Press Releases

National Bank: A Successful Business Model

Montreal, 10 March 2004 -

At the annual meeting of shareholders held today, Réal Raymond, President and Chief Executive Officer of National Bank of Canada credited the success of the Bank's business model for last year's excellent financial results. Built on a strong position in its core market of Quebec, this business model enabled the Bank to increase its earnings to an all-time high of $624 million or $3.37 per share in 2003.

"The Bank has never been healthier. Employee morale, too, has never been better. All this spells good news – as it should – for shareholders, who have seen the price of Bank shares reach successive record highs," stated Mr. Raymond.

The Bank's strategy is built around the business model of the super-regional bank. "Based on the results it has yielded and its acceptance by the market, we firmly believe that this strategy is the right one for us," Mr. Raymond added. The Bank is also looking to certain niche markets, such as wealth management and partnerships, as a way of expanding elsewhere in Canada.

Strong results in all sectors

The National Bank's CEO interprets the results of the past fiscal year as proof that its business plan is working. All sectors, Personal and Commercial, Wealth Management and Financial Markets contributed to the record earnings for fiscal 2003 and for the first quarter of 2004.

"This Bank-wide revenue growth," indicated the National Bank's CEO, "attests to the health of all our business lines and the importance we assign to diversifying our revenue streams."

Personal and Commercial

The Bank's largest sector, Personal and Commercial, contributed close to $328 million to the Bank's net income, up 16% from fiscal 2002. This segment benefited primarily from partnership agreements signed with London Life, Great-West Life, Investors Group, MD Management and others in a move to expand its distribution network. "The hopes we had pinned on partnerships as a means of expanding the Bank's growth while diversifying our distribution channels outside our core market were therefore justified," Mr. Raymond pointed out.

On the SME side, the sector succeeded in maintaining a good balance between risk-taking and profitability, while holding on to its top ranking in the Quebec market. Substantially improved credit was one of the by-products of this approach.

Wealth Management

Fiscal 2003 was one of sustained growth for the Wealth Management sector as assets under administration increased by 18% to $109 billion as at January 31, 2004 from $92 billion a year earlier. These results were partly attributable to completing the integration of Altamira, which brings to the Bank a nationally recognized brand, and to solid performances by National Bank Discount Brokerage and National Bank Financial.

In 2003, the Bank undertook a number of initiatives that proved to be beneficial for wealth management. For instance, it launched a new line of innovative products, including Strategic Portfolios, and signed agreements with several firms of independent financial advisors that can now offer National Bank Mutual Funds to their clients.

Also noteworthy was the remarkable growth of National Bank Financial's Individual Investor Services outside Quebec, as 39% of its revenues now come from outside the province, compared to 29% in 2002.

Financial Markets

Revenues at Financial Markets continued to climb, reaching $931 million as against $829 million in 2002. This sector's net income was $235 million, down 2% from 2002. The excellent performance of Treasury, and trading activities in particular, was offset by the lower demand for corporate financing and a slowdown in merger and acquisition activities.

"Since 2000, financial market revenues have steadily climbed within a context of highly volatile markets," explained the National Bank's CEO. "Our success in attracting talented people to Treasury and National Bank Financial and in building a diversified portfolio of activities has enabled us to seize market opportunities as they arise."

Corporate governance

Over the past fiscal year, National Bank continued its efforts to improve its corporate governance mechanisms. Some 60 officers at the Bank and its subsidiaries must now attest to the compliance of all material financial information relating to the activities under their responsibility. A Disclosure Committee was formed to oversee the certification and communication of financial information.

In addition, Bank officers now have to maintain holdings of Bank shares. Other changes, such as reducing the size of the Board from a maximum of 25 directors to 18, should make the Board run more efficiently.

Bank mergers

On the subject of bank mergers, Mr. Raymond indicated that 2004 could be a watershed year for the Canadian banking industry. "For the moment, the ball is in the court of the decision-makers in Ottawa, but it is sure to bounce back to the industry. Once laid out, the rules of the game will guide our decisions. However, I sincerely believe that National Bank has what it takes to benefit better than most from any opportunities to acquire assets," he explained. "Decision time is fast approaching. Given our strong performance and our many advantages, I am convinced that National Bank will be able to plot its own course, rather than just be a spectator to the reshaping of the financial industry," he added. Whatever the outcome, Mr. Raymond made it clear that National Bank's business plan was in no way contingent on any possible bank mergers.

New Chairman of the Board

The annual meeting was also an opportunity to thank André Bérard, who stepped down as Chairman of the Board, a position he has held since 1989. That role will now be conferred upon Jean Douville. Mr. Bérard's important contribution to modernizing National Bank's corporate governance was highlighted.

About the National Bank

National Bank of Canada is an integrated group which provides comprehensive financial services to consumers, small and medium-sized enterprises and large corporations in its core market, while offering specialized services to its customers elsewhere in the world. The National Bank offers a full array of banking services, including corporate and investment banking. 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. The National Bank has close to $81 billion in assets and, together with its subsidiaries, employs over 17,000 people. The Bank's securities are listed on the Toronto Stock Exchange (NA: TSX). For more information, visit the Bank's website at

Information (the telephone number and e-mail address provided below are for the exclusive use of journalists and other media representatives):

Denis Dubé
Director – Public Relations
National Bank of Canada
Tel.: (514) 394-8644