Canada Retail Banking: Opportunities and Risks to 2023

Summary

Canada’s total loan balances outstanding (including credit card balances, personal loan balances, and residential mortgage balances outstanding) recorded a healthy compound annual growth rate (CAGR) of 4.8% during 2014-18 to reach C$2.2tn ($1.6tn). Credit card balances outstanding was the fastest-growing credit segment during the review period. The burden of household debt to GDP is growing in Canada, primarily on account of rising mortgage debt and low interest rates. Mortgage loans accounted for nearly three quarters of the total loan balances in Canada.

In addition, household savings as a percentage of GDP stood at 5.2% in 2018 - lower than many developed countries including Germany (11.6%), the US (9.2%), France (7.9%), and Italy (6.7%). The low savings rate is the result of Canadians using a portion of their earnings to repay debt. Furthermore, Canada has started observing decelerating economic growth, primarily due to low levels of investment and household consumption, which is expected to create an uncertain economic environment. Consequently, we anticipate the total loan balances outstanding to grow at a CAGR of 4.1% over 2019-23.

Retail deposit balances in Canada recorded a healthy CAGR of 5.4% between 2014 and 2018 to reach C$1.4tn ($1.1tn). Despite low interest rates, deposits remain popular among Canadian consumers. The growth in retail deposits can be attributed to the increased deposit limit and use of tax-free savings accounts (TFSAs) as a substitute for traditional options.

Based on our proprietary datasets, this report analyzes the Canada’s lending market, with a focus on the consumer lending segment. The report discusses in detail the credit card, personal, and mortgage loan markets, covering market size, competitors’ market shares, and survey insights. The report also provides a market overview and insights on the retail deposit segment. In addition, it covers the key digital disruptors in Canada’s retail lending segment.

Scope

• Mortgage loan balances in Canada recorded a CAGR of 5.2% primarily due to rising house prices, which were driven by growing household income and low mortgage interest rates.
• The Canadian personal loans market recorded a CAGR of 3.2% during 2014-18 to reach C$498.5bn ($365.4bn).
• Credit card balances outstanding grew by a CAGR of 6.5% during 2014-18 to reach C$120.5bn ($88.3bn). Growing credit card usage can be attributed to high public awareness of credit card benefits.

Reasons to buy

• Make strategic decisions using top-level historic and forecast data on the Canada’s retail lending industry.
• Identify the most promising lending segment.
• Receive detailed insights into lending in Canada, including consumer lending.
• Understand the changing market and competitive dynamics by learning about new competitors and recent deals in the retail lending space.
• Receive comprehensive coverage of the retail deposit market in Canada.