By VERNON CLEMENT JONES , Guardian Business Editor

The wolf — i.e., a growth in delinquencies — is still baying at the door of RBC FINCO, with the mortgage lender suffering a 21 percent drop in net income for the first nine months of the fiscal year relative to the year-ago period.

"The bank continued to experience good mortgage growth of 11 percent during the period," writes Managing Director Tanya McCartney, in a statement to shareholders published yesterday. "However, the weakened economy contributed to a rise in non-accrual loans which resulted in an increase to the Bank's loan loss provision in the second quarter.

"The increase in non-accrual loans is manageable and the Bank's risk profile continues to remain within its risk appetite."

Still, that may not make its $3.1-million decline in net income for the three quarters ended July 31, 2008, any more palatable.

The actual figure of $11,573,968 factors in 1,100 percent growth in its net credit losses provisioning compared to the last fiscal year and standing at $3.18m on July 31, 2008.

The lender is not alone, with Fidelity, its own book increasingly represented by mortgage loans, seeing a 800 percent rise in its provisioning against bad or doubtful loans.

For FINCO investors, a BISX-listed mortgage house, 75 percent held by banking titan RBC, the drop in net income has lowered their share earnings by about 12 cents from that same year-ago period.

The share value itself also took a hit Monday in trading, closing at $12, or 50 cents down from Friday's close with 1,600 shares trading hands.

Central Bank data suggests FINCO is only one of several commercial banks in the country that are now suffering mired in a rough patch, in part chalked that up to the faltering economy and its effects on the ability of wage earners to keep pace with payments.

But, the bank — again like its competitors — may not yet have turned the corner on any growth in delinquencies, given the absence of any real turnaround in the U.S. economy predicted for the next 18 months.

Things may in fact worsen.

Still, in RBC's case, its 11 percent growth in mortgages likely reflects more rigid qualification terms applied to would-be borrowers.

The growth in loans now on the balance sheet coincides with surging caution on the part of most commercial banks as they look to protect their profitability. They've largely anticipated the pinching effect our own slowdown would have on a borrower's ability to keep on top of loan payments and toughened up lending terms in addition to raising the qualifying bar prospects now have to jump.

That prudence is all the more key given the returns for banks on their own investments have fallen as the local securities exchange realizes a near-13 percent dip in the value of its All Share Index, year to date.