National Bank of Canada is reporting lower profit for the third quarter ended July 31. Quarterly profit plunged 82% after the bank wrote down the book value of an investment in Cognicase and took a $112 million charge.

The bank said earnings were $26 million, or 12¢ a share, before goodwill, for the third quarter. That is down from $148 million, or 73¢ a share a year ago.

The bank recorded an impairment charge of $112 million after taxes during the quarter after it revalued its investment in computer services company Cognicase. Excluding the charge, the bank had a profit of $138 million before goodwill.

National acquired the interest in Cognicase when it sold SIBN Inc., its information technology subsidiary in May 2000.

“The value assigned to the investment in Cognicase reflects a conservative assessment in view of current conditions in the technology sector,” the bank said in a news release. “This adjustment to the book value of the investment in no way affects the bank’s business relationship with Cognicase.”

The bank said that compared to the third quarter of 2001, earnings were up by 5% at Personal Banking and Wealth Management, by 12% at Commercial Banking and by 11% at Financial Markets, Treasury and Investment Banking.

The quality of the loan portfolio continued to improve. In fact, as at July 31, 2002, net impaired loans were down $32 million and allowances for credit losses exceeded gross impaired loans by $124 million compared to $92 million at the end of the previous quarter.

Tier 1 capital remained high at 10.2% of regulatory capital as at July 31, 2002 versus 10.7% as at April 30, 2002 and 9.6% as at October 31, 2001.