Desjardins Group demonstrated weaker financial performance during the third quarter ended Sept. 30, 2005.

Return on equity was 16.0% as opposed to 19.8% for the same period in 2004.

As a result, Desjardins declares combined surplus earnings before dividends to members of $306 million down from $342 million for third quarter 2004.

Over the nine months ended September 30, 2005, Desjardins Group announced surplus earnings before dividends to members of $835 million, down from the $866 million posted for the same year-earlier period.

Desardins said the group’s results for the first three quarters of 2005 were impacted by a variety of factors, including a $40 million decrease in the personal and commercial segment’s surplus earnings from the corresponding 2004 period. Higher operating expenses resulting from growth in overall business volume, notably in financing activity, which grew by 8.9% or $6.4 billion during the last 12 months, and the impact on net interest income by a narrowing of the spread by 15 basis points, are partly to blame.

For the first three quarters of 2005, the provisions for dividends to caisse member-owners amounted to $285 million, a $13 million increase over the year-earlier period.

Over the same nine-month period, return on equity, at 15.1%, sits just atop the 12 to 15% target, as against 17.4% for the corresponding nine-month period in 2004.

Tier 1 capital ratio was 13.85%, one of the industry’s best ratios, and its total capital ratio at that time was 13.75%.

Total assets amounted to $109.8 billion for the nine months, compared to $101.7 billion a year earlier.

Desjardins Financial Security continued to demonstrate solid growth. Its net earnings were up $26 million or 27.1% from 2004, largely attributable to a 25.5% increase in group insurance sales outside Quebec and a 71.3% increase in group savings sales. It also benefited from a gain from the sale of its Bahamas division in first quarter 2005 as well as the settling of several major non-performing mortgage loans, which led to the recovery of provisions for losses.

As for Desjardins Securities, it recorded a net loss of $7 million for the nine months ended Sept. 30, 2005 compared to a net loss of $1 million one year earlier.