income taxes                                                (6)       (7)
    -------------------------------------------------------------------------
    Net Income                                            $     10  $     12
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    

    Other Comprehensive Income
    The new rules require that we present a new Consolidated Statement of
    Comprehensive Income, which is comprised of net income, changes in
    unrealized gains or losses related to available-for-sale securities,
    changes in unrealized gains or losses related to cash flow hedges and the
    net unrealized foreign exchange gain or loss for the period related to
    our net investment in foreign operations. This statement has been
    included above our Consolidated Statement of Changes in Shareholders'
    Equity.

    (a) Securities
    The new rules require that we reclassify certain of our securities
    previously classified as investment securities as either available-for-
    sale or held-to-maturity securities.

    Available-for-sale securities are measured at fair value with unrealized
    gains and losses recorded in other comprehensive income until the
    security is either sold, or if an unrealized loss is considered other
    than temporary, the unrealized loss is recorded in income. The criteria
    for other than temporary impairment remain unchanged. Available-for-sale
    securities where there is no quoted market price, including securities
    whose sale is restricted, will continue to be recorded at amortized cost.
    We have not classified any of our investment securities as held-to-
    maturity.

    The new rules do not impact accounting for our merchant banking
    investments or investments in corporate equity where we exert significant
    influence, but not control. These are recorded as other securities on our
    Consolidated Balance Sheet. Additional information on our policies
    related to securities, determining fair value and other than temporary
    impairment is included in Note 3 to our consolidated financial statements
    for the year ended October 31, 2006.

    On November 1, 2006, we remeasured our available-for-sale securities at
    fair value, as appropriate. A net unrealized gain of $3 million was
    recorded in opening accumulated other comprehensive income.

    (b) Hedging Derivatives
    The new rules require us to record all of our hedging derivatives at fair
    value. Prior to November 1, 2006, we accounted for derivatives that
    qualified as accounting hedges on an accrual basis.

    The types of hedging relationships that qualify for hedge accounting have
    not changed under the new rules. We will continue to designate our hedges
    as either cash flow hedges or fair value hedges. A description of the
    items or transactions that we hedge and the risk management policy for
    each type of hedge is included in Note 9 to our consolidated financial
    statements for the year ended October 31, 2006.

    (i) Cash Flow Hedges
    Cash flow hedges are used to manage the possible increase or decrease in
    interest income or expense related to variable rate assets and
    liabilities due to changes in interest rates.

    Under the new rules, we will continue to record interest receivable or
    payable on the derivative as an adjustment to interest, dividend and fee
    income in the Consolidated Statement of Income over the life of the
    hedge.

    To the extent that changes in the fair value of the derivative offset
    changes in the fair value of the hedged item, they are recorded in other
    comprehensive income. Any portion of the change in fair value of the
    derivative that does not offset changes in the fair value of the hedged
    item (the ineffectiveness of the hedge) is recorded directly in non-
    interest revenue, other in the Consolidated Statement of Income. The
    ineffective portion of our cash flow hedges totalled $6 million for the
    quarter ended July 31, 2007 ($9 million for the nine months ended
    July 31, 2007).

    For hedges that are discontinued before the end of the original hedge
    term, the unrealized gain or loss in other comprehensive income is
    amortized to interest, dividend and fee income in the Consolidated
    Statement of Income over the remaining term of the original hedge. If the
    hedged item is sold or settled, the entire unrealized gain or loss is
    recognized in interest, dividend and fee income in the Consolidated
    Statement of Income. The amount of other comprehensive loss that is
    expected to be reclassified to the Consolidated Statement of Income over
    the next 12 months is $67 million ($44 million after tax). This will be
    offset by increased net interest income on assets and liabilities that
    are hedged.

    On November 1, 2006, we remeasured our cash flow hedge derivatives at
    fair value. The portion of the fair value that offset the fair value of
    the hedged item totalled $8 million ($5 million after tax) and was
    recorded in opening accumulated other comprehensive income. The
    ineffective portion of cash flow hedges recorded in opening retained
    earnings totalled less than $1 million. We also reclassified $86 million
    ($56 million after tax) of deferred losses related to cash flow hedges
    that were discontinued prior to November 1, 2006 from other assets to
    opening accumulated other comprehensive income.

    (ii) Fair Value Hedges
    Fair value hedges are used to manage possible changes in the value of our
    fixed rate assets and liabilities due to changes in interest rates. For
    fair value hedges, not only is the hedging derivative recorded at fair
    value but fixed rate assets and liabilities that are part of a hedging
    relationship are adjusted for the changes in value of the risk being
    hedged (quasi fair value). To the extent that the change in the fair
    value of the derivative does not offset changes in the quasi fair value
    adjustment to the hedged item (the ineffectiveness of the hedge), the net
    amount will be recorded directly in non-interest revenue, other in the
    Consolidated Statement of Income. The ineffective portion of our fair
    value hedges totalled $1 million for the quarter ended July 31, 2007
    ($2 million for the nine months ended July 31, 2007).

    For fair value hedges that are discontinued, we cease adjusting the
    hedged item to quasi fair value. The quasi fair value adjustment on the
    hedged item will be recorded as an adjustment to the interest
    income/expense on the hedged item over its remaining term to maturity. If
    the hedged item is sold or settled, any remaining quasi fair value
    adjustment would be included in the determination of the gain or loss on
    sale or settlement.

    When we remeasured fair value hedging derivatives to fair value on
    November 1, 2006, we made a corresponding adjustment to the carrying
    value of the items that we hedge with those derivatives (quasi fair value
    adjustment). The difference between these two amounts was recorded in
    opening retained earnings and totalled less than $1 million. On
    November 1, 2006, we also reclassified deferred amounts related to fair
    value hedges that were discontinued prior to November 1, 2006 from other
    assets to adjust the carrying amount of the items that were previously
    hedged. Quasi fair value adjustments related to these two activities were
    comprised of an increase in loans of $3 million, an increase in deposits
    of $38 million, an increase in subordinated debt of $9 million and an
    increase in other assets of $6 million.

    (c) Fair Value Option
    The new rules allow management to elect to measure financial instruments
    that would not otherwise be accounted for at fair value as trading
    instruments with changes in fair value recorded in income provided they
    meet certain criteria. Financial instruments must be designated on
    November 1, 2006 when the new standard was adopted or when new financial
    instruments are acquired, and the designation is irrevocable.

    Structured notes issued by the Bank include embedded options. The Bank
    enters into derivatives which manage our exposure to changes in the
    structured note fair value caused by changes in interest rates. The
    structured notes are designated as trading under the fair value option
    which better aligns the accounting result with how the portfolio is
    managed. These notes are classified as other liabilities. The fair value
    and amount due at contractual maturity of these notes as at July 31, 2007
    was $572 million and $591 million, respectively. The impact of recording
    these notes as trading was an increase in non-interest revenue, trading
    revenues of $12 million for the quarter ended July 31, 2007 ($15 million
    for the nine months ended July 31, 2007). The increase was offset by a
    loss on the derivatives.

    Securities in our insurance subsidiaries that support our insurance
    liabilities have been designated as trading under the fair value option.
    Since the actuarial calculation of insurance liabilities is based on the
    recorded value of the securities supporting them, recording the
    securities at fair value better aligns the accounting result with how the
    portfolio is managed. The fair value of these securities as at July 31,
    2007 was $30 million. The impact of recording these securities as trading
    was an increase in non-interest revenue, insurance income of less than
    $1 million for both the quarter and nine months ended July 31, 2007.

    On November 1, 2006, we remeasured the portfolio of structured notes and
    certain of our insurance subsidiary securities at fair value. The net
    unrealized loss of less than $1 million was recorded in opening retained
    earnings.

    (d) Effective Interest Method
    Loan origination costs are included in our loan balances and are
    recognized in interest, dividend and fee income, loans, over the life of
    the resulting loan. Prior to November 1, 2006, an equal amount of loan
    origination costs were recognized each period over the life of the
    resulting loan. The new rules require that we use the effective interest
    method to recognize loan origination costs whereby the amount recognized
    varies over the life of the loan based on principal outstanding.

    As at November 1, 2006, we adjusted our deferred loan origination costs
    to what the balance would have been had we always used the effective
    interest method to recognize loan origination costs. The impact was a
    decrease in loans, residential mortgages of $87 million, a decrease in
    future income tax liability of $30 million and a decrease in retained
    earnings of $57 million.

    Note 3 - Allowance for Credit Losses

    The allowance for credit losses recorded in our Consolidated Balance
    Sheet is maintained at a level which we consider adequate to absorb
    credit-related losses on our loans, customers' liability under
    acceptances and other credit instruments. The portion related to other
    credit instruments is recorded in other liabilities in our Consolidated
    Balance Sheet. As at July 31, 2007 and July 31, 2006 there was no
    allowance for credit losses related to other credit instruments included
    in other liabilities.

    
    A continuity of our allowance for credit losses is as follows:

    (Canadian $ in millions)          For the three months ended
    -------------------------------------------------------------------------
                             Specific          General
                            Allowance         Allowance          Total
    -------------------------------------------------------------------------
                        July 31, July 31, July 31, July 31, July 31, July 31,
                           2007     2006     2007     2006     2007     2006
    -------------------------------------------------------------------------
    Balance at beginning
     of period          $   158  $   178  $   901  $   939  $ 1,059  $ 1,117
    Provision for
     credit losses           91       42        -        -       91       42
    Recoveries               24       33        -        -       24       33
    Write-offs             (116)     (90)       -        -     (116)     (90)
    Foreign exchange
     and other                -        1      (13)       4      (13)       5
    -------------------------------------------------------------------------
    Balance at end
     of period          $   157  $   164  $   888  $   943  $ 1,045  $ 1,107
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    (Canadian $ in millions)         For the nine months ended
    -------------------------------------------------------------------------
                             Specific          General
                            Allowance         Allowance          Total
    -------------------------------------------------------------------------
                        July 31, July 31, July 31, July 31, July 31, July 31,
                           2007     2006     2007     2006     2007     2006
    -------------------------------------------------------------------------
    Balance at beginning
     of period          $   153  $   169  $   905  $   959  $ 1,058  $ 1,128
    Provision for
     credit losses          202      160        -        -      202      160
    Recoveries               67       88        -        -       67       88
    Write-offs             (274)    (252)       -        -     (274)    (252)
    Foreign exchange
     and other                9       (1)     (17)     (16)      (8)     (17)
    -------------------------------------------------------------------------
    Balance at end
     of period          $   157  $   164  $   888  $   943  $ 1,045  $ 1,107
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    

    Note 4 - Securitization

    During the quarter ended July 31, 2007, we securitized residential
    mortgages totalling $1,245 million for total cash proceeds of
    $1,207 million ($2,692 million and $2,636 million respectively, for the
    nine months ended July 31, 2007). There are no expected credit losses as
    the mortgages are guaranteed by third parties. We retained responsibility
    for servicing these mortgages. We recorded $2 million of gains in non-
    interest revenue, securitization revenues, $38 million of deferred
    purchase price in available-for-sale securities and $8 million of
    servicing liability in other liabilities related to the securitization of
    those loans ($12 million, $100 million and $20 million respectively, for
    the nine months ended July 31, 2007). The key weighted-average
    assumptions used to value the deferred purchase price for these
    securitizations was an average term of 4.3 years, a prepayment rate of
    10.0%, an interest rate of 5.07% and a discount rate of 5.01% (4.5 years
    and 9.6%, 5.19% and 4.57% respectively, for the nine months ended
    July 31, 2007).

    In addition, gains on sales of loans sold to all revolving securitization
    vehicles were $39 million for the quarter ended July 31, 2007
    ($143 million for the nine months ended July 31, 2007).

    Note 5 - Acquisitions

    Ozaukee Bank
    On July 10, 2007, we announced that we had reached a definitive agreement
    to purchase Ozaukee Bank. Under the agreement, Ozaukee Bank shareholders
    will receive approximately 3 million shares of Bank of Montreal. The
    exact number of shares will be determined based on a formula prior to
    closing. The acquisition of Ozaukee Bank is subject to regulatory
    approval and the approval of Ozaukee Bank shareholders. The acquisition
    of Ozaukee Bank is expected to close later this calendar year, at which
    time it will be recorded in our consolidated financial statements as the
    acquisition of a business. Ozaukee Bank will be part of our Personal and
    Commercial Banking U.S. reporting segment.

    Merchants and Manufacturers Bancorporation, Inc.
    On July 10, 2007, we announced that we had reached a definitive agreement
    to purchase Merchants and Manufacturers Bancorporation, Inc. ("Merchants
    and Manufacturers") for total cash consideration of approximately
    $146 million. The acquisition of Merchants and Manufacturers is subject
    to regulatory approval and the approval of Merchants and Manufacturers
    shareholders. The acquisition of Merchants and Manufacturers is expected
    to close later this calendar year, at which time it will be recorded in
    our consolidated financial statements as the acquisition of a business.
    Merchants and Manufacturers will be part of our Personal and Commercial
    Banking U.S. reporting segment.

    First National Bank & Trust
    On January 4, 2007, we completed the acquisition of First National Bank &
    Trust ("First National") for total cash consideration of $345 million.
    The results of First National's operations have been included in our
    consolidated financial statements since that date. The acquisition of
    First National provides us with the opportunity to expand our banking
    services in the Indianapolis, Indiana market. As part of this
    acquisition, we acquired a core deposit intangible asset, which will be
    amortized on an accelerated basis over a period not to exceed 10 years.
    Goodwill related to this acquisition is deductible for tax purposes.
    First National is part of our Personal and Commercial Banking U.S.
    reporting segment.

    bcpbank Canada
    On December 4, 2006, we completed the acquisition of bcpbank Canada, a
    full-service chartered bank, for total cash consideration of $42 million.
    The results of bcpbank Canada's operations have been included in our
    consolidated financial statements since that date. As part of this
    acquisition, we acquired a core deposit intangible asset, which will be
    amortized on an accelerated basis over 10 years. Goodwill related to this
    acquisition is not deductible for tax purposes. bcpbank Canada is part of
    our Personal and Commercial Banking Canada reporting segment.

    Villa Park Trust and Savings Bank
    On December 1, 2005, we completed the acquisition of Chicago-based Villa
    Park Trust and Savings Bank ("Villa Park"), a community bank, for total
    cash consideration of $76 million. The results of Villa Park's operations
    have been included in our consolidated financial statements since that
    date. The acquisition of Villa Park provides us with the opportunity to
    expand our banking services in the Chicago, Illinois market. As part of
    this acquisition, we acquired a core deposit intangible asset, which will
    be amortized on an accelerated basis over 10 years. Goodwill related to
    this acquisition is not deductible for tax purposes. Villa Park is part
    of our Personal and Commercial Banking U.S. reporting segment.

    The estimated fair values of the assets acquired and the liabilities
    assumed at the date of acquisition are as follows:
    

                                                           July 31,  July 31,
    (Canadian $ in millions)                                  2007      2006
    -------------------------------------------------------------------------
                                                   First   bcpbank     Villa
                                                National    Canada      Park
    -------------------------------------------------------------------------
    Cash resources                               $   110   $    47   $    16
    Securities                                       317        23        54
    Loans                                          1,013       293       247
    Premises and equipment                            30         9         5
    Goodwill                                         172        14        44
    Core deposit intangible asset                     37         5         7
    Other assets                                      52         2         4
    -------------------------------------------------------------------------
    Total assets                                   1,731       393       377
    -------------------------------------------------------------------------
    Deposits                                       1,376       339       296
    Other liabilities                                 10        12         5
    -------------------------------------------------------------------------
    Total liabilities                              1,386       351       301
    -------------------------------------------------------------------------
    Purchase price                               $   345   $    42   $    76
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    The allocation of the purchase price for First National and bcpbank
    Canada is subject to refinement as we complete the valuation of the
    assets acquired and liabilities assumed.
    

    Note 6 - Employee Compensation

    Change in Accounting Policy
    During the year ended October 31, 2006, we adopted the CICA's new
    accounting requirements for stock-based compensation. The new rules
    require that stock-based compensation granted to employees eligible to
    retire be expensed at the time of grant. Previously, we amortized the
    cost over the vesting period. Prior periods have been restated to reflect
    this change.

    Stock Options
    During the nine months ended July 31, 2007, we granted a total of
    1,229,500 stock options. The weighted-average fair value of these options
    was $7.56 per option and was determined using a trinomial option pricing
    model, based on the following weighted-average assumptions:

    
    For stock options granted during the nine months ended July 31, 2007
    -------------------------------------------------------------------------
    Expected dividend yield                                             3.8%
    Expected share price volatility                                    15.6%
    Risk-free rate of return                                            4.0%
    Expected period until exercise                                 7.4 years
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Pension and Other Employee Future Benefit Expenses
    We recorded pension and other employee future benefit expenses as
    follows:

                                            Pension         Other employee
    (Canadian $ in millions)             benefit plans   future benefit plans
    -------------------------------------------------------------------------
                                         For the three       For the three
                                          months ended        months ended
    -------------------------------------------------------------------------
                                       July 31,  July 31,  July 31,  July 31,
                                          2007      2006      2007      2006
    -------------------------------------------------------------------------
    Benefits earned by employees       $    35   $    34   $     5   $     4
    Interest cost on accrued benefit
     liability                              54        51        12        13
    Actuarial loss recognized in
     expense                                16        20         4         5
    Amortization of plan amendment costs     3         1         -        (2)
    Expected return on plan assets         (70)      (63)       (1)       (2)
    -------------------------------------------------------------------------
    Benefits expense                        38        43        20        18
    Canada and Quebec pension
     plan expense                           14        13         -         -
    Defined contribution expense             3         2         -         -
    -------------------------------------------------------------------------
    Total pension and other employee
     future benefit expenses           $    55   $    58   $    20   $    18
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


                                            Pension         Other employee
    (Canadian $ in millions)             benefit plans   future benefit plans
    -------------------------------------------------------------------------
                                          For the nine        For the nine
                                          months ended        months ended
    -------------------------------------------------------------------------
                                       July 31,  July 31,  July 31,  July 31,
                                          2007      2006      2007      2006
    -------------------------------------------------------------------------
    Benefits earned by employees       $   114   $   103   $    16   $    14
    Interest cost on accrued benefit
     liability                             164       155        37        35
    Actuarial loss recognized in
     expense                                46        62        12        12
    Amortization of plan amendment costs     8         4        (3)       (4)
    Expected return on plan assets        (209)     (189)       (4)       (4)
    -------------------------------------------------------------------------
    Benefits expense                       123       135        58        53
    Canada and Quebec pension plan
     expense                                44        41         -         -
    Defined contribution expense            11         8         -         -
    -------------------------------------------------------------------------
    Total pension and other employee
     future benefit expenses           $   178   $   184   $    58   $    53
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    

    Note 7 - Restructuring Charge

    On January 31, 2007, we recorded a restructuring charge of $135 million
    in the Consolidated Statement of Income. The objectives of the
    restructuring are to enhance customer service by directing spending and
    resources on front-line sales and service improvements; creating more
    efficient processes and systems across the company and continuing to
    accelerate the pace of the company's growth.

    The charge relates to the elimination of approximately 1,000 positions in
    primarily non-customer-facing areas of the company across all support
    functions and business groups. Of the charge, $117 million relates to
    severance-related costs, $11 million is associated with premises-related
    charges and $7 million relates to other costs.

    Premises-related charges include lease cancellation payments for those
    locations where we have legally extinguished our lease obligation as well
    as the carrying value of abandoned assets.

    We engaged a professional services firm to provide us with strategic and
    organizational advice with respect to the restructuring initiatives. A
    charge of $7 million for these services has been included in the
    restructuring charge.

    
                                  Severance-  Premises-
                                    related    related
                                    charges    charges      Other      Total
    -------------------------------------------------------------------------
    Opening balance                 $   117    $    11    $     7    $   135
    Paid in the quarter                  (7)         -         (7)       (14)
    -------------------------------------------------------------------------
    Balance as at January 31, 2007      110         11          -        121
    Paid in the quarter                  (5)       (10)         -        (15)
    -------------------------------------------------------------------------
    Balance as at April 30, 2007        105          1          -        106
    Paid in the quarter                 (17)         -          -        (17)
    -------------------------------------------------------------------------
    Balance as at July 31, 2007     $    88    $     1    $     -    $    89
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    

    Note 8 - Subordinated debt

    During the quarter ended July 31, 2007, we redeemed all of our 7.92%
    Debentures, Series 22, due 2012, totalling $150 million. The debentures
    were redeemed at a redemption price of 100 per cent of the principal
    amount plus unpaid accrued interest to the redemption date.

    During the quarter ended July 31, 2007, we issued $1.2 billion of
    subordinated debt under our Canadian Medium-Term Note Program. The issue,
    Series D Medium-Term Notes, Second Tranche, is due June 2017. Interest on
    this issue is payable semi-annually at a fixed rate of 5.20% until
    June 21, 2012, and at a floating rate equal to the rate on three month
    Bankers' Acceptances plus 1.00%, paid quarterly, thereafter to maturity.

    During the quarter ended April 30, 2007, our US$300 million 7.80% Notes
    matured.

    Note 9 - Share Capital

    During the quarter ended January 31, 2007, we issued 14,000,000 4.5% Non-
    Cumulative Perpetual Class B Preferred Shares, Series 13, at a price of
    $25.00 per share, representing an aggregate issue price of $350 million.

    During the quarter ended July 31, 2007, we repurchased 2,809,900 common
    shares at an average cost of $69.12 per share, totalling $195 million.
    During the quarter ended July 31, 2006, we repurchased 2,544,900 common
    shares at an average cost of $61.90 per share, totalling $158 million.
    During the nine months ended July 31, 2007, we repurchased 6,215,300
    common shares at an average cost of $69.69 per share, totalling
    $433 million. During the nine months ended July 31, 2006, we repurchased
    4,944,400 common shares at an average cost of $63.13 per share, totalling
    $312 million.

    On August 27, 2007, we redeemed all our 8,000,000 Non-Cumulative Class B
    Preferred Shares, Series 4, at a price of $25.00 per share, together with
    declared and unpaid dividends to the date of redemption. This represents
    an aggregate redemption price of approximately $200 million.

    There have been 6,681,100 common shares repurchased under the existing
    normal course issuer bid that expires on September 5, 2007 and pursuant
    to which we are permitted to repurchase up to 15,000,000 common shares.

    Share Capital Outstanding (a)

    
    (Canadian $ in millions,
     except as noted)                          July 31, 2007
    -------------------------------------------------------------------------
                                        Number
                                     of shares   Amount  Convertible into...
    -------------------------------------------------------------------------
    Preferred Shares -
     Classified as Liabilities
      Class B - Series 4             8,000,000  $   200     common shares (b)
      Class B - Series 6            10,000,000      250     common shares (b)
    -------------------------------------------------------------------------
                                                    450
    -------------------------------------------------------------------------
    Preferred Shares -
     Classified as Equity
      Class B - Series 5             8,000,000      200     -
      Class B - Series 10 (c)       12,000,000      396     common shares (b)
      Class B - Series 13           14,000,000      350     -
    -------------------------------------------------------------------------
                                                    946
    Common Shares                  498,943,821    4,372     -
    -------------------------------------------------------------------------
    Share Capital                               $ 5,318
    -------------------------------------------------------------------------
    Stock options issued under                              21,229,981
     stock option plan                              n/a      common shares
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (a) For additional information refer to Notes 20 and 21 to our
        consolidated financial statements for the year ended October 31, 2006
        on pages 118 to 121 of our 2006 Annual Report.
    (b) The number of shares issuable on conversion is not determinable until
        the date of conversion.
    (c) Face value is US$300 million.
    n/a - not applicable

    Note 10 - Contingent Liabilities

    Following our recent disclosures of mark-to-market losses in our
    commodities trading businesses on April 27, 2007 and May 17, 2007
    aggregating $680 million (pre-tax) as of April 30, 2007, the Bank has
    received inquiries, requests for documents and subpoenas pertaining to
    the trading losses from securities, commodities, banking and law
    enforcement authorities. As these inquiries are in the early stages, we
    are unable to determine whether any proceedings against the Bank will
    result. The Bank is cooperating with all of these authorities.

    Note 11 - United States Generally Accepted Accounting Principles

    Reporting under United States GAAP would have resulted in the following:

    (Canadian $ in millions,               For the three        For the nine
     except earnings per share figures)     months ended        months ended
    -------------------------------------------------------------------------
                                       July 31,  July 31,  July 31,  July 31,
                                          2007      2006      2007      2006
    -------------------------------------------------------------------------
    Net Income - Canadian GAAP         $   660   $   710   $ 1,679   $ 1,967
    United States GAAP adjustments          (4)       (3)      (28)      (42)
    -------------------------------------------------------------------------
    Net Income - United States GAAP    $   656   $   707   $ 1,651   $ 1,925
    -------------------------------------------------------------------------
    Earnings Per Share
      Basic - Canadian GAAP            $  1.30   $  1.41   $  3.29   $  3.88
      Basic - United States GAAP          1.30      1.39      3.24      3.79
      Diluted - Canadian GAAP             1.28      1.38      3.24      3.80
      Diluted - United States GAAP        1.27      1.37      3.18      3.72
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    

    Hybrid Financial Instruments
    During the quarter ended January 31, 2007, we adopted the new United
    States accounting standard on hybrid financial instruments. The new rules
    allow us to elect to measure certain hybrid financial instruments at fair
    value in their entirety, with any changes in fair value recognized in
    earnings. Under the previous rules, only the embedded derivative in the
    hybrid financial instrument was recorded at fair value. We did not elect
    to measure any hybrid financial instruments at fair value. The new
    standard did not have any impact on our consolidated financial
    statements.

    Pensions and Other Employee Future Benefits
    During the quarter ended January 31, 2007, we adopted the new United
    States accounting standard on pensions and other employee future benefit
    plans. The new rules require us to recognize in our Consolidated Balance
    Sheet the funded status of the pension benefit and other employee future
    benefit plans, with a corresponding adjustment to accumulated other
    comprehensive income, net of tax. There will be no change in the
    calculation of the pension and other employee future benefits expense.

    Financial Instruments
    During the quarter ended January 31, 2007, we adopted new Canadian
    accounting requirements for financial instruments, hedges and other
    comprehensive income, which are harmonized with the United States
    accounting standards (see Note 2)

    Note 12 - Operating and Geographic Segmentation

    Operating Groups
    We conduct our business through operating groups, each of which has a
    distinct mandate. We determine operating groups based on our management
    structure and therefore our groups, and results attributed to them, may
    not be comparable with those of other financial services companies. We
    evaluate the performance of our groups using measures such as net income,
    revenue growth, return on equity, net economic profit and non-interest
    expense-to-revenue (productivity) ratio.

    Personal and Commercial Banking
    Personal and Commercial Banking ("P&C") is comprised of two operating
    segments: Personal and Commercial Banking Canada and Personal and
    Commercial Banking U.S.

    Personal and Commercial Banking Canada
    Personal and Commercial Banking Canada ("P&C Canada") offers a full range
    of products and services to personal and business clients in Canada
    through branches and direct banking channels such as telephone banking,
    online banking and a network of automated banking machines.

    Personal and Commercial Banking U.S.
    Personal and Commercial Banking U.S. ("P&C U.S.") offers a full range of
    products and services to personal and business clients in the United
    States, primarily in the Chicago area and Indiana, through branches and
    direct banking channels such as telephone banking, online banking and a
    network of automated banking machines.

    Private Client Group
    Private Client Group ("PCG") brings together all of our wealth management
    businesses. Operating primarily in Canada and the United States, PCG
    serves a full range of North American client segments, from mainstream to
    ultra-high net worth, as well as select institutional market segments.
    PCG offers clients a broad range of wealth management products and
    services, including full-service and direct investing, private banking
    and investment products, providing the tools they need to accumulate,
    protect and grow their financial assets.

    BMO Capital Markets
    BMO Capital Markets ("BMO CM") combines all of our businesses serving
    corporate, institutional and government clients. In Canada and the United
    States, its clients span a broad range of industry sectors. BMO CM also
    serves clients in the United Kingdom, Europe, Asia and Australia. It
    offers clients complete financial solutions, including equity and debt
    underwriting, corporate lending and project financing, mergers and
    acquisitions, advisory services, merchant banking, securitization,
    treasury and market risk management, debt and equity research and
    institutional sales and trading.

    Corporate Services
    Corporate Services includes Technology and Operations ("T&O") and the
    Corporate units that provide expertise and governance support in areas
    such as strategic planning, law, finance, internal audit, risk
    management, corporate communications, economics, corporate marketing,
    human resources and learning. Operating results for Corporate Services
    include revenues and expenses associated with certain securitization
    activities, the hedging of foreign-source earnings and activities related
    to the management of certain balance sheet positions and our overall
    asset liability structure.

    T&O manages, maintains and provides governance over information
    technology, real estate, operations services and sourcing for the Bank.
    The unit focuses on enterprise-wide priorities that improve quality and
    efficiency.

    Operating results for T&O are included with Corporate Services for
    reporting purposes. However, costs of T&O services are transferred to
    P&C, PCG, and BMO CM and only minor amounts are retained in T&O's
    results. As such, results for Corporate Services largely reflect
    operating results of Corporate units.

    Corporate Services also includes residual revenues and expenses
    representing the differences between actual amounts earned or incurred
    and the amounts allocated to operating groups.

    Basis of Presentation
    The results of these operating segments are based on our internal
    financial reporting systems. The accounting policies used in these
    segments are generally consistent with those followed in the preparation
    of our consolidated financial statements as disclosed in Notes 1 and 2.
    Notable accounting measurement differences are the taxable equivalent
    basis adjustment and the provision for credit losses, as described below.

    Taxable Equivalent Basis
    We analyze net interest income on a taxable equivalent basis ("teb").
    This basis includes an adjustment which increases GAAP revenues and the
    GAAP provision for income taxes by an amount that would raise revenues on
    certain tax-exempt securities to a level that would incur tax at the
    statutory rate.

    Analysis on a teb basis neutralizes the impact of investing in tax-exempt
    or tax-advantaged securities rather than fully taxable securities with
    higher yields. It reduces distortions in net interest income related to
    the choice of tax-advantaged and taxable investments.

    Provisions for Credit Losses
    Provisions for credit losses are generally allocated to each group based
    on expected losses for that group over an economic cycle. Differences
    between expected loss provisions and provisions required under GAAP are
    included in Corporate Services.

    Inter-Group Allocations
    Various estimates and allocation methodologies are used in the
    preparation of the operating groups' financial information. We allocate
    expenses directly related to earning revenue to the groups that earned
    the related revenue. Expenses not directly related to earning revenue,
    such as overhead expenses, are allocated to operating groups using
    allocation formulas applied on a consistent basis. Operating group net
    interest income reflects internal funding charges and credits on the
    groups' assets, liabilities and capital, at market rates, taking into
    account relevant terms and currency considerations. The offset of the net
    impact of these charges and credits is reflected in Corporate Services.

    Geographic Information
    We operate primarily in Canada and the United States but also have
    operations in the United Kingdom, Europe, the Caribbean and Asia, which
    are grouped in Other countries. We allocate our results by geographic
    region based on the location of the unit responsible for managing the
    related assets, liabilities, revenues and expenses, except for the
    consolidated provision for credit losses, which is allocated based upon
    the country of ultimate risk.

    Prior periods have been restated to give effect to the current period's
    organization structure and presentation changes.

    Our results and average assets, allocated by operating segment, are as
    follows:

    
    (Canadian $ in millions)
    -------------------------------------------------------------------------

    For the three months             P&C
     ended July 31, 2007          Canada    P&C U.S.         PCG      BMO CM
    -------------------------------------------------------------------------
    Net interest income        $     800   $     181   $     154   $     254
    Non-interest revenue             454          45         366         437
    -------------------------------------------------------------------------
    Total Revenue                  1,254         226         520         691
    Provision for credit losses       81           9           1          19
    Non-interest expense             670         177         357         445
    -------------------------------------------------------------------------
    Income before taxes and
     non-controlling interest
     in subsidiaries                 503          40         162         227
    Income taxes                     153          14          57          31
    Non-controlling interest
     in subsidiaries                   -           -           -           -
    -------------------------------------------------------------------------
    Net Income                 $     350   $      26   $     105   $     196
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Average Assets             $ 120,000   $  23,454   $   7,033   $ 210,834
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Goodwill (As At)           $     107   $     708   $     320   $      95
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


                                                             Teb       Total
    For the three months       Corporate  Total (teb      adjus-       (GAAP
     ended July 31, 2007      Services(1)   basis)(2)     tments       basis)
    -------------------------------------------------------------------------
    Net interest income        $     (88)  $   1,301   $     (54)  $   1,247
    Non-interest revenue               6       1,308           -       1,308
    -------------------------------------------------------------------------
    Total Revenue                    (82)      2,609         (54)      2,555
    Provision for credit losses      (19)         91           -          91
    Non-interest expense              10       1,659           -       1,659
    -------------------------------------------------------------------------
    Income before taxes and
     non-controlling interest
     in subsidiaries                 (73)        859         (54)        805
    Income taxes                     (74)        181         (54)        127
    Non-controlling interest
     in subsidiaries                  18          18           -          18
    -------------------------------------------------------------------------
    Net Income                 $     (17)  $     660   $       -   $     660
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Average Assets             $   4,014   $ 365,335   $       -   $ 365,335
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Goodwill (As At)           $       2   $   1,232   $       -   $   1,232
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    For the three months             P&C
     ended July 31, 2006          Canada    P&C U.S.         PCG      BMO CM
    -------------------------------------------------------------------------
    Net interest income        $     760   $     184   $     148   $     200
    Non-interest revenue             469          45         329         477
    -------------------------------------------------------------------------
    Total Revenue                  1,229         229         477         677
    Provision for credit losses       78           8           1          20
    Non-interest expense             674         168         344         385
    -------------------------------------------------------------------------
    Income before taxes and
     non-controlling interest
     in subsidiaries                 477          53         132         272
    Income taxes                     130          23          49          69
    Non-controlling interest
     in subsidiaries                   -           -           -           -
    -------------------------------------------------------------------------
    Net Income                 $     347   $      30   $      83   $     203
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Average Assets             $ 115,777   $  21,879   $   6,611   $ 165,473
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Goodwill (As At)           $      93   $     587   $     324   $      98
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


                                                             Teb       Total
    For the three months       Corporate  Total (teb      adjus-       (GAAP
     ended July 31, 2006      Services(1)   basis)(2)     tments       basis)
    -------------------------------------------------------------------------
    Net interest income        $     (25)  $   1,267   $     (33)  $   1,234
    Non-interest revenue              16       1,336           -       1,336
    -------------------------------------------------------------------------
    Total Revenue                     (9)      2,603         (33)      2,570
    Provision for credit losses      (65)         42           -          42
    Non-interest expense              29       1,600           -       1,600
    -------------------------------------------------------------------------
    Income before taxes and
     non-controlling interest
     in subsidiaries                  27         961         (33)        928
    Income taxes                     (39)        232         (33)        199
    Non-controlling interest
     in subsidiaries                  19          19           -          19
    -------------------------------------------------------------------------
    Net Income                 $      47   $     710   $       -   $     710
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Average Assets             $   4,917   $ 314,657   $       -   $ 314,657
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Goodwill (As At)           $       2   $   1,104   $       -   $   1,104
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    For the nine months              P&C
     ended July 31, 2007          Canada    P&C U.S.         PCG      BMO CM
    -------------------------------------------------------------------------
    Net interest income        $   2,295   $     558   $     458   $     741
    Non-interest revenue           1,334         132       1,086         807
    -------------------------------------------------------------------------
    Total Revenue                  3,629         690       1,544       1,548
    Provision for credit losses      242          27           2          58
    Non-interest expense           1,974         535       1,075       1,168
    -------------------------------------------------------------------------
    Income before taxes and
     non-controlling interest
     in subsidiaries               1,413         128         467         322
    Income taxes                     447          46         166         (55)
    Non-controlling interest
     in subsidiaries                   -           -           -           -
    -------------------------------------------------------------------------
    Net Income                 $     966   $      82   $     301   $     377
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Average Assets             $ 118,307   $  23,921   $   6,960   $ 202,653
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Goodwill (As At)           $     107   $     708   $     320   $      95
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


                                                             Teb       Total
    For the nine months        Corporate  Total (teb      adjus-       (GAAP
     ended July 31, 2007      Services(1)   basis)(2)     tments       basis)
    -------------------------------------------------------------------------
    Net interest income        $    (269)  $   3,783   $    (136)  $   3,647
    Non-interest revenue             143       3,502           -       3,502
    -------------------------------------------------------------------------
    Total Revenue                   (126)      7,285        (136)      7,149
    Provision for credit losses     (127)        202           -         202
    Non-interest expense             194       4,946           -       4,946
    -------------------------------------------------------------------------
    Income before taxes and
     non-controlling interest
     in subsidiaries                (193)      2,137        (136)      2,001
    Income taxes                    (202)        402        (136)        266
    Non-controlling interest
     in subsidiaries                  56          56           -          56
    -------------------------------------------------------------------------
    Net Income                 $     (47)  $   1,679   $       -   $   1,679
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Average Assets             $   3,574   $ 355,415   $       -   $ 355,415
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Goodwill (As At)           $       2   $   1,232   $       -   $   1,232
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    For the nine months              P&C
     ended July 31, 2006          Canada    P&C U.S.         PCG      BMO CM
    -------------------------------------------------------------------------
    Net interest income        $   2,186   $     556   $     424   $     582
    Non-interest revenue           1,236         125       1,004       1,565
    -------------------------------------------------------------------------
    Total Revenue                  3,422         681       1,428       2,147
    Provision for credit losses      235          23           2          60
    Non-interest expense           1,922         503       1,007       1,211
    -------------------------------------------------------------------------
    Income before taxes and
     non-controlling interest
     in subsidiaries               1,265         155         419         876
    Income taxes                     395          64         148         204
    Non-controlling interest
     in subsidiaries                   -           -           -           -
    -------------------------------------------------------------------------
    Net Income                 $     870   $      91   $     271   $     672
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Average Assets             $ 113,706   $  21,812   $   6,490   $ 158,715
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Goodwill (As At)           $      93   $     587   $     324   $      98
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


                                                             Teb       Total
    For the nine months        Corporate  Total (teb      adjus-       (GAAP
     ended July 31, 2006      Services(1)   basis)(2)     tments       basis)
    -------------------------------------------------------------------------
    Net interest income        $    (125)  $   3,623   $     (94)  $   3,529
    Non-interest revenue              65       3,995           -       3,995
    -------------------------------------------------------------------------
    Total Revenue                    (60)      7,618         (94)      7,524
    Provision for credit losses     (160)        160           -         160
    Non-interest expense              97       4,740           -       4,740
    -------------------------------------------------------------------------
    Income before taxes and
     non-controlling interest
     in subsidiaries                   3       2,718         (94)      2,624
    Income taxes                    (117)        694         (94)        600
    Non-controlling interest
     in subsidiaries                  57          57           -          57
    -------------------------------------------------------------------------
    Net Income                 $      63   $   1,967   $       -   $   1,967
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Average Assets             $   4,731   $ 305,454   $       -   $ 305,454
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Goodwill (As At)           $       2   $   1,104   $       -   $   1,104
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (1) Corporate Services includes Technology and Operations.
    (2) Taxable equivalent basis - see Basis of Presentation section.



    Our results and average assets, allocated by geographic region, are as
    follows:

    (Canadian $ in millions),
     Taxable equivalent basis(1)
    -------------------------------------------------------------------------
    For the three months                      United       Other
     ended July 31, 2007          Canada      States   countries       Total
    -------------------------------------------------------------------------
    Net interest income        $     991   $     231   $      79   $   1,301
    Non-interest revenue           1,030         184          94       1,308
    -------------------------------------------------------------------------
    Total Revenue                  2,021         415         173       2,609
    Provision for credit losses       59          32           -          91
    Non-interest expense           1,219         402          38       1,659
    -------------------------------------------------------------------------
    Income before taxes and
     non-controlling interest
     in subsidiaries                 743         (19)        135         859
    Income taxes                     192         (28)         17         181
    Non-controlling interest
     in subsidiaries                  13           5           -          18
    -------------------------------------------------------------------------
    Net Income                 $     538   $       4   $     118   $     660
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Average Assets             $ 221,240   $ 111,384   $  32,711   $ 365,335
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Goodwill (As At)           $     424   $     808   $       -   $   1,232
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    For the three months                      United       Other
     ended July 31, 2006          Canada      States   countries       Total
    -------------------------------------------------------------------------
    Net interest income        $     980   $     248   $      39   $   1,267
    Non-interest revenue             945         348          43       1,336
    -------------------------------------------------------------------------
    Total Revenue                  1,925         596          82       2,603
    Provision for credit losses       56         (14)          -          42
    Non-interest expense           1,126         442          32       1,600
    -------------------------------------------------------------------------
    Income before taxes and
     non-controlling interest
     in subsidiaries                 743         168          50         961
    Income taxes                     208          42         (18)        232
    Non-controlling interest
     in subsidiaries                  14           5           -          19
    -------------------------------------------------------------------------
    Net Income                 $     521   $     121   $      68   $     710
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Average Assets             $ 195,496   $  90,954   $  28,207   $ 314,657
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Goodwill (As At)           $     410   $     694   $       -   $   1,104
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    For the nine months                       United       Other
     ended July 31, 2007          Canada      States   countries       Total
    -------------------------------------------------------------------------
    Net interest income        $   2,810   $     738   $     235   $   3,783
    Non-interest revenue           3,086         212         204       3,502
    -------------------------------------------------------------------------
    Total Revenue                  5,896         950         439       7,285
    Provision for credit losses      170          36          (4)        202
    Non-interest expense           3,581       1,241         124       4,946
    -------------------------------------------------------------------------
    Income before taxes and
     non-controlling interest
     in subsidiaries               2,145        (327)        319       2,137
    Income taxes                     535        (185)         52         402
    Non-controlling interest
     in subsidiaries                  40          16           -          56
    -------------------------------------------------------------------------
    Net Income                 $   1,570   $    (158)  $     267   $   1,679
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Average Assets             $ 211,032   $ 111,574   $  32,809   $ 355,415
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Goodwill (As At)           $     424   $     808   $       -   $   1,232
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    For the nine months                       United       Other
     ended July 31, 2006          Canada      States   countries       Total
    -------------------------------------------------------------------------
    Net interest income        $   2,747   $     769   $     107   $   3,623
    Non-interest revenue           2,782       1,078         135       3,995
    -------------------------------------------------------------------------
    Total Revenue                  5,529       1,847         242       7,618
    Provision for credit losses      161           -          (1)        160
    Non-interest expense           3,350       1,289         101       4,740
    -------------------------------------------------------------------------
    Income before taxes and
     non-controlling interest
     in subsidiaries               2,018         558         142       2,718
    Income taxes                     543         171         (20)        694
    Non-controlling interest
     in subsidiaries                  41          16           -          57
    -------------------------------------------------------------------------
    Net income                 $   1,434   $     371   $     162   $   1,967
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Average Assets             $ 191,337   $  87,794   $  26,323   $ 305,454
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Goodwill (As At)           $     410   $     694   $       -   $   1,104
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (1) Taxable equivalent basis - see Basis of Presentation section.
    





For further information:

For further information: Media Relations Contacts: Ralph Marranca, 
Toronto, ralph.marranca@bmo.com, (416) 867-3996; Ronald Monet, Montreal, 
ronald.monet@bmo.com, (514) 877-1873; Investor Relations Contacts: Viki 
Lazaris, Senior Vice-President, viki.lazaris@bmo.com, (416) 867-6656;  Steven
Bonin, Director, steven.bonin@bmo.com, (416) 867-5452; Krista White,  Senior
Manager, krista.white@bmo.com, (416) 867-7019; Chief Financial  Officer: Karen
Maidment, Chief Financial and Administrative Officer,  karen.maidment@bmo.com,
(416) 867-6776; Corporate Secretary: Sharon  Sandall, Acting Secretary,
Corporate and Legal Affairs,  corp.secretary@bmo.com, (416) 867-6785


Custom Packages

Browse our custom packages or build your own to meet your unique communications needs.

Start today.

CNW Membership

Fill out a CNW membership form or contact us at 1 (877) 269-7890

Learn about CNW services

Request more information about CNW products and services or call us at 1 (877) 269-7890