Strong growth in trading income and improved results from insurance activities helped Desjardins Group earn higher profitability in the third quarter of 2009, the cooperative financial group reported on Monday.

For the period ended September 30, Desjardins Group’s surplus earnings before member dividends were $378 million, compared to $149 million a year earlier.

Return on equity was 14.4%, compared to 6.2% on a year-over-year basis.

The group said financial performance in the quarter benefited from strong growth in trading income, despite lower interest rates, which restrained net interest income at the caisses and limited their profitability. Results were also strong in the group’s insurance activities, particularly in the life and health insurance subsidiary, and in securities activities, as well as growth in business volumes, Desjardins said.

Net income for the life and health insurance arm, Desjardins Financial Security, was $67.6 million, up sharply from $16.4 million in the same quarter of 2008. In the personal and commercial segment, surplus earnings before member dividends stood at $260 million, up $63 million or 32% from the third quarter of 2008.

“Desjardins Group is seeing solid growth in all its main segments,” said Monique F. Leroux, chair of the board and president and CEO of Desjardins Group. “We are beginning to reap the benefits of major efforts made over the last year, since Desjardins has posted stronger financial results and one of the highest capitalization rates in the industry across the country.”

The group reported a Tier 1 capital ratio of 14.94%, up from 14.15% at the end of the third quarter of 2008. Leroux said Desjardins would continue to act cautiously in the current environment.

“We must continue to manage our cooperative financial group prudently in an economic environment that still harbours uncertainties, while actively working to raise productivity levels and always maintaining our capitalization at such a high level,” she said.

Desjardins Group’s total income reached $3.07 billion at the end of the third quarter of 2009, for an increase of $1.06 billion or 52.7% compared to the same quarter of 2008.

Net interest income stood at $958 million in the third quarter of 2009, up $76 million or 8.6% as compared to the same quarter last year. Net premiums were stable compared to the third quarter of 2008, at $1.1 billion.

Other income stood at $1 billion, up sharply from $17 million in the same quarter of 2008. This significant growth was due to a $943-million increase in trading income and a $146-million increase in income from available-for-sale securities as a result of improved markets, Desjardins Group said.

Expenses related to claims, benefits, annuities and changes in insurance provisions surged 110% to $1.2 billion from the third quarter of 2008. Non-interest expenses stood at $1.22 billion, up 6.6% from the same quarter of 2008. Much of this increase was due to increased salaries and fringe benefits related to the annual indexation of salaries.

IE