New market study, "Canada Commercial Banking Report Q4 2010", has been published

Sept. 23, 2010 - PRLog -- We still forecast fairly robust loan growth for Canadian banks in 2010 of about 4.0%. This would be a significant rebound from 1.8% in 2009 and 3.5% in 2008, during the global recession. Furthermore, we expect growth to rise further by 2011 and beyond to 5.5%. Still, this would be well below the double-digit growth rates of the mid-2000s global credit boom, and, in our view, the dynamics for much greater loan growth in Canada are simply not there. Loans have grown well in the early part of the recovery and economic growth is likely to remain fairly strong, but we believe that household leverage will taper off towards the end of 2010.     This is going to be as much about demand as supply, as we expect households to consolidate their balance sheets in future. Judging from several metrics, the debt burden on Canadian households has worsened since the recession started, unlike the situation in the US, where households have begun to deleverage. The debt-to-income ratio has reached 147% in Canada and due to the aforementioned dynami cs for debt and income, this has been accelerating for months.     Interest rates should be on the way up from record lows in H210, which will start to take a greater toll on debt servicing costs. Mortgage lending should moderate as well, as we expect some of the air to come out the housing market over the coming years, particularly given some key valuation ratios: house prices-to-income are close to a 20-year high. However, we emphasise that we expect a slowdown and do not envisage a crisis resulting from the rising debt load. Canada's banking system is relatively prudent and households should be able to handle their debt burdens.     Whither Regulation     The global regulatory environment for banks is evolving rapidly and there have been several proposals for a new, tighter Canadian framework. Canadian banks are among the most robust in the world. For example, the sector's average Tier 1 capital ratio stood at 12.2% for 2009, far above the international norm and the requirements of most regulators, including Canada's own Office of the Superintendent of Financial Institutions (OSFI). Still, the government is putting emphasis on more robust capital rules and lower leverage ratios on a global basis, particularly ahead of Toronto hosting the G20 summit in June 2010, and it is likely to encourage further consolidation domestically.     Later in 2010, OSFI, in line with the Basel Committee, is likely to finalise a new capital adequacy regime that is intended to reinforce Canadian banks' balance sheets and help avoid the types of systematic risks experienced in the US and Europe. Although OSFI assistant superintendent Ted Price has said 'Canada had it about right' in terms of capital adequacy and the regulatory regime, there may yet be some additional measures for Canadian banks. For example, some Canadian financial institutions, which under OSFI's rules would not be allowed to 'grandfather' so-called 'innovative' capital instruments in their capital buffers, this could potentially pose some short-term risks as balance sheets are reconfigured.     OSFI has also suggested the use of embedded contingent capital incommon equity when a bank's viability is in doubt. This would theoretically help avoid situations in which private investors would automatically help to recapitalise the bank, thereby avoiding taxpayer participation. In general, we do not regard capital adequacy or leverage as major problems for the Canadian banking sector. With deposit growth staying robust, we continue to expect the loan-to-deposit ratio to decline over the coming years, from a peak of 102.6% in 2007 to around 90.0% by 2014, in line with our global banking outlook. Furthermore, the Canadian government's balance sheet should be robust enough to support the banking sector at least temporarily, as was the case in several countries during the financial crisis, should worse come to worse.

For more information or to purchase this report, go to:
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Partial Table of Contents:

Executive Summary
- Table: Levels (CADbn)
- Table: Levels (US$bn)
- Table: Levels At May 2010
- Table: Annual Growth Rate Projections 2010-2014 (%)
- Table: Ranking Out Of 59 Countries Reviewed In 2010
- Table: Projected Levels (CADbn)
- Table: Projected Levels (US$bn)
SWOT Analysis
- Canada Commercial Banking SWOT
- Canada Political SWOT
- Canada Economic SWOT
Business Environment Outlook
- Commercial Banking Business Environment Rating
- Table: Canada Commercial Banking Business Environment Rating
- Commercial Banking Business Environment Rating Methodology
- Table: Developed States Commercial Banking Business Environment Ratings
Global Commercial Banking Outlook
- Table: Banks' Bond Portfolios
- Table: Commercial Banking Business Environment Ratings
- Table: Comparison Of Loan/Deposit, Loan/Asset & Loan/GDP Ratios
- Table: Anticipated Developments In 2010
- Table: Comparison Of Total Assets, Client Loans & Client Deposits (US$bn)
- Table: Comparison Of Per Capita Deposits, 2010 (US$)
- Table: Interbank Rates & Bond Yields, 2009-2010
Canada Banking Sector Outlook
Economic Outlook
- Table: Canada Economic Activity, 2007-2014
Competitive Landscape
- Market Structure
- Protagonists
- Table: Protagonists In Canada's Commercial Banking Sector
- Definition Of The Commercial Banking Universe
- List Of Banks
- Table: Domestic Banks
- Table: Foreign Banks - Lending Branches
Company Profiles
- Royal Bank of Canada
- Table: Stock Market Indicators
- Table: Balance Sheet (CADmn, unless stated)
- Table: Balance Sheet (US$mn, unless stated)
- Table: Key Ratios (%)
- Toronto-Dominion Bank
- Table: Stock Market Indicators
- Table: Balance Sheet (CADmn, unless stated)
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Full Table of Contents is available at:
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Fast Market Research is an online aggregator and distributor of market research and business information. We represent the world's top research publishers and analysts and provide quick and easy access to the best competitive intelligence available.