---

# UNITED STATES
SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549

# FORM 20-F

(Mark One)

|[  ] | REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE
      SECURITIES EXCHANGE ACT OF 1934
|---- | ----------------------------------------------------------------------------------------------------

# OR

|[X] | ANNUAL
      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934For the fiscal year ended December 31, 2004
|--- | -------------------------------------------------------------------------------------------------------------------------------------------

# OR

|[  ] | TRANSITION
      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934For the transition period from ___________________ to
      ___________________
|---- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Commission
file number  333-49153

NB FINANCE,
LTD.(Exact name
of Registrant as specified in its charter)

NB
FINANCE, LTD.(Translation of Registrants name into English)

Bermuda(Jurisdiction of
incorporation or organization)

Clarendon
House2 Church StreetHamilton HM 11Bermuda(Address of
principal executive offices)

Securities
registered or to be registered pursuant to Section 12(b) of the Act:  
None

Securities
registered or to be registered pursuant to Section 12(g) of the Act:
  None

Securities for
which there is a reporting obligation pursuant to Section 15(d) of the
Act:   None

Indicate the number of
outstanding shares of each of the issuers classes of capital or common stock as
of the close of the period covered by the annual report:

12,000 shares
of common stock, par value $1.00 per share

_________________

Indicate by check mark
whether the registrant (1) has filed all reports required to be filed by Section
13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12
months (or for such shorter period that the registrant was required to file such
reports), and (2) have been subject to such filing requirements for the past 90
days :

[X]    Yes       No
[  ]

Indicate by check mark
which financial statement item the registrant has elected to follow.

[X]    Item
17      Item 18 [  ]

---

FORWARD-LOOKING
STATEMENTS

From time to time, NB
Finance, Ltd. (the Company or NB Finance) makes written and oral
forward-looking statements, included in this annual report on form 20-F for
filling with the U.S. Securities and Exchange Commission (SEC), in reports to
shareholders, in press releases and in other communications. For all such
statements, the Company claims the protection of the safe harbor for
forward-looking statements contained in 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, anticipations, 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.

Forward-looking
statements are not guarantees of future performance. 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 Companys control, which include, but are not limited to, changes in North
American and/or global economic and financial conditions (particularly
fluctuations in interest rates, currencies and other financial instruments),
liquidity, market trends, regulatory developments and competition in geographic
areas where the Company operates, technological changes, the possible impact on
our businesses of international conflicts and other developments including those
relating to the war on terrorism and the Companys anticipation of and success
in managing the risks implied by the foregoing.

The Company cautions that
the foregoing list of important factors is not exhaustive. Investors and others
who intend to base themselves on the Companys forward-looking statements should
carefully consider the above factors as well as the uncertainties they represent
and the risk they entail. The Company therefore cautions readers not to place
undue reliance on these forward-looking statements. The Company does not
undertake to update any forward-looking statements, whether written or oral,
that may be made from time to time by or on behalf of the Company.

2

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PART I

ITEM 1:   
IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS

Not
Applicable.

ITEM
2:    OFFER STATISTICS AND EXPECTED TIMETABLE

Not
Applicable.

ITEM
3:    KEY INFORMATION

# Selected
Financial Data

|                                                   | Year
      EndedDecember 31,2004 | Year
      EndedDecember 31,2003 | Year
      EndedDecember 31,2002 | Year
      EndedDecember 31,2001 | Year
      EndedDecember 31,2000
|-------------------------------------------------- | -------------------------------- | -------------------------------- | -------------------------------- | -------------------------------- | --------------------------------
|                                                   |                                 
|Statement of Income Data:                          |                                  |                                  |                                  |                                  |                                 
|                                                   |                                 
|Operating
      revenues                           |                                  | $   95,211,882                   |                                  | $  44,484,134                    |                                 
|Income
      (loss) from Continuing                |                                 
|Operations                                         |                                  | ($
      7,937,023               | )                                | $    6,915,778                   |                                 
|Net
      income (loss)                            |                                  | ($       7,937,023               | )                                | $    6,915,778                   |                                 
|Income
      (loss) from Continuing                |                                 
|Operations per Common Share                        |                                  | ($
      661.42                  | )                                | $         576.32                 |                                 
|Balance Sheet Data:                                |                                 
|Total
      assets                                 |                                  | $ 675,579,983                    |                                  | $700,113,693                     |                                 
|Total
      liabilities                            |                                  | $ 525,366,862                    |                                  | $541,963,549                     |                                 
|Shareholder's Equity                               |                                  | $ 150,213,121                    |                                  | $158,150,144                     |                                 
|Capital
      Stock                                |                                  | $          12,000                |                                  | $         12,000                 |                                 
|Number of
      Shares                             |                                  | 12,000                           |                                  | 12,000                           |                                 
|Cash
      Dividends Declared per 
   Common Share |                                  | N/A                              |                                  | N/A                              |                                 

3

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# Exchange Rate

References to $ are to
United States dollars; references to C$ are to Canadian dollars. As of December
31, 2004, the Canadian dollar exchange rate was C$1.2020 = $1.00 and certain
amounts stated herein reflect such exchange rate. The exchange rates were
obtained from the Bank of Canada. All financial statements are denominated in
United States dollars.

|                     | Exchange
      Rate in $C to $1
|-------------------- | -------------------------------
|
|July 2004            |                                
|August
      2004    |                                
|September
      2004 |                                
|October
      2004   |                                
|November
      2004  |                                
|December
      2004  |                                

|                    | Year
      Average in $C to $1
|------------------- | ------------------------------
|December 1999       |                               
|December
      2000 |                               
|December
      2001 |                               
|December
      2002 |                               
|December
      2003 |                               
|December
      2004 |                               

# Risk Factors

There are no risk factors
relevant to the Company other than those associated with servicing and
administering Mortgage Loans insured by Canada Mortgage and Housing Corporation,
an agency of the Government of Canada (CMHC).

ITEM 4:
   INFORMATION ON THE COMPANY

# Background

NB Finance is a wholly
owned subsidiary of National Bank of Canada (the Bank). There are no
securities of the Company currently registered or expected to be registered
pursuant to the Securities Act of 1933, as amended, or traded publicly on any
exchange. The Bank owns and, pursuant to the OSFI Order (as defined below), will
continue to own, all 12,000 issued and outstanding shares of common stock, par
value $1.00 per share (the Common Stock) of the Company. The Common Stock is
the only outstanding class of securities of the Company. The Company has issued
no other securities.

# General

The Company was
incorporated on September 3, 1997 under the Bermuda Companies Act
1981. The Company does not have any subsidiaries. The Companys business
objective is to acquire residential first mortgages

4

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insured by CMHC, that are
secured by real property located in Canada and to issue obligations secured by
such real property (the Promissory notes) and other similar obligations to NB
Capital Corporation (NB Capital). The Promissory notes currently consist of
sixty-seven hypothecation loans issued to NB Capital by the Company that have
recourse only to the Mortgage Loans. Hypothecation loans are loans secured by
the pledge of mortgages as security therefor. The Mortgage Loans consist of
sixty-seven pools of, at December 31, 2004, an aggregate of 12,971 CMHC-insured
residential first mortgages. Pursuant to an order (the OSFI Order), dated
September 2, 1997, of the Office of the Superintendent of Financial Institutions
Canada, the Company is not permitted to incur any indebtedness or engage in any
business activities other than ownership of Mortgage Loans and activities
incidental thereto.

As of December 31, 2004,
the Company has issued Promissory notes to NB Capital in the aggregate principal
amount of approximately $410 million. The proceeds from the issuance of the
Promissory notes, in addition to a capital contribution from the Bank, have been
used to acquire the Mortgage Loans from the Bank for approximately C$721 million
($600 million). Accordingly, as of December 31, 2004, the Promissory notes were
overcollateralized by $190 million. The Company has acquired all or
substantially all of such Mortgage Loans from the Bank and/or affiliates of the
Bank on terms comparable to those that could be obtained by the Company if such
Mortgage Loans were purchased from unrelated parties. As of the date of this
Form 20-F, the Company has not entered into any agreements with any third
parties with respect to the purchase of Mortgage Loans.

The Company and NB
Capital have entered into separate Mortgage Loan Assignment Agreements
(together, the Mortgage Loan Assignment Agreements) (See Item 19, Exhibits
10.37 to 10.40) pursuant to which the Company assigned its entire right, title
and interest in, to and under the Mortgage Loans to NB Capital and permitted NB
Capital to administer, perform and enforce the Mortgage Loans. Accordingly, no
interest or principal payments with respect to the Mortgage Loans are made
directly to the Company. Pursuant to a Servicing Agreement, dated September 3,
1997, between the Company and the Bank (the Servicing Agreement), the Mortgage
Loans are serviced by the Bank. Pursuant to the Assignment of a Servicing
Agreement, dated September 3, 1997, between the Company, NB Capital and the
Bank, the Company has assigned to NB Capital all of its rights, titles and
interest in the Servicing Agreement.

For information regarding
the Companys revenue and operating profit, see the Companys financial
statements, beginning on page F-1.

# Description of
the Mortgage Loans

All of the Mortgage Loans
were originated in accordance with underwriting policies customarily employed by
the Bank, or with underwriting policies acceptable to the Bank. With respect to
its underwriting policies, the Bank will not make any residential mortgage loans
that exceed a loan to value ratio of 75% unless such loan is insured. If the
residential mortgage loan is CMHC-insured (i) a cash down payment of between 5%
and 24.9% is required, (ii) the monthly payment for capital, interest, taxes and
heating must not exceed 32% of the gross monthly revenue of the borrower and
(iii) the monthly payment for capital, interest, taxes, heating and all other
monthly payments (including, without limitation, personal loans, lease payments
and credit card debt service) must not exceed 40% of the net monthly revenue of
the borrower. Additionally, for all Mortgage Loans, an external credit check
must be positive. When a loan is insured, an additional amount may be added to
the principal amount of the mortgage loan representing the premium related
thereto. The premium rates vary in accordance with the principal amount of the
loan. Generally, the greater the loan to value ratio, the greater the premium
rate. As is generally the case in the Canadian residential mortgage business,
such underwriting policies are derived from CMHC-approved underwriting criteria.

As a CMHC-approved
lender, the Bank has access to the Canadian National Housing Act mortgage
insurance program. All of the Mortgage Loans are insured by CMHC pursuant to
that program. The bulk of those loans were insured at origination. Whether a
loan is insured through the CMHC portfolio insurance program, at origination or
during the term of the loan, the insurance is valid until the expiration of the
loan.

5

---

All of the Mortgage Loans
are balloon mortgages. Accordingly, the Mortgage Loans do not provide for the
full amortization of the principal balance thereof equally over their term to
maturity and a principal payment equal to the original balance less any
principal amount paid will be due on each Mortgage Loan at maturity. Balloon
mortgages are the most prevalent type of mortgage offered by Canadian mortgage
lenders. At the expiration of the term, the mortgage is generally renewed, based
on then current market conditions, for a new term. Although the Bank offers
terms varying from 3 months to 10 years, terms exceeding 5 years are relatively
rare. Moreover, although the Bank offers monthly, semi-monthly and weekly pay
mortgages, most of the Mortgage Loans are monthly pay mortgages. In general,
loans are amortized over a period not exceeding 25 years.

The Mortgage Loans
provide for limited prepayment rights. For example, typically up to 10% of the
original principal amount of a Mortgage Loan may be prepaid once annually
without penalty. Moreover, a Mortgage Loan may also be prepaid without penalty
if the mortgaged property is sold and the mortgagor enters into a new mortgage
with the same terms and conditions as the Mortgage Loan. In most other
circumstances, prepayments or renegotiations of either the interest rate or the
term of a Mortgage Loan will be subjected to prepayment penalties. During the
first three years following the most recent interest adjustment date, such
penalties are a resultant of a yield maintenance clause. After three years, such
penalties will be limited to three months of interest.

# Description of
the Promissory notes

The Promissory notes
issued by the Company to NB Capital are comprised of sixty-seven hypothecation
loans. As of December 31, 2004, the principal amount of the Promissory
notes liability was approximately $410 million. Each of the sixty-seven
hypothecation loans comprising the Promissory notes issued by the Company is
secured by a pool of Mortgage Loans. As of December 31, 2004, there were
12,971 Mortgage Loans in an aggregate amount of approximately C$721 million
($600 million). The value of each pool of Mortgage Loans comprising the Mortgage
Loans exceeds the principal amount of the hypothecation loan that it secures.
Accordingly, the Mortgage Assets issued by the Company are overcollateralized by
the Mortgage Loans. The aggregate amount of such overcollateralization is, as of
December 31, 2004, approximately $190 million. NB Capital acquired the
Promissory notes issued by the Company pursuant to the terms of certain loan
agreements.

Each Promissory note
issued by the Company is recourse only to the Mortgage Loans securing such
Promissory note. Each pool of Mortgage Loans is comprised of entirely
CMHC-insured residential first mortgages. Each Promissory note issued by the
Company is further secured by the residential real properties underlying such
CMHC-insured residential first mortgages. Such residential real properties are
located primarily in Quebec, Ontario and New Brunswick. Since the Mortgage Loans
are insured, the Company expects little or no loss of principal or interest.
However, CMHC insurance does not guarantee timely payment of interest and
principal. The Promissory notes have maturities ranging from January 2005 to
December 2012. The Promissory notes pay interest at rates ranging from 5.49% to
10.21%, with an average rate of approximately 8.18% per annum.

Payments of interest are
made monthly out of payments on the Mortgage Loans. Pursuant to the Mortgage
Loan Assignment Agreements, NB Capital receives all scheduled payments made on
the Mortgage Loans, retains a portion of any such payments equal to the amount
due and payable on the Promissory notes issued by the Company and remits the
balance, if any, to the Company. NB Capital also retains a portion of any
prepayments of principal in respect of the Mortgage Loans equal to the
proportion of such prepayments that the outstanding principal amount of the
Mortgage Loan bears to the outstanding principal amount of the Promissory notes
issued by the Company, which amount would be applied to reduce the outstanding
principal amount of the Promissory notes issued by the Company. Repayment of the
Promissory notes issued by the Company is secured by an assignment of the
Mortgage Loans to NB Capital pursuant to the Mortgage Loan Assignment
Agreements, which are governed by the laws of Bermuda.

The assignment of the
Mortgage Loans by the Company to NB Capital is without recourse. NB Capital has
a security interest in the real property securing the Mortgage Loans and,
subject to fulfilling certain procedural requirements under applicable Canadian
law, is entitled to enforce payment on the Mortgage Loans in its own name if a
mortgagor should default thereon. In the event of such a default, NB Capital has
the same rights as the Company

6

---

to force a sale of the
mortgaged property and satisfy the obligations of the Company out of the
proceeds. In the event of a default in respect of a Mortgage Loan, the amount of
the Promissory notes issued by the Company will be reduced by an amount equal to
the portion thereof allocable to the defaulting mortgage.

Following repayment of
the Promissory notes issued by the Company, NB Capital will reassign any
outstanding Mortgage Loans (without recourse) and deliver them to, or as
directed by, the Company. All payments in respect of the Mortgage Loans are made
in Canadian dollars. The amounts due (in US$) on the Promissory notes issued by
the Company are retained by NB Capital free and clear of and without withholding
or deduction for or on account of any present or future taxes imposed by or on
behalf of Bermuda or any political subdivision thereof or therein.

# Description of
Property

The registered offices of
the Company are located at Clarendon House, 2 Church Street, Hamilton HM11,
Bermuda. The Company neither owns nor leases any properties.

ITEM 5:   
OPERATING AND FINANCIAL REVIEW AND PROSPECTS

# General

The Companys sole
business purpose is to acquire Mortgage Loans and to issue the Promissory notes,
and other similar obligations, to NB Capital. Pursuant to the OSFI Order, the
Company is not permitted to incur any indebtedness or engage in any business
activities other than ownership of the Mortgage Loans and activities incidental
thereto.

# Operating
Results

Loss from continuing
operations for the year ended December 31, 2004 was $7,937,023, which represents
a decrease of $14,852,801 or 214.77% over the year ended December 31, 2003 when
income from continuous operations was $6,915,778 which represents an increase of
$798,154 or 13.05% over the prior year ended December 31, 2002. The decrease for
2004 was principally due to a change in fair value on derivative financial
instruments of $67,287,163 partially compensated by a foreign exchange gain on
mortgage loans transactions of $49,473,127 which were recognized in 2004.
Revenues for the year ended December 31, 2004, the year ended December 31, 2003
and the year ended December 31, 2002, were $95,211,882, $44,484,134 and
$43,385,203, respectively.

Forty-six percent of
revenues were derived from the Mortgage Loans. The Promissory notes issued by
the Company are collateralized by the Mortgage Loans that consist of sixty-seven
pools of CMHC-insured residential first mortgages and which are secured by real
property located in Canada. The balance of the revenues resulted from a foreign
exchange gain on mortgage loans transactions of $49,473,127 and from bank
interest.

Expenses for the year
ended December 31, 2004, the year ended December 31, 2003 and the year ended
December 31, 2002 totaled $103,148,905, $37,568,356 and $37,267,579,
respectively, of which $35,811,136, $37,529,935 and $37,246,933, respectively,
represent interest on Promissory notes. As well, during the year ended December
31, 2004, a loss of $67,287,163 was recorded related to the valuation of
derivative financial instruments at their fair value.

During the year ended
December 31, 2004, no dividend was authorized on the Companys Common Stock.

7

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# Liquidity and
Capital Resources

The Companys revenues
are primarily derived from its Mortgage Loans. The Companys principal
short-term liquidity needs are, with respect to the Promissory notes, to pay
principal when due (maturity dates range between January 2005 to December 2012)
and monthly interest payments. Pursuant to the OSFI Order, the Company is not
permitted to incur any indebtedness or engage in any business activities other
than ownership of Mortgage Loans and activities incidental thereto.

As of December 31, 2004,
approximately $410 million of Promissory notes issued by the Company were
overcollateralized by approximately C$721 million ($600 million) of Mortgage
Loans. The Company believes that the amounts generated from the payment of
interest and principal on such Mortgage Loans will provide more than sufficient
funds to make full payments with respect to the Promissory notes issued by the
Company and sufficient funds to meet its operating expenses. Pursuant to the
Mortgage Loan Assignment Agreements, all payments made in respect of the
Mortgage Loans are made to NB Capital (through the Bank as servicer under the
Servicing Agreement). Any such amount in excess of the amount due and payable on
the Promissory notes is remitted to the Company and used to fund the acquisition
of additional Mortgage Loans.

The Company does not
require any capital resources for its operations and, therefore, it is not
expected to acquire any capital assets in the foreseeable future.

# Critical
Accounting Policies

In December 2001, the SEC
requested that all registrants discuss their most critical accounting policies
in managements discussion and analysis of financial condition and results of
operations. The SEC indicated that a critical accounting policy is one which
is both important to the portrayal of the Companys financial condition and
results and requires managements most difficult, subjective or complex
judgments, often as a result of the need to make estimates about the effect of
matters that are inherently uncertain. We believe, based on our current
business, that there are no critical accounting policies in connection with the
preparation of the financial statements of NB Finance.

# Off-Balance
Sheet Arrangements

Notes 2, 8 and 9 to the
financial statements included in this form 20-F on pages F-1 through F-9 discuss
the Companys off-balance sheet arrangements.

# Tabular
Disclosure of Contractual Obligations

The promissory notes are
issued to NB Capital, a wholly-owned subsidiary of the Bank.

|                 | Payments
      due by period
|---------------- | ----------------------------
|                 |                             
|
|Promissory notes |                             

---

8

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ITEM 6:
   DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES

# Directors and
Executive Officers

The Board of Directors of
the Company consists of the individuals set forth below. The Company currently
has five executive officers, four officers and no employees. The Company does
not anticipate that it will require any employees.

The following persons are
the directors of the Company to serve until the next general annual meeting:

|Name                      | Age | Position and Offices Held | Director Since
|------------------------- | --- | ------------------------- | --------------
|Donna Goral               |     | 47                        |               
|Martin
      Ouellet      |     | 51                        |               
|Monique
      Baillergeau |     | 46                        |               
|Serge
      Lacroix       |     | 47                        |               

The only other executive
officer of the Company is Jean Dagenais (Chief Financial Officer). Joan L.K.
Barnes (Secretary), Michael Ashford (Assistant Secretary), Martin-Pierre
Boulianne (Assistant Secretary) and Vanessa Fontana (Assistant Secretary) are
officers of the Company.

Donna Goral is a director
of NB Capital and has also been Vice-President  Taxation, USA Operations for
the Bank since 1992. Ms. Gorals tax experience also includes positions with
KPMG Peat Marwick and Ernst & Whinney. She is a member of the American
Institute of Public Accountants, the New York State Society of CPAs and the
Institute of International Bankers.

Serge Lacroix has been
Chairman of the Board and President of NB Capital since June 2002 and director
of NB Finance since July 2002. He has been with National Bank of Canada or one
of its subsidiaries since 1993 in various positions, most recently as Managing
Director and Senior Vice-President of the New York Branch. Mr. Lacroix was also
General Manager, President and CEO of NBC Financial (UK) Ltd. and Senior
Vice-President at National Bank Financial. From 1982 until 1993, he held various
positions at Wood Gundy in London, Montreal and Vancouver. Prior to that, he was
a Trader at Nesbitt Thompson Inc. and he started his career in 1976 as a Foreign
Exchange Trader with Banque Canadienne Nationale.

Monique Baillergeau was
appointed Director of NB Capital and NB Finance in May 2003. She has been with
the National Bank of Canada New York branch since February 1986. In 1998, she
was assigned to manage the Operations of the London branch. In May 2003, she
accepted the position of Vice President in charge of Operations and
Administration in New York.

Jean Dagenais joined the
National Bank of Canada in 1990 as Manager and Chief Accountant. In 1997, he was
promoted to Vice-President. As such, he is responsible for the preparation of
the Banks consolidated financial statements as well as other financial
information presented to management, shareholders and regulatory authorities. He
began is career in 1980 as external auditor with a major international
accounting firm. From 1985 to 1990, he held various positions in accounting and
financial reporting with large corporations. He studied at the University of
Sherbrooke, where he obtained a Bachelor in Administration. He was admitted to
the Order of Certified Management Accountants in 1982 and to the Order of
Chartered Accountants in 1983.

9

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Martin Ouellet has been
an employee of the Bank since 1980. He has held different positions within the
Treasury and Financial Markets division of the Bank. Recently, he has acted as
the Vice-President and Treasurer, responsible for Asset and Liability
Management, funding and liquidity management. He is a Director and the President
of NB Finance.

# Compensation of
Directors and Officers

The Company is a wholly
owned subsidiary of the Bank. Each director and officer of the Company is also
an employee of the Bank, except for Michael Ashford and Joan L.K. Barnes. The
Company did not pay any form of compensation to its officers or directors for
the year ended December 31, 2004. Any compensation paid to the directors and
officers of the Company is paid to such individual by the Bank as compensation
for all functions performed for the Bank and its subsidiaries. The Company did
not set aside or accrue any amount during the year ended December 31, 2004 to
provide pension, retirement or similar benefits for directors and officers
pursuant to any existing plan provided or contributed to by the Company.

# Options to
Purchase Securities from Registrant

See "Background" under
Item 4: INFORMATION ON THE COMPANY above. No options, warrants or rights were
granted to any individual with respect to the Common Stock or other securities
of the Company.

# Audit Committee

The Company does not have
an audit committee. As a result, all functions ordinarily performed by an audit
committee are performed by the entire Board of Directors. There are no
committees of the Board of Directors.

ITEM 7:   
MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS

# Control of the
Company

The Company is a wholly
owned subsidiary of the Bank. Pursuant to the OSFI Order, the Bank will at all
times continue to hold all outstanding shares of Common Stock. The Common Stock
is the only outstanding voting security of the Company. The Common Stock is not
registered with the SEC. There are no arrangements known to the Company the
operation of which may at a subsequent date result in a change in control of the
Company.

# Related Party
Transactions

On April 28, 2004 and
August 26, 2004, the Company acquired from the Bank, its direct parent, twelve
pools of Mortgage Loans pursuant to twelve Deeds of Sale of Mortgage Loans,
dated April 28, 2004, and August 26, 2004 respectively, between the Bank and the
Company. During the fiscal year ended December 31, 2004, there were no other
material transactions (completed or proposed) to which the Company and any
director or officer of the Company, any relative or spouse thereof or the Bank
had any direct or indirect material interest.

On May 27, 2003 and
October 21, 2003, the Company acquired from the Bank, its direct parent,
thirteen pools of Mortgage Loans pursuant to thirteen Deeds of Sale of Mortgage
Loans, dated May 27, 2003 and October 21, 2003 respectively, between the Bank
and the Company. During the fiscal year ended December 31, 2003, there were no
other material transactions (completed or proposed) to which the Company and any
director or officer of the Company, any relative or spouse thereof or the Bank
had any direct or indirect material interest.

10

---

On January 29, 2002, June
20, 2002 and December 16, 2002, the Company acquired from the Bank, its direct
parent, twenty pools of Mortgage Loans pursuant to twenty Deeds of Sale of
Mortgage Loans, dated January 29, 2002, June 20, 2002 and December 16, 2002
respectively, between the Bank and the Company. During the fiscal year ended
December 31, 2002, there were no other material transactions (completed or
proposed) to which the Company and any director or officer of the Company, any
relative or spouse thereof or the Bank had any direct or indirect material
interest.

ITEM 8:
   FINANCIAL INFORMATION

# Consolidated
Statements and Other Financial Information

See page F-1 to F-9
hereto.

# Legal
Proceedings

The Company is not the
subject of any material litigation. The Company is not currently involved in
nor, to the Companys knowledge, currently threatened with any material
litigation other than routine litigation arising in the ordinary course of
business, most of which is expected to be covered by liability insurance.

# Significant
changes

There have been no
significant changes since the date of the Financial Statements included in this
report.

ITEM 9:   
THE OFFER AND LISTING

# Nature of
Companys Securities

See Background under
Item 4: INFORMATION ON THE COMPANY above. No trading market exists with respect
to the securities of the Company. All Common Shares of the Company are held by
the Bank.

ITEM 10:
   ADDITIONAL INFORMATION

# Exchange
Controls and other Limitations Affecting Security Holders

See Background under
Item 4: INFORMATION ON THE COMPANY above. There are no governmental laws,
decrees or regulations in Bermuda or Canada that restrict the export or import
of capital or that affect the remittance of dividends, interest or other
payments to nonresident holders of the Common Stock. Pursuant to the OSFI Order,
the Bank will at all times continue to hold all outstanding shares of Common
Stock. None of the Companys Memorandum of Association, Bye-laws or Bermuda law
limit the right of nonresident or foreign owners to hold or vote securities.

11

---

# Taxation

See Background under
Item 4: INFORMATION ON THE COMPANY above. United States security holders are not
subject to any taxes under existing laws and regulations of Bermuda with respect
to the Depositary Shares. No tax treaty exists between the United States and
Bermuda.

# Share Capital

See other financial
information contained in Item 8.

ITEM 11:   
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Any market risk to which
the Company would be exposed would result from fluctuations in : (a) interest
rates related to Mortgage Loans and (b) currency exchange rates related to
Promissory notes, each affecting the interest payments made by the Company in
respect of the Promissory notes. Since the Promissory notes are significantly
over collateralized by the Mortgage Loans, interest rate fluctuations should not
present significant market risk. The Company expects that the interest and
principal generated by the Mortgage Loans should enable full payment by the
Company of all of its obligations as they come due. Since the Mortgage Loans are
guaranteed by a fixed ratio of exchange predetermined on the date of purchase
and applicable until the maturity of the Mortgage Loans pursuant to the Mortgage
Loan Assignment Agreements, fluctuations in currency exchange rates should not
present significant market risk.

ITEM 12:
   DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES

Not
Applicable.

# PART II

ITEM 13:   
DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES

There have been no
material defaults in the payment of principal, interest, a sinking or purchase
fund installment or with respect to any indebtedness of the Company. There have
been no material arrearages in the payment of dividends or any material
delinquency with respect to the Common Stock.

ITEM 14:   
MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS

There have been no
material modifications to any constituent instruments that define the rights of
holders of the Common Stock. The rights evidenced by the Common Stock have not
been materially limited or qualified.

12

---

ITEM
15:    CONTROLS AND PROCEDURES

Based on their evaluation
of the Companys disclosure controls and procedures as of the end of the period
covered by this Annual Report on Form 20-F, the Companys President and Chief
Financial Officer have concluded that such controls and procedures are
effective.

There were no changes in
the Companys internal controls over financial reporting identified in
connection with their evaluation that occurred during the period covered by this
annual report that have materially affected, or are reasonably likely to
materially affect, the Companys control over financial reporting.

ITEM
16A:    AUDIT COMMITTEE FINANCIAL EXPERT

The Company does not have
an audit committee. The entire board of directors performs all functions
ordinarily performed by an audit committee. The Board of Directors has reviewed
the definition of audit committee financial expert under item 16A of Form 20-F
and determined that each of Donna Goral, Monique Baillergau, Serge Lacroix and
Martin Ouellet satisfies the criteria for an audit committee financial expert
under the Exchange Act. The SEC has indicated that the designation of Ms. Goral,
Ms. Baillergeau, Mr. Lacroix and Mr. Ouellet as audit committee financial
experts does not make such persons an expert for any purpose, impose any
duties, obligations or liability on such persons that are greater than those
imposed on members of the board of directors who do not carry this designation
or affect the duties, obligations or liability of any other member of the board
of directors.

ITEM
16B:    CODE OF ETHICS

On December 23, 2003, the
Company adopted a Code of Conduct and Ethics (as an exhibit to this Form 20-F
Report) (the Code) that applies to all of the Companys directors, officers
and employees (as defined in the Code). No amendments to the provisions of the
Code have been made nor any waivers have been granted by the Company since its
adoption. The Company undertakes to provide a copy of this Code without charge,
upon request. Investors may send a request for a copy of the Code in writing to
the Companys assistant secretary at 600 rue de la Gauchetiere West, 4th floor,
Montreal, Québec, Canada, H3B 4L2, by certified mail with a self-addressed
envelope attached to such request.

ITEM 16C:
   PRINCIPAL ACCOUNTANT FEES AND SERVICES

Audit Fees

Deloitte & Touche
LLPs aggregate fees billed for professional services rendered for the audit
services for the 2004 fiscal year were $29,000 compared to $15,000 for 2003. The
engagement of Deloitte & Touche LLP for the 2004 fiscal year and the scope
of audit were pre-approved by our board of directors.

13

---

Audit-Related
Fees

There were no
audit-related fees for the fiscal years 2004 or 2003.

Tax Fees

There were no tax fees
for the fiscal years 2004 or 2003.

The Companys board of
directors pre-approves the services  both permitted audit services and
permitted non-audit services  of the external auditor before the external
auditor is engaged by the Company to render such permitted audit services or
permitted non-audit services. The board of directors evidences its pre-approval
by resolution of the board of directors.

ITEM 17:
   FINANCIAL STATEMENTS

The Financial Statements
contained herein were prepared in accordance with accounting principles
generally accepted in Canada and are expressed in United States dollars. There
are no material differences between Canadian and United States generally
accepted accounting principles. The Financial Statements are contained on pages
F-1 through F-9 of this Form 20-F.

ITEM 18:
   FINANCIAL STATEMENTS

See Item 17.

14

---

Financial statements
of

NB FINANCE, LTD.

December 31, 2004, 2003
and 2002

---

|NB FINANCE, LTD.Table of Contents                      | 
|------------------------------------------------------ | 
|                                                      
|                                                      
|Report of Independent Registered Chartered Accountants | 
|                                                      
|Statements of income and retained earnings             | 
|                                                      
|Balance
      sheets                                   | 
|                                                      
|Statements of cash flows                               | 
|                                                      
|Notes to
      the financial statements                | 

---

| | Deloitte
      & Touche LLP1 Place Ville-Marie Suite 3000Montréal QC H3B
      4T9Canada Tel.:  (514)
      393-7115Fax:  (514) 390-4111www.deloitte.ca
| | -------------------------------------------------------------------------------------------------------------------------------------------------------

# Report of
Independent Registered Chartered Accountants

To the Board of Directors
and Shareholder of NB Finance, Ltd. (the Company)

We have audited the
accompanying balance sheets of NB Finance, Ltd. as of December 31, 2004 and
2003 and the related statements of income and retained earnings and cash flows
for each of the three years in the period ended December 31, 2004. These
financial statements are the responsibility of the Companys management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

We conducted our audits in
accordance with the standards of the Public Company Accounting Oversight Board
(United States). Those standards require that we plan and perform the audit to
obtain reasonable assurance whether the financial statements are free of
material misstatement. The Company is not required to have, nor were we engaged
to perform, an audit of its internal control over financial reporting. Our
audits included consideration of internal control over financial reporting as a
basis for designing audit procedures that are appropriate in the circumstances,
but not for the purpose of expressing an opinion on the effectiveness of the
Companys internal control over financial reporting. Accordingly, we express no
such opinion. An audit also includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, assessing
the accounting principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.

In our opinion, the
financial statements referred to above present fairly, in all material respects,
the financial position of the Company as of December 31, 2004 and 2003, and
the results of its operations and its cash flows for each of the three years in
the period ended December 31, 2004, in conformity with accounting principles
generally accepted in Canada.

/s/ Deloitte & Touche LLP
Montreal, Canada

March 18, 2005

---

# NB FINANCE,
LTD. Statements of income and retained earningsyears ended December 31, 2004, 2003
and 2002(in U.S. dollars)

|                                                  
|--------------------------------------------------
|
|                                                  
|
|Revenue                                           
|Interest - mortgage loans                         
|Foreign exchange gain                             
|Amortization of the premium paid or
      the     
|discount received
      on mortgage loans         
|Interest - bank                                   
|                                                  
|                                                  
|                                                  
|Expenses                                          
|Interest - promissory notes                       
|Change in fair value on derivative
      financial
|instruments                                       
|Professional fees                                 
|Other                                             
|                                                  
|                                                  
|                                                  
|Net income (loss)                                 
|                                                  
|Retained
      earnings, beginning of year        
|                                                  
|Retained earnings, end of year                    
|                                                  

F-1

---

# NB FINANCE,
LTD. Balance sheetsas at December 31, 2004 and 2003(in U.S. dollars)

|                                                                  
|------------------------------------------------------------------
|
|                                                                  
|
|Assets                                                            
|Cash and cash equivalents                                         
|Mortgage loans (Note 3)                                           
|Premium paid on mortgage loans (Note 4)                           
|Interest receivable                                               
|Prepaid expenses                                                  
|Assets related to derivative financial
      instruments          
|                                                                  
|                                                                  
|                                                                  
|                                                                  
|Liabilities                                                       
|Promissory notes (Note 5)                                         
|Due to an affiliated company (Note 6)                             
|Due to the parent company                                         
|Discount received on mortgage loans (Note 4)                      
|Liabilities related to derivative financial
      instruments     
|Deferred transition gain on derivative financial
      instruments
|Accounts payable                                                  
|                                                                  
|                                                                  
|                                                                  
|                                                                  
|Shareholder's equity                                              
|Capital stock (Note 7)                                            
|Contributed surplus                                               
|Retained earnings                                                 
|                                                                  
|                                                                  
|                                                                  
|                                                                  
|                                                                  

F-2

---

# NB FINANCE,
LTD. Statements of cash flowsyears ended December 31, 2004, 2003
and 2002(in U.S. dollars)

|                                                                                
|--------------------------------------------------------------------------------
|
|                                                                                
|
|Cash flows from (used in) operating activities                                  
|Net income (loss)                                                               
|Item not affecting cash resources                                               
|Amortization of the premium
      paid or the                                   
|discount
      received on mortgage loans                                       
|Amortization of deferred
      transition gain                                  
|on derivative
      financial instruments                                       
|Foreign exchange gain                                                           
|Change in fair value on
      derivative financial                              
|instruments                                                                     
|                                                                                
|Changes in non-cash operating working capital
      items                       
|Financial derivative assets and
      liabilities                               
|Interest receivable                                                             
|Prepaid expenses                                                                
|Due to an affiliated
      company                                              
|Accounts payable                                                                
|Due to a parent
    company                                                     
|                                                                                
|                                                                                
|                                                                                
|                                                                                
|Cash
      flows from (used in) financing activities                            
|Issue of promissory notes                                                       
|Reimbursements of promissory notes                                              
|                                                                                
|                                                                                
|                                                                                
|                                                                                
|Cash
      flows from (used in) investing activities                            
|Increase in mortgage loans                                                      
|Repayments of mortgage loans                                                    
|Discount (Premium) on mortgage loans                                            
|                                                                                
|                                                                                
|                                                                                
|                                                                                
|Net
      increase in cash and cash equivalents                                 
|                                                                                
|Cash and
      cash equivalents, beginning of year                              
|                                                                                
|Cash
      and cash equivalents, end of year                                    
|                                                                                
|                                                                                
|Additional cash flow information                                                
|Interest paid                                                                   
|                                                                                
|Cash and cash equivalents comprise cash on hand and temporary
      investments.

F-3

---

# NB FINANCE,
LTD. Notes to the financial statementsyears ended December 31, 2004 and
2003(in U.S. dollars)

|1. |  | Incorporation and nature of operations
|-- |  | --------------------------------------

| | NB
      Finance, Ltd. (the Company) is a wholly-owned subsidiary of National
      Bank of Canada and was incorporated in Bermuda on September 3, 1997.
      The Companys principal activity is holding mortgage loans.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|2. |  | a)   Summary of significant accounting policies
|-- |  | -----------------------------------------------

| | Financial statements
| | --------------------

| | The
      financial statements are prepared in accordance with accounting principles
      generally accepted (GAAP) in Canada and are expressed in U.S. dollars.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Mortgage loans
| | --------------

| | Mortgage
      loans are recorded at their principal amounts less allowances for credit
      losses.
| | -----------------------------------------------------------------------------------------------------

| | Estimates
| | ---------

| | The
      preparation of financial statements in accordance with accounting
      principles generally accepted in Canada requires management to make
      estimates and assumptions that affect the amounts reported in the
      financial statements and accompanying notes. Although these estimates are
      based on managements best knowledge of current events and actions that
      the Company may undertake in the future, actual results could differ from
      the estimates.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Translation of foreign currencies
| | ---------------------------------

| | Monetary
      assets and liabilities denominated in foreign currencies are translated
      into U.S. dollars at year-end rates of exchange. Revenue and expense items
      are translated at rates prevailing at the transaction dates. Gains and
      losses resulting from translation are reflected in the statement of
      income.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Derivative financial instruments
| | --------------------------------

| | The
      Company uses cross currency swaps to manage the currency risk exposure of
      the mortgage loans. Before 2004, the foreign exchange gains and losses of
      these instruments were recognized the same way as the foreign exchange
      gains and losses on the hedged assets in the statement of income. In 2004,
      these derivative financial instruments do not qualify for hedge accounting
      and are carried at fair value as assets or liabilities with changes in
      fair value recorded in the statement of income.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Income taxes
| | ------------

| | The
      Company is not subject to any income taxes on the Bermuda income.
| | ---------------------------------------------------------------------------

| | Premium paid or discount received on mortgage loans
| | ---------------------------------------------------

| | The
      premium paid or discount received on mortgage loans is amortized on a
      straight-line basis on the residual term of mortgage pools.
| | -------------------------------------------------------------------------------------------------------------------------------------------------

F-4

---

# NB FINANCE,
LTD. Notes to the financial statementsyears ended December 31, 2004 and
2003(in U.S. dollars)

|2. |  | b)   Recent accounting standards adopted
|-- |  | ----------------------------------------

| | Effective January 1, 2004, the Company applied the accounting
      treatment prescribed by the Emerging Issues Committee entitled Accounting
      for Trading, Speculative or Non-Hedging Derivative Financial Instruments
      (EIC-128) and AcG-13 published by the Canadian Institute of Chartered
      Accountants (CICA). AcG-13 sets out the conditions required for rendering
      derivative financial instruments eligible for hedge accounting. Each
      derivative instrument that does not qualify for hedge accounting must be
      valued at fair value and recognized on the balance sheet as an asset or a
      liability as set out in EIC-128. As at January 1, 2004, the Company
      evaluated its existing hedge relationships and chose not to apply hedge
      accounting to relationships for all its derivative financial instruments.
      Since the guideline has been applied prospectively, the fair value of the
      derivative financial instruments as at January 1, 2004 amounting to
      $3,966,795 was deferred and is recognized in earnings at the same time as
      revenues related to the hedged item.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|3. |  | Mortgage loans
|-- |  | --------------

| | The
      Company acquired mortgage loans expressed in Canadian dollars from
      National Bank of Canada. The mortgage loans are secured by residential
      first mortgages and insured by the Canada Mortgage and Housing
      Corporation.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | The
      mortgage loans have maturity dates varying from January 2005 to
      December 2012. These loans bear interest at rates ranging from
      approximately 5.35% to 8.37% with a weighted average rate of 6.54% per
      annum.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Cross
      currency swaps with the parent company convert the Canadian dollars
      exposure of the mortgage loans to U.S. dollars. These swaps are not
      eligible under the hedge accounting guideline AcG-13.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                  | 2004 | 2003        
|--------------------------------- | ---- | ------------
|                                  |     
|
|                                 
|Mortgage loans, beginning of year |      | 633,914,616 
|Acquisitions                      |      | 213,266,127 
|Principal
      repayments        |      | (294,041,893
|Foreign
      exchange difference |      | 47,090,558  
|                                 
|Mortgage
      loans, end of year |      | 600,229,408 
|                                 

F-5

---

# NB FINANCE,
LTD. Notes to the financial statementsyears ended December 31, 2004 and
2003(in U.S. dollars)

| | Mortgage Loans (Continued)
| | --------------------------

| | The
      scheduled principal repayments are as follows:
| | --------------------------------------------------------

|     | $
|---- | -
|2005 |  
|2006 |  
|2007 |  
|2008 |  
|2009 |  
|2010 |  
|2011 |  
|2012 |  

| | The
      mortgage loans are insured by the Canada Mortgage and Housing Corporation
      so that the credit risk is negligible. Moreover, based on the current
      financial structure, the exposure to interest rate risk is minimal.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|4. |  | Premium paid or discount received on mortgage loans
|-- |  | ---------------------------------------------------

| | The
      premium paid or discount received is amortized on a straight-line basis on
      the residual term of mortgages acquired. The amortization amounts to
      $926,848 in 2004 ($2,349,020 in 2003 and $3,077,260 in 2002).
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|5. |  | Promissory notes
|-- |  | ----------------

| | The
      promissory notes are issued to NB Capital Corporation, a wholly-owned
      subsidiary of the parent company.
| | -----------------------------------------------------------------------------------------------------------------------

|                                                      | 2004 | 2003       
|----------------------------------------------------- | ---- | -----------
|                                                      |     
|
|Promissory notes, interest rate ranging between 5.49% |      |            
|and 10.21%, repayable by monthly
    variable         |     
|instalments until December 2012                       |      | 409,905,811
|                                                     

The scheduled principal
repayments for the next eight years are as follows:

|     | $
|---- | -
|2005 |  
|2006 |  
|2007 |  
|2008 |  
|2009 |  
|2010 |  
|2011 |  
|2012 |  

F-6

---

# NB FINANCE,
LTD. Notes to the financial statementsyears ended December 31, 2004 and
2003(in U.S. dollars)

|6. |  | Transactions with an affiliated company
|-- |  | ---------------------------------------

| | During
      the year, the Company incurred interest expenses to NB Capital Corporation
      in an amount of $35,811,136 ($37,529,935 in 2003 and $37,246,933 in 2002).
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | The
      amount due to an affiliated company as at December 31, 2004 and 2003
      represents interest and principal reimbursements due on the promissory
      notes to NB Capital Corporation.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | The
      Company received $625,555 ($400,891 in 2003 and $614,164 in 2002) in
      interest on bank accounts held with National Bank of Canada.
| | -------------------------------------------------------------------------------------------------------------------------------------------------

|7. |  | Capital stock
|-- |  | -------------

| | Authorized       12,000 common
      shares, $1 par value
| | ---------------------------------------------------------

|                      | 2004 | 2003  
|--------------------- | ---- | ------
|                      |     
|
|Issued and fully paid |      |       
|12,000 common shares  |      | 12,000
|                     

|8. |  | Fair
      values of financial instruments
|-- |  | ------------------------------------------

| | The
      following table presents the fair value of balance sheet financial
      instruments, except for instruments whose fair value is estimated to be
      equal to their carrying value. This fair value is determined using the
      valuation methods and assumptions described below.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Fair
      value represents the amount at which a financial instrument could be
      exchanged in an arms length transaction between willing parties. The fair
      values presented are estimates derived using present value or other
      valuation techniques and may not be indicative of the net realizable
      value.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                            | 2004            | 2003        
|--------------------------- | --------------- | ------------
|                            | Carrying Value$ | Fair Value$ 
|Assets                      |                 |             
|Mortgages
      loans       |                 | 600,229,408 
|Liabilities                 |                
|Promissory notes            |                 | (409,905,811
|Derivative Financial        |                
|Instruments                 |                
|Cross
      currency swaps, |                
|net                         |                 | (100,708,647
|                           

F-7

---

# NB FINANCE,
LTD. Notes to the financial statementsyears ended December 31, 2004 and
2003(in U.S. dollars)

| | Fair
      values of financial instruments (continued)
| | ------------------------------------------------------

| | The
      cross currency swaps have maturity dates ranging from March 2005 to
      December 2012 and exchange rates ranging from ($C/$US) 1.3054 to 1.6118.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------

| | The
      following table presents the notional amount of the cross currency swap
      contracts according to their maturity date:
| | -----------------------------------------------------------------------------------------------------------------------------------

|     | Notional Amount$
|---- | ----------------
|2005 |                 
|2006 |                 
|2009 |                 
|2011 |                 
|2012 |                 

---

|9. |  | Reconciliation of Canadian and United States GAAP
|-- |  | -------------------------------------------------

| | The
      financial statements of the Company are prepared in accordance with
      Canadian GAAP. The principal differences resulting from the application of
      U.S.GAAP on net income are presented below. The 2002 fiscal year is not
      included in the reconciliation due to the unavailability of certain
      information.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Starting
      January 1, 2004, under Canadian GAAP, derivative financial instruments
      that do not qualify for hedge accounting are carried at fair value on the
      balance sheet with changes in fair value recorded in earnings. Any
      resulting transitional gain (loss) is deferred and recognized in earnings
      at the same time as revenues related to the hedged item. According to
      U.S.GAAP, derivative financial instruments that do not qualify for hedge
      accounting are carried at fair value on the balance sheet with changes in
      fair value recorded in earnings. The following table reconciles net income
      (loss) according to Canadian GAAP with net income (loss) according to
      U.S.GAAP.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                                                | 2004 | 2003      
|--------------------------------------------------------------- | ---- | ----------
|                                                                |     
|
|Net income (loss) per Canadian GAAP                             |      | (7,937,023
|Amortization of transitional gain                               |      | (791,840  
|Changes
      in fair value on derivative financial instruments |      | --        
|                                                               
|Net
      income (loss) per U.S.GAAP                            |      | (8,728,863

F-8

---

# NB FINANCE,
LTD. Notes to the financial statementsyears ended December 31, 2004 and
2003(in U.S. dollars)

| | Reconciliation of Canadian and United States GAAP
      (continued)
| | -------------------------------------------------------------------

| | The
      following table reconciles shareholders equity according to Canadian GAAP
      with shareholders equity according to U.S.GAAP.
| | -------------------------------------------------------------------------------------------------------------------------------------------

|                                                    | 2004 | 2003       
|--------------------------------------------------- | ---- | -----------
|                                                    |     
|
|Shareholder's equity per Canadian GAAP              |      | 150,213,121
|                                                   
|Transition gain on derivative financial instruments |      | 3,174,955  
|                                                   
|                                                   
|Shareholder's equity per U.S.GAAP                   |      | 153,388,076

F-9

---

ITEM 19:    EXHIBITS

The
following documents are filed as part of this report:

|Exhibit Number | Description
|-------------- | -----------
|10.3           |            
|
|10.5           |            
|
|10.6           |            
|
|10.7           |            
|               |            
|10.10          |            
|
|10.12          |            
|
|10.13          | (i)        
|
|10.13          | (ii)       
|
|10.14          | (i)        
|
|10.14          | (ii)       
|
|10.15          |            
|
|10.16          |            
|
|10.17          |            
|
|10.18          |            
|
|10.19          |            
|
|10.20          |            
|
|10.21          |            
|
|10.22          |            
|
|10.23          |            
|
|10.24          |            
|
|10.25          |            

15

---

|      |  |                                                                                                                                              | 
|----- |  | -------------------------------------------------------------------------------------------------------------------------------------------- | 
|10.26 |  | Promissory Note representing $55,963,732.07 executed by NB Finance, Ltd. in favor of NB Capital Corporation*                                 | 
|
|10.27 |  | Mortgage Loan Assignment Agreement dated as of January 29, 2002 among NB Finance, Ltd., NB Capital Corporation and National Bank of Canada*  | 
|
|10.28 |  | Promissory Note representing $71,866,079.87 executed by NB Finance, Ltd. in favor of NB Capital Corporation*                                 | 
|
|10.29 |  | Mortgage Loan Assignment Agreement dated as of June 20, 2002 among NB Finance, Ltd., NB Capital Corporation and National Bank of Canada*     | 
|
|10.30 |  | Promissory Note representing $64,221,362.98 executed by NB Finance, Ltd. in favor of NB Capital Corporation*                                 | 
|
|10.31 |  | Mortgage Loan Assignment Agreement dated as of December 16, 2002 among NB Finance, Ltd., NB Capital Corporation and National Bank of Canada* | 
|
|10.32 |  | Promissory Note representing $52,054,168.88 executed by NB Finance, Ltd. in favor of NB Capital Corporation*                                 | 
|
|10.33 |  | Promissory Notes representing $70,420,135.45 executed by NB Finance, Ltd. in favor of NB Capital Corporation*                                | 
|
|10.34 |  | Mortgage Loan Assignment Agreement dated as of May 27, 2003 among NB Finance, Ltd., NB Capital Corporation and National Bank of Canada*      | 
|
|10.35 |  | Promissory Notes representing $106,552,720.44 executed by NB Finance, Ltd. in favor of NB Capital Corporation*                               | 
|
|10.36 |  | Mortgage Loan Assignment Agreement dated as of October 21, 2003 among NB Finance, Ltd., NB Capital Corporation and National Bank of Canada*  | 
|
|10.37 |  | Promissory Note representing $76,053,456.93 executed by NB Finance, Ltd. in favor of NB Capital Corporation**                                | 
|
|10.38 |  | Mortgage Loan Assignment Agreement dated as of April 28, 2004 among NB Finance, Ltd., NB Capital Corporation and National Bank of Canada**   | 
|
|10.39 |  | Promissory Note representing $94,559,444.49 executed by NB Finance, Ltd. in favor of NB Capital Corporation**                                | 
|
|10.40 |  | Mortgage Loan Assignment Agreement dated as of August 26, 2004 among NB Finance, Ltd., NB Capital Corporation and National Bank of Canada**  | 
|
|11.1  |  | NB Finance, Ltd. Code of Conduct and Ethics**                                                                                                | 
|
|12.1  |  | President's certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002**                                                        | 

16

---

|     |  |                                                                                                                                   | 
|---- |  | --------------------------------------------------------------------------------------------------------------------------------- | 
|12.2 |  | Chief Financial Officer's certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002**                               | 
|
|13.1 |  | Written Statement of Chairman and President Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. Section 1350)**  | 
|
|13.2 |  | Written Statement of Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. Section 1350)** | 

|* | As
previously filed.
|- | --------------------

|** | As
filed herewith.
|-- | ------------------

17

---

SIGNATURES

The Registrant hereby
certifies that it meets all of the requirements for filing on Form 20-F and that
it has duly caused and authorized the undersigned to sign this annual report on
its behalf.

| | NB
      FINANCE, LTD.By:  /s/ Martin
      Ouellet        Name:     Martin
      Ouellet        Title:
            President
| | -----------------------------------------------------------------------------------------------------------------------------

Dated: June 20,
2005

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