Desjardins Group recorded improved financial performance in the fourth quarter ended Dec. 31, 2006, with combined surplus earnings before patronage dividends to members of $284 million, up $30 million or 11.8% compared to the same quarter in 2005.

Return on equity (surplus earnings before patronage dividends to members over average assets) stood at 13.3% compared to 12.9% for the same period in 2005.

Total income, which is comprised of net interest income, net premiums and other income, increased $216 million to reach $2,517 million, a 9.4% rise over fourth quarter 2005.

Desjardins said factors that had a favourable impact on its Q4 results included a $77 million or 35.3% increase in income from trading and investment activity, a $30 million or 24.0% increase in income from brokerage, investment fund and trust services, and a $55 million or 6.3% increase in revenue from insurance premiums and annuities. Net interest income remained steady.

The provisions for credit losses expense stood at $45 million at the end of fourth quarter 2006 compared to $19 million one year earlier. Desjardins continued to show an excellent-quality loan portfolio.

Expenses related to claims, benefits, annuities and changes in insurance provisions reached $879 million at the end of fourth quarter 2006, an increase of $59 million or 7.2% over the corresponding period in 2005, of which a portion stems from an equivalent increase in investment income from the insurance subsidiaries. Non-interest expenses totalled $1,196 million, up $72 million or 6.4% compared to 2005, partially attributable to an increase in salaries and fringe benefits.

“The increase in profitability in the second six-month period is the result of substantial efforts put forth by all our components. It shows that the work undertaken to ensure profitable business development and to further improve our productivity has been successful and must continue,” explained Alban D’Amours, President and Chief Executive Officer of Desjardins Group.

For the year ended Dec. 31, 2006, Desjardins Group reported combined surplus earnings before patronage dividends to members of $988 million compared to $1,089 million in 2005. Return on equity reached 12.1% compared to 14.5% one year earlier. This decline is mainly attributable to the sharp increase in equity of $648 million since the previous year (equity totalled $8.6 billion as at December 31, 2006) and to a drop in profitability.

“Most of our financial and strategic objectives were attained and even surpassed in 2006 thanks to the considerable efforts made in the area of productivity and to sustained business development, which enabled us to record gains in market share in most of our segments,” said D’Amours.

Total assets of Desjardins Group grew $17 billion last year, reaching $135.1 billion as at Dec. 31, 2006. Assets include an amount of $6 billion from the application, effective Jan. 1, 2006, of a new accounting standard regarding the holding of variable interest entities that requires the consolidation of investment companies in the Group’s Combined Financial Statements. Until Dec. 31, 2005, these investments had been recorded at their net amount at their fair value.