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Deposit-accepting intermediaries: Activities and economic performance
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Chartered banks, trust companies, caisses populaires and credit unions produced services in Canada valued at $69.1 billion in 2007, up 6.7% from 2006.
This amount consisted of net interest income, which grew 5.6% to $34.6 billion, and non-interest income, which increased 7.7% to $34.5 billion.
Strong consumer spending, backed by a solid labour market, drove the growth. Business investment remained strong as did the active housing market in the early part of 2007.
Retail banking continued to be the primary income-generating activity for deposit-accepting intermediaries, accounting for 60.0% of the total value of services produced in 2007.
The share of treasury and investment banking increased from 18.3% in 2006 to 21.6% in 2007. The rise was primarily due to gains in non-interest income for the segment, which grew from the previous year.
Chart 1
Value of services produced in Canada by deposit-accepting Intermediaries
Non-interest income continued to outperform interest income in terms of growth, closing the gap between the two general categories of income to $121 million in 2007 from $749 million in 2006.
In 2007, deposit-accepting intermediaries increased their provisions for credit losses by 15.9% to $3.2 billion. Expected losses from impaired loans and losses in credit instruments swelled considerably at the end of 2007, marking a higher increase than observed in the previous year.
Note to readersThis is the 10th and final release of the annual Survey of Deposit-accepting Intermediaries. The annual Survey of Deposit-accepting Intermediaries covers the Canadian-based activities of the principal deposit-accepting intermediaries, namely chartered banks, trust companies, caisses populaires and credit unions. The report does not cover foreign operations. Net interest income is the difference between interest income and interest expenses. Interest income covers all interest from loans, titles and deposits of deposit-accepting intermediaries. Interest expenses cover interest paid on deposits, subordinated debentures and other interest costs. Non-interest income covers all sources of revenue other than interest income. Examples include revenue from brokerage and other securities services, credit services, deposit and payment services charges, trading, mutual fund management, card services, foreign exchange, securitization activities and trans-sectoral income. The value of services produced is the sum of net interest and non-interest income. This value is not to be confused with service charges. |
Many deposit-accepting intermediaries raised their provisions because of higher write-offs on both personal and business loans. They were also affected late in 2007 by the US subprime mortgage crisis.
Net interest income
Higher product volumes and rising earning assets driven by growth in mortgages and deposits led to the increase in net interest income for deposit-accepting intermediaries in 2007.
This growth was partially offset by the tightening conditions in the corporate and institutional finance segment, which declined by 14.8% to $1.5 billion. However, retail banking services continued to dominate the interest income segment of deposit-accepting intermediaries, accounting for 87.9%.
Banks, caisses populaires, and credit unions continued to expand their electronic financial offerings. In 2007, the interest income arising from this portfolio increased by 15.9% to $2.3 billion. This segment has grown more than five-fold in the last 10 years.
Non-interest income
For a significant part of the sector, an early strong business investment environment in 2007 led to an increase in trade volumes and mutual fund revenues. Electronic financial services benefitted from these conditions, posting a 1.5% increase over 2006 to $5.4 billion.
However, worsening market conditions that prevailed during the latter part of 2007 adversely affected income as the fiscal year came to a close.
Trading income was down across the board, due to increased funding costs on trading positions, and weak equity trading.
Available on CANSIM: table 182-0001.
Definitions, data sources and methods: survey number 2513.
For more information, or to enquire about the concepts, methods or data quality of this release, contact Kaveh Dashti (613-951-6799; kaveh.dashti@statcan.gc.ca) or Mario Vella (613-951-1395; mario.vella@statcan.gc.ca), Industrial Organization and Finance Division.
Table 1
Value of services produced in Canada by deposit-accepting intermediaries
Table 2
Distribution of income by activity of deposit-accepting intermediaries
Table 3
Type of income by type of activity
