ATB Financial reported a sharply lower annual profit for 2008 as record loan results partially offset the downturn in Alberta’s economy, the Alberta-based financial institution said Wednesday.

ATB reported net income of $6.4 million in fiscal 2008-09. Net income was $231.2 million before a provision for potential losses on ATB’s holdings of asset-backed commercial paper (ABCP) of $224.8 million. That compared to net income last year of $30 million during the previous fiscal year, or $283.1 million before ABCP.

Gross loans grew by a record $3.2 billion to $22.8 billion, a 16.2% increase from 2007-08. Business loans jumped to approximately $9 billion, a 21.9% increase. Total personal and business deposits rose a record $3.2 billion, or 17.8%, to approximately $21 billion.

In spite of record loan and deposit growth, net income excluding ABCP was down 18.3%, which reflects the impact of decreases in the prime lending rate, Canada’s competitive deposit market, and increased operating expenses, ATB says.

Operating revenue, excluding ABCP, was $907.0 million, up 7.3% from last year.

“The fact that we have remained profitable while absorbing two consecutive years of substantial provisions related to ABCP speaks to the strength and stability of our organization,” said Dave Mowat, ATB president and CEO.

Mowat noted senior executives’ performance pay will be adjusted as a result of ATB’s decrease in net income.

In view of ATB’s net income forecast for 2009-10, performance pay will be reduced by at least 50% for senior executives.

IE