National Bank of Canada looks to the future with confidence and optimism

"Our determination to shape the Bank to the imperatives of the third millennium is already bearing fruit."

- André Bérard
Chairman of the Board and
Chief Executive Officer
National Bank of Canada

The Annual Meeting of Shareholders of National Bank of Canada held today provided an opportunity for the Bank's senior officers to review the accomplishments and success of the previous fiscal year and to discuss the challenges facing the Bank in the years ahead.

Réal Raymond, President - Personal and Commercial Bank, reported on how the segment he has headed since November 1, 1999 contributed to the Bank's results for fiscal 1999. "The Personal and Commercial Banking segment made a tremendous contribution to the Bank's excellent results in 1999. In fact, 37% of the Bank's net income was generated by the personal banking arm, while commercial banking contributed 24%. Earnings for the segment as a whole grew by 9% over the previous year."

These results were achieved through a combination of factors, such as the phenomenal increase in the number of trades carried out at National Bank Discount Brokerage, where trading volumes grew by 177% in 1999 and by close to 345% in the first three months of 2000 alone. In addition, Mr. Raymond stated that the National Bank's efforts to control operating costs had also been successful: "The Bank as a whole continued to keep a tight rein on operating costs. It is particularly important to single out our excellent performance in terms of our productivity ratio, that is, operating expenses expressed as a percentage of total revenues, which fell to below 60% in 1999 - one of the lowest rates in the industry and better than the average for the other five major Canadian banks."

In his address, Jean Turmel, President - Financial Markets, Treasury and Investment Bank, pointed out that revenues for the segment he directs were up 16% over the previous year.

Mr. Turmel reviewed the impact of the acquisition of First Marathon and its integration with Lévesque Beaubien Geoffrion to create National Bank Financial: "With the acquisition of First Marathon and its subsequent consolidation with Lévesque Beaubien Geoffrion, we took a giant step forward in our diversification strategy. The result is an integrated company that is present Canada-wide, providing clients with brokerage and investment advisory services, as well as corporate financing, investment banking and merger/acquisition advisory services. The challenge for National Bank Financial will be to become one of the principal agents of growth for the Bank both in Quebec and the rest of Canada."

Mr. Turmel concluded by urging investors to revise the way they perceive banks, whose shares have fallen out of favour chiefly because investors are infatuated with high-tech stocks. "What people have not yet fully realized," Mr. Turmel explained, "is that banks themselves have become high-tech enterprises. Once they do realize it, we can expect bank shares to perform extremely well again."

André Bérard, Chairman of the Board and Chief Executive Officer of the National Bank, recalled that "as a result of our sustained and vigorous growth in net income over seven years, in 1999 we caught up with the industry in terms of return on shareholders' equity." In view of this remarkable progress, the National Bank can look to the future with confidence. "The excellent progress we have made provides a solid foundation for building the bank of the future," Mr. Bérard added. The increased demand for financial services has greatly changed the industry as clients have become more demanding and sophisticated. The National Bank intends to pursue growth objectives that will unite the interests of its employees, shareholders and clients alike.

"How is the National Bank preparing for its future in light of these changes? First, by positioning itself to take advantage of the strong growth in the wealth management market," Mr. Bérard explained. "Our emphasis on wealth management reflects our determination to continue to be the universal bank for individuals in Quebec, an innovative bank that is attuned to its clients and active in the community," he added.

Mr. Bérard also looked at three ways in which the Bank intends to continue to expand. The first is by growing outside Quebec through full-service and discount brokerage activities, while the second is by broadening and giving a more North American vocation to its financial services for small and medium-sized enterprises, a client group which the Bank knows extremely well. As Mr. Bérard noted: "Once again, the focus is on transposing tried-and-true expertise to achieve revenue growth without making a large investment."

The third method of development - technological development - is already well advanced with the merger of the National Bank's high-tech subsidiary, SIBN, with Cognicase. On this subject, Mr. Bérard reminded his audience that the merger "was hailed as a veritable win-win situation by industry analysts. It forms yet another part of the foundation on which the Bank is building its future. It is also an excellent example of the alternate ways open to a financial institution of our size to gain access to first-class technological expertise."

If financial markets are currently being transformed, the regulatory framework that governs them must also be adapted so that financial institutions can respond to the needs of their clients, be they individuals or businesses. Mr. Bérard stressed that: "What the federal government has to realize is that the Canadian banks, the backbone of our financial system, need to be given free rein in deploying their resources and organizing their business. Canadian banks must be able to compete on an equal footing in a financial industry that is increasingly fragmented and populated by myriad companies that operate with little or no regulation."

National Bank of Canada is an integrated group whose mission is to provide comprehensive financial services to consumers, small and medium-sized enterprises and large corporations in its core market, while offering specialized services to its clients elsewhere in the world.

The National Bank offers a full array of banking services, including all the investment banking services required by large corporations. It is an active player on international capital markets and, through its subsidiaries, is involved in securities brokerage, insurance and wealth management as well as mutual fund and retirement plan management.

Ranking sixth among Canada's chartered banks, the National Bank is the leading banking institution in Quebec and the bank of choice for small and medium-sized enterprises. It has branches in every province of the country. Through its representative offices, subsidiaries and alliances, it is also represented in the United States, Europe and elsewhere in the world.

Founded in 1859, National Bank of Canada is the product of a series of mergers and acquisitions. It has assets in excess of $70 billion and, together with its subsidiaries, it employs over 17,000 people. The Bank's head office is in Montreal and its shares are listed on the Toronto and Vancouver stock exchanges.

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Information:

Jean Robillard
Media Relations and Financial Communications Officer
Public Relations Department
Tel.: (514) 394-6990
jean.robillard@bnc.ca