National Bank of Canada swung to a fourth-quarter loss on Thursday, after previously warning that it would take a big charge on asset backed commercial paper.
National Bank, the sixth largest bank in the country, said it lost C$175 million ($176.5 million), or C$1.14 a share in the three months ended Oct. 31. That was down from profit of C$220 million, or C$1.31 a share, in the same 2006 period.
The bank said last week that it would take a C$575 million pre-tax charge, or C$365 million after tax, related to its holdings of non-bank ABCP. It is the biggest ABCP hit announced by a Canadian bank.
The C$35 billion market for this type of ABCP, paper that is not backed by the big domestic chartered banks, has been in limbo since mid-August when buyers disappeared and many conduits could not tap back-up funding.
As a result, Montreal-based National bought C$2.1 billion worth of ABCP sponsored by small Canadian financial players other than the back from clients over the summer.
The Quebec-focused bank said that excluding the ABCP charge and other items, it earned C$217 million or C$1.34 a share in the fourth quarter.
Analysts had expected National to report profit of C$1.11 a share before items, according to Reuters Estimates.
Removing the ABCP charge and other one-time items, quarterly net income still declined in the bank's personal personal and commercial banking business, falling to C$111 million in the quarter, from a year-ago profit of C$116 million that included a gain on securities.
($1=0.99 Canadian) (Reporting by Lynne Olver and John McCrank; editing by Janet Guttsman)