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AMANAGEMENT’S DISCUSSION AND ANALYSIS

Enterprise-Wide StrategyOur VisionTo be the bank that defines great customer experience.

Our Guiding PrincipleWe aim to deliver top-tier total shareholder return and balance our commitments to financial performance, our customers and employees, theenvironment and the communities where we live and work.

Our 2015 Strategy in ContextThe economic environment is constantly evolving. As we navigate through this constant change, we continue to remain grounded in our brandpromise. We’re here to help is a simple statement meant to inspire and guide what we do every day. We aim to help customers feel valued,understood and confident in the decisions they make.

Our strategic priorities have proven to be robust, providing us with consistent direction in the midst of evolving expectations, increasingly intensecompetitive activity and continued market uncertainty. Digital technologies continue to play a critical role across our strategic priorities in enabling ourobjectives. We believe that the strength of our business model, customer base, balance sheet, risk management framework and leadership team,along with the advantages offered by the scale of our consolidated North American platform, will continue to generate sustainable growth and helpus deliver on our vision and brand promise.

Our commitment to stakeholders is evident in our focus on delivering an industry-leading customer experience, managing revenues andexpenses to achieve our financial goals, and maintaining a prudent approach to risk management. We have made good progress on our enterprisestrategic priorities, with select accomplishments outlined below, as well as on our group strategies, detailed in the 2015 Operating GroupsPerformance Review, which starts on page 45.

Our 2015 Priorities and Progress1. Achieve industry-leading customer loyalty by delivering on our brand promise.‰ Developed further capabilities in digital banking and investing to help customers in new and innovative ways:

‰ Launched Touch ID log-in in Canada and the United States, enabling customers to log in to the BMO mobile banking application using fingerprintrecognition. Within a month of the launch in Canada, approximately 115,000 new users registered for the mobile app.

‰ Introduced Mobile Cash in the United States, allowing customers to withdraw money from a BMO Harris automated banking machine (ABM)using their smartphone; we now have the largest network of mobile-enabled cardless ABMs in the United States.

‰ Launched a new BMO Banking and InvestorLine portal, becoming the first major Canadian bank to provide customers with access to bothpersonal banking and self-directed investment accounts all in one place.

‰ Enhanced our cash management offerings with the launch of BMO DepositEdge™ in Canada, enabling business customers to deposit chequesremotely, and BMO Spend Dynamics™, giving corporate card clients convenient access to their transaction data and the ability to analyze theirprogram spend.

‰ For the third consecutive year, BMO was recognized by global financial services research firm Celent with a 2015 Model Bank Award forexcellence in the digital banking category.

‰ Completed the successful launch of BMO’s refreshed brand with innovative tactics, including the “Help Given” social media campaign, whichgenerated over 7.7 million views in Canada and the United States, and sponsorship of The Amazing Race Canada, which allowed BMO to reachmillions of Canadians during its 12-week season.

‰ Recognized with awards across our groups, including Best Wealth Management in Canada, 2015 (Global Banking and Finance Review), Best Full-Service Investment Advisory in Canada, 2015 (Global Banking and Finance Review), 2015 Greenwich Quality Leader in Canadian Equity Sales andCorporate Access and 2015 Greenwich Share Leader for Canadian Fixed Income Research (Greenwich Associates) and, for the sixth consecutive year,World’s Best Metals & Mining Investment Bank (Global Finance).

2. Enhance productivity to drive performance and shareholder value.‰ Continued to make our processes more efficient, enabling front-line employees to add new customers and strengthen existing relationships:

‰ In Canadian P&C, our automated leads management engine, which uses data to identify customer opportunities, has generated incrementalrevenue by presenting customers with proactive needs-based product and service offers.

‰ In U.S. P&C, launched a new Home Lending Loan Origination system with e-disclosures, online loan tracker and digital loan processing.‰ Across the business, improved online sales processes driving growth in sales volumes. Online retail banking sales volumes across Canada are

now equivalent to sales at over 100 branches.‰ Optimized our cost structure to deliver greater efficiencies:

‰ Continued to roll out new branch formats offering smaller, more flexible and more cost-effective points of distribution across North America,including the introduction of our Smart Branch format in the United States, which allows customers to conduct transactions with ABM video-tellers and makes day-to-day banking easier and more convenient.

‰ Continued to expand eStatements participation across North America, as more customers move to the paperless option.‰ Divested our retirement services and municipal bond trading businesses to increase focus on our core Wealth and Capital Markets businesses.‰ Improved data and analytical capabilities, which helped generate revenues and improved management of BMO’s expense base.

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3. Leverage our consolidated North American platform to deliver quality earnings growth.‰ Continued to develop consolidated North American capabilities and platforms in priority areas:

‰ Provided consistent brand messaging across the Canadian and U.S. businesses, building on shared customer insights to address the changingexpectations of the banking industry.

‰ Completed a reorganization of Trading Products by asset class to further enhance customer experience and North American franchise value.‰ Maintained key North-South leadership mandates to achieve greater consistency, eliminate duplication and leverage best practices.

‰ Continued to expand our business and capabilities in the United States:‰ Announced the signing of an agreement to acquire General Electric Capital Corporation’s (GE Capital) Transportation Finance business with net

earning assets on closing of approximately $11.9 billion (US$8.9 billion). The acquisition builds on our position as a market leader in commercialbanking, and enhances our business position in the United States by further diversifying net income, adding scale and enhancing profitabilityand margins.

‰ Improved sales productivity across key products and segments through enhanced coaching and performance management, and deployment ofcustomer acquisition programs.

‰ Introduced compelling offers in Canada that increased sales and established and strengthened client relationships, including the new SavingsBuilder Account, Spring Home Financing and Summer Everyday Banking Campaigns.

4. Expand strategically in select global markets to create future growth.‰ Completed the integration of F&C Asset Management plc (F&C), and rebranded it as BMO Global Asset Management. This acquisition strengthens

the position of BMO Global Asset Management as a top 50 global asset manager.‰ BMO served as a co-chair of the Toronto Financial Services Alliance (TFSA) Renminbi (RMB) Working Group, which played a crucial role in

establishing an offshore renminbi clearing hub in Canada. The Canadian hub facilitates settlements in renminbi, with the intention of encouragingtrade and strengthening ties between Canadian companies and their Chinese business partners.

‰ Ranked among top 20 global investment banks and 12th largest investment bank in North and South America, based on fees, by Thomson Reuters.

5. Ensure our strength in risk management underpins everything we do for our customers.‰ Leveraged our capital processes to enhance our risk appetite and limit framework through further alignment with our businesses’ capacity to

bear risk.‰ Developed and embedded our stress testing capabilities in business management processes and provided additional risk insights.‰ Continued to improve risk culture as evidenced by internal and external surveys.‰ Responded to rising regulatory expectations, evidenced by improvements in stress testing, market risk measurement and anti-money laundering.‰ Continued to develop the next generation of our risk infrastructure by integrating, automating and upgrading our foundational capabilities.

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