MONTREAL - National Bank's profits decreased by nearly 11 per cent in the third quarter as Canada's sixth-biggest bank suffered the impact of lower trading volumes offset by higher personal and commercial activities.

The Montreal-based bank earned $271 million, or $1.56 per diluted share for the period ended July 31. That compared to $303 million, or $1.78 for the same period last year.

Before one-time items, the bank's earnings were $1.57 per share, above the $1.52-a-share average estimate of analysts surveyed.

In morning trading, National Bank's (TSX:NA) shares were ahead 64 cents to $56.29 on the Toronto Stock Exchange.

"The third quarter results demonstrated excellent performance in the personal and commercial segment and a credit portfolio of good quality," president and CEO Louis Vachon said in a release.

"Despite less favourable conditions for trading activities, the financial markets segment maintained sound profitability. Our diversified business model and the One client, one bank program continue to prove their worth."

Return on equity -- a broad measure of bank efficiency -- fell to 17.7 per cent from 22.1 per cent.

Meanwhile, revenues in the quarter dropped to $1.05 billion from $1.13 billion in the same period last year.

National Bank's personal and commercial segment's profits grew by 32 per cent to $162 million as revenues increased by $35 million to $621 million.

Net interest income increased $29 million to $380 million as it enjoyed "a solid increase" in personal and commercial loans while net interest margin was stable at 2.46 per cent.

Personal banking revenues grew 5.8 per cent to $418 million on higher loan volumes. Commercial banking revenues increased 6.3 per cent on higher loans volumes, acceptances and lending fees.

Net income for the wealth management segment grew eight per cent or $2 million to $28 million as revenues increased slightly to $187 million.

Net interest income rose $2 million or seven per cent, and other income decreased by $1 million. Higher revenues from trust services and mutual funds was offset by lower commission revenues as brokerage activity dipped slightly.

The financial markets segment's net income was down $72 million to $98 million on weaker trading activity.

On a taxable equivalent basis, total revenues decreased nearly 23 per cent to $313 million from $405 million in the year-ago period.

Trading activity revenues fell $78 million to $88 million as revenues from all types of activity were down compared to the "highly favourable financial market conditions that characterized the third quarter of 2009."

Only financial market fee revenues rose 12 per cent to $65 million, while revenues from banking services were stable.

Other revenues decreased due to a $14 million lower contribution from Maple Financial Group Inc., offset by higher revenues from Credigy Ltd.

The segment recorded a $4 million recovery in the provision for credit losses compared to an $8 million provision in the year-earlier quarter, for a decrease of $12 million that was due to the recovery of manufacturing sector loans.

National was the fourth Canadian bank to report results this week.

Earlier Thursday, Royal Bank of Canada (TSX:RY) missed expectations as it reported its third-quarter net income tumbled 18 per cent to $1.28 billion, affected by a major drop in profits from its capital markets division.

Bank of Montreal missed expectations on Tuesday, while CIBC outperformed analyst estimates Wednesday.