2021 Annual Report to Shareholders

1 204th Annual Report 2021 2021 Annual Report to Shareholders BMO Financial Group ABOUT BMO Business Review 2 Financial Performance 3 2021 Highlights 4 Endings and Beginnings 5 Chair s Message 6 A North American Bank 7 Chief Executive Officer s Message 10 Net-Zero Ambition 12 Digital First 14 Our Bold Commitments 16 Board of Directors and Executive Committee Financial Review 17 Enhanced Disclosure Task Force 18 Management s Discussion and Analysis 122 Supplemental Information 139 Statement of Management s Responsibility for Financial Information 140 Independent Auditors Report 143 Reports of Independent Registered Public Accounting Firm 146 Consolidated Financial Statements 151 Notes to Consolidated Financial Statements Resources and Directories 136 Glossary of Financial Terms 212 Where to Find More Information IBC Shareholder Information A purpose-driven BMO is a diversified North American financial services provider with a proud 204-year history and a clear strategy for the future.

2 Guided by our values and driven by a deep sense of purpose, we serve more than 12 million customers through three integrated operating groups: Personal and Commercial Banking, BMO Capital Markets and BMO Wealth Management. Our bank is focused on being innovative, agile and uniquely competitive in a fast-changing world. We re led by more than 12 million customers individuals, families, businesses, institutional clients and communities who inspire us to grow our own business, create value for our Shareholders and advance positive social change. 12+ million customers globally 8thlargest bank in North America by assets $988 billion in total assets 1817 Canada s first bank, established in 1817 A future-ready bank As the world emerges from a transformative crisis and the economy regains traction, BMO has never been better positioned for continued growth. Strong operating momentum; industry-leading customer loyalty; data-informed risk management; the flexibility to leverage our capital strength these are the building blocks of a bank that s ready for the future.

3 We help our customers achieve their goals with digitally enabled products and services designed for speed, convenience and efficiency and powered by human advice. And we foster a winning culture in which people across BMO are aligned in our decision-making, empowered to drive long-term change and recognized for our efforts to advance the bank s strategic priorities. BMO has bold ambitions to accelerate our growth as a leading North American bank, one that helps to further a more inclusive society, a sustainable future, and a thriving economy in which everyone benefits. BMO Financial Group 204th Annual Report 2021 1 Financial Performance Medium-term objectives 2021 financial performanceReported1 Adjusted1 Adjusted EPS growth of 7% to 10% Adjusted ROE of 15% or more Adjusted net operating leverage of 2% or more Capital ratios that exceed regulatory requirements CET1 Ratio2 Earnings per share growth (%) Reported ( ) ( ) 2017 2018 2019 2020 2021 Average Annual ROE (%) Reported Adjusted1 2019 2020 2021 Net Revenue1 (C$ billions) Reported / 2019 2020 2021 Net Income (C$ billions) Reported Adjusted1 2019 2020 2021 1 Net revenue and all adjusted measures are non-GAAP measures.

4 For further information, see the Non-GAAP and Other Financial Measures section of Management s Discussion and Analysis ( MD&A ). Regarding the composition of non-GAAP and other financial measures, including supplementary financial measures, refer to the Glossary of Financial Terms in the MD&A. 2 The CET1 ratio is disclosed in accordance with OSFI s Capital Adequacy Requirements (CAR) Guideline. 3 Percentages determined excluding results in Corporate Services. Certain comparative figures have been reclassified to conform with the current year s presentation. Bank of Montreal brands the organization s member companies as BMO Financial Group. Note 26 of the financial statements lists the intercorporate relationships among Bank of Montreal and its significant subsidiaries. Total shareholder return (%) BMO S&P/TSX Composite index 1-year 3-year 5-year Common Equity Tier 1 Ratio (%) 2019 2020 2021 Reported Net Revenue1 by Geography 36% Canada 58% Other 6% Reported Net Revenue1 by Operating Group3 BMO CM 23% Canadian P&C 34% BMO WM 22% P&C 21% 2 BMO Financial Group 204th Annual Report 2021 2021 Highlights Business driven by purpose Four years in a row on Ethisphere s World s Most Ethical Companies ; six years in a row on bloomberg s gender - equality index .

5 Leading the banking sector in sustainability BMO is one of only two North American banks on the Dow Jones Sustainability World index , and Corporate Knights most sustainable bank in North America. Diversifying our senior leadership In the , we ve set a target of increasing representation of People of Color in senior roles to 30% and we re more than two-thirds of the way there. A clear ambition We ve made a commitment to a sustainable future, including the ambition to be our clients lead partner in the transition to a net-zero world. Finance for a better society From leading the City of Toronto s $100 million Social Bond to acting as sole agent for Sandstorm Gold Royalties sustainability-linked loan, we are Growing the Good in finance. BMO EMpower US$5billion for minority opportunity By tackling barriers to financial inclusion, we re creating opportunities for success among minority businesses, communities and families in the United States. Affordable housing We ve earmarked $12 billion to finance housing that meets accredited affordable housing definitions across Canada supporting CMHC s aspiration that every Canadian be in a home they can afford by 2030.

6 A 193-Year Dividend Record BMO Financial Group has the longest-running dividend payout record of any company in Canada, at 193 years. BMO common shares had an Annual dividend yield of at October 31, 2021. Compound Annual growth rate BMO 15-year BMO 5-year Dividends declared ($ per share) BMO Financial Group 204th Annual Report 2021 3 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 21 4 BMO Financial Group 204th Annual Report 20We are at a special moment in time. As our lives return to something more familiar, our generation has the chance to build something new. We can end barriers that hold others back. Turn inequity into opportunity. Exclusion into inclusion. At BMO, we are all coming together to ensure that as the world rebuilds, everyone benefits. Vlatka Puljic Ambassador, BMO Employee Giving Director, Project Management NA Business Banking Chicago, IL Photo: Jacob Hand Photography 4 BMO Financial Group 204th Annual Report 2021 CHAIR S MESSAGE George A.

7 Cope Chair of the Board RECENTLY, I CHAIRED A MEETING of your Board of Directors that was extraordinary for almost being ordinary. The directors met in person. Though we observed the COVID-19 protocols vaccinations and testing, face coverings, physical distancing, frequent sanitizing and met safely in the spacious auditorium at the BMO Institute For Learning, it was the first time in 18 months that we were all together, face to face. I was just completing my first full fiscal year as Chair and up to that point, since my appointment, all our meetings had been held virtually. I saw this as a marker of how far we had come and how our world had begun to recover from the pandemic. While it is clearly far from over, we regard the prospects for a strong economic recovery to be good, and that is good for our employees, and good for our customers. For some customers, however, we recognize that the recovery may take longer but rest assured that, as we did during the worst days of the pandemic, we will be there to stand by BMO s customers.

8 This too is part of Boldly Growing the Good in business and life. Changing the way we work Much has changed in the past year, but perhaps most significant for BMO is the transformation in the way our customers choose to do business with us. Long before the pandemic, we had begun to establish the infrastructure to transform BMO into a Digital First bank and, while the transformation isn t yet complete, it is certainly well advanced. The board is very pleased with the energy of the management team and their relentless focus on supporting our customers, changing the way we work, and accelerating the digital transformation as Darryl spells out in his Message to Shareholders . Our long-standing focus on sustainability articulated when we first set out our Sustainability Principles has strengthened significantly in the past year, and we can expect it will be ever-present as the world grapples with climate change and the massive transition that will be required of all of us. BMO s ambition is to be our clients lead partner in the transition to a net-zero world, and the board is well positioned to oversee this priority.

9 Adding strength to strength There were three important changes to the makeup of the Board of Directors in the past year. As I announced in last year s Annual Report , one of our longest-serving directors, Ron Farmer, retired from the board at last year s Annual Meeting. We continue to miss his wise counsel and good humour. At that same meeting, we welcomed two new directors to our boardroom: Madhu Ranganathan from OpenText Corporation, who brings not only more than 30 years of financial leadership, but also deep understanding of the role of technology in the workplace, which is so relevant to businesses today, and Stephen Dent, from Birch Hill Equity Partners, who has more than 30 years of experience in private equity and deep expertise in capital allocation, strategic planning, accounting and finance. Madhu and Steve have already proven to be excellent additions to our Board of Directors. Our 13-member board now comprises six women and seven men, in keeping with our commitment to maintain a gender -balanced board.

10 In addition, as was the case last year, three of our four standing committees are chaired by women. I should also note that, as a reflection of our emphasis on competing vigorously on both sides of the border, we now have balanced representation on the board from both Canada and the United States six of our directors are American and seven are Canadian. BMO generates about 40% of its earnings in the United States, which BMO continues to regard as a market with significant potential for growth. As it stands today, BMO is, by assets, the eighth largest bank on the continent, and our lines of business are the fastest-growing areas of the bank. BMO s strategy is succeeding, and our performance last year reflects the strength of BMO s greatest asset: its people. The winning culture that prevails at BMO, grounded in our shared Purpose, positions us well to achieve our bold ambitions. All of us on the board thank you, as Shareholders , for the trust you have placed in us to represent your interests.