Being the middleman between you and your money brings in a lot of money for Canadian banks. Every Canadian household receives about $3,200 in profit from our banks. Let’s look at our banks’ earnings, their methods, and what we can do to reduce our impact on their profits.
Canadian banks make more than $3,200 in profit
for every household in Canada.
Most major Canadian banks have delivered their 2018 earnings reports over the last week and a half. They are replete with staggering statistics demonstrating that the very real financial difficulties that Canadians face are inextricably linked to bank behavior.
First, let’s take a look at how our banks did.
What did Canadian banks earn in 2018?
In 2018, Royal Bank earned $12.4 billion. They earned $3.25 billion in the last quarter (the last three months of their earnings). This is a 15% increase over last year.
In 2018, Toronto Dominion Bank earned $11.33 billion, with $2.96 billion arriving in the fourth quarter. A 20% growth in the last year.
The Bank of Nova Scotia reported $8.72 billion in revenue in 2018, with $2.27 billion in the last quarter. This is a 10% gain.
CIBC reported $5.28 billion in revenue and $1.27 billion in profit for the fourth quarter, representing a 12% rise in annual revenue.
Bank of Montreal made a profit of $4.24 billion on revenue of $17.91 billion in 2018
Banks in Canada are more profitable than in practically any other country on the planet.
For the fiscal year, annual earnings at Canada’s six largest banks increased 7.4% to a record $45.5 billion. As a result, Canadian banks have set aside more than $15.2 billion for bonuses! Everyone appears to be winning in the banking industry, but Canadians are finding it increasingly difficult to save.
So how did the banks reach unexpected heights this year?
Reading through their year end statements provides insight into how some of the world’s most profitable corporations managed to do so. Here are some noteworthy points:
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- Increased net interest margin (NIM)
NIMs are the difference between what banks pay depositors for money in the bank and what they charge borrowers for sums due on mortgages, lines of credit, and credit cards.
- Increased net interest margin (NIM)
TD Bank reported a NIM of 1.68% over the last year and attributes their predicted 7 to 10% earnings increase for the future year to rising spreads. Or, maybe more accurately, banks have been cutting savings interest while boosting borrowing interest rates.
Canadian banks intend to progressively devalue your money while charging you even more to borrow.
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- Fee increases
The fees that our banks charge us to deposit and utilize our money have also been continuously increasing; several banks have cited greater fee increases as a reason for their phenomenal success.
- Fee increases
Banks throughout the world admire the Canadian consumer’s ability to bear some of the highest banking costs in the industrialized world. What’s more, our banks are no longer compelled to cooperate with the federal government banking regulator, which was established to fairly handle client complaints.
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- Reduced taxes
This may seem unusual, but it has been noted in nearly every investor report produced by banks in the last week and a half. The Royal Bank of Canada reported, “Strong earnings were driven by a lower effective tax rate and higher revenue” . According to Scotiabank’s press release, the effective tax rate is only 18.7%. The favorable tax environment is also mentioned by TD Bank.
- Reduced taxes
Bottom line: Canadian banks are making record profits by exploiting Canadians in any way they can. We didn’t even go into this year’s stricter borrowing rules.
How do you protect yourself?
How does the customer move forward in a society where banks obviously dominate the financial landscape? To prosper in a banking market that devalues savings and raises borrowing costs, you must examine both your approach to long-term savings and immediate, and even unexpected, borrowing needs.
We knew the banks were making it more difficult than ever. That is why we founded Cannect. Cannect was created to offer Canadians an alternative to banks by making the equity they’ve built up over time work for them.
Cannect’s team has been investing in technology and seeking for new ways to bring value to Canadians for the past ten years. Here’s how we can assist you in saving money right now and in the future.
Collaboration to borrow for less
Cannect leverages its purchasing power to get the lowest available mortgage rates for its customers wishing to negotiate their next mortgage with a Canadian lender, including negotiating a better mortgage with your current bank.
Meeting today’s necessities without jeopardizing your financial future
Investments that benefit Canadians directly
The Cannect Invest mortgage fund offers regular Canadian investors a managed fund that has traditionally generated a return of around 8% while balancing risk more successfully than even the largest banks.
Cannect Invest has averaged an 8% return over the past 5 years.
Learn more about Cannect Invest
Reducing long-term debt responsibilities for Canadians who require funds other than their mortgage
Finally, if you need to borrow money outside of your mortgage, CannectFlex home equity loans give homeowners access to the equity in their house regardless of their income or credit, and on flexible terms that keep them out of high-interest long-term debt.
Simply put, CannectFlex aims to find borrowers who have been displaced by new mortgage restrictions or inappropriate bank underwriting methods in order for them to access their equity immediately and establish long-term financial health.
A Cannect Flex home equity loan enabled over 75% of clients to obtain a reduced interest rate mortgage.
Each borrower works with a mortgage counselor to improve their financial situation by fixing their mortgage covenant and improving their credit. When their Cannect Flex home equity loan matures, nearly 75% of Canadians who engage with Cannect are refinanced into reduced interest rate mortgage loans.
Borrowing with Cannect
The idea behind what we’ve done is simple: unite Canadians, from investors to borrowers, so that by working together, we can save and earn your money.
To be sure, all banks are concentrating on technology, automation, and enhancing access to their services. Unfortunately, it’s all in an attempt to increase profits by draining more of your cash.
Cannect believes that technology will be a major disruptor in the banking industry. The difference is that we believe it is a method for Canadians to reclaim control of their hard-earned equity and continue to build wealth.
That sounds like a lot more Canadian approach to us. We believe you will agree.
