Press Releases

National Bank maintains revenue and profitability growth in third quarter of 2006

Montreal, 31 August 2006 -
  • Revenues of $933 million, an increase of 5%
  • Diluted earnings per share of $1.30, up 10%
  • Return on common shareholders' equity increased to 20.2%

National Bank today released its earnings report for the third quarter ended July 31, 2006. During the quarter, the Bank posted growth in revenues and profitability compared to the corresponding year-earlier period.

The Bank's three main business segments each reported higher revenues and profitability, and improved productivity. Total revenues increased robustly on the strength of the Personal and Commercial segment. With net income totalling $220 million, the third quarter was the best quarter for the Bank this fiscal year.

“The disciplined deployment of our strategies continues to pay off. Increasing the profitability of our operations is more important than just trying to grab a larger share of the market. The success of this approach is borne out in wider spreads and the continued high quality of our loan portfolio. We are well on our way to achieving our financial targets for fiscal 2006,” said Réal Raymond, President and Chief Executive Officer.

During the quarter, National Bank appointed Louis Vachon as Chief Operating Officer of the Bank. In creating this position, the Bank intends to boost operational efficiency by fostering synergy among its operating units. It will also afford Mr. Raymond more time to focus on the Bank's strategic development, client and investor relations and risk management.

Highlights

  • Growth in total revenues in the third quarter of 2006 to $933 million, up 5% from $889 million in the third quarter of 2005.
  • Rise in diluted earnings per share to $1.30, a 10% increase over the year-earlier period. The quarter was highlighted by an after-tax gain of 5 cents per share associated with the initial public offering of MasterCard Inc., of which the Bank is a shareholder.
  • Increase in ROE of 60 basis points to 20.2% versus 19.6% in the corresponding quarter of 2005.
  • Optimization of the capital structure through the issue of $225 million of innovative instruments that qualify as Tier 1 capital.

Personal and Commercial

  • Rise of 6.5% in total revenues at Personal and Commercial due mainly to vigorous growth in loan volumes over the third quarter of 2005. Insurance-related revenues increased 15% from the third quarter of 2005.
  • Return of the net interest margin to Q1 2006 levels, just shy of where it stood in Q3 2005.
  • Continued improvement in commercial loans and deposits as a result of the propitious business climate in Quebec and the ongoing development of specialized markets. Foreign exchange revenues rose 25% from the year-earlier period.
  • Signing of a cooperation agreement between the Bank and UniCredit Group to assist commercial clients in their business dealings with counterparties in Central and Eastern Europe, Russia, Ukraine and Turkey.

Wealth Management

  • Growth of 16% in revenues from trust services and mutual funds owing to continued interest in private investment management services and long-term mutual funds.
  • Launch of six new tax-effective Monthly Income Portfolios to meet the needs of investors seeking regular income streams.

Financial Markets

  • Strong performance from Financial Markets despite reduced activity on secondary markets and fewer new securities issues. The marked increase in gains on investment account securities offset the decline in trading revenues.

Financial Objectives

Objectives

Results
3rd quarter
2006

Results
Nine months
2006

Growth in diluted earnings per share
excluding specified items

5% - 10%

6%

8%

Return on common shareholders' equity

16% - 18%

20.2%

20.2%

Tier 1 capital ratio

More than 8.5%

9.4%

9.4%

Dividend payout ratio

35% - 45%

37%

37%

Financial Information
(unaudited)

For the quarter
ended July 31

(millions of dollars)

2006

2005

%

Personal and Commercial

130

116

+12

Wealth Management

34

29

+17

Financial Markets

60

54

+11

Other

(4)

8

-

Net income

220

207

+6

Less specified items:

  • gain related to the MasterCard IPO
  • net gain on the sale of shareholder
    management activities (included in Wealth Management)
  • gain on the disposal of investments in
    South America
  • reduction in the general allowance for
    credit risk

(9)
-

-

-

-
-

-

-

Net income excluding specified items

211

207

+2

Diluted earnings per share

$1.30

$1.18

+10

Less specified items:

  • gain related to the MasterCard IPO
  • net gain on the sale of shareholder
    management activities (included in Wealth Management)
  • gain on the disposal of investments in
    South America
  • reduction in the general allowance for
    credit risk

(0.05)
-

-

-

-
-

-

-

Diluted earnings per share excluding specified items

$1.25

$1.18

+6

Return on common shareholders' equity

20.2%

19.6%

For the nine months
ended July 31

(millions of dollars)

2006

2005

%

Personal and Commercial

355

333

+7

Wealth Management

114

85

+34

Financial Markets

208

192

+8

Other

(26)

38

-

Net income

651

648

-

Less specified items:

  • gain related to the MasterCard IPO
  • net gain on the sale of shareholder management
    activities (included in Wealth Management)
  • gain on the disposal of investments in
    South America
  • reduction in the general allowance for
    credit risk

(9)
(5)

-

-

-
-

(25)

(11)

Net earnings excluding specified items

637

612

+4

Diluted earnings per share

$3.83

$3.70

+4

Less specified items:

  • gain related to the MasterCard IPO
  • net gain on the sale of shareholder management
    activities (included in Wealth Management)
  • gain on the disposal of investments in
    South America
  • reduction in the general allowance for
    credit risk

(0.05)
0.03)

-

-

-
-

(0.15)

(0.07)

Diluted earnings per share excluding specified items

$3.75

$3.48

+8

Return on common shareholders' equity

20.2%

21.1%

Caution regarding forward-looking statements
From time to time, National Bank of Canada makes written and oral forward-looking statements in this quarterly report, in other filings with Canadian regulators or the United States Securities and Exchange Commission, in reports to shareholders, in press releases and in other communications. All such statements are made pursuant to Canadian securities regulations and the 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, 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, the management of credit, market and liquidity risks; the strength of the Canadian and United States economies and the economies of other countries in which the Bank conducts business; the impact of the movement of the Canadian dollar relative to other currencies, particularly the U.S. dollar; the effects of changes in monetary policy, including changes in interest rate policies of the Bank of Canada; the effects of competition in the markets in which the Bank operates; the impact of changes in the laws and regulations regulating financial services and enforcement thereof (including banking, insurance and securities); judicial judgments and legal proceedings; the Bank's ability to obtain accurate and complete information from or on behalf of its clients or counterparties; the Bank's ability to successfully realign its organization, resources and processes; its ability to complete strategic acquisitions and integrate them successfully; changes in the accounting policies and methods the Bank uses to report its financial condition, including uncertainties associated with critical accounting assumptions and estimates; operational and infrastructure risks; other factors that may affect future results, including changes in trade policies, timely development of new products and services, changes in estimates relating to reserves, changes in tax laws, technological changes, unexpected changes in consumer spending and saving habits; natural disasters; the possible impact on the business from public health emergencies, conflicts, other international events and other developments, including those relating to the war on terrorism; and the Bank's success in anticipating and managing the foregoing risks.

Additional information about these factors can be found under “Risk Management,” “Risk Management Framework,” “Credit Risk Management,” “Market Risk Management,” “Liquidity Risk Management,” “Operational Risk Management,” and “Factors that could affect future results” in the 2005 Annual Report.

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 also cautions readers not to place undue reliance on these forward-looking statements.

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND OPERATING RESULTS

August 31, 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 third quarter and the first nine months of fiscal 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 posted net income of $220 million in the third quarter of fiscal 2006, up 6% from $207 million for the same period of 2005. Excluding the after-tax gain of $9 million from the initial public offering by MasterCard Inc., of which the Bank is a shareholder, net income was $211 million. Net income for the first nine months of fiscal 2006 was $651 million for the Bank,
$3 million more than for the same period of 2005. Had it not been for specified items, i.e., the MasterCard IPO, the net gain on the sale of shareholder management activities, the gain on the disposal of investments in South America and the reduction in the general allowance for credit risk in the first nine months of 2005 and 2006, net income would have been $25 million or 4% higher period over period.

Diluted earnings per share amounted to $1.30 in the third quarter of 2006, up 10% from $1.18 for the same period of 2005. Excluding the gain from the MasterCard IPO in the third quarter of 2006, diluted earnings per share increased $0.07. Diluted earnings per share in the first nine months of 2006 were $3.83, up 4% from the first nine months of 2005. Excluding specified items, diluted earnings per share grew 8% from period to period.

Total Revenues
The Bank's total revenues rose 5% in the third quarter of 2006 to reach $933 million, as against $889 million in the third quarter of 2005. Personal and Commercial net interest income advanced $19 million, or 5.8%, to $348 million for the quarter, owing to higher volumes of both consumer loans and business loans and deposits. Although the net interest margin narrowed compared to the corresponding quarter of 2005, it widened between the second and third quarter of 2006. The improvement in the spread on deposits cancelled out the deterioration of credit product spreads caused by competition.

Trading revenues, recorded in both net interest income and other income, decreased by $40 million from the third quarter of 2005 to the third quarter of 2006. The decline was more than offset by gains on investment account securities. These gains amounted to $60 million in the third quarter of 2006, with $13 million before tax coming from the MasterCard IPO, and represented a substantial increase compared to the $7 million loss in the third quarter of 2005.

Revenues from mutual funds and trust services climbed $10 million from the third quarter of 2005 to reach $83 million in the third quarter of 2006. Most of the increase stemmed from the growth in private investment management and mutual funds.

Aside from these items, the increase in other income was attributable to commissions on loans and bankers' acceptances, foreign exchange revenues and other revenues, which together rose $27 million. Securitization revenues, however, were $38 million this quarter, as against $48 million in the third quarter of 2005.

Financial market fees amounted to $139 million in the third quarter of 2006, compared to $158 million in the year-earlier period, due to the slowdown in secondary market activities and the smaller number of new issues.

Total revenues in the first nine months of 2006 grew 3% to reach $2,861 million, versus $2,772 million in the corresponding period of 2005. Personal and Commercial net interest income advanced $47 million, or 4.9%, to $1,013 million in the first nine months of 2006. Compared to the same period of 2005, trading revenues fell $17 million to $246 million, gains on securities rose $43 million to $130 million and revenues from trust services and mutual funds grew $40 million to $247 million. Similarly, other revenues, foreign exchange revenues and lending fees increased $80 million. Securitization revenues declined $26 million to $117 million and financial market fees decreased $54 million to $462 million.

Operating Expenses
In the third quarter of 2006, operating expenses were $634 million, up $18 million from the year-earlier period. Salaries and staff benefits decreased $1 million to $354 million, with the decrease in variable compensation offsetting the increase in regular salaries and pension plan costs during the third quarter of 2006. The ratio of salaries and staff benefits to operating expenses fell 2% to 56%. Technology expenses were up $6 million while professional fees increased $7 million to $40 million. Changes in these expenses depend on the completion schedule for technological development projects.

For the first nine months of 2006, operating expenses were up $48 million, to $1,901 million. This growth was due to professional fees, which were up $12 million, salaries and staff benefits, which rose $12 million, and technology expenses, which increased $14 million.

Income Taxes
Income taxes for the third quarter of 2006 totalled $58 million, representing an effective tax rate of 20.5%, compared to $46 million and an effective tax rate of 17.8% for the year-earlier period. The tax rate for the third quarter of 2006 was affected by the receipt of tax-exempt dividends, while in the third quarter of 2005 the tax rate was reduced by a transaction on the financial markets. For the first nine months of 2006, income taxes amounted to $233 million, for an effective tax rate of 25.7%, as against $219 million and an effective tax rate of 24.7% for the corresponding period of 2005.

Results by Segment

Personal and Commercial

Net income for the Personal and Commercial segment totalled $130 million for the third quarter of 2006, up 12% from the $116 million in net income earned in the corresponding quarter of 2005. Total revenues for the segment climbed 7% to $559 million. At Personal Banking, total revenues rose $22 million, or 6%, owing chiefly to growth of $2.8 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 decrease in the spread on credit products was fully offset by the improvement in the spread on transaction deposits that resulted from the rise in interest rates. Insurance revenues jumped 15%, at an annualized rate. Total revenues for Commercial Banking were up $12 million, or 7%, due to the increase in net interest income attributable to higher volumes of loans and acceptances and growth in foreign exchange revenues. Although the spread on Commercial Banking credit products in the third quarter of 2006 was slightly narrower than in the third quarter of 2005, it was relatively steady compared to the second quarter of 2006. The spread on deposits cancelled out the decrease in the spread on credit products, at an annualized rate.

Operating expenses for the Personal and Commercial segment were $339 million for the third quarter of 2006, as against $324 million for the year-earlier period, for an increase of 5%, which is lower than the growth in total revenues. As a result, the efficiency ratio declined to 60.6% for the third quarter of 2006 from 61.7% for the same quarter of 2005. The segment's provision for credit losses was decreased by $2 million to $24 million due to a higher recovery rate for Commercial Banking.

For the first nine months of fiscal 2006, the Personal and Commercial segment posted net income of $355 million, a 7% increase over the $333 million recorded for the same period of 2005. Total revenues for the segment rose 6% to $1,608 million on growth of $62 million or 6% at Personal Banking and $26 million or 5% at Commercial Banking. The efficiency ratio moved down to 61.3% in the first nine months of 2006 from 61.9% for the same period a year earlier.

Wealth Management

Net income for the Wealth Management segment totalled $34 million for the third quarter of 2006, compared to $29 million for the corresponding quarter of 2005, for an increase of 17%. The segment's total revenues advanced 3% to $204 million for the third quarter of 2006. A slowdown of activities on secondary markets affecting revenues for Individual Investor Services at National Bank Financial was offset by strong growth in trust and mutual fund activities. Operating expenses were up $2 million, or 1%, to $152 million this quarter. The efficiency ratio dropped from 75.4% in the third quarter of 2005 to 74.5% this quarter.

For the first nine months of fiscal 2006, net income for the Wealth Management segment amounted to $114 million versus $85 million for the same period in 2005, for an increase of 34%. Total revenues for the segment rose 8% to $648 million in the first nine months of fiscal 2006. Operating expenses edged up barely $11 million or 2% to $472 million.

Financial Markets

For the quarter ended July 31, 2006, the Financial Markets segment posted net income of $60 million, up $6 million or 11% from the year-earlier period. Total segment revenues rose $15 million to $238 million. Higher gains on securities were partly offset by lower trading revenues. The reduction in new issues of securities was evident in the $9 million drop in financial market fees, while revenues from corporate banking services rose $9 million, mainly because of an increase in the value of credit derivatives. Operating expenses for the quarter were $143 million, up $3 million from the year-earlier period. This modest increase was due to a reduction in variable compensation. The provision for credit losses for the quarter stood at $1 million, compared to nil in the corresponding quarter of 2005. For the first nine months of fiscal 2006, the segment's net income totalled $208 million, up $16 million, or 8%, from the year-earlier period.

Financial Market Revenues

(taxable equivalent basis (1))
(millions of dollars)

Q3
2006

Q3
2005

Trading revenues

Equity

56

86

Interest rate

11

11

Commodity and foreign exchange

1

10

68

107

Financial market fees

57

66

Gains on securities

43

-

Banking services

34

25

Other

36

25

Total

238

223

(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 12 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 recorded a loss of $4 million for the third quarter of 2006, compared to net income of $8 million for the same period a year earlier. The pre-tax gain of $13 million related to the MasterCard IPO partly offset the impact of lower securitization revenues and net interest income. For the first nine months of fiscal 2006, the “Other” heading recorded a loss of $26 million, as against a gain of $38 million for the corresponding period of 2005, when the Bank recorded a $37 million pre-tax gain on the disposal of investments and reversed $17 million of the general allowance for credit risk.

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 third quarter of 2006, cash and cash equivalents declined $0.4 billion compared to a decrease of $0.9 billion for the third quarter of 2005. As at July 31, 2006, cash and cash equivalents totalled $9.2 billion versus $8.0 billion the previous year.

Operating activities generated cash inflows of $1.2 billion for the third quarter of 2006, mainly because of the decrease in trading account securities. For the corresponding quarter of 2005, operating activities required cash of $1.6 billion because of the increase of $3.4 billion for trading account securities, partly offset by $1.6 billion in inflows from other items.

Financing activities in the third quarter of 2006 required cash of $2.3 billion, mostly in purchased funds, owing chiefly to lower deposits. For the third quarter of 2005, the $1.7 billion increase in obligations related to securities sold short and the $7.6 billion rise in securities sold under repurchase agreements accounted for $8.2 billion in cash inflows from financing activities.

Finally, investing activities generated cash of $0.7 billion in the third quarter of 2006. In the corresponding quarter of 2005, investing activities required cash of $7.5 billion due to the $2.3 billion increase in loans, the $3.7 billion rise in deposits with financial institutions pledged as collateral and the $1.4 billion in securities purchased under reverse repurchase agreements.

Risk Management

Credit Risk

In the third quarter of 2006, the Bank recorded specific provisions for credit losses of $16 million, an increase of $1 million over the third quarter of 2005. As at July 31, 2006, gross impaired loans stood at $214 million compared to $260 million at the end of fiscal 2005. This decline was primarily due to the successful recovery of impaired business loans. The ratio of gross impaired loans to total adjusted capital and allowances was only 5.6%. As at July 31, 2006, allowances for credit losses exceeded gross impaired loans by $210 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. VaR is the maximum value of potential daily losses, measured at a 99% confidence level, which means that actual losses are likely to exceed VaR 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
July 31, 2006

For the quarter ended
April 30, 2006

Period end

High

Average

Low

Period end

High

Average

Low

Interest rate

(3.3)

(7.6)

(4.2)

(2.4)

(7.1)

(8.2)

(5.8)

(3.6)

Foreign exchange

(1.6)

(1.9)

(1.3)

(0.8)

(0.9)

(2.2)

(1.5)

(0.6)

Equity

(3.8)

(4.2)

(3.4)

(2.3)

(3.7)

(6.7)

(4.9)

(3.7)

Commodity

(1.0)

(1.6)

(1.1)

(0.7)

(1.4)

(1.4)

(0.9)

(0.7)

Correlation effect(2)

4.8

7.3

4.5

2.3

6.5

9.5

6.0

3.2

Global VaR

(4.9)

(8.0)

(5.5)

(3.9)

(6.6)

(9.0)

(7.1)

(5.4)

(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 July 31, 2006, the Bank had assets of $108.6 billion, up $1.0 billion versus $107.6 billion at the end of fiscal 2005. Loans and acceptances were up $1.6 billion. In addition, cash, deposits with financial institutions, securities and securities purchased under reverse repurchase agreements increased $0.3 billion. The table below presents the main portfolios.

Average monthly volumes

July

October

July

(millions of dollars)

2006

2005

2005

Loans and acceptances*

Residential mortgages

21,313

20,728

20,419

Consumer loans

9,302

8,283

7,832

Credit card receivables

1,741

1,707

1,680

SME loans

15,210

14,182

14,858

Corporate loans

3,614

3,216

2,892

51,180

48,116

47,681

Deposits

Personal (balance)

29,178

26,385

25,476

Off-balance sheet personal savings (balance)

67,580

63,262

63,776

Business

12,288

11,103

11,250

*including securitized assets

Residential mortgage loans rose steadily during the third quarter of 2006, reaching $21.3 billion as against $20.4 billion in the year-earlier period. Consumer loans climbed 19% to $9.3 billion, primarily driven by secured lines of credit. Higher consumer spending also accounted for the increase in credit card receivables, which were up 3.6% over the previous year to total $1.7 billion as at July 31, 2006. Business loans continued to grow, with SME loans up 2.4% year over year, to $15.2 billion as at July 31, 2006. Average volumes of corporate loans, for their part, rose $700 million to $3.6 billion.

Personal deposits stood at $29.2 billion as at July 31, 2006, up $3.7 billion or 14.5% from the corresponding quarter of 2005, chiefly owing to deposits distributed by Altamira. Off-balance sheet personal savings administered by the Bank as at July 31, 2006 totalled $67.6 billion, an increase of $3.8 billion or 6.0% 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 nine months ended July 31, 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 9.4% and 12.4%, respectively, as at July 31, 2006 versus 9.6% and 12.8% as at October 31, 2005, including the $500 million debenture issued on November 2, 2005. During the third quarter of 2006, the Bank issued $225 million in innovative capital instruments. During the first nine months of fiscal 2006, the Bank repurchased 4.5 million common shares for a total of $275 million as part of its normal course issuer bids.

Risk-weighted assets rose $2.4 billion or 5.2% since the start of the fiscal year mainly because of higher loan volumes.

Dividends

At its meeting on August 31, 2006, the Board of Directors declared regular dividends on the various classes and series of preferred shares as well as a 50 cent dividend per common share, payable on November 1, 2006 to shareholders of record on September 28, 2006.

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 Street West, 7th Floor
Montreal, Quebec H3B 4L2
Telephone: (514) 394-0296
Toll free: 1-800-517-5455
Fax: (514) 394-6196
E-mail: investorrelations@nbc.ca
Website: www.nbc.ca/investorrelations

Public Relations

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

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

Next quarterly report publication date for fiscal 2005-2006
Fourth quarter: November 30, 2006

DISCLOSURE OF 3rd QUARTER 2006 RESULTS

Conference Call

  • A conference call for analysts and institutional investors will be held on August 31, 2006 at 1:00 p.m. EDT.
  • Access by telephone in listen-only mode : 1 -866-898-9626 or (416) 340-2216
  • A recording of the conference call can be heard until September 7, 2006 by calling 1-800-408-3053 or (416) 695-5800. The access code is 3194419#.

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 the 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. The 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 close to $109 billion in assets and, together with its subsidiaries, employs 17,183 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.

Information ( The telephone number provided below is for the exclusive use of journalists and other media representatives):

Pierre Fitzgibbon
Senior Vice-President
Finance, Technology and
Corporate Affairs
(514) 394-8610
Denis Dubé
Senior Director
Public Relations
(514) 394-8644
Hélène Baril
Senior Director
Investor Relations
(514) 394-0296

Third Quarter 2006

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