Press Releases

National Bank: robust revenue and diluted EPS growth in the second quarter of 2006

Montreal, 25 May 2006 -

·         Revenues of $949 million, an increase of 5.4%
·        
Diluted earnings per share of $1.26, up 10%
·        
Return on common shareholders’ equity of 20.4%
·         Increase in the quarterly dividend of 4% to 50 cents per share


(millions of dollars)

For the quarter ended
April 30

 

 

2006

2005

%

Personal and Commercial

       111

   105

  +6

Wealth Management

         42

         30

   +40

Financial Markets

         59

         61

  -3

Other

       2

          6

   -

Net income

        214

       202

+6 

Less: Reduction in general allowance
      for credit risk
      Net gain on sale of shareholder
      management activities included
      in Wealth Management
      Gain on disposal of investments in
      South America

     
-


(5)

-


(11)


-

-

 

Net income excluding
preceding items


209


191


+9

Diluted earnings per share

$1.26

$1.15

+10

Less: Reduction in general allowance
      for credit risk
      Net gain on sale of shareholder
      management activities included
      in Wealth Management
      Gain on disposal of investments in
      South America

  
-


(0.03)

-


(0.07)


-

-

 

Diluted earnings per share
excluding preceding items

$1.23

$1.08

+14

Return on common shareholders’ equity

    
20.4%


19.9%

 

 

 

 

 


(millions of dollars)

For the six months ended
April 30

 

 

2006

2005

%

Personal and Commercial

       225

   217

  +4

Wealth Management

         80

         56 

  +43

Financial Markets

         141

         137

  +3

Other

       (15)

       31

   -

Net income

        431

       441

  -2

Less: Reduction in general allowance
      for credit risk
      Net gain on sale of shareholder
      management activities included
      in Wealth Management
      Gain on disposal of investments in
      South America

           
-


(5)

-


(11)


-

(25)

 

Net income excluding preceding items

426

405

+5

Diluted earnings per share

$2.52

$2.52

-

Less: Reduction in general allowance
      for credit risk
      Net gain on sale of shareholder
      management activities included
      in Wealth Management
      Gain on disposal of investments in
      South America

          
-


(0.03)

-


(0.07)


-

(0.15)

 

Diluted earnings per share
excluding preceding items


$2.49


$2.30


+8

Return on common shareholders’
equity

    
20.2%


21.8%

 

National Bank reported net income of $214 million for the second quarter of fiscal 2006, an increase of $12 million over the same period in 2005. Diluted earnings per share totaled $1.26, up 10% from $1.15 in the second quarter of 2005. Had it not been for the reduction in the general allowance for credit risk in the second quarter of 2005 and the net gain on the sale of its shareholder management activities in the second quarter of 2006, the increase would have been 14%.

Return on common shareholders’ equity was 20.4% in the second quarter of 2006 versus 19.9% for the same quarter last year. The Board of Directors also approved an increase of 4% in the quarterly dividend to 50 cents per share.

The quarter saw robust growth in revenues in both the Personal and Commercial and Wealth Management segments as well as a slight decrease in operating expenses. These activities also showed excellent profitability. “Over 8% of personal savings on deposit with the six major Canadian banks, be they securities, mutual funds or other vehicles(1), are held at the Bank—a proportion far exceeding our relative size in the Canadian market. This competitive advantage is fully reflected in our quarterly results and is a source of long-term profitability for our shareholders,” stated Réal Raymond, President and Chief Executive Officer.

The Bank posted net income of $431 million for the first six months of fiscal 2006 versus $441 million for the same period in 2005. Diluted earnings per share for the first six months of 2006 stood at $2.52, unchanged from the first half of 2005. Had it not been for the reduction in the general allowance for credit risk, the gain on disposal of investments in South America and the net gain on the sale of the shareholder management activities in the first half of 2005 and 2006, diluted earnings per share would have increased 8%. Lastly, return on common shareholders’ equity was 20.2% in the first half of 2006 compared to 21.8% for the same period last year.

(1) Source: Investor Economics Inc.

Results by Segment

In the second quarter of 2006, net income for Personal and Commercial totaled $111 million, up 6% from $105 million for the same quarter the previous year. The segment recorded sustained growth in total revenues due to insurance and foreign exchange activities and higher net interest income resulting primarily from increased loan volumes. Operating expenses rose chiefly due to the higher cost of salaries and staff benefits. The segment’s contribution before the provision for credit losses and income taxes was $200 million for the quarter, 10% higher than in the corresponding period of 2005. This growth was partly offset by the increase in the provision for credit losses. In the first six months of 2006, net income for the Personal and Commercial segment was $225 million, up 4% over the $217 million recorded for the corresponding period of 2005. Total revenues for the segment grew 5.4% to $1,049 million.

Net income for Wealth Management totaled $42 million for the quarter, compared to $30 million for the corresponding period of 2005, an increase of 40%. The gain on the sale of National Bank Trust’s shareholder management activities during the quarter, less certain expenses, contributed $5 million to the increase in quarterly net income. The segment’s total revenues rose 11% on the strength of increased activity in almost all of its business units. A slight increase in operating expenses resulted in a decrease in the efficiency ratio from 77.3% in the second quarter of 2005 to 71.7% this quarter. In the first six months of 2006, net income for Wealth Management reached $80 million, 43% more than for the same period of 2005. Total revenues for the segment grew 11% to $444 million in the first half of 2006.

Financial Markets posted net income of $59 million in the second quarter of 2006, for a decrease of $2 million versus the corresponding quarter of 2005. The segment’s revenues declined by $8 million to $237 million. Lower financial market fees were partly offset by higher gains on securities and trading revenues. The decrease in operating expenses therefore enabled the segment to substantially maintain its profitability. In the first half of 2006, net income for the segment stood at $141 million, $4 million more than for the same period of 2005. The improvement mainly reflects the decline in operating expenses.

Credit Risk

For the second quarter of 2006, the Bank recorded $22 million in specific provisions for credit losses. Excluding the $17 million reduction in the general allowance for credit risk in the corresponding period of 2005, the increase in credit losses was $4 million this quarter. As at April 30, 2006, gross impaired loans stood at $242 million versus $260 million at the end of fiscal 2005. This decline was primarily due to the decrease in gross impaired real estate loans. As at April 30, 2006, allowances for credit losses exceeded gross impaired loans by $197 million compared to $191 million as at October 31, 2005.

Regulatory Capital

As at April 30, 2006, Tier 1 and total capital ratios stood at 9.1% and 12.2%, respectively, compared to 9.6% and 12.8% as at October 31, 2005, taking into account the $500 million debenture issued on November 2, 2005. During the quarter, the Bank repurchased 2.7 million common shares, at a total cost of $168 million, as part of its normal course issuer bid. Under this program, the Bank is seeking to repurchase a maximum of 8.3 million common shares by January 22, 2007.

Financial Objectives





 


Objectives

Results
2nd quarter
2006

Results
1st six months 2006

Growth in diluted earnings per share excluding the reduction in the general allowance for credit risk and the gains on disposal of investments and activities

5% - 10%

14%

8%

Return on common shareholders’ equity

16% - 18%

20.4%

20.2%

Tier 1 capital ratio

More than 8.5%

9.1%

9.1%

Dividend payout ratio

35% - 45%

37%

37%


MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND OPERATING RESULTS

May 25, 2006 — The following text presents Management’s discussion and analysis of the Bank’s financial condition and operating results. This analysis was prepared in accordance with Multilateral Instrument 51-102 respecting Continuous Disclosure Obligations of the Canadian Securities Administrators and is based on the unaudited interim consolidated financial statements for the second quarter and the first six months of 2006. Additional information about National Bank of Canada, including the Annual Information Form, can be obtained from the SEDAR website at www.sedar.com and the Bank’s website at www.nbc.ca.

Analysis of Results

Consolidated Results
National Bank recorded net income of $214 million in the second quarter of fiscal 2006, up 6% from the $202 million recorded for the corresponding period of 2005. Excluding the reduction in the general allowance for credit risk in the second quarter of 2005 and the net gain on the sale of the shareholder management activities in the second quarter of 2006, the increase would have been 9%. The Bank’s net income for the first six months of fiscal 2006 was $431 million, $10 million less than for the year-earlier period. Excluding the reduction in the general allowance for credit risk, the gain on the disposal of investments in South America and the net gain on the sale of the shareholder management activities in the first half of 2005 and 2006, net income increased $21 million, or 5%, year over year.

Diluted earnings per share amounted to $1.26 in the second quarter of 2006, up 10% from $1.15 for the same period of 2005. Excluding the reduction in the general allowance for credit risk in the first quarter of 2005 and the net gain on the sale of the shareholder management activities in the second quarter of 2006, diluted earnings per share increased 14%. Diluted earnings per share in the first half of 2006 were $2.52, unchanged from the first half of 2005. Excluding the reduction in the general allowance for credit risk, the gain on the disposal of investments in South America and the net gain on the sale of the shareholder management activities, diluted earnings per share grew 8% for the first six months.

Total Revenues
At $949 million, the Bank’s total revenues rose 5.4% in the second quarter of 2006, as against $900 million in the second quarter of 2005. Personal and Commercial net interest income advanced $14 million, or 4.5%, to $328 million for the quarter, owing to higher volumes of consumer and business loans. While the spread on credit products narrowed from the second quarter of 2005 to the second quarter of 2006, the effect was partly offset by the wider spread on deposits.

Trading revenues totaled $86 million for the second quarter of 2006, up $11 million, owing primarily to commodity and currency trading. Gains on investment account securities climbed $11 million to $28 million in the second quarter of 2006.

Revenues from mutual funds and trust services, particularly Private Investment Management, climbed $14 million from the second quarter of 2005 to reach $83 million in the second quarter of 2006. Aside from these items, the increase in other income was attributable to lending fees and foreign exchange revenues, each of which rose $6 million. Securitization revenues, however, were $39 million this quarter, as against $47 million in the second quarter of 2005. Financial market fees amounted to $164 million in the second quarter of 2006, compared to $189 million in the year-earlier period when institutional brokerage activities were significantly higher.

Total revenues in the first half of 2006 grew 2.4%, reaching $1,928 million versus $1,883 million in the first half of 2005. Personal and Commercial net interest income advanced $28 million, or 4.4%, to $665 million. Trading revenues climbed $22 million to $179 million. Revenues from mutual funds and trust services, including Private Investment Management, rose $30 million from the first half of 2005 to $164 million in the first six months of 2006. Lending fees and foreign exchange revenues increased $10 million and $11 million, respectively, while securitization revenues amounted to $79 million, compared to $95 million for the same period in 2005. Financial market fees totaled $323 million in the first six months of 2006, as against $358 million in the first six months of 2005.

Operating Expenses
In the second quarter of 2006, operating expenses were $623 million, down $1 million from the year-earlier period. Salaries and staff benefits remained substantially the same for the comparison period. At 57%, the ratio of salaries and staff benefits to operating expenses also remained stable. The increase in regular salaries and pension plan costs during the second quarter of 2006 was offset by the decrease in variable compensation.

In the first half of 2006, operating expenses climbed $30 million to $1,267 million, owing to the $13 million growth in salaries and staff benefits. Technology expenses were up $8 million to $215 million, while other expenses, including professional fees, increased $9 million to $315 million.

Income Taxes
Income taxes for the second quarter of 2006 totaled $82 million, representing an effective tax rate of 27.0%, compared to $66 million and an effective tax rate of 24.0% for the year-earlier period. For the first half of 2006, income taxes amounted to $175 million, representing an effective tax rate of 28.1%, as against $173 million and an effective tax rate of 27.6% for the corresponding period of 2005.

Results by Segment

Personal and Commercial

Net income for the Personal and Commercial segment totaled $111 million for the second quarter of 2006, up 5.7% from the $105 million in net income earned in the corresponding quarter of 2005. Total revenues for the segment climbed 5.5% to $520 million. At Personal Banking, total revenues rose $21 million or 6.5% owing to growth of $3 billion in average asset volumes, attributable mainly to consumer loans, but also to residential mortgages and credit card advances. The increase in revenues stemming from higher loan volumes was partly offset by a narrowing of the spread on these products. However, the spread on transaction deposits widened because of rising interest rates. Insurance revenues jumped 31%, at an annualized rate. Total revenues for Commercial Banking were up $6 million or 3.9% due to the increase in net interest income attributable to higher volumes of loans and acceptances and growth in foreign exchange revenues. While the spread narrowed slightly on Commercial Banking credit products, it widened on deposits. Operating expenses for the Personal and Commercial segment were $320 million for the second quarter of 2006, as against $311 million for the year-earlier period, for an increase of 2.9%. As a result, the efficiency ratio declined to 61.5% for the quarter from 63.1% for the second quarter of 2005. The segment provision for credit losses was increased by $7 million to $33 million.

For the first six months of fiscal 2006, the Personal and Commercial segment posted net income of $225 million, a 3.7% increase over the $217 million recorded for the same period of 2005. Total revenues for the segment rose 5.4% to $1,049 million on growth of $39 million or 6.0% at Personal Banking and $15 million or 4.4% at Commercial Banking. The efficiency ratio moved down to 61.6% in the first half of 2006 from 62.0% for the same period a year earlier.

Wealth Management

Net income for the Wealth Management segment totaled $42 million for the second quarter of 2006, compared to $30 million for the corresponding quarter of 2005, for an increase of 40%. The net gain realized on the sale of National Bank Trust’s shareholder management activities during the quarter contributed $5 million to the increase in net income for the quarter. The segment’s total revenues advanced 11% to $230 million for the second quarter of 2006. Almost all the business units in the segment saw increased activity. Operating expenses were up $5 million or 3% to $165 million for the quarter. With revenue growth outstripping expense growth, the efficiency ratio was reduced from 77.3% in the second quarter of 2005 to 71.7% this quarter.

For the first half of fiscal 2006, net income for the Wealth Management segment amounted to $80 million versus $56 million for the same period in 2005, for an increase of 43%. Total revenues for the segment rose by 11% to $444 million in the first six months of fiscal 2006. Operating expenses edged up barely $9 million or 3% to $320 million for the six-month period.

Financial Markets

For the quarter ended April 30, 2006, the Financial Markets segment posted net income of $59 million, down $2 million from the year-earlier period. Segment revenues fell $8 million to $237 million. Lower financial market fees were offset by higher gains on securities and trading revenues. Operating expenses for the quarter were $142 million, a decline of 5.3% from the $150 million recorded in the corresponding quarter of 2005, primarily owing to variable compensation. The provision for credit losses for the quarter stood at $1 million, compared to $2 million for the second quarter of 2005. For the first half of fiscal 2006, the segment’s net income totaled $141 million, or $4 million more than the corresponding period of 2005.

Financial Market Revenues
(taxable equivalent basis(1))
(millions of dollars)

Q2
2006

Q2
2005

Trading revenues

 

 

  Equity

57

57

   Interest rate

14

13

  Commodity and foreign exchange

12

5

 

83

75

Financial market fees

65

88

Gains on securities

31

14

Banking services

29

34

Other

29

34

Total

237

245

(1) Taxable equivalent basis is a calculation method that consists in grossing up certain tax-exempt income by the amount of income tax that otherwise would have been payable. The use of the taxable equivalent basis is not in accordance with GAAP. Securities regulators require that companies caution readers that measures adjusted on a basis other than GAAP do not have standardized meanings under GAAP and may not be comparable to similar measures used by other companies. Please refer to Note 11 to the unaudited interim consolidated financial statements for the impact of the taxable equivalent adjustment to segment results.

Other

The “Other” heading of segment results posted net income of $2 million for the second quarter of 2006, compared to $6 million for the same period a year earlier. For the first six months of 2006, the “Other” heading recorded a loss of $15 million, as against a gain of $31 million for the corresponding period of 2005. In the first half of 2005, the Bank recorded a $37 million pre-tax gain on the disposal of investments and reversed the general allowance for credit risk by
$17 million.

Cash Flows

Due to the nature of the Bank’s business, most of its revenues and expenses are cash items. Moreover, significant cash flow movement can be observed in certain activities, such as trading activities, and could impact several assets and liabilities such as trading account securities, securities sold short or securities sold under repurchase agreements.

For the second quarter of 2006, cash and cash equivalents were up $1.2 billion, compared to an increase of $2.3 billion for the second quarter of 2005. As at April 30, 2006, cash and cash equivalents totaled $9.6 billion versus $8.9 billion the previous year.

Operating activities required cash of $5.2 billion for the second quarter of 2006, mainly because of the increase in trading account securities. For the corresponding quarter of 2005, operating activities required cash of $3.9 billion for the same reason.

Financing activities provided cash inflows of $5.2 billion, most of which was generated by higher deposits, particularly purchased funds. For the second quarter of 2005, the $5.1 billion rise in deposits and the $3.4 billion increase in obligations related to securities sold short accounted for $8.0 billion in cash inflows from financing activities.

Finally, cash inflows from investing activities were $1.2 billion in the second quarter of 2006. Investing activities in the corresponding quarter of 2005 required cash of $1.8 billion due to the $1.9 billion increase in loans.

Risk Management

Credit Risk

In the second quarter of 2006, the Bank recorded specific provisions for credit losses of $22 million, an increase of $4 million over the second quarter of 2005. As at April 30, 2006, gross impaired loans stood at $242 million compared to $260 million at the end of fiscal 2005. This decline was primarily due to the decrease in gross impaired real estate loans. The ratio of gross impaired loans to total adjusted capital and allowances was only 6.4%. As at April 30, 2006, allowances for credit losses exceeded gross impaired loans by $197 million versus $191 million as at October 31, 2005.

Market Risk – Trading Activities

The Value-at-Risk (VaR) simulation model is one of the main tools used to manage market risk in trading activities. The VaR measure is based on a 99% confidence level, which is an estimate of the maximum potential trading loss in 99 out of 100 days, which means that actual losses will probably exceed VaR on only one day out of 100. The computerized VaR calculation model is based on two years of historical data. Market risk management is discussed in more detail on page 61 of the 2005 Annual Report.

The table below entitled “Trading Activities” illustrates the allocation of market risk by type of risk: interest rate, foreign exchange, equity price and commodity.

Trading Activities(1)
(millions of dollars)

Global VaR by risk category

For the quarter ended
April 30, 2006

For the quarter ended
January 31, 2006

 

Period end

High

Average

Low

Period end

High

Average

Low

Interest rate

(7.1)

(8.2)

(5.8)

(3.6)

(5.2)

(7.2)

(3.7)

(1.8)

Foreign exchange

(0.9)

(2.2)

(1.5)

(0.6)

(1.9)

(2.8)

(1.8)

(0.6)

Equity

(3.7)

(6.7)

(4.9)

(3.7)

(6.1)

(6.2)

(4.7)

(3.0)

Commodity

(1.4)

(1.4)

(0.9)

(0.7)

(1.6)

(2.3)

(1.2)

(0.5)

Correlation effect(2)

6.5

9.5

6.0

3.2

5.7

8.3

5.6

1.8

Global VaR

(6.6)

(9.0)

(7.1)

(5.4)

(9.1)

(10.2)

(5.8)

(4.1)

(1) Amounts are presented on a pre-tax basis and represent one-day VaR.
(2) The correlation effect is the result of the diversification of types of risk.

Balance Sheet

As at April 30, 2006, the Bank had assets of $111.2 billion, up $3.6 billion versus $107.6 billion at the end of fiscal 2005. Loans and acceptances were up $700 million. In addition, cash, deposits with financial institutions, securities and securities purchased under reverse repurchase agreements increased $3.4 billion. The table below presents the main portfolios.

Average monthly volumes

April

October

April

(millions of dollars)

2006

2005

2005

Loans and acceptances*

 

 

 

Residential mortgages

20,972

20,728

20,053

Consumer loans

9,049

8,283

7,354

Credit card receivables

1,716

1,707

1,646

SME loans

15,312

14,182

15,009

Corporate loans

3,558

3,216

2,741

 

50,607

48,116

46,803

Deposits

 

 

 

Personal (balance)

28,270

26,385

25,033

Off-balance sheet personal savings (balance)

68,636

63,262

60,239

Business

11,310

11,103

10,533

*including securitized assets

Residential mortgage loans rose steadily during the second quarter, with the average monthly volume reaching $21.0 billion as against $20.1 billion in the second quarter of 2005. Consumer loans climbed 23% to $9.0 billion, driven by volumes from secured lines of credit. The rise in credit card receivables, which were up 4.3% over the previous year to total $1.7 billion as at April 30, 2006, was attributable to increased consumer spending. Business loans continued to grow, with SME loans up $300 million year over year, representing an average volume of $15.3 billion as at April 30, 2006. Average volumes of corporate loans, for their part, rose $800 million to $3.6 billion.

Personal deposits stood at $28.3 billion as at April 30, 2006, up $3.2 billion or 12.9% from the corresponding quarter of 2005, chiefly owing to deposits distributed by Altamira. Off-balance sheet personal savings administered by the Bank as at April 30, 2006 totaled $68.6 billion, an increase of $8.4 billion or 13.9% in a year. The rise was primarily attributable to savings administered by brokerage subsidiaries, with the remainder divided between Private Investment Management and mutual funds.

Accounting policies and estimates

The interim consolidated financial statements have been prepared in accordance with Canadian generally accepted accounting principles (“GAAP”). The reader is referred to Note 1 and Note 2a to the 2005 annual consolidated financial statements for more information on the significant accounting policies used to prepare the financial statements.

There have not been any changes to the Bank’s significant accounting policies affecting the first half of 2006.

Details of significant future changes in accounting standards are presented in Note 2 to the interim consolidated financial statements.

The key assumptions and bases for estimates made by Management in accordance with GAAP and their impact on amounts presented in the interim consolidated financial statements and notes remain essentially unchanged from those described in the 2005 Annual Report.

Capital

Tier 1 and total capital ratios, according to the rules of the Bank for International Settlements, stood at 9.1% and 12.2%, respectively, as at April 30, 2006 versus 9.6% and 12.8% as at October 31, 2005, including the $500 million debenture issued on November 2, 2005. During the quarter, the Bank repurchased 2.7 million common shares for a total of $168 million as part of its normal course issuer bid. Under the program, the Bank intends to repurchase a maximum of 8,278,000 common shares by January 22, 2007.

In addition, risk-weighted assets rose $1.8 billion or 3.8% since the start of the fiscal year mainly because of higher loan volumes.

Dividends

At its Meeting on May 25, 2006, the Board of Directors declared regular dividends on the various classes and series of preferred shares as well as a 2 cents increase to 50 cents per common share, payable on August 1, 2006 to shareholders of record on June 22, 2006.

Caution regarding forward-looking statements
From time to time, National Bank of Canada makes written and oral forward-looking statements, included in this quarterly report, in other filings with Canadian regulators or the U.S. Securities and Exchange Commission, in reports to shareholders, in press releases and in other communications.  All such statements are made pursuant to the “safe harbour” provisions of the United States Private Securities Litigation Reform Act of 1995. These forward-looking statements include, among others, statements with respect to the economy, market changes, the achievement of strategic objectives, certain risks as well as statements with respect to our beliefs, plans, expectations, anticipations, estimates and intentions. These forward-looking statements are typically identified by the words “may,” “could,” “should,” “would,” “suspect,” “outlook,” “believe,” “anticipate,” “estimate,” “expect,” “intend,” “plan,” and words and expressions of similar import.

By their very nature, such forward-looking statements require us to make assumptions and involve inherent risks and uncertainties, both general and specific. There is significant risk that express or implied projections contained in such statements will not materialize or will not be accurate. A number of factors could cause actual future results, conditions, actions or events to differ materially from the targets, expectations, estimates or intentions expressed in the forward-looking statements.  Such differences may be caused by factors, many of which are beyond the Bank’s control, which include, but are not limited to, changes in Canadian and/or global economic and financial conditions (particularly fluctuations in interest rates, currencies and other financial instruments), liquidity, market trends, regulatory developments and competition in geographic areas where the Bank operates, technological changes, consolidation in the Canadian financial services sector, the possible impact on our businesses of international conflicts and other developments including those relating to the war on terrorism and the Bank’s anticipation of and success in managing the risks implied by the foregoing.

The Bank cautions that the foregoing list of important factors is not exhaustive. Investors and others who base themselves on the Bank's forward-looking statements should carefully consider the above factors as well as the uncertainties they represent and the risk they entail. The Bank therefore cautions readers not to place undue reliance on these forward-looking statements. The Bank does not undertake to update any forward-looking statements, whether written or oral, that may be made from time to time by or on behalf of the Bank.


Information for Shareholders and Investors

Investor Relations
Financial analysts and investors who want to obtain financial information on the Bank are asked to contact the Investor Relations Department.
600 De La Gauchetière West, 7th Floor
Montreal, Quebec   H3B 4L2
Telephone: (514) 394-0296
Fax: (514) 394-6196
E-mail: investorrelations@nbc.ca
Website: www.nbc.ca/investorrelations

Public Relations
600 De La Gauchetière West, 10th Floor
Montreal, Quebec   H3B 4L2
Telephone: (514) 394-8644
Fax: (514) 394-6258


Website: www.nbc.ca
General information: telnat@nbc.ca

Quarterly report publication dates for fiscal 2005-2006
Third quarter: August 31, 2006
Fourth quarter: November 30, 2006

DISCLOSURE OF 2nd QUARTER 2006 RESULTS

Conference Call
·         A conference call for analysts and institutional investors will be held on May 25, 2006 at 1:00 p.m. EDT.
·         Access by telephone is 1-866-898-9626 or (416) 340-2216
·         A recording of the conference call can be heard until June 1, 2006 by calling 1-800-408-3053 or (416) 695-5800.  The access code is 3185725#.

Webcast:
·         The conference call will be webcast live at www.nbc.ca/investorrelations
·         A recording of the webcast will also be available on the Internet after the call.

Financial Documents
·         The quarterly financial statements are available at all times on National Bank’s website at www.nbc.ca/investorrelations.
·         The Report to Shareholders, supplementary financial information and a slide presentation will be available on the Investor Relations page of National Bank’s website shortly before the start of the conference call.

Transfer Agent and Registrar
For information about stock transfers, address changes, dividends, lost certificates, tax forms and estate transfers, shareholders are requested to contact the Transfer Agent, Computershare Trust Company of Canada, at the address or telephone numbers below.

Computershare Trust Company of Canada
Share Ownership Management
1100 University, 12th Floor
Montreal, Quebec   H3B 2G7
Telephone: (514) 871-7171
1-800-341-1419
Fax: (514) 871-7442
E-mail: clientele@tbn.bnc.ca

Direct Deposit Service for Dividends
Shareholders may elect to have their dividend payments deposited directly via electronic funds transfer to their bank account at any financial institution that is a member of the Canadian Payments Association. To do so, they must send a written request to the Transfer Agent, Computershare Trust Company of Canada.

Dividend Reinvestment and Share Purchase Plan
National Bank offers holders of its common shares a Dividend Reinvestment and Share Purchase Plan through which they can invest in common shares of the Bank without paying a commission or administration fee. Participants in the Plan may acquire shares by reinvesting cash dividends paid on shares they hold or by making optional cash payments of at least $500 per payment, to a maximum of $5,000 per quarter. For additional information, please contact the Registrar, Computershare Trust Company of Canada, at 1-800-341-1419 or (514) 871-7171.

About National Bank of Canada
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 clients elsewhere in the world. National Bank offers a full array of banking services, including retail, 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. National Bank has more than $110 billion in assets and, together with its subsidiaries, employs 16
,955 people. The Bank’s securities are listed on the Toronto Stock Exchange (NA:TSX). For more information, visit the Bank’s website at www.nbc.ca.

For more information:

Pierre Fitzgibbon
Senior Vice-President,  Finance, Technology and Corporate Affairs
(514) 394-8610

Denis Dubé
Director, Public Relations
(514) 394-8644

Hélène Baril
Director, Investor Relations
(514) 394-0296

Second Quarter 2006

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