National Bank of Canada reported net income of $233 million in the second quarter of fiscal 2007, an increase of 9% over the same period of 2006. Diluted earnings per share totalled $1.40, up 11% from $1.26 in the second quarter of fiscal 2006. Had it not been for the net gain on the sale of its shareholder management business in the second quarter of 2006, the increase in diluted earnings per share would have been 14%.

Between the second quarter of 2006 and the second quarter of 2007, the bank’s total revenue grew 9% to $1.02 billion. Return on common shareholders’ equity stood at 20.3%.

“I am very satisfied with how the bank fared during the quarter. It exceeded all of its profitability objectives with strong contributions from all segments,” said Réal Raymond, outgoing president and CEO.

The incoming president and CEO, Louis Vachon, feels that the financial institution is in an excellent position today to continue its trend of profitable growth. “National Bank has once again demonstrated the value of its growth strategy based on a balance between its three core areas of expertise: personal and commercial banking, wealth management and financial markets. Over the coming quarters, the segments’ strategies will be brought up to date to enable the bank to further strengthen its presence in its priority markets and exceed the expectations of all parties that have a stake in its success.”

Total revenue for personal and commercial was up 3% in Q2. Business growth was tempered by a slight decline in the net interest margin from 2.84% in Q2 2006 to 2.80% this quarter, specifically attributable to narrower margins on retail credit products and business deposits.

Total revenue for wealth management was up 6% in Q2 2007 from Q2 2006, the most solid gain of the prior fiscal year, despite pressure on discount brokerage revenue.

Total revenue for financial markets was up 31% to $334 million in the Q2 2007 — or 23% to $311 million, net of non-controlling interest — due to significantly higher financial market fees and trading revenue.