National Bank posts record income of $122 million (+19%) and raises quarterly dividend 5.6%

National Bank of Canada declared income before goodwill charges of $122.2 million or 62¢ per share for the quarter ended January 31, 2000 as against $102.7 million or 56¢ per share for the corresponding period of 1999. Return on common shareholders' equity before goodwill charges was 17.3% for the quarter compared to 16.4% for the first quarter of fiscal 1999.

Moreover, the Board of Directors approved an increase in the quarterly dividend of 1¢ per share, bringing it to 19¢ per share.

The Bank also referred to the agreement in principle it has signed with the firm Cognicase. Under this agreement, Cognicase will acquire all the outstanding shares of SIBN, the Bank's subsidiary which specializes in information technology and e-business solutions. When the transaction is finalized, which is expected in May 2000, the Bank will hold 35% of the shares of Cognicase and become its principal shareholder.

Financial Results

The strong growth in the Bank's income stemmed from the Personal Banking and Wealth Management segment as well as the Financial Markets, Treasury and Investment Banking segment.

Income before goodwill charges for the Personal Banking and Wealth Management segment was up 25.6% to reach $54 million for the first quarter of 2000. This increase was attributable to banking operations with individuals, brokerage income from National Bank Financial and discount brokerage operations.

For the Financial Markets, Treasury and Investment Banking segment, income before goodwill charges totalled $34 million for the first quarter of 2000, up 30.8% over the corresponding quarter a year earlier. The strong performance by National Bank Financial and higher trading income accounted for the increase.

At Commercial Banking, income was $36 million for the quarter compared to $34 million for the same period a year earlier, representing an increase of 6%. The growth in income was chiefly attributable to a higher volume of loans and acceptances.

Revenues

Total revenues, on a taxable equivalent basis, amounted to $747 million for the first quarter of 2000, up $119 million or 19% from the $628 million recorded in the first quarter of 1999. The integration of First Marathon and higher revenues from trading operations helped to boost revenues for the Financial Markets, Treasury and Investment Banking segment by $49 million or close to 50%. Moreover, revenues for the Personal Banking and Wealth Management segment were up $44 million or 11.5% primarily because of growth in revenues from banking operations with individuals and brokerage activities. Revenues for the Commercial Banking segment rose 7% on higher volumes of loans and acceptances.

Operating Expenses

Operating expenses for the first quarter of 2000 were $492 million versus $400 million for the corresponding quarter of fiscal 1999. Excluding the operating expenses of National Bank Financial, expenses were $339 million, up $27 million or 8.7%, with almost one-third attributable to investments in technology and the remainder to the increase in salaries and staff benefits.

Loan Losses and Impaired Loans

For the first quarter of 2000, the provision for credit losses was $46 million or one-fourth of the estimated losses for the year. The provision for credit losses was the same as the corresponding period last year.

Impaired loans, as at January 31, 2000, stood at $44 million as against $45 million at the end of the first quarter of 1999.

Assets

As at January 31, 2000, the Bank had total assets of $73.5 billion, up $1.3 billion from their level of $72.2 billion a year earlier. Cash resources and securities rose $4.4 billion, which was partially offset by a $3.3 billion reduction in securities purchased under reverse repurchase agreements. At $12.1 billion, residential mortgage loans declined by $1.0 billion owing to securitization activities. Commercial loans in Canada, for their part, were up $500 million, while commercial loans in the United States increased by close to $400 million.

Savings

Personal deposits as at January 31, 2000 were up $1.4 billion or more than 7%. Off-balance sheet savings, which stood at $39 billion, grew by $6.4 billion, with National Bank Financial accounting for more than 80%.

Capital

As at January 31, 2000, shareholders' equity stood at $3.4 billion for a $74 million increase since the beginning of the fiscal year, stemming primarily from internally generated funds.

Tier 1 and total capital ratios, in accordance with the rules of the Bank for International Settlements, were 7.6% and 10.8% respectively, compared to 7.5% and 10.3% as at January 31, 1999.

At its meeting on February 24, 2000, the Board of Directors declared regular dividends on the various classes and series of preferred shares, as well as a dividend of 19¢ per common share, payable on or after May 1, 2000 to shareholders of record on March 23, 2000.

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For more information :

M. Michel Labonté
Senior Vice-President
Finance and Control
(514) 394-8610

M. Jean Dagenais
Vice-President and
Chief Accountant
(514) 394-6233

Mme Elaine Carr
Manager - Investor Relations
(514) 394-0296

Refer to Note 26 on page 79 of the 1999 Annual Report for information on the impact of the adjustment to the general allowance for credit risk as at October 31, 1998.

APPENDIX I

APPENDIX II