BMO's 2023 audited annual consolidated financial statements and accompanying Management Discussion and Analysis (MD&A) are available online at www.bmo.com/investorrelations and at www.sedarplus.ca.

Financial Results Highlights

Fourth Quarter 2023 Compared with Fourth Quarter 2022:

Net income of $1,617 million, compared with $4,483 million; adjusted net income ^{1, 3} of $2,150 million, compared with $2,136 million
Reported earnings per share (EPS) ² of $2.06, compared with $6.51; adjusted EPS ^{1, 2, 3} of $2.81, compared with $3.04
Provision for credit losses (PCL) of $446 million, compared with $226 million
Return on equity (ROE) of 8.6%, compared with 27.6%; adjusted ROE ^{1, 3} of 11.7%, compared with 12.9%
Common Equity Tier 1 (CET1) Ratio ⁴ of 12.5%, compared with 16.7%

Fiscal 2023 Compared with Fiscal 2022:

Net income of $4,377 million, compared with $13,537 million; adjusted net income ^{1, 3} of $8,675 million, compared with $9,039 million
Reported EPS ² of $5.68, compared with $19.99; adjusted EPS ^{1, 2, 3} of $11.73, compared with $13.23
PCL of $2,178 million, compared with $313 million; adjusted PCL ^{1, 3} of $1,473 million, compared with $313 million
ROE of 6.0%, compared with 22.9%; adjusted ROE ^{1, 3} of 12.3%, compared with 15.2%

Adjusted ^{1, 3} results in the current quarter and the prior year excluded the following items:

Acquisition and integration costs of $433 million ($582 million pre-tax) in the current quarter, and $145 million ($193 million pre-tax) in the prior year.
Amortization of acquisition-related intangible assets of $88 million ($119 million pre-tax) in the current quarter, and $6 million ($8 million pre-tax) in the prior year.
Impact of a lawsuit associated with a predecessor bank, M&I Marshall and Ilsley Bank, of $12 million ($16 million pre-tax) in the current quarter and $846 million ($1,142 million pre-tax) in the prior year.
Revenue of $3,336 million ($4,541 million pre-tax) in the prior year related to the management of the impact of interest rate changes between the announcement and closing of the Bank of the West acquisition on its fair value and goodwill.
A recovery of $8 million ($6 million pre-tax) in the prior year related to the sale of our EMEA and U.S. Asset Management businesses.

TORONTO, Dec. 1, 2023 /PRNewswire/ - For the fourth quarter ended October 31, 2023, BMO Financial Group (TSX:BMO) (NYSE:BMO) recorded net income of $1,617 million or $2.06 per share on a reported basis, and net income of $2,150 million or $2.81 per share on an adjusted basis.

"Our results this year reflect the fundamental strength and diversification of our businesses. Driven by record revenue and ongoing momentum in Canadian Personal and Commercial Banking and the contribution of Bank of the West, we delivered strong performance in a challenging economic backdrop," said Darryl White, Chief Executive Officer, BMO Financial Group.

"This year, we made significant progress against our strategic priorities to continue to grow and strengthen our bank, completing three notable acquisitions, advancing our Digital First capabilities and delivering interconnected One Client experiences. With the successful conversion of Bank of the West, BMO is the most integrated north-south bank on the continent. Our relentless focus on putting customers first and supporting their financial goals with innovative digital experiences and expert guidance continues to be recognized, including being ranked first by J.D. Power ⁵ for Personal Banking Customer Satisfaction among the Big 5 Banks in its 2023 Canada Retail Banking Satisfaction Study.

"Looking to 2024, we have proactively positioned the bank for future growth and are confident that our dynamic expense and capital management actions and ongoing targeted investments will drive consistent and differentiated performance. At BMO we are leveraging our position as a leading financial services provider to put our Purpose into action and help our clients and communities make progress for a thriving economy, sustainable future and an inclusive society," concluded Mr. White.

Concurrent with the release of results, BMO announced a first quarter 2024 dividend of $1.51 per common share, an increase of $0.04 from the prior quarter and an increase of $0.08 or 6% from the prior year. The quarterly dividend of $1.51 per common share is equivalent to an annual dividend of $6.04 per common share.

Caution

The foregoing section contains forward-looking statements. Please refer to the Caution Regarding Forward-Looking Statements.

(1)	Results and measures in this document are presented on a generally accepted accounting principles (GAAP) basis. They are also presented on an adjusted basis that excludes the impact of certain specified items from reported results. Adjusted results and ratios are non-GAAP and are detailed for all reported periods in the Non-GAAP and Other Financial Measures section. For details on the composition of non-GAAP amounts, measures and ratios, as well as supplementary financial measures, refer to the Glossary of Financial Terms.
(2)	All EPS measures in this document refer to diluted EPS, unless specified otherwise.
(3)	Refer to the Non-GAAP and Other Financial Measures section for further information on adjusting items.
(4)	The CET1 Ratio is disclosed in accordance with the Office of the Superintendent of Financial Institutions' (OSFI's) Capital Adequacy Requirements (CAR) Guideline.
(5)	For more information, refer to www.jdpower.com/business.
Note: All ratios and percentage changes in this document are based on unrounded numbers.

Recent Acquisitions

On February 1, 2023, we completed our acquisition of Bank of the West, including its subsidiaries, from BNP Paribas. Bank of the West provides a broad range of banking products and services, primarily in the Western and Midwestern regions of the United States. The acquisition strengthens our position in North America with increased scale and greater access to growth opportunities in strategic new markets. We completed the conversion of Bank of the West customer accounts and systems to our respective BMO operating platforms in September 2023. The acquisition has been reflected in our results as a business combination, primarily in the U.S. P&C and BMO Wealth Management reporting segments.

On June 1, 2023, we completed the acquisition of the AIR MILES Reward Program (AIR MILES) business of LoyaltyOne Co. The AIR MILES business operates as a wholly-owned subsidiary of BMO. The acquisition was accounted for as a business combination and the acquired business and corresponding goodwill are included in our Canadian P&C reporting segment.

For more information on the acquisition of Bank of the West and AIR MILES, refer to Note 10 of the audited annual consolidated financial statements.

Caution

The foregoing section contain forward-looking statements. Please refer to the Caution Regarding Forward-Looking Statements.

Fourth Quarter 2023 Performance Review

Adjusted results and ratios in this section are on a non-GAAP basis. Refer to the Non-GAAP and Other Financial Measures section for further information on adjusting items. The order in which the impact on net income is discussed in this section follows the order of revenue, expenses and provision for credit losses, regardless of their relative impact.

Reported net income was $1,617 million, a decrease of $2,866 million or 64%, and adjusted net income was $2,150 million, an increase of $14 million or 1%. The inclusion of Bank of the West results in the current quarter decreased reported net income by $317 million, and increased adjusted net income by $195 million. Adjusted results excluded the items noted above. Reported EPS was $2.06, a decrease of $4.45, and adjusted EPS was $2.81, a decrease of $0.23, including the impact of common share issuances in the first quarter of 2023.

Canadian P&C

Reported net income was $962 million, an increase of $45 million or 5% from the prior year, and adjusted net income was $966 million, an increase of $49 million or 5%. Results reflected a 13% increase in revenue, due to higher net interest income driven by higher balance growth and margins, and higher non-interest revenue, partially offset by higher expenses and a higher provision for credit losses.

U.S. P&C

Reported net income was $661 million, an increase of $1 million from the prior year, and adjusted net income was $740 million, an increase of $78 million or 12% from the prior year. The impact of the stronger U.S. dollar increased net income by 1%.

On a U.S. dollar basis, reported net income was $486 million, a decrease of $2 million or 1% from the prior year. Adjusted net income, which excluded amortization of acquisition-related intangible assets, was $543 million, an increase of $54 million or 11% due to inclusion of Bank of the West, partially offset by a decrease in underlying revenue primarily due to lower net interest income, higher expenses and a higher provision for credit losses.

BMO Wealth Management

Reported net income was $262 million, a decrease of $36 million or 12% from the prior year, and adjusted net income was $263 million, a decrease of $35 million or 12%. Wealth and Asset Management reported net income was $212 million, a decrease of $9 million or 4%, and adjusted net income was $213 million, a decrease of $8 million or 3% as the inclusion of Bank of the West and higher revenue from growth in client assets was more than offset by higher underlying expenses. Insurance net income was $50 million, a decrease of $27 million or 36% from the prior year, primarily due to unfavourable market movements in the current year relative to favourable market movements in the prior year.

BMO Capital Markets

Reported net income was $489 million, an increase of $132 million or 37% from the prior year, and adjusted net income was $492 million, an increase of $129 million or 36%. Results reflected revenue growth of 19%, with higher revenue in both Global Markets and Investment and Corporate Banking, partially offset by higher expenses and a higher provision for credit losses, compared with a recovery in the prior year.

Corporate Services

Reported net loss was $757 million, compared with reported net income of $2,251 million in the prior year, and adjusted net loss was $311 million, compared with adjusted net loss of $104 million.

Capital

BMO's Common Equity Tier 1 (CET1) Ratio was 12.5% as at October 31, 2023, an increase from 12.3% at the end of the third quarter of 2023, primarily due to internal capital generation and common shares issued under the Dividend Reinvestment and Share Purchase Plan, partially offset by the impact of acquisition and integration costs related to Bank of the West and unrealized losses on fair value through other comprehensive income securities.

Credit Quality

Total provision for credit losses was $446 million, compared with a provision of $226 million in the prior year. The provision for credit losses on impaired loans was $408 million, an increase of $216 million from the prior year. The provision for credit losses on performing loans was $38 million, an increase of $4 million from the prior year.

Refer to the Critical Accounting Estimates and Judgments section of BMO's 2023 Annual Report and Note 4 of our audited annual consolidated financial statements for further information on the allowance for credit losses as at October 31, 2023.

Caution

The foregoing sections contain forward-looking statements. Please refer to the Caution Regarding Forward-Looking Statements.

Regulatory Filings

BMO's continuous disclosure materials, including interim filings, annual Management's Discussion and Analysis and audited annual consolidated financial statements, Annual Information Form and Notice of Annual Meeting of Shareholders and Proxy Circular, are available on our website at www.bmo.com/investorrelations, on the Canadian Securities Administrators' website at www.sedarplus.ca, and on the EDGAR section of the U.S. Securities and Exchange Commission's website at www.sec.gov. Information contained in or otherwise accessible through our website (www.bmo.com), or any third-party websites mentioned herein, does not form part of this document.

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. In this document, the names BMO and BMO Financial Group, as well as the words "bank", "we" and "our", mean Bank of Montreal, together with its subsidiaries.

Financial Review

Management's Discussion and Analysis (MD&A) commentary is as at December 1, 2023. The material that precedes this section comprises part of this MD&A. The MD&A should be read in conjunction with the unaudited interim consolidated financial statements for the period ended October 31, 2023, included in this document, as well as the audited annual consolidated financial statements for the year ended October 31, 2023, and the MD&A for fiscal 2023, contained in BMO's 2023 Annual Report.

BMO's 2023 Annual Report includes a comprehensive discussion of its businesses, strategies and objectives, and can be accessed on our website at www.bmo.com/investorrelations. Readers are also encouraged to visit the site to view other quarterly financial information.

Bank of Montreal's management, under the supervision of the Chief Executive Officer and the Chief Financial Officer, has evaluated the effectiveness, as at October 31, 2023, of Bank of Montreal's disclosure controls and procedures (as defined in the rules of the U.S. Securities and Exchange Commission and the Canadian Securities Administrators) and has concluded that such disclosure controls and procedures are effective.

There were no changes in our internal control over financial reporting during the quarter ended October 31, 2023, which materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Because of inherent limitations, disclosure controls and procedures and internal control over financial reporting can provide only reasonable assurance and may not prevent or detect misstatements.

As in prior quarters, Bank of Montreal's Audit and Conduct Review Committee reviewed this document and Bank of Montreal's Board of Directors approved the document prior to its release.

Financial Highlights

(Canadian $ in millions, except as noted)	Q4-2023	Q3-2023	Q4-2022	Fiscal 2023	Fiscal 2022
Summary Income Statement (1) (5)
Net interest income	4,941	4,905	3,767	18,681	15,885
Non-interest revenue	3,419	3,024	6,803	12,518	17,825
Revenue	8,360	7,929	10,570	31,199	33,710
Insurance claims, commissions and changes in policy benefit liabilities (CCPB)	151	4	(369)	1,939	(683)
Revenue, net of CCPB (2)	8,209	7,925	10,939	29,260	34,393
Provision for credit losses on impaired loans	408	333	192	1,180	502
Provision for (recovery of) credit losses on performing loans	38	159	34	998	(189)
Total provision for credit losses (PCL)	446	492	226	2,178	313
Non-interest expense	5,700	5,594	4,776	21,219	16,194
Provision for income taxes	446	385	1,454	1,486	4,349
Net income	1,617	1,454	4,483	4,377	13,537
Net income available to common shareholders	1,485	1,411	4,406	4,034	13,306
Adjusted net income	2,150	2,037	2,136	8,675	9,039
Adjusted net income available to common shareholders	2,018	1,994	2,059	8,332	8,808
Common Share Data ($, except as noted) (1)
Basic earnings per share	2.07	1.97	6.52	5.69	20.04
Diluted earnings per share	2.06	1.97	6.51	5.68	19.99
Adjusted diluted earnings per share	2.81	2.78	3.04	11.73	13.23
Book value per share	97.17	93.79	95.60	97.17	95.60
Closing share price	104.79	122.54	125.49	104.79	125.49
Number of common shares outstanding (in millions)
End of period	720.9	716.7	677.1	720.9	677.1
Average basic	719.2	715.4	676.1	709.4	664.0
Average diluted	720.0	716.4	677.5	710.5	665.7
Market capitalization ($ billions)	75.5	87.8	85.0	75.5	85.0
Dividends declared per share	1.47	1.47	1.39	5.80	5.44
Dividend yield (%)	5.6	4.8	4.4	5.5	4.3
Dividend payout ratio (%)	71.1	74.6	21.3	102.0	27.1
Adjusted dividend payout ratio (%)	52.3	52.7	45.6	49.4	41.0
Financial Measures and Ratios (%) (1)
Return on equity	8.6	8.3	27.6	6.0	22.9
Adjusted return on equity	11.7	11.7	12.9	12.3	15.2
Return on tangible common equity	12.5	11.9	30.1	8.2	25.1
Adjusted return on tangible common equity	16.0	15.8	14.0	15.8	16.6
Efficiency ratio	68.2	70.6	45.2	68.0	48.0
Adjusted efficiency ratio, net of CCPB (2)	60.8	61.6	57.2	59.8	55.8
Operating leverage	(40.2)	(14.9)	35.3	(38.5)	19.6
Adjusted operating leverage, net of CCPB (2)	(7.3)	(10.4)	0.4	(8.2)	1.3
Net interest margin on average earning assets	1.66	1.68	1.46	1.63	1.62
Net interest margin on average earning assets excluding trading revenue and trading assets	1.87	1.90	1.56	1.82	1.72
Effective tax rate	21.62	20.92	24.49	25.34	24.31
Adjusted effective tax rate	22.65	21.85	21.83	22.33	22.80
Total PCL-to-average net loans and acceptances	0.27	0.30	0.16	0.35	0.06
PCL on impaired loans-to-average net loans and acceptances	0.25	0.21	0.14	0.19	0.10
Liquidity coverage ratio (LCR) (3)	128	131	135	128	135
Net stable funding ratio (NSFR) (3)	115	114	114	115	114
Balance Sheet and other information (as at October 31, $ millions, except as noted)
Assets	1,293,276	1,248,554	1,139,199	1,293,276	1,139,199
Average earning assets	1,177,770	1,161,226	1,021,540	1,145,632	979,341
Gross loans and acceptances	668,396	643,911	567,191	668,396	567,191
Net loans and acceptances	664,589	640,391	564,574	664,589	564,574
Deposits	909,676	883,569	769,478	909,676	769,478
Common shareholders' equity	70,051	67,215	64,730	70,051	64,730
Total risk weighted assets (4)	424,197	412,943	363,997	424,197	363,997
Assets under administration	808,985	774,760	744,442	808,985	744,442
Assets under management	332,947	340,184	305,462	332,947	305,462
Capital Ratios (%) (4)
Common Equity Tier 1 Ratio	12.5	12.3	16.7	12.5	16.7
Tier 1 Capital Ratio	14.1	14.0	18.4	14.1	18.4
Total Capital Ratio	16.2	16.1	20.7	16.2	20.7
Leverage Ratio	4.2	4.2	5.6	4.2	5.6
TLAC Ratio	27.0	26.8	33.1	27.0	33.1
Foreign Exchange Rates ($)
As at October 31, Canadian/U.S. dollar	1.3868	1.3177	1.3625	1.3868	1.3625
Average Canadian/U.S. dollar	1.3648	1.3331	1.3516	1.3492	1.2918

(1)	Adjusted results exclude certain items from reported results and are used to calculate our adjusted measures as presented in the above table. Management assesses performance on a reported basis and an adjusted basis, and considers both to be useful. Revenue, net of CCPB, as well as reported ratios calculated net of CCPB, and adjusted results, measures and ratios in this table are non-GAAP amounts. For further information, refer to the Non-GAAP and Other Financial Measures section; for details on the composition of non-GAAP amounts, measures and ratios, as well as supplementary financial measures, refer to the Glossary of Financial Terms.
(2)	We present revenue, efficiency ratio and operating leverage on a basis that is net of CCPB, which reduces the variability in insurance revenue resulting from changes in fair value that are largely offset by changes in the fair value of policy benefit liabilities, the impact of which is reflected in CCPB. For further information, refer to the Insurance Claims, Commissions and Changes in Policy Benefits section.
(3)	LCR and NSFR are disclosed in accordance with the Liquidity Adequacy Requirements (LAR) Guideline as set out by Office of the Superintendent of Financial Institutions (OSFI), as applicable.
(4)	Capital ratios and risk–weighted assets are disclosed in accordance with the Capital Adequacy Requirements (CAR) Guideline, as set out by OSFI, as applicable.
(5)	Due to the increase in the bank's investments in Low Income Housing Tax Credit (LIHTC) entities following our acquisition of Bank of the West, we have updated our accounting policy related to the presentation of returns from these investments in the consolidated statement of income. As a result, amounts previously recorded in non-interest expense and provision for income taxes are both recorded in non-interest revenue. Fiscal 2023 comparatives have been reclassified to conform with the current period's methodology. The impact in fiscal 2022 was not material.

Non-GAAP and Other Financial Measures

Results and measures in this document are presented on a generally accepted accounting principles (GAAP) basis. Unless otherwise indicated, all amounts are in Canadian dollars and have been derived from our audited annual consolidated financial statements prepared in accordance with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board. References to GAAP mean IFRS. We use a number of financial measures to assess our performance, as well as the performance of our operating segments, including amounts, measures and ratios that are presented on a non–GAAP basis, as described below. We believe that these non–GAAP amounts, measures and ratios, read together with our GAAP results, provide readers with a better understanding of how management assesses results.

Non–GAAP amounts, measures and ratios do not have standardized meanings under GAAP. They are unlikely to be comparable to similar measures presented by other companies and should not be viewed in isolation from, or as a substitute for, GAAP results.

Further information regarding the composition of our non-GAAP and other financial measures, including supplementary financial measures, is provided in the Glossary of Financial Terms and available online at www.bmo.com/investorrelations and at www.sedarplus.ca.

Our non–GAAP measures broadly fall into the following categories:

Adjusted measures and ratios

Management considers both reported and adjusted results and measures to be useful in assessing underlying ongoing business performance. Adjusted results and measures remove certain specified items from revenue, non–interest expense, provision for credit losses and income taxes, as detailed in the following table. Adjusted results and measures presented in this document are non–GAAP amounts. Presenting results on both a reported basis and an adjusted basis permits readers to assess the impact of certain items on results for the periods presented, and to better assess results excluding those items that may not be reflective of ongoing business performance. As such, the presentation may facilitate readers' analysis of trends. Except as otherwise noted, management's discussion of changes in reported results in this document applies equally to changes in the corresponding adjusted results.

Measures net of insurance claims, commissions and changes in policy benefit liabilities

We also present reported and adjusted revenue on a basis that is net of insurance claims, commissions and changes in policy benefit liabilities (CCPB), and our efficiency ratio and operating leverage are calculated on a similar basis. Measures and ratios presented on a basis net of CCPB are non-GAAP amounts. Insurance revenue can experience variability arising from fluctuations in the fair value of insurance assets caused by movements in interest rates and equity markets. The investments that support policy benefit liabilities are predominantly fixed income assets recorded at fair value, with changes in fair value recorded in insurance revenue in the Consolidated Statement of Income. These fair value changes are largely offset by changes in the fair value of policy benefit liabilities, the impact of which is reflected in CCPB. The presentation and discussion of revenue, efficiency ratios and operating leverage on a net basis reduces this variability, which allows for a better assessment of operating results. For more information, refer to the Insurance Claims, Commissions and Changes in Policy Benefit Liabilities section.

Tangible common equity and return on tangible common equity

Tangible common equity is calculated as common shareholders' equity, less goodwill and acquisition-related intangible assets, net of related deferred tax liabilities. Return on tangible common equity is commonly used in the North American banking industry and is meaningful because it measures the performance of businesses consistently, whether they were acquired or developed organically.

Caution

This Non-GAAP and Other Financial Measures section contains forward-looking statements. Please refer to the Caution Regarding Forward-Looking Statements.

Non-GAAP and Other Financial Measures

(Canadian $ in millions, except as noted)	Q4-2023	Q3-2023	Q4-2022	Fiscal 2023	Fiscal 2022
Reported Results
Net interest income	4,941	4,905	3,767	18,681	15,885
Non-interest revenue	3,419	3,024	6,803	12,518	17,825
Revenue	8,360	7,929	10,570	31,199	33,710
Insurance claims, commissions and changes in policy benefit liabilities (CCPB)	(151)	(4)	369	(1,939)	683
Revenue, net of CCPB	8,209	7,925	10,939	29,260	34,393
Provision for credit losses	(446)	(492)	(226)	(2,178)	(313)
Non-interest expense	(5,700)	(5,594)	(4,776)	(21,219)	(16,194)
Income before income taxes	2,063	1,839	5,937	5,863	17,886
Provision for income taxes	(446)	(385)	(1,454)	(1,486)	(4,349)
Net income	1,617	1,454	4,483	4,377	13,537
Diluted EPS ($)	2.06	1.97	6.51	5.68	19.99
Adjusting Items Impacting Revenue (Pre-tax)
Impact of divestitures (1)	-	-	-	-	(21)
Management of fair value changes on the purchase of Bank of the West (2)	-	-	4,541	(2,011)	7,713
Legal provision (including related interest expense and legal fees) (3)	(14)	(3)	(515)	(30)	(515)
Impact of Canadian tax measures (4)	-	(138)	-	(138)	-
Impact of adjusting items on revenue (pre-tax)	(14)	(141)	4,026	(2,179)	7,177
Adjusting Items Impacting Provision for Credit Losses (Pre-tax)
Initial provision for credit losses on purchased performing loans (pre-tax) (5)	-	-	-	(705)	-
Adjusting Items Impacting Non-Interest Expense (Pre-tax)
Acquisition and integration costs (6)	(582)	(497)	(193)	(2,045)	(326)
Amortization of acquisition-related intangible assets (7)	(119)	(115)	(8)	(357)	(31)
Impact of divestitures (1)	-	-	6	-	(16)
Legal provision (including related interest expense and legal fees) (3)	(2)	7	(627)	3	(627)
Impact of Canadian tax measures (4)	-	(22)	-	(22)	-
Impact of adjusting items on non-interest expense (pre-tax)	(703)	(627)	(822)	(2,421)	(1,000)
Impact of adjusting items on reported net income (pre-tax)	(717)	(768)	3,204	(5,305)	6,177
Adjusting Items Impacting Revenue (After-tax)
Impact of divestitures (1)	-	-	-	-	(23)
Management of fair value changes on the purchase of Bank of the West (2)	-	-	3,336	(1,461)	5,667
Legal provision (including related interest expense and legal fees) (3)	(10)	(2)	(382)	(23)	(382)
Impact of Canadian tax measures (4)	-	(115)	-	(115)	-
Impact of adjusting items on revenue (after-tax)	(10)	(117)	2,954	(1,599)	5,262
Adjusting Items Impacting Provision for Credit Losses (After-tax)
Initial provision for credit losses on purchased performing loans (after-tax) (5)	-	-	-	(517)	-
Adjusting Items Impacting Non-Interest Expense (After-tax)
Acquisition and integration costs (6)	(433)	(370)	(145)	(1,533)	(245)
Amortization of acquisition-related intangible assets (7)	(88)	(85)	(6)	(264)	(23)
Impact of divestitures (1)	-	-	8	-	(32)
Legal provision (including related interest expense and legal fees) (3)	(2)	5	(464)	2	(464)
Impact of Canadian tax measures (4)	-	(16)	-	(16)	-
Impact of adjusting items on non-interest expense (after-tax)	(523)	(466)	(607)	(1,811)	(764)
Adjusting Items Impacting Provision for Income Taxes (After-tax)
Impact of Canadian tax measures (4)	-	-	-	(371)	-
Impact of adjusting items on reported net income (after-tax)	(533)	(583)	2,347	(4,298)	4,498
Impact on diluted EPS ($)	(0.75)	(0.81)	3.47	(6.05)	6.76
Adjusted Results
Net interest income	4,955	4,908	4,439	19,094	16,352
Non-interest revenue	3,419	3,162	2,105	14,284	10,181
Revenue	8,374	8,070	6,544	33,378	26,533
Insurance claims, commissions and changes in policy benefit liabilities (CCPB)	(151)	(4)	369	(1,939)	683
Revenue, net of CCPB	8,223	8,066	6,913	31,439	27,216
Provision for credit losses	(446)	(492)	(226)	(1,473)	(313)
Non-interest expense	(4,997)	(4,967)	(3,954)	(18,798)	(15,194)
Income before income taxes	2,780	2,607	2,733	11,168	11,709
Provision for income taxes	(630)	(570)	(597)	(2,493)	(2,670)
Net income	2,150	2,037	2,136	8,675	9,039
Diluted EPS ($)	2.81	2.78	3.04	11.73	13.23

(1)	Reported net income in fiscal 2022 included the impact of divestitures related to the sale of our EMEA and U.S. Asset Management businesses: Q4-2022 included a $8 million ($6 million pre-tax) recovery of non-interest expense; Q3-2022 included non-interest expense of $6 million ($7 million pre-tax); Q2-2022 included a loss of $9 million ($10 million pre-tax), comprising a gain of $8 million related to the transfer of certain U.S. asset management clients recorded in non-interest revenue and non-interest expense of $18 million; and Q1-2022 included a loss of $48 million ($26 million pre-tax), comprising a $29 million loss related to foreign currency translation reclassified from accumulated other comprehensive income to non-interest revenue, and a $3 million net recovery of non-interest expense, including taxes of $22 million on the closing of the sale of our EMEA Asset Management businesses. These amounts were recorded in Corporate Services.
(2)	Reported net income included revenue (losses) related to the acquisition of Bank of the West resulting from the management of the impact of interest rate changes between the announcement and closing of the acquisition on its fair value and goodwill:Q1-2023 included a loss of $1,461 million ($2,011 million pre-tax), comprising $1,628 million of mark-to-market losses on certain interest rate swaps recorded in non-interest trading revenue and $383 million of losses on a portfolio of primarily U.S. treasuries and other balance sheet instruments recorded in net interest income; Q4-2022 included revenue of $3,336 million ($4,541 million pre-tax), comprising $4,698 million of mark-to-market gains and $157 million of net interest losses; Q3-2022 included a loss of $694 million ($945 million pre-tax), comprising $983 million of mark-to-market losses and $38 million of net interest income; Q2-2022 included revenue of $2,612 million ($3,555 million pre-tax), comprising $3,433 million of mark-to-market gains and $122 million pre-tax net interest income; and Q1-2022 included revenue of $413 million ($562 million pre-tax), comprising $517 million of mark-to-market gains and $45 million of net interest income. These amounts were recorded in Corporate Services. For further information on this acquisition, refer to the Recent Acquisitions section.
(3)	Reported net income included the impact of a lawsuit associated with a predecessor bank, M&I Marshall and Ilsley Bank: Q4-2023 included $12 million ($16 million pre-tax), comprising interest expense of $14 million and non-interest expense of $2 million; Q3-2023 included a net recovery of $3 million ($4 million pre-tax), comprising interest expense of $3 million and a non-interest expense recovery of $7 million; Q2-2023 included interest expense of $6 million ($7 million pre-tax); Q1-2023 included $6 million ($8 million pre-tax), comprising interest expense of $6 million and non-interest expense of $2 million; and Q4-2022 included a legal provision of $846 million ($1,142 million pre-tax), comprising interest expense of $515 million and non-interest expense of $627 million. These amounts were recorded in Corporate Services. For further information, refer to the Provisions and Contingent Liabilities section in Note 24 of the audited annual consolidated financial statements of BMO's 2023 Annual Report.
(4)	Reported net income included the impact of certain tax measures enacted by the Canadian government: Q3-2023 included a charge of $131 million ($160 million pre-tax) related to the amended GST/HST definition for financial services, comprising $138 million recorded in non-interest revenue and $22 million recorded in non-interest expense; and Q1-2023 included a one-time tax expense of $371 million, comprising a Canada Recovery Dividend (CRD) of $312 million and $59 million related to the pro-rated fiscal 2022 impact of the 1.5% tax rate increase, net of a deferred tax asset remeasurement. These amounts were recorded in Corporate Services.
(5)	Reported net income in Q2-2023 included an initial provision for credit losses of $517 million ($705 million pre-tax) on the purchased Bank of the West performing loan portfolio, recorded in Corporate Services.
(6)	Reported net income included acquisition and integration costs, recorded in non-interest expense. Costs related to the acquisition of Bank of the West were recorded in Corporate Services: In fiscal 2023, Q4-2023 included $434 million ($583 million pre-tax), Q3-2023 included $363 million ($487 million pre-tax), Q2-2023 included $545 million ($722 million pre-tax), and Q1-2023 included $178 million ($235 million pre-tax); and in fiscal 2022, Q4-2022 included $143 million ($191 million pre-tax), Q3-2022 included $61 million ($82 million pre-tax), Q2-2022 included $26 million ($35 million pre-tax) and Q1-2022 included $7 million ($8 million pre-tax). Costs related to the acquisitions of Radicle and Clearpool were recorded in BMO Capital Markets: In fiscal 2023, Q4-2023 included a recovery of $2 million ($3 million pre-tax), Q3-2023 included $1 million ($2 million pre-tax), Q2-2023 included $2 million ($2 million pre-tax), Q1-2023 included $3 million ($4 million pre-tax); and in fiscal 2022, Q4-2022 included $2 million ($2 million pre-tax), Q3-2022 included $1 million ($2 million pre-tax), Q2-2022 included $2 million ($2 million pre-tax) and Q1-2022 included $3 million ($4 million pre-tax). Costs related to the acquisition of AIR MILES were recorded in Canadian P&C: In fiscal 2023, Q4-2023 included $1 million ($2 million pre-tax), Q3-2023 included $6 million ($8 million pre-tax) and Q2-2023 included $2 million ($3 million pre-tax).
(7)	Reported net income included amortization of acquisition-related intangible assets recorded in non-interest expense in the related operating group:Q4-2023 included $88 million ($119 million pre-tax), Q3-2023 and Q2-2023 both included $85 million ($115 million pre-tax); Q1-2023 included $6 million ($8 million pre-tax); Q4-2022 included $6 million ($8 million pre-tax); Q3-2022 included $5 million ($7 million pre-tax); and Q2-2022 and Q1-2022 both included $6 million ($8 million pre-tax).

Summary of Reported and Adjusted Results by Operating Segment

				BMO Wealth	BMO Capital	Corporate		U.S. Segment (1)
(Canadian $ in millions, except as noted)	Canadian P&C	U.S. P&C	Total P&C	Management	Markets	Services	Total Bank	(US$ in millions)
Q4-2023
Reported net income (loss)	962	661	1,623	262	489	(757)	1,617	388
Acquisition and integration costs	1	-	1	-	(2)	434	433	317
Amortization of acquisition-related intangible assets	3	79	82	1	5	-	88	61
Legal provision (including related interest expense
and legal fees)	-	-	-	-	-	12	12	8
Adjusted net income (loss)	966	740	1,706	263	492	(311)	2,150	774
Q3-2023
Reported net income (loss)	915	576	1,491	303	310	(650)	1,454	364
Acquisition and integration costs	6	-	6	-	1	363	370	275
Amortization of acquisition-related intangible assets	2	77	79	1	5	-	85	60
Legal provision (including related interest expense
and legal fees)	-	-	-	-	-	(3)	(3)	(2)
Impact of Canadian tax measures	-	-	-	-	-	131	131	-
Adjusted net income (loss)	923	653	1,576	304	316	(159)	2,037	697
Q4-2022
Reported net income	917	660	1,577	298	357	2,251	4,483	2,306
Acquisition and integration costs	-	-	-	-	2	143	145	106
Amortization of acquisition-related intangible assets	-	2	2	-	4	-	6	4
Impact of divestitures	-	-	-	-	-	(8)	(8)	(3)
Management of fair value changes on the purchase of
Bank of the West	-	-	-	-	-	(3,336)	(3,336)	(2,470)
Legal provision (including related interest expense
and legal fees)	-	-	-	-	-	846	846	621
Adjusted net income (loss)	917	662	1,579	298	363	(104)	2,136	564
Fiscal 2023
Reported net income (loss)	3,718	2,724	6,442	1,126	1,682	(4,873)	4,377	90
Acquisition and integration costs	9	-	9	-	4	1,520	1,533	1,124
Amortization of acquisition-related intangible assets	6	234	240	4	20	-	264	186
Management of fair value changes on the purchase of
Bank of the West	-	-	-	-	-	1,461	1,461	1,093
Legal provision (including related interest expense
and legal fees)	-	-	-	-	-	21	21	15
Impact of Canadian tax measures	-	-	-	-	-	502	502	-
Initial provision for credit losses on purchased
performing loans	-	-	-	-	-	517	517	379
Adjusted net income (loss)	3,733	2,958	6,691	1,130	1,706	(852)	8,675	2,887
Fiscal 2022
Reported net income	3,826	2,497	6,323	1,251	1,772	4,191	13,537	6,079
Acquisition and integration costs	-	-	-	-	8	237	245	185
Amortization of acquisition-related intangible assets	1	5	6	3	14	-	23	17
Impact of divestitures	-	-	-	-	-	55	55	(45)
Management of fair value changes on the purchase of
Bank of the West	-	-	-	-	-	(5,667)	(5,667)	(4,312)
Legal provision (including related interest expense
and legal fees)	-	-	-	-	-	846	846	621
Adjusted net income (loss)	3,827	2,502	6,329	1,254	1,794	(338)	9,039	2,545

(1) U.S. segment reported and adjusted results comprise net income recorded in U.S. P&C and our U.S. operations in BMO Wealth Management, BMO Capital Markets and Corporate Services.

Refer to footnotes (1) to (7) in the Non-GAAP and Other Financial Measures table for details on adjusting items.

Net Revenue, Efficiency Ratio and Operating Leverage

(Canadian $ in millions, except as noted)	Q4-2023	Q3-2023	Q4-2022	Fiscal 2023	Fiscal 2022
Reported
Net interest income	4,941	4,905	3,767	18,681	15,885
Non-interest revenue	3,419	3,024	6,803	12,518	17,825
Revenue	8,360	7,929	10,570	31,199	33,710
Insurance claims, commissions and changes in policy benefit liabilities (CCPB)	151	4	(369)	1,939	(683)
Revenue, net of CCPB	8,209	7,925	10,939	29,260	34,393
Non-interest expense	5,700	5,594	4,776	21,219	16,194
Efficiency ratio (%)	68.2	70.6	45.2	68.0	48.0
Efficiency ratio, net of CCPB (%)	69.4	70.6	43.7	72.5	47.1
Revenue growth (%)	(20.9)	30.0	60.9	(7.5)	24.0
Revenue growth, net of CCPB (%)	(25.0)	39.3	68.9	(14.9)	33.4
Non-interest expense growth (%)	19.3	44.9	25.6	31.0	4.4
Operating Leverage (%)	(40.2)	(14.9)	35.3	(38.5)	19.6
Operating Leverage, net of CCPB (%)	(44.3)	(5.6)	43.3	(45.9)	29.0
Adjusted (1)
Net interest income	4,955	4,908	4,439	19,094	16,352
Non-interest revenue	3,419	3,162	2,105	14,284	10,181
Revenue	8,374	8,070	6,544	33,378	26,533
Insurance claims, commissions and changes in policy benefit liabilities (CCPB)	151	4	(369)	1,939	(683)
Revenue, net of CCPB	8,223	8,066	6,913	31,439	27,216
Non-interest expense	4,997	4,967	3,954	18,798	15,194
Efficiency ratio (%)	59.7	61.5	60.4	56.3	57.3
Efficiency ratio, net of CCPB (%)	60.8	61.6	57.2	59.8	55.8
Revenue growth, net of CCPB (%)	19.0	21.6	6.7	15.5	5.7
Non-interest expense growth (%)	26.3	32.0	6.3	23.7	4.4
Operating Leverage, net of CCPB (%)	(7.3)	(10.4)	0.4	(8.2)	1.3

(1) Refer to footnotes (1) to (7) in the Non-GAAP and Other Financial Measures table for details on adjusting items.

Return on Equity and Return on Tangible Common Equity

(Canadian $ in millions, except as noted)	Q4-2023	Q3-2023	Q4-2022	Fiscal 2023	Fiscal 2022
Reported net income	1,617	1,454	4,483	4,377	13,537
Net income attributable to non-controlling interest in subsidiaries	7	2	-	12	-
Net income attributable to bank shareholders	1,610	1,452	4,483	4,365	13,537
Dividends on preferred shares and distributions on other equity instruments	(125)	(41)	(77)	(331)	(231)
Net income available to common shareholders (A)	1,485	1,411	4,406	4,034	13,306
After-tax amortization of acquisition-related intangible assets	88	85	6	264	23
Net income available to common shareholders after adjusting for amortization of
acquisition-related intangible assets (B)	1,573	1,496	4,412	4,298	13,329
After-tax impact of other adjusting items (1)	445	498	(2,353)	4,034	(4,521)
Adjusted net income available to common shareholders (C)	2,018	1,994	2,059	8,332	8,808
Average common shareholders' equity (D)	68,324	67,823	63,343	67,486	58,078
Goodwill	(16,462)	(16,005)	(5,247)	(13,466)	(5,051)
Acquisition-related intangible assets	(2,904)	(2,965)	(124)	(2,197)	(130)
Net of related deferred liabilities	1,050	1,062	252	856	251
Average tangible common equity (E)	50,008	49,915	58,224	52,679	53,148
Return on equity (%) (= A/D) (2)	8.6	8.3	27.6	6.0	22.9
Adjusted return on equity (%) (= C/D) (2)	11.7	11.7	12.9	12.3	15.2
Return on tangible common equity (%) (= B/E) (2)	12.5	11.9	30.1	8.2	25.1
Adjusted return on tangible common equity (%) (= C/E) (2)	16.0	15.8	14.0	15.8	16.6

(1) Refer to footnotes (1) to (7) in the Non-GAAP and Other Financial Measures table for details on adjusting these items.

(2) Quarterly calculations are on an annualized basis.

Return on Equity by Operating Segment ⁽¹⁾

	Q4-2023
				BMO Wealth	BMO Capital	Corporate		U.S. Segment (2)
(Canadian $ in millions, except as noted)	Canadian P&C	U.S. P&C	Total P&C	Management	Markets	Services	Total Bank	(US$ in millions)
Reported
Net income available to common shareholders	951	644	1,595	260	480	(850)	1,485	374
Total average common equity (1)	14,197	32,484	46,681	6,601	12,068	2,974	68,324	30,449
Return on equity (%)	26.6	7.9	13.6	15.6	15.8	na	8.6	4.9
Adjusted (3)
Net income available to common shareholders	955	723	1,678	261	483	(404)	2,018	760
Total average common equity (1)	14,197	32,484	46,681	6,601	12,068	2,974	68,324	30,449
Return on equity (%)	26.7	8.8	14.3	15.7	15.9	na	11.7	9.9
	Q3-2023
				BMO Wealth	BMO Capital	Corporate		U.S. Segment (2)
(Canadian $ in millions, except as noted)	Canadian P&C	U.S. P&C	Total P&C	Management	Markets	Services	Total Bank	(US$ in millions)
Reported
Net income available to common shareholders	904	562	1,466	301	302	(658)	1,411	354
Total average common equity	14,048	31,992	46,040	6,702	11,727	3,354	67,823	30,670
Return on equity (%)	25.6	7.0	12.6	17.8	10.2	na	8.3	4.6
Adjusted (3)
Net income available to common shareholders	912	639	1,551	302	308	(167)	1,994	687
Total average common equity	14,048	31,992	46,040	6,702	11,727	3,354	67,823	30,670
Return on equity (%)	25.8	7.9	13.4	17.8	10.4	na	11.7	8.9
	Q4-2022
				BMO Wealth	BMO Capital	Corporate		U.S. Segment (2)
(Canadian $ in millions, except as noted)	Canadian P&C	U.S. P&C	Total P&C	Management	Markets	Services	Total Bank	(US$ in millions)
Reported
Net income available to common shareholders	906	650	1,556	296	346	2,208	4,406	2,300
Total average common equity	12,231	14,381	26,612	5,400	12,142	19,189	63,343	17,270
Return on equity (%)	29.4	17.9	23.2	21.7	11.3	na	27.6	52.8
Adjusted (3)
Net income available to common shareholders	906	652	1,558	296	352	(147)	2,059	558
Total average common equity	12,231	14,381	26,612	5,400	12,142	19,189	63,343	17,270
Return on equity (%)	29.4	18.0	23.2	21.8	11.5	na	12.9	12.8
	Fiscal 2023
				BMO Wealth	BMO Capital	Corporate		U.S. Segment (2)
(Canadian $ in millions, except as noted)	Canadian P&C	U.S. P&C	Total P&C	Management	Markets	Services	Total Bank	(US$ in millions)
Reported
Net income available to common shareholders	3,677	2,672	6,349	1,118	1,648	(5,081)	4,034	56
Total average common equity (1)	13,672	27,889	41,561	6,356	11,856	7,713	67,486	27,203
Return on equity (%)	26.9	9.6	15.3	17.6	13.9	na	6.0	0.2
Adjusted (3)
Net income available to common shareholders	3,692	2,906	6,598	1,122	1,672	(1,060)	8,332	2,853
Total average common equity (1)	13,672	27,889	41,561	6,356	11,856	7,713	67,486	27,203
Return on equity (%)	27.0	10.4	15.9	17.7	14.1	na	12.3	10.5
	Fiscal 2022
				BMO Wealth	BMO Capital	Corporate		U.S. Segment (2)
(Canadian $ in millions, except as noted)	Canadian P&C	U.S. P&C	Total P&C	Management	Markets	Services	Total Bank	(US$ in millions)
Reported
Net income available to common shareholders	3,783	2,461	6,244	1,243	1,732	4,087	13,306	6,052
Total average common equity	11,798	13,815	25,613	5,282	11,556	15,627	58,078	17,081
Return on equity (%)	32.1	17.8	24.4	23.5	15.0	na	22.9	35.4
Adjusted (3)
Net income available to common shareholders	3,784	2,466	6,250	1,246	1,754	(442)	8,808	2,518
Total average common equity	11,798	13,815	25,613	5,282	11,556	15,627	58,078	17,081
Return on equity (%)	32.1	17.8	24.4	23.6	15.2	na	15.2	14.7

(1)	Return on equity is based on allocated capital. In Q2-2023, following the closing of the Bank of the West acquisition, capital was allocated from Corporate Services to U.S. P&C and BMO Wealth Management. For further information, refer to the How BMO Reports Operating Group Results section.
(2)	U.S. segment reported and adjusted results comprise net income and allocated capital recorded in U.S. P&C and our U.S. operations in BMO Wealth Management, BMO Capital Markets and Corporate Services.
(3)	Refer to footnotes (1) to (7) in the Non-GAAP and Other Financial Measures table for details on adjusting items.
na - not applicable

Capital is allocated to the operating segments based on the amount of regulatory capital required to support business activities. Effective the first quarter of fiscal 2023, our capital allocation rate increased to 11.0% of risk weighted assets, compared with 10.5% in 2022, to reflect increased regulatory capital requirements. Unallocated capital is reported in Corporate Services. Capital allocation methodologies are reviewed annually.

Foreign Exchange

	Q4-2023		Fiscal 2023
(Canadian $ in millions, except as noted)	vs. Q4-2022	vs. Q3-2023	vs. Fiscal 2022
Canadian/U.S. dollar exchange rate (average)
Current period	1.3648	1.3648	1.3492
Prior period	1.3516	1.3331	1.2918
Effects on U.S. segment reported results
Increased (Decreased) net interest income	12	59	273
Increased (Decreased) non-interest revenue	53	30	476
Increased (Decreased) total revenue	65	89	749
Decreased (Increased) provision for credit losses	(1)	(5)	1
Decreased (Increased) non-interest expense	(23)	(69)	(285)
Decreased (Increased) provision for income taxes	(10)	(3)	(117)
Increased (Decreased) net income	31	12	348
Impact on earnings per share ($)	0.04	0.02	0.52
Effects on U.S. segment adjusted results
Increased (Decreased) net interest income	18	59	292
Increased (Decreased) non-interest revenue	7	30	142
Increased (Decreased) total revenue	25	89	434
Decreased (Increased) provision for credit losses	(1)	(5)	1
Decreased (Increased) non-interest expense	(15)	(54)	(246)
Decreased (Increased) provision for income taxes	(2)	(8)	(43)
Increased (Decreased) net income	7	22	146
Impact on earnings per share ($)	0.01	0.03	0.22

Adjusted results in this table are on a non-GAAP basis and are discussed in the Non-GAAP and Other Financial Measures section.

The table above indicates the relevant average Canadian/U.S. dollar exchange rates and the impact of changes in those rates on BMO's U.S. segment reported and adjusted results.

The Canadian dollar equivalents of BMO's U.S. segment results that are denominated in U.S. dollars increased relative to the fourth quarter of 2022 and the third quarter of 2023, due to changes in the Canadian/U.S. dollar exchange rate. References in this document to the impact of the U.S. dollar do not include U.S. dollar-denominated amounts recorded outside of BMO's U.S. segment.

Economically, our U.S. dollar income stream was not hedged against the risk of changes in foreign exchange rates during 2023 and 2022. Changes in exchange rates will affect future results measured in Canadian dollars, and the impact on those results is a function of the periods in which revenue, expenses and provisions for (or recoveries of) credit losses and income taxes arise.

Refer to the Enterprise-Wide Capital Management section of BMO's 2023 Annual Report for a discussion of the impact that changes in foreign exchange rates can have on BMO's capital position.

Net Income

Q4 2023 vs. Q4 2022

Reported net income was $1,617 million, a decrease of $2,866 million or 64% from the prior year, and adjusted net income was $2,150 million, an increase of $14 million or 1%. The inclusion of Bank of the West results in the current quarter decreased reported net income by $317 million, and increased adjusted net income by $195 million. Reported EPS was $2.06, a decrease of $4.45, and adjusted EPS was $2.81, a decrease of $0.23, including the impact of common share issuances in the first quarter of 2023.

Adjusted results in the current quarter and the prior year excluded the following items:

Acquisition and integration costs of $433 million ($582 million pre-tax) in the current quarter, and $145 million ($193 million pre-tax) in the prior year, recorded in non-interest expense. The current quarter included acquisition and integration costs of $434 million ($583 million pre-tax) related to Bank of the West.
Amortization of acquisition-related intangible assets of $88 million ($119 million pre-tax) in the current quarter, and $6 million ($8 million pre-tax) in the prior year, recorded in non-interest expense. The current quarter included amortization of acquisition-related intangible assets of $78 million ($105 million pre-tax) related to Bank of the West.
The impact of a lawsuit associated with a predecessor bank, M&I Marshall and Ilsley Bank, of $12 million ($16 million pre-tax) in the current quarter, comprising interest expense of $14 million and non-interest expense of $2 million. The prior year included $846 million ($1,142 million pre-tax), comprising interest expense of $515 million and non-interest expense of $627 million.
Revenue of $3,336 million ($4,541 million pre-tax) in the prior year related to the management of the impact of interest rate changes between the announcement and closing of the Bank of the West acquisition on its fair value and goodwill.
A recovery of $8 million ($6 million pre-tax) in the prior year related to the sale of our EMEA and U.S. Asset Management businesses.

The decrease in reported net income reflected the impact of fair value management actions in the prior year and higher acquisition-related costs in the current year, partially offset by a lower legal expense related to the lawsuit associated with M&I Marshall and Ilsley Bank, noted above. Adjusted net income increased, primarily due to higher revenue, largely offset by higher expenses and a higher provision for credit losses. Reported net income increased in BMO Capital Markets and Canadian P&C, and decreased in BMO Wealth Management. U.S. P&C net income was relatively unchanged from the prior year on a reported basis, primarily due to higher amortization of acquisition-related intangible assets, and increased on an adjusted basis. Corporate Services recorded a net loss on a reported basis, compared with net income in the prior year, primarily due to the items noted above, and on an adjusted basis, Corporate Services net loss increased from the prior year.

Q4 2023 vs. Q3 2023

Reported net income increased $163 million or 11% from the prior quarter, and adjusted net income increased $113 million or 6%. Reported EPS increased $0.09 from the prior quarter, and adjusted EPS increased $0.03.

Adjusted results in the current quarter excluded the items noted above, and adjusted results in the prior quarter excluded the following items:

Acquisition and integration costs of $370 million ($497 million pre-tax).
Amortization of acquisition-related intangible assets of $85 million ($115 million pre-tax).
A charge of $131 million ($160 million pre-tax) related to tax measures enacted by the Canadian government that amended the GST/HST definition for financial services, comprising $138 million recorded in non-interest revenue and $22 million recorded in non-interest expense.
A net recovery of $3 million ($4 million pre-tax) related to the lawsuit associated with a predecessor bank, M&I Marshall and Ilsley Bank, comprising interest expense of $3 million and non-interest expense of $7 million.

The increase in reported net income was primarily due to the impact of tax measures in the prior quarter noted above, partially offset by higher acquisition-related costs in the current quarter. The increase in adjusted net income primarily reflected higher revenue. Reported net income increased in BMO Capital Markets, U.S. P&C and Canadian P&C, and decreased in BMO Wealth Management. Corporate Services recorded a higher net loss on both a reported and an adjusted basis, compared with the prior quarter.

For further information on non-GAAP amounts, measures and ratios in this Net Income section, refer to the Non-GAAP and Other Financial Measures section.

Revenue

Q4 2023 vs. Q4 2022

Reported revenue was $8,360 million, a decrease of $2,210 million or 21% from the prior year. Reported revenue, net of CCPB, was $8,209 million, a decrease of $2,730 million or 25%, and adjusted revenue, net of CCPB, was $8,223 million, an increase of $1,310 million or 19%.

The decrease in reported results primarily reflected the impact of fair value management actions in the prior year, partially offset by lower interest expense related to the lawsuit associated with M&I Marshall and Ilsley Bank in the prior year. On an adjusted basis, net revenue increased across all operating groups, including the addition of Bank of the West and AIR MILES. Revenue in Corporate Services decreased on a reported and an adjusted basis.

Reported net interest income was $4,941 million, an increase of $1,174 million or 31% from the prior year, and adjusted net interest income was $4,955 million, an increase of $516 million or 12%. The increase in reported results reflected lower interest expense related to the lawsuit associated with the predecessor bank, M&I Marshall and Ilsley Bank, and the impact of fair value management actions in the prior year. Net interest income increased in our P&C businesses and BMO Wealth Management, including Bank of the West, partially offset by lower net interest income in Corporate Services, lower trading-related net interest income and the impact of risk transfer transactions. Trading-related net interest income was $213 million, a decrease of $138 million from the prior year and was largely offset in trading non-interest revenue.

BMO's overall reported net interest margin of 1.66% increased 20 basis points. Adjusted net interest margin, excluding trading-related net interest income and trading-related earning assets was 1.88%, an increase of 2 basis points, primarily due to the impact of Bank of the West and higher margins in Canadian P&C, largely offset by lower net interest income and higher low-yielding assets in Corporate Services.

Reported non-interest revenue was $3,419 million, a decrease of $3,384 million from the prior year, and reported non-interest revenue, net of CCPB, was $3,268 million, a decrease of $3,904 million. The decrease in reported results primarily reflected the mark-to-market gain on fair value management actions in the prior year. Adjusted non–interest revenue, net of CCPB, was $3,268 million, an increase of $794 million or 32% from the prior year, primarily due to higher trading revenue and underwriting and advisory fee revenue, the inclusion of Bank of the West and AIR MILES, higher securities gains, other than trading, and higher card-related revenue.

Gross insurance revenue was $275 million, an increase of $493 million from the prior year, primarily due to higher annuity premiums. Insurance revenue can experience variability arising from fluctuations in the fair value of insurance assets caused by movements in interest rates and equity markets. The investments that support policy benefit liabilities are predominantly fixed income and equity assets recorded at fair value, with changes in fair value recorded in insurance revenue in the Consolidated Statement of Income. The impact of these fair value changes was largely offset by changes in policy benefit liabilities, which are discussed in the Insurance Claims, Commissions and Changes in Policy Benefit Liabilities section.

Q4 2023 vs. Q3 2023

Reported revenue increased $431 million or 5% from the prior quarter. Reported revenue, net of CCPB increased $284 million or 4%, including the impact of certain tax measures enacted by the Canadian government in the prior quarter. Adjusted revenue, net of CCPB increased $157 million or 2% from the prior quarter. Reported net revenue increased in BMO Capital Markets, Canadian P&C and U.S. P&C, and decreased in BMO Wealth Management. Revenue in Corporate Services was relatively unchanged from the prior quarter on a reported basis, and decreased on an adjusted basis. The impact of the stronger U.S. dollar increased revenue, net of CCPB, by 1% on both a reported and an adjusted basis.

Reported net interest income increased $36 million or 1% from the prior quarter, and adjusted net interest income increased $47 million or 1%, driven by increases in our P&C businesses and higher trading-related net interest income, partially offset by lower net interest income in Corporate Services. Trading-related net interest income increased $53 million from the prior quarter.

BMO's overall reported net interest margin decreased 2 basis points from the prior quarter. Adjusted net interest margin, excluding trading-related net interest income and trading-related earning assets decreased 2 basis points, primarily due to lower net interest income in Corporate Services, partially offset by higher margins in U.S. P&C.

Reported non-interest revenue increased $395 million from the prior quarter, and reported non-interest revenue, net of CCPB, increased $248 million, primarily due to the impact of the Canadian tax measures noted above. Adjusted non-interest revenue, net of CCPB, increased $110 million or 4% from the prior quarter, primarily due to higher underwriting and advisory fee revenue, higher card-related revenue and the inclusion of an additional month of AIR MILES results, partially offset by lower trading-related revenue.

Gross insurance revenue increased $109 million from the prior quarter, primarily due to lower premiums associated with a change in our longevity portfolios in the prior quarter and higher annuity premiums, partially offset by change in the fair value of investments. These changes were largely offset in CCPB, as discussed in the Insurance Claims, Commissions and Changes in Policy Benefit Liabilities section.

For further information on non-GAAP amounts, measures and ratios, and results presented on a net revenue basis in this Revenue section, refer to the Non-GAAP and Other Financial Measures section.

Change in Net Interest Income, Average Earning Assets and Net Interest Margin ⁽¹⁾

(Canadian $ in millions, except as noted)	Net interest income (teb) (2)			Average earning assets (3)			Net interest margin (in basis points)
(Canadian $ in millions, except as noted)	Q4-2023	Q3-2023	Q4-2022	Q4-2023	Q3-2023	Q4-2022	Q4-2023	Q3-2023	Q4-2022
Canadian P&C	2,166	2,129	1,961	310,566	305,354	292,124	277	277	266
U.S. P&C	2,142	2,066	1,462	219,715	215,960	149,721	387	380	388
Personal and Commercial Banking (P&C)	4,308	4,195	3,423	530,281	521,314	441,845	322	319	307
All other operating groups and Corporate Services (4)	633	710	344	647,489	639,912	579,695	na	na	na
Total reported	4,941	4,905	3,767	1,177,770	1,161,226	1,021,540	166	168	146
Total adjusted	4,955	4,908	4,439	1,177,770	1,161,226	1,021,540	167	168	172
Trading net interest income and earning assets	213	160	351	176,511	170,807	150,715	na	na	na
Total reported excluding trading net interest income and earning assets	4,728	4,745	3,416	1,001,259	990,419	870,825	187	190	156
Total adjusted excluding trading net interest income and earning assets	4,742	4,748	4,088	1,001,259	990,419	870,825	188	190	186
U.S. P&C (US$ in millions)	1,570	1,550	1,082	160,972	161,991	110,753	387	380	388

(Canadian $ in millions, except as noted)	Net interest income (teb) (2)			Average earning assets (3)			Net interest margin (in basis points)
(Canadian $ in millions, except as noted)	YTD-2023		YTD-2022	YTD-2023		YTD-2022	YTD-2023		YTD-2022
Canadian P&C	8,308		7,449	303,855		278,022	273		268
U.S. P&C	7,853		5,037	202,155		138,094	388		364
Personal and Commercial Banking (P&C)	16,161		12,486	506,010		416,116	319		300
All other operating groups and Corporate Services (4)	2,520		3,399	639,622		563,225	na		na
Total reported	18,681		15,885	1,145,632		979,341	163		162
Total adjusted	19,094		16,352	1,145,632		979,341	167		167
Trading net interest income and trading assets	900		1,672	168,686		153,875	na		na
Total excluding trading net interest income and trading assets	17,781		14,213	976,946		825,466	182		172
Total adjusted excluding trading net interest income and trading assets	18,194		14,680	976,946		825,466	186		178
U.S. P&C (US$ in millions)	5,818		3,893	149,767		106,829	388		364

(1)	Adjusted results and ratios in this table are on a non-GAAP basis and are discussed in the Non-GAAP and Other Financial Measures section.
(2)	Operating group revenue is presented on a taxable equivalent basis (teb) in net interest income. For further information, refer to the How BMO Reports Operating Group Results section.
(3)	Average earning assets represents the daily average balance of deposits with central banks, deposits with other banks, securities borrowed or purchased under resale agreements, securities, and loans, over a one-year period.
(4)	For further information on net interest income for these other operating groups and Corporate Services, refer to the Review of Operating Groups' Performance section.
na – not applicable

Total Provision for Credit Losses

				BMO Wealth	BMO Capital	Corporate
(Canadian $ in millions)	Canadian P&C	U.S. P&C	Total P&C	Management	Markets	Services	Total Bank
Q4-2023
Provision for credit losses on impaired loans	248	147	395	2	11	-	408
Provision for (recovery of) credit losses on performing loans	21	29	50	(1)	(10)	(1)	38
Total provision for (recovery of) credit losses	269	176	445	1	1	(1)	446
Total PCL-to-average net loans and acceptances (%) (1)	0.33	0.33	0.33	0.01	0.01	nm	0.27
PCL on impaired loans-to-average net loans and acceptances (%) (1)	0.31	0.28	0.29	0.02	0.06	nm	0.25
Q3-2023
Provision for credit losses on impaired loans	209	119	328	1	1	3	333
Provision for credit losses on performing loans	60	84	144	6	9	-	159
Total provision for credit losses	269	203	472	7	10	3	492
Total PCL-to-average net loans and acceptances (%) (1)	0.34	0.39	0.36	0.06	0.05	nm	0.30
PCL on impaired loans-to-average net loans and acceptances (%) (1)	0.26	0.23	0.25	0.01	-	nm	0.21
Q4-2022
Provision for (recovery of) credit losses on impaired loans	142	47	189	-	5	(2)	192
Provision for (recovery of) credit losses on performing loans	32	15	47	3	(23)	7	34
Total provision for (recovery of) credit losses	174	62	236	3	(18)	5	226
Total PCL-to-average net loans and acceptances (%) (1)	0.23	0.17	0.21	0.03	(0.10)	nm	0.16
PCL on impaired loans-to-average net loans and acceptances (%) (1)	0.19	0.13	0.17	-	0.02	nm	0.14
Fiscal 2023
Provision for credit losses on impaired loans	784	380	1,164	5	9	2	1,180
Provision for credit losses on performing loans	146	130	276	13	9	700	998
Total provision for credit losses	930	510	1,440	18	18	702	2,178
Initial provision for credit losses on purchased performing loans (2)	-	-	-	-	-	(705)	(705)
Adjusted total provision for (recovery of) credit losses (3)	930	510	1,440	18	18	(3)	1,473
Total PCL-to-average net loans and acceptances (%) (1)	0.30	0.26	0.28	0.04	0.02	nm	0.35
PCL on impaired loans-to-average net loans and acceptances (%) (1)	0.25	0.20	0.23	0.01	0.01	nm	0.19
Fiscal 2022
Provision for (recovery of) credit losses on impaired loans	432	107	539	2	(32)	(7)	502
Provision for (recovery of) credit losses on performing loans	(91)	(90)	(181)	(4)	(11)	7	(189)
Total provision for (recovery of) credit losses	341	17	358	(2)	(43)	-	313
Total PCL-to-average net loans and acceptances (%) (1)	0.12	0.01	0.09	(0.01)	(0.07)	nm	0.06
PCL on impaired loans-to-average net loans and acceptances (%) (1)	0.15	0.08	0.13	-	(0.05)	nm	0.10

(1)	PCL ratios are presented on an annualized basis.
(2)	Fiscal 2023 comprised an initial provision for credit losses of $705 million on the purchased Bank of the West performing loan portfolio, recorded in Corporate Services.
(3)	Adjusted results exclude certain items from reported results and are used to calculate our adjusted measures as presented in the above table. Management assesses performance on a reported basis and an adjusted basis, and considers both to be useful. For further information, refer to the Non-GAAP and Other Financial Measures section; for details on the composition of non-GAAP amounts, measures and ratios, as well as supplementary financial measures, refer to the Glossary of Financial Terms.
nm – not meaningful

Q4 2023 vs. Q4 2022

Total provision for credit losses was $446 million, compared with total provision for credit losses of $226 million in the prior year. Total provision for credit losses as a percentage of average net loans and acceptances ratio was 27 basis points, compared with 16 basis points in the prior year. The provision for credit losses on impaired loans was $408 million, an increase of $216 million from the prior year. The provision for credit losses on impaired loans as a percentage of average net loans and acceptances ratio was 25 basis points, compared with 14 basis points in the prior year. The provision for credit losses on performing loans was $38 million, compared with a provision of $34 million in the prior year. The $38 million provision for credit losses on performing loans in the current quarter primarily reflected portfolio credit migration, largely offset by an improvement in the macroeconomic outlook. The $34 million provision for credit losses on performing loans in the prior year reflected a deteriorating economic outlook and balance growth, largely offset by continued reduction in uncertainty as a result of the improving pandemic environment and portfolio credit improvement.

Q4 2023 vs. Q3 2023

Total provision for credit losses decreased $46 million from the prior quarter. The provision for credit losses on impaired loans increased $75 million from the prior quarter. The provision for credit losses on impaired loans as a percentage of average net loans and acceptances ratio was 25 basis points, compared with 21 basis points in the prior quarter. The provision for credit losses on performing loans was $38 million, compared with a provision of $159 million in the prior quarter. The $159 million provision for credit losses on performing loans in the prior quarter primarily reflected portfolio credit migration.

Impaired Loans

(Canadian $ in millions, except as noted)	Q4-2023	Q3-2023	Q4-2022	Fiscal 2023	Fiscal 2022
GIL, beginning of period	2,844	2,658	1,954	1,991	2,169
Classified as impaired during the period	1,766	917	499	4,047	1,635
Purchased credit impaired during the period	-	-	-	415	-
Transferred to not impaired during the period	(184)	(120)	(231)	(545)	(659)
Net repayments	(248)	(384)	(152)	(1,214)	(819)
Amounts written-off	(271)	(190)	(118)	(753)	(363)
Recoveries of loans and advances previously written-off	-	-	-	-	-
Disposals of loans	(24)	-	(9)	(24)	(54)
Foreign exchange and other movements	77	(37)	48	43	82
GIL, end of period	3,960	2,844	1,991	3,960	1,991
GIL to gross loans and acceptances (%)	0.59	0.44	0.35	0.59	0.35

Total gross impaired loans and acceptances (GIL) were $3,960 million, an increase from $1,991 million in the prior year. The increase in impaired loans was predominantly in business and government lending, with the largest increases in the service, commercial real estate and retail trade industries. GIL as a percentage of gross loans and acceptances was 0.59% in 2023, which increased from an historically low level of 0.35% in the prior year. GIL increased $1,116 million from $2,844 million in the prior quarter.

Loans classified as impaired during the quarter totalled $1,766 million, compared with $499 million in the prior year and $917 million in the prior quarter. On a full-year basis, loans classified as impaired during the year increased to $4,047 million from $1,635 million in 2022, reflecting higher impaired loan formations in both the wholesale and the consumer portfolios, including the purchased credit impaired loans related to the acquisition of Bank of the West.

Factors contributing to the change in GIL are outlined in the table above.

Insurance Claims, Commissions and Changes in Policy Benefit Liabilities

Insurance claims, commissions and changes in policy benefit liabilities (CCPB) in the current quarter were $151 million, an increase of $520 million from the prior year, largely driven by higher annuity premiums. CCPB increased $147 million from the prior quarter, due to higher annuity premiums and lower claims associated with a change in our longevity portfolios in the prior quarter, partially offset by changes in the fair value of investments. These changes were largely offset in insurance revenue.

Non-Interest Expense

Q4 2023 vs. Q4 2022

Reported non–interest expense was $5,700 million, an increase of $924 million or 19% from the prior year, and adjusted non–interest expense was $4,997 million, an increase of $1,043 million or 26%. Reported results reflected higher acquisition and integration costs and amortization of acquisition-related intangible assets, compared with the prior year, partially offset by lower expense related to the lawsuit associated with M&I Marshall and Ilsley Bank.

Reported and adjusted non-interest expense increased due to the impact of Bank of the West and AIR MILES, as well as higher premises costs, including a charge related to the consolidation of BMO real estate in the current quarter, higher employee-related and advertising costs.

The reported gross efficiency ratio was 68.2%, compared with 45.2% in the prior year. On a net revenue basis ⁽¹⁾, the reported efficiency ratio was 69.4%, compared with 43.7% in the prior year, and the adjusted efficiency ratio was 60.8%, compared with 57.2% in the prior year. Reported gross operating leverage was negative 40.2%. On a net revenue basis, reported operating leverage was negative 44.3% and adjusted operating leverage was negative 7.3%.

Q4 2023 vs. Q3 2023

Reported non-interest expense increased $106 million or 2% from the prior quarter, and adjusted non-interest expense increased $30 million or 1%. The impact of the stronger U.S. dollar increased non-interest expense by approximately 1% on both a reported and an adjusted basis. Reported results reflected higher acquisition and integration costs, partially offset by the impact of tax measures in the prior quarter.

Reported and adjusted non-interest expense increased due to higher premises costs, including the real estate charge, higher professional fees, advertising costs, an additional month of AIR MILES and the impact of the stronger U.S. dollar, partially offset by lower employee-related costs, including severance in the prior quarter.

For further information on non-GAAP amounts, measures and ratios in this Non-Interest Expense section, refer to the Non-GAAP and Other Financial Measures section.

(1) This ratio is calculated using net revenue and non-interest expense. For further discussion of revenue, refer to the Revenue section.

Provision for Income Taxes

The provision for income taxes was $446 million, a decrease of $1,008 million from the fourth quarter of 2022, and an increase of $61 million from the third quarter of 2023. The effective tax rate for the current quarter was 21.6%, compared with 24.5% in the fourth quarter of 2022, and 20.9% in the third quarter of 2023. The change in the reported effective tax rate in the current quarter relative to the fourth quarter of 2022 and the third quarter of 2023 was primarily due to the impact of higher pre-tax earnings in the prior year and lower pre-tax earnings in the prior quarter, respectively.

The adjusted provision for income taxes was $630 million, an increase of $33 million from the fourth quarter of 2022, and an increase of $60 million from the third quarter of 2023. The adjusted effective tax rate was 22.7% in the current quarter, compared with 21.8% in the fourth quarter of 2022, and 21.9% in the third quarter of 2023. The change in the adjusted effective tax rate in the current quarter relative to the fourth quarter of 2022 and third quarter of 2023 was primarily due to earnings mix.

For further information on non-GAAP amounts, measures and ratios in this Provision for Income Taxes section, refer to the Non-GAAP and Other Financial Measures section.

Capital Management

BMO continues to manage its capital within the framework described in the Enterprise-Wide Capital Management section of BMO's 2023 Annual Report.

Fourth Quarter 2023 Regulatory Capital Review

BMO's Common Equity Tier 1 (CET1) Ratio was 12.5% as at October 31, 2023, an increase from 12.3% at the end of the third quarter of 2023, primarily due to internal capital generation and common shares issued under the dividend reinvestment and share purchase plan (DRIP), partially offset by the impact of acquisition and integration costs related to Bank of the West and unrealized losses on fair value through other comprehensive income (OCI) securities.

CET1 Capital was $52.9 billion as at October 31, 2023, an increase from $50.9 billion as at July 31, 2023, driven by the impact of foreign exchange movements, common shares issued under the DRIP and retained earnings growth, partially offset by unrealized losses on fair value through OCI securities.

Risk-weighted assets (RWA) were $424.2 billion as at October 31, 2023, an increase from $412.9 billion as at July 31, 2023. RWA increased primarily due to the impact of foreign exchange movements, a net increase from model and methodology updates and net asset quality changes, partially offset by risk transfer transactions.

In calculating regulatory capital ratios, there is a requirement to increase total RWA when a capital floor amount calculated under the standardized approaches, multiplied by a capital floor adjustment factor is higher than a similar calculation using more risk-sensitive internal modelled approaches, where applicable. The capital floor was not operative as at October 31, 2023, unchanged from July 31, 2023.

The bank's Tier 1 and Total Capital Ratios were 14.1% and 16.2%, respectively, as at October 31, 2023, compared with 14.0% and 16.1%, respectively, as at July 31, 2023, primarily due to the same factors impacting the CET1 Ratio.

The impact of foreign exchange movements on capital ratios was largely offset. BMO's investments in foreign operations are primarily denominated in U.S. dollars, and the foreign exchange impact of U.S.-dollar-denominated RWA and capital deductions may result in variability in the bank's capital ratios. We may manage the impact of foreign exchange movements on our capital ratios, and we did so during the current quarter. Any such activities could also impact our book value and return on equity.

Our Leverage Ratio was 4.2% as at October 31, 2023, unchanged from July 31, 2023.

The bank's risk-based Total Loss Absorbing Capacity (TLAC) Ratio and TLAC Leverage Ratio were 27.0% and 8.1%, respectively, as at October 31, 2023, compared with 26.8% and 8.1%, respectively, as at July 31, 2023.

Regulatory Capital Developments

Refer to the Enterprise-Wide Capital Management section of BMO's 2023 Annual Report for a more detailed discussion of regulatory developments.

Regulatory Capital, Leverage and TLAC

Regulatory capital requirements for BMO are determined in accordance with guidelines issued by the Office of the Superintendent of Financial Institutions (OSFI), which are based on the Basel III framework developed by the Basel Committee on Banking Supervision (BCBS), and include OSFI's Capital Adequacy Requirements (CAR) Guideline and the Leverage Requirements (LR) Guideline. TLAC requirements are determined in accordance with OSFI's TLAC Guideline. For more information refer to the Enterprise-Wide Capital Management section of BMO's 2023 Annual Report.

OSFI's capital, leverage and TLAC requirements are summarized in the following table.

(% of risk-weighted assets or leverage exposures)	Minimum capital, leverage and TLAC requirements	Total Pillar 1 Capital buffer (1)	Tier 1 Capital buffer (2)	Domestic stability buffer (3)	Minimum capital, leverage and TLAC requirements including capital buffers	BMO capital, leverage and TLAC ratios as at October 31, 2023
Common Equity Tier 1 Ratio	4.5 %	3.5 %	na	3.0 %	11.0 %	12.5 %
Tier 1 Capital Ratio	6.0 %	3.5 %	na	3.0 %	12.5 %	14.1 %
Total Capital Ratio	8.0 %	3.5 %	na	3.0 %	14.5 %	16.2 %
TLAC Ratio	21.5 %	na	na	3.0 %	24.5 %	27.0 %
Leverage Ratio	3.0 %	na	0.5 %	na	3.5 %	4.2 %
TLAC Leverage Ratio	6.75 %	na	0.5 %	na	7.25 %	8.1 %

(1)	The minimum CET1 Ratio requirement of 4.5% is augmented by the 3.5% Total Pillar 1 Capital buffers, which can absorb losses during periods of stress. Pillar 1 Capital buffers, which will be met with CET1 Capital, include a capital conservation buffer of 2.5%, a Common Equity Tier 1 surcharge for domestic systemically important banks (D-SIBs) of 1.0% and a countercyclical buffer, as prescribed by OSFI (immaterial for the fourth quarter of 2023). If a bank's capital ratios fall within the range of this combined buffer, restrictions on discretionary distributions of earnings (such as dividends, share repurchases and discretionary compensation) would ensue, with the degree of such restrictions varying according to the position of the bank's ratios within the buffer range.
(2)	Effective February 1, 2023, D-SIBs are required to meet a 0.5% Tier 1 capital buffer requirement for the Leverage and TLAC Leverage Ratios.
(3)	OSFI requires all D-SIBs to hold a Domestic Stability Buffer (DSB) against Pillar 2 risks associated with systemic vulnerabilities. The DSB was set at 3.0% as at October 31, 2023. Effective November 1, 2023, the DSB will increase to 3.5%. Breaches of the DSB do not result in a bank being subject to automatic constraints on capital distributions. In the event of a breach, OSFI would require a remediation plan, and would expect for the plan to be executed in a timely manner. Banks may be required to hold additional buffers that are applicable to capital, leverage and TLAC ratios.
na – not applicable

Regulatory Capital and TLAC Position ⁽¹⁾

(Canadian $ in millions, except as noted)	Q4-2023	Q3-2023	Q4-2022
Gross common equity (1)	70,051	67,215	64,730
Regulatory adjustments applied to common equity	(17,137)	(16,320)	(3,839)
Common Equity Tier 1 Capital (CET1)	52,914	50,895	60,891
Additional Tier 1 Eligible Capital (2)	6,958	6,958	6,308
Regulatory adjustments applied to Tier 1 Capital	(87)	(86)	(78)
Additional Tier 1 Capi

BMO Financial Group Reports Fourth Quarter and Fiscal 2023 Results