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## Non-Interest Revenue 

(excluding non-recurring items) ($ millions) 

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## Contribution to Non-Interest Revenue Growth 

(excluding non-recurring items) (%) 

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Mutual funds revenues rose $58 million, primarily due to the Guardian Group of Funds and CSFB direct acquisitions. 

Securitization revenues were largely unchanged. As detailed in Note 6 on page 76 of the financial statements, gains on sales of loans as a component of securitization revenues were up sharply from 2001. These increases were largely offset by lower other securitization revenue. The offsets largely relate to changes in GAAP in 2001 whereby revenues of securitized revolving credit card loans and mortgages are now accounted for as gains on sale rather than in other securitization revenue on a cash basis as received. 

Underwriting and advisory fees declined $6 million to $228 mil- lion. Restructuring advisory activities were strong,while revenues from equity origination rose sharply, largely due to very active income trust activity. Structuring fees of the securitization unit were solid while mergers and acquisitions fees were down in a soft market. Investment securities losses were $146 million, compared with $20 million in 2001. Net losses in both years reflect significant write-downs in Investment Banking Group’s own CBOs and in certain merchant banking positions. Losses also reflect the weak credit environment and weakness in certain industries, including telecommunications. Equity investments in CBOs were completely written off during 2002. 

Foreign exchange revenue growth was largely offset by lower insurance revenues. Other revenues increased $89 million due to higher real estate and other income, including sales-related commissions. 

## Trading Revenues 

Trading revenues include net interest income and non-interest revenue earned from on- and off-balance sheet positions undertaken for trading purposes. The management of these positions typically includes marking them to market on a daily basis. Trading revenues include income (expense) and gains (losses) from both on-balance sheet instruments and off-balance sheet interest rate, foreign exchange (including spot positions), equity, commodity and credit contracts. 

Revenues from trading-related activities totalled $391 million, compared with $605 million a year ago. Trading revenues are primarily dependent on the volume of activities undertaken for clients, who enter transactions with BMO to mitigate their risks or to invest. BMO earns a spread or profit on the net sum of its client positions by profitably neutralizing, within prescribed limits, the overall risk of the net positions. BMO also assumes proprietary positions with the goal of earning trading profits. While proprietary positions may expose the organization to loss or profit, the positions and their risks are closely managed and profit or loss from these activities is generally not the most sig- nificant factor affecting the level of trading-related revenues. 

The $214 million reduction in year-over-year results was partly attributable to very strong trading revenue in 2001, as 2002 results were lower in most product areas. Lower market volatility in 2002, which also limits trading opportunities, was an important factor in lower demand and the resulting reduction in client-related activities. A shift to a steeper interest rate yield curve, the credit environment, the closing of our U.S. primary dealer in 2001 and exiting certain businesses in 2002 also con- tributed to the decline in revenue. The market risk section on page 31 provides further information on trading revenues. 

## Interest and Non-Interest Trading Revenues ($ millions) 

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## 2001 Compared with 2000 

In 2001, total revenues increased $199 million or 2% to $8,863 million. This increase consisted of a $303 million or 7% increase in net interest income and a $104 million or 2% decline in non-interest revenue. Excluding non-recurring items, total revenues increased $270 million or 3% to $8,708 million. 

In 2001, BMO discontinued recording its share of Grupo Financiero Bancomer’s earnings in results due to a reduction in BMO’s ownership interest. Equity earnings on the investment were $54 million lower than in 2000. Net interest income rose 

