Perspectives on the Canadian banking industry

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In a land of opportunity, what’s next?

Coming out of one of the most profound financial crises in history, in 2010, Canada’s six largest banks posted solid earnings, and once again demonstrated why they are considered among the most stable in the world. The 2010 combined net income of the Big Six banks was $20.4 billion, exceeding last year’s net income by more than $6 billion and eclipsing the previous record of $19.5 billion set in 2007. These results have helped propel some of the Big Six banks to be in the same league as the world’s largest banks by market capitalization.

Results in the personal and commercial segments for the banks were strong. These were supported by lower personal and commercial loan loss provisions, a cyclical indicator of a post-recessionary economy. However, 2010 was not without its challenges. Trading and investment banking revenues declined later in the year, as the fixed income market could not sustain the pace set in the previous year, which was aided by a bounce coming out of the recession. At the same time, the overhang of uncertain market conditions made it harder to accurately predict deal flows, which impacted income at most of the Big Six.

Looking ahead, what does the future bring for Canadian banks? Fully armed with capital, how will they take advantage of opportunities, both domestically and abroad, to drive earnings growth and differentiate themselves from the competition? Read this publication to find out.