REVIEW OF OPERATING GRO UPS  PERFORMANCE Net Income Business Mix and Average Assets by Operating Group  ($ millions, except as noted) This section includes an analysis of our operating groups  financial results and descriptions of their businesses, and  their objectives, accomplishments, challenges and outlooks. A separate analysis of Harris Bank is also provided. Its financial results are incorporated within each of the operating groups. On a U.S. dollar/U.S. GAAP basis, Harris Bank net income was $278 million in 2002, an improvement of $77 million from 2001. Excluding gains on the sales of businesses and a fourth quarter increase in the loan loss provision in recognition of a more uncertain economy in 2001, net income increased $33 million. Personal and Commercial Client Group  (pages 37 to 40) Private Client Group  (pages 41 to 43) Investment Banking Group  (pages 44 to 47) Corporate Support, including Technology and Solutions  Harris Bank (pages 49 to 50) Net income was $968 million in 2002, an increase of $174 million from 2001. Excluding non-recurring items that increased net income $9 million in 2001, net income rose $183 million or 23%. Net income was $96 million in 2002, a decline of $25 million from 2001. Excluding non-recurring expense that reduced net income $39 million in 2002, net income of $135 million rose 12%. Net income was $592 million in 2002, an increase of $115 million from 2001. Excluding non-recurring items that reduced net income $105 million in 2001, net income increased $10 million. (pages 47 to 49) Net loss was $239 million in 2002, compared with net income of $79 million in 2001. Excluding non-recurring items that increased  net income $189 million in 2001, net income declined $129 million. Basis of presentation of operating results — Expenses are matched against the revenues to which they relate. Indirect expenses, such as overhead expenses and any revenue that may be associated thereto, are allocated to the operating groups using appropriate allocation formulas applied on a consistent basis. For each currency, the net income effect of funds transferred from any group with  a surplus to any group with a shortfall is at market rates for the currency and appropriate term. Segmentation of assets by geographic region is based upon the geographic location of the unit responsible for managing the related assets, liabilities, revenues and expenses. Provisions for credit losses allocated to the operating groups are based on expected losses over an economic cycle.  Differences between expected loss provisions and required provisions under GAAP are allocated to the Corporate Support Group. Periodically, certain lines of business and units within them are transferred between operating groups to more closely align BMOGLYPH<213>s organizational structure and its strategic  priorities. All comparative figures are restated to give effect to the transfers. During the year, the Cash Management Services business was transferred from Technology and Solutions to Investment B anking Group.  36 BMO FINANCIAL GROUP ANNUAL REPORT 2002 Net Income Business Mix byGLYPH<CR> Operating Group GLYPH<CR> (excluding non-recurring items) Corporate Support (16.5%)  PCG 9.3% IBG 40.7% P&C 66.5% 2002 Corporate Support (8.0%)  PCG 8.8% IBG 42.2% P&C 57.0% 2001 Net Income by Country GLYPH<CR> (excluding non-recurring items) U.S. 36.6% Canada GLYPH<CR> 52.3% 2002 2001 Other GLYPH<CR> countries GLYPH<CR> 10.8% U.S. 21.9 % Canada GLYPH<CR> 67.3% Other GLYPH<CR> countries GLYPH<CR> 11.1% Personal and Commercial Private Investment Corporate Support, including  Total Client Group Client Group Banking Group Technology and Solutions Consolidated For the year ended October 31 2002 2001 2000 2002 2001 2000 200 2 2001 2000 2002 2001 2000 2002 2001 2000 Net income Canada 725 639 773 124 106 166 137 139 291 (224) (78) (86) 762 806 1,144 United States 188 96 85 (26) 10 29 353 255 322 (21) (117) 58 494 244 494 Other countries 55 59 55 (2) 5 — 102 83 71 6 274 93 161 421 219 Total 968 794 913 96 121 195 592 477 684 (239) 79 65 1,417 1,471 1,857 Business mix (%) 68.3 54.0 49.2 6.8 8.2 10.5 41.8 32.4 36.8 (16.9) 5.4 3.5 100.0 100.0 100.0 Excluding non- recurring items 968 785 822 135 121 195 592 582 684 (239) (110) (29) 1,456 1,378 1,672 Business mix (%) 66.5 57.0 49.2 9.3 8.8 11.7 40.7 42.2 40.9 (16.5) (8.0) (1.8) 100.0 100.0 100.0 Total revenue Canada 3,675 3,545 3,605 1,171 1,127 1,251 919 1,092 1,306 (166) (107) (138) 5,599 5,657 6,024 United States 863 689 631 528 367 309 1,395 1,510 1,196 172 26 141 2,958 2,592 2,277 Other countries 70 76 69 (2) 12 12 220 195 195 14 331 87 302 614 363 Total 4,608 4,310 4,305 1,697 1,506 1,572 2,534 2,797 2,697 20 250 90 8,859 8,863 8,664 Business mix (%) 52.0 48.6 49.7 19.2 17.0 18.1 28.6 31.6 31.1 0.2 2.8 1.1 100.0 100.0 100.0 Excluding non- recurring items 4,608 4,298 4,153 1,697 1,506 1,572 2,534 2,975 2,697 20 (71) 16 8,859 8,708 8,438 Business mix (%) 52.0 49.4 49.2 19.2 17.3 18.6 28.6 34.2 32.0 0.2 (0.9) 0.2 100.0 100.0 100.0 Average assets Canada 86,826 81,035 79,138 1,797 2,140 1,836 72,057 61,825 55,165 (5,294) (5,071) (5,433) 155,386 139,929 130,706  United States 18,745 14,874 12,541 3,630 3,149 2,373 51,556 62,847 62,368 1,040 1,266 (30) 74,971 82,136 77,252 Other countries 235 236 234 82 51 80 17,147 20,420 25,726 169 476 946 17,633 21,183 26,986 Total 105,806 96,145 91,913  5,509 5,340 4,289 140,760 145,092 143,259  (4,085) (3,329) (4,517) 247,990 243,248 234,944 