National Bank of Canada reported net income of $207 million for the third quarter ended July 31, up 24% from $167 million for the corresponding quarter of 2004. The gain was mainly due to lower loan loss provisions, as well as revenue growth outstripping expense growth.

Earnings per share for the quarter totalled $1.20, up 26% from 95¢ per share for the third quarter of 2004. Return on common shareholders’ equity was 19.6% for the quarter versus 17.2% for the same period a year earlier.

The bank notes that all of its business segments posted substantial increases in net income for the third quarter. Higher volumes of personal and business loans as well as retail brokerage and private investment management activities contributed to the growth in revenues, it says. Moreover, credit quality held steady which enabled the provision for credit losses to be cut by half, especially in the financial markets segment.

“Our third quarter results confirm that the bank is capable of delivering consistently solid growth,” declares president and chief executive officer Real Raymond. “Once again, we capitalized on our strategy to enhance our core business through various initiatives aimed at improving customer satisfaction while continuing to invest in the bank’s internal growth and keeping a tight rein on operating expenses.”

Total revenues for the quarter rose to $889 million from $858 million for the third quarter of 2004, with much of the increase generated by the personal and commercial and wealth management segments. Operating expenses for the quarter were higher too, $616 million versus $586 million for the corresponding quarter of 2004. The $30-million increase was primarily attributable to variable compensation.

The bank slashed its provision for credit losses to $15 million for the quarter versus $31 million for the third quarter of 2004. The decline was mainly due to the financial markets segment.

The personal and commercial segment generated net income of $119 million for the quarter, up 24% from $96 million for the same period one year earlier. This gain resulted from a 7% increase in revenues versus just 3% growth in expenses, combined with an almost 20% reduction in the provision for credit losses, particularly business loans. The jump in revenues was due to growth of more than 10% in personal loans and close to 5% in business loans.

Net income for the wealth management segment reached $30 million for the third quarter, an increase of 36% compared with $22 million for the corresponding quarter a year earlier. Revenues rose by 17%, fuelled by brokerage activities and private investment management which continued to progress versus the third quarter of 2004. Operating expenses, for their part, rose more slowly, increasing 10%.

Net income for the financial markets segment increased to $59 million for the third quarter of 2005 from $50 million for the same period of 2004, mainly due to lower credit losses.

At July 31, gross impaired loans amounted to $261 million, down $127 million or 33% from the beginning of the fiscal year. All business loan portfolios contributed to the decrease.

“I would like to thank the bank’s employees for having contributed to these excellent results,” states Raymond. “We will continue in this direction with a view to building solid and lasting foundations from which to pursue our growth.”