Source: The Canadian Press

Financial co-operative Desjardins Group reported Friday that its surplus before member dividends surged 225.6% to $381 million in the first quarter.

The profits for the period ended March 31 compared to $117 million in 2009.

Chief executive Monique Leroux said 2010 was off to a strong start with Desjardins posting gains in several areas.

“Desjardins is one of the best capitalized institutions in the country’s financial services industry, which is prudent given the sustained fragility of the economy,” she said in a statement.

Leroux said the financial institution also kept a lid on costs through many initiatives taken throughout the organization.

Canada’s largest financial co-operative said its improved financial performance was mainly due to better trading income caused by market conditions. It also recorded an $18 million increase in the value of its asset-backed term notes, compared to a $101 million writedown in the prior year period.

Property and casualty insurance benefited from last winter’s milder weather while the life and health insurance enjoyed improved sales and the recovery of financial markets.

Surplus earnings at its caisse network increased 62.8% to $127 million in the first three months of the year, compared to $78 million in 2009.

This was due to business volume growth, which had a positive impact on net interest income, despite lower interest rates.

Total revenues increased 24.6% or $553 million to $2.8 billion.

Provisions for credit losses increased by $5 million to $65 million.

Desjardins increased its provision for member dividends to $76 million, from $65 million in the first quarter of 2009.

Return on equity rose to 13.5%, compared to 4.8% in the same period a year earlier.

Desjardins said its Tier 1 capital ratio was among the best in the industry at 16.13%, compared to 15.86% last year.

Its total assets increased by 5.3% since the beginning of the year to $165.6 billion, from $157.2 billion.

Desjardins had $68.9 billion of outstanding residential mortgages, up 1.8% or $1.2 billion from Dec. 31. These mortgages which are primarily located in Quebec, accounted for 61.1% of the total loans portfolio.

New residential construction and sales of existing homes experienced considerable growth in the first quarter of 2010 in both Quebec and Ontario, where the average selling price of homes rose 10.5% and 20.2% respectively.

Loans to business and government grew by 1.7%, or $438 million to $26.7 billion. Consumer credit, credit cards and personal loans were up 0.9% to $17.1 billion.