The Canadian Press

ATB Financial increased its third-quarter provision for credit losses by 45% — to $20.2 million — on Friday as the Edmonton-based financial services company said it needs to remain cautious while the economy recovers.

It also reported net income of $35.8 million or $49.9 million before the payment in lieu of taxes that the Alberta Crown corporation makes and before a $3.5-million provision for a loss on asset-backed commercial paper.

The profit compared with a net loss of $85.8 million a year earlier or a profit of $54.2 million before a $140-million provision that ATB made for losses on ABCP, a type of investment that suffered when sales and redemptions dried up in 2007.

The provision for credit losses in the most recent quarter was up $6.3 million, from $13.9 million a year earlier and $10.25 in the prior quarter ended Sept. 30.

Dave Mowat, ATB Financial’s president and chief executive, said the increased loan-loss provision was “necessarily cautious” in an economy still emerging from the 2008-09 recession.

“While our loan portfolio and our customers have proven to be resilient through this recent cycle, we are setting aside additional provisions to be prudent as Alberta’s economy rebuilds strength,” Mowat said.

Total operating revenue increased to $244 million in the three months ended Dec. 31, up from $226.2 million a year earlier.

Net interest income accounted for $177.8 million of the total, up from $162.6 million in the year-earlier period.

ATB Financial is the largest Alberta-based financial institution, with $26.2 billion in assets under its management. It provides deposit-taking, lending, investor and corporate financial services through its branches as well as phone and the Web.