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SECTOR OUTLOOKOntario Credit Unions and Caisses Populaires
Fourth Quarter Ended December 31, 2018 Sector Credit Unions Caisses Populaires
Financial Highlights 4Q-2018* 3Q-2018 4Q-2017 4Q-2018* 3Q-2018 4Q-2017 4Q-2018* 3Q-2018 4Q-2017Income Statement (% average assets) Net Interest Income 1,91 1,97 1,96 1,87 1,92 1,90 2,15 2,26 2,30Loan Costs 0,06 0,06 0,04 0,05 0,05 0,03 0,08 0,10 0,08Other Income 0,50 0,50 0,51 0,48 0,47 0,48 0,69 0,67 0,72Non-Interest Expense 1,90 1,88 1,99 1,91 1,89 2,00 1,78 1,80 1,92Taxes 0,1 0,11 0,08 0,08 0,09 0,08 0,23 0,23 0,12Net Income 0,37 0,43 0,36 0,31 0,37 0,28 0,75 0,81 0,89Balance Sheet ($ billions; as at quarter end) Assets 63,4 62,0 57,2 55,3 54,1 49,8 8,18 8,0 7,4Loans 55,9 54,5 49,8 48,7 47,6 43,4 7,15 7,0 6,4Deposits 51,0 48,6 45,7 44,3 43,0 40,1 6,71 5,6 5,7Members' Equity & Capital 4,4 4,3 4,1 3,7 3,6 3,4 0,74 0,7 0,7Capital Ratios (%) Leverage 6,84 6,95 7,11 6,52 6,65 6,79 8,97 9,00 9,25Risk Weighted 13,29 13,62 13,70 12,74 12,99 13,11 16,90 17,88 17,55Key Measures and Ratios (% except as noted) Return on Regulatory Capital 5,24 6,06 5,10 4,64 5,50 4,15 8,17 8,88 9,71Liquidity Ratio 11,0 11,3 11,5 11,6 11,7 12,0 6,9 7,5 7,7Efficiency Ratio (before dividends/rebates) 77,7 75,9 79,2 80,2 78,3 82,0 63,6 62,1 64,4Efficiency Ratio 80,7 78,2 81,8 83,5 80,9 84,8 64,6 63,3 65,4Mortgage Loan Delinquency>30 days 0,46 0,41 0,44 0,46 0,42 0,45 0,46 0,40 0,41Commercial Loan Delinquency>30 days 1,03 0,72 0,88 1,07 0,70 0,87 0,80 0,89 1,01Total Loan Delinquency>30 days 0,65 0,54 0,64 0,65 0,52 0,59 0,66 0,68 0,97Total Loan Delinquency>90 days 0,26 0,29 0,31 0,24 0,27 0,29 0,39 0,42 0,44Asset Growth (from last quarter) 2,28 2,80 1,64 2,22 2,86 1,60 2,69 2,40 1,89Loan Growth (from last quarter) 2,48 3,18 2,36 2,46 3,24 2,41 2,61 2,78 2,02Deposit Growth (from last quarter) 4,98 2,21 2,24 3,14 2,25 2,31 19,08 1,94 1,70Credit Unions (number) 78 79 93 66 67 69 12 12 24Membership (thousands) 1 681 1 665 1 620 1 487 1 477 1 431 194 188 189Average Assets ($ millions, per credit union) 813 785 615 864 807 721 682 664 308
* Trends are current quarter to last quarter Better Neutral Worse
1Sector Outlook Fourth Quarter Ended December 31, 2018
Sector Key Financial Trends
2009 2010 2011 2012 2013 2014 2015 2016 2017 20182%
5%
8%
11%
14% Table #1 - Selected Growth Trends
Assets Loans Deposits
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 20181.00%
1.50%
2.00%
2.50%
3.00%
0.0%0.1%0.2%0.3%0.4%0.5%0.6%0.7%0.8%0.9%
Table #2 -Selected Performance Trends
Financial Margin (L) Gross Margin (L) Operating Expenses (L) ROA (R)
Loan Costs (R)
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 201875%
80%
85%
90%
95%
100%
0.1%
0.2%
0.3%
0.4%
0.5%
0.6%Table #3 - Efficiency Ratio and Return on Assets
Efficiency Ratio ROA (R)
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018-20%
-15%
-10%
-5%
0%
5%
10%
15%
20%Table #4 - Loan Growth
Personal Mortgages Commercial Total5 Year Average
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2Sector Outlook Fourth Quarter Ended December 31, 2018
2009 2010 2011 2012 2013 2014 2015 2016 2017 20180.00%
0.40%
0.80%
1.20%
1.60%
2.00%
2.40%
2.80%
3.20%
Table # 5 - Loan Delinquencies - Greater than 30 days
Personal Mortgages Commercial Total
2009 2010 2011 2012 2013 2014 2015 2016 2017 20183%
4%
5%
6%
7%
8%
9%Table # 6 - Loan Yields
Personal Mortgages Commerical Total
1Q 20133Q 2013
1Q 20143Q 2014
1Q 20153Q 2015
1Q 20163Q 2016
1Q 20173Q 2017
1Q 20182Q 2018
3Q 20184Q 2018-2%
3%
8%
13%
18%
23% Table #7 - Deposits growth
Demand Deposits - Yearly GrowthTerm Deposits - Yearly GrowthRegistered Deposits - Yearly GrowthTotal Deposits - Yearly Growth5 Year Average Total Deposit Growth Rate
$-
$1,000,000,000
$2,000,000,000
$3,000,000,000
$4,000,000,000
$5,000,000,000
$6,000,000,000
$7,000,000,000
$8,000,000,000
5%6%7%8%9%10%11%12%13%14%15%16%17%
Total Borrowings in $millions (L) Securitizations in $millions (L) Liquidity Ratio (R)
Table #8 - Liquidity, Total Borrowings andSecuritization
DISCLAIMER: The information presented in this report has been prepared using the latest financial filings submitted to DICO and as such accuracy and completeness cannot be guaranteed. Income Statement results are the aggregate of year-to-date annualized information.
ELECTRONIC PUBLICATION: The Sector Outlook is available in PDF format (readable using Adobe Acrobat Reader) and can be downloaded from the Publications section on DICO’s website at www.dico.com.
3Sector Outlook Fourth Quarter Ended December 31, 2018
DICO Observations Q4-2018 Profitability is flat, year over year; increase in interest and investment income attributable to higher rates was largely offset
by higher interest on deposits. Mortgage loan delinquency over 30 days increased by 2 bps year over year; this is highlighted because of the continued
high rate of growth in mortgage loan assets, the effects of higher interest rates on new and existing mortgages when renewed and high household debt levels.
Commercial loan delinquency over 30 days increased by 15 bps year over year, due to the large increase in 30-89 day delinquency year over year (from 26 bps to 55 bps) but offset by a decrease in the amount that is delinquent more than 90 days (from 62 bps to 48 bps).
Asset growth (11.0% year over year) continues to be fueled by residential mortgages (14.8%), perhaps impacted by tightened lending rules at banks; it appears increasing interest rates and slowing sales volumes and/or reduced prices in some markets have not had a negative impact on sector growth.
Loan growth continues to outpace deposit growth leading to reliance on securitization transactions (up 22.8% year over year) and bank borrowings as sources of funding.
Liquidity decreased by 50 bps year over year to 11.0% as growth in liquid assets was outpaced by growth in deposits, borrowings and securitization transactions.
Capital and capital ratios are under pressure as growth in loans outpaces growth in retained earnings.
Economic OverviewThe Bank of Canada (the “Bank”) held its overnight rate at 1.75% on January 9, 2019, after three 25 bps increases in 2018 and a total of five 25 bps increases since it began raising rates in July 2017.
In its January report, the Bank stated that low interest rates continue to stimulate the Canadian economy with the economy is operating at close to capacity, the unemployment rate is at a 40-year low and inflation is close to target of 2 per cent. Rates could therefore rise until they reach a "neutral rate", the level that neither stimulates nor impedes regular economic activity. The Bank estimates Canada's neutral interest rate to be between 2.5% and 3.5%.
The Bank expects growth in Canada to average about 0.8% for the first quarter of 2019. Real GDP is projected to slow to 1.7% this year (down from previously projected 2.1%) before increasing to 2.1% in 2020. The Bank’s projections for business investment and exports have been revised up due to robust foreign demand, reflecting the new US-Mexico-Canada Agreement (“USMCA”) and the recently-approved liquid natural gas project in British Columbia. However, investment and exports will be dampened by the recent decline in commodity prices, ongoing competitiveness challenges and limited transportation capacity.
The Bank believes the global economic outlook faces uncertainties and notes financial market volatility has resurfaced and some emerging markets are under stress. It says the US economy is especially robust but is expected to moderate. It considers the USMCA will reduce trade policy uncertainty in North America which has curbed business confidence and
4Sector Outlook Fourth Quarter Ended December 31, 2018
investment but trade conflict, particularly between the United States and China, and future of Brexit, is weighing on global growth and commodity prices.
Statistics Canada reports that the ratio of household debt to income increased to 173.8% in the third quarter, up from 169.1% in the second quarter, and up from 171% in the third quarter last year.
Housing MarketsIn its report, the Bank states that federal changes in mortgage finance policy, higher interest rates and provincial and municipal housing measures have been e ective in mitigating household debt vulnerabilities, but ff the sheer size of outstanding amounts means that vulnerability will persist for some time.
The Bank says the announcement in October 2017 and implementation in January 2018 of revisions to Guideline B-20 resulted in volatility in housing markets evidenced by abnormally high resales in the fourth quarter of 2017, followed by a sharp drop in the first half of 2018, with national resales recovering somewhat in the third quarter of 2018 but remaining at a lower level than last year.
The Toronto Real Estate Board reports that 2018 sales were down 16.1% versus 2017 total sales and average prices in the GTA decreased 4.3% year over year.
ConsolidationThe sector has continued to consolidate over the last twelve months with the number of institutions decreasing by 15 to 78 and average asset size increasing to $813 million; credit unions declined by five to 64 with average assets of $864 million; caisse populaires decreased by 12 to 12 with average asset size of $684 million. These amalgamations should result in larger, more stable entities capable of achieving economies of scale.
Profitability4Q-2018 vs 4Q-2017
As shown in Tables 2 and 3 on page 2, return on average assets for the sector increased slightly to 37 bps (up 1 bps or 3%) from the same quarter a year earlier mainly reflecting improved non-interest expenses (down 9 bps to 1.90%), largely offset by decreased net interest and investment income (down 5 bps to 1.91%), higher loan costs (up 2 bps to 6 bps) and higher taxes (up 2 bps to 10 bps).
Within the sector, return on average assets for credit unions increased to 31 bps (up 3 bps or 11%) mainly due to decreased non-interest income (down 9 bps to 1.91%), partially offset by a decrease in net interest and investment income (down 3 bps to 1.87%) and increased loan costs (up 2 bps to 5 bps). Caisses profitability decreased to 75 bps (down 14 bps or 16%) mainly reflecting a decrease in net interest and investment income (down 15 bps to 2.15%) and higher income taxes (up 11 bps to 0.23%), offset by improvement in non-interest expenses (down 14 bps to 1.78%).
5Sector Outlook Fourth Quarter Ended December 31, 2018
Out of 78 credit unions, six credit unions had a negative return on assets. DICO closely monitors credit unions that are unprofitable, identifies core challenges and works with the credit unions to develop strategies to resolve the situation with the intention of returning to profitability.
3Q 2018 Ontario Sector vs Canadian Sector*
*Most recent report by Canadian Credit Union Association; including Ontario sector
Ontario sector profitability of 43 bps was below that of the Canadian sector (53 bps). Although net interest income of 1.97% (vs 2.10%) and other income of 0.50% (vs 0.55%) were lower, non-interest expenses of 1.88% (vs 1.92%) were better and taxes (0.11% versus 0.12%) and loan costs (0.06% versus 0.08%) were lower.
Capital 4Q-2018 vs 4Q-2017
Sector capital increased to $4.4 billion (up $327 million or 8.0%) from the year earlier quarter comprised of:
Retained earnings of $2.6 billion (up $211 million or 8.7%); Investment and patronage shares of $1.7 billion (up $112 million or 7.1%); and Membership shares of $65 million (up $2 million or 4.1%).
Within the sector, credit union capital increased to $3.7 billion (up $263 million or 7.7%) and consisted of:
Retained earnings of $2.0 billion (up $135 million or 7.3%); Investment and patronage shares of $1.6 billion (up $124 million or 8.4%); and Membership shares of $63 million (up $3 million or 4.5%).
Caisses capital increased to $737 million (up $55 million or 9.6%) comprised of:
Retained earnings of $642 million (up $74 million or 13.1%); Investment and patronage shares of $73 million (down $14 million or 15.3%); and Membership shares of $2 million (down $0.1 million or 5.4%).
As a percent of risk weighted assets, sector capital was 13.29%, down 41 bps from the year earlier quarter, as growth in risk weighted assets outpaced growth in capital. Credit union capital was 12.74% (down 37 bps) and caisses capital was 16.90% (down 65 bps). Leverage for the sector was 6.84% (down 27 bps) reflecting credit union leverage of 6.52% (down 27 bps) and caisses leverage of 8.97% (down 28 bps).
Although profitability is increasing, growth in retained earnings has not been keeping pace with the growth in assets. In order to maintain minimum capital requirements and provide for future growth, credit unions have an increasing dependency on the
6Sector Outlook Fourth Quarter Ended December 31, 2018
issuance of investment shares. As a result, investment shares remain a significant portion of their capital composition (38.3% in 4Q18 versus 38.6% in 4Q17).
4Q-2018 vs 3Q-2018
Sector capital increased by $92 million (2.1% from $4.3 billion) from last quarter primarily from an increase in investment shares of $59 million (3.6% from $1.6 billion) and retained earnings of $33 million (1.3% from $2.6 billion) with largely unchanged membership shares.
Sector capital as a percent of risk weighted assets decreased 33 bps (from 13.62%) in the previous quarter. Credit union capital decreased 25 bps (from 12.99%) and caisses’ capital decreased 98 bps (from 17.88%). Leverage for the sector decreased 11 bps (from 6.95%) reflecting decreases at credit unions of 13 bps (from 6.65%) and at caisses of 3 bps (from 9.00%).
Liquidity (including Securitization)
4Q-2018 vs 4Q-2017
As shown in Tables 7 and 8, sector deposits increased by $5.3 billion (up 11.7% to $51.0 billion), securitizations increased by $1.3 billion (up 22.8% to $7.0 billion) and borrowings decreased by $0.7 billion (down 70% to $0.3 billion), a net increase of $5.9 billion (up 10.1% to $58.3 billion) from the year earlier. However, liquid assets increased only $268 million (up 4.9% to $5.7 billion) resulting in a decrease in liquidity to 11.0% (down 50 bps from 11.5% in 4Q17).
In 4Q18, there were 33 credit unions (21 credit unions, 12 caisse populaires) with combined total assets of $56.0 billion (88% of sector assets) participating in securitization programs. On September 1, 2018, the Securitization Guidance Note outlining prudent risk management measures came into effect with securitization reporting to DICO beginning in early 2019. DICO is monitoring the extent to which securitization programs are used by credit unions.
Deposits at credit unions increased by $4.3 billion (up 10.7% to $44.3 billion), securitizations increased by $1.2 billion (up 21.4% to $6.6 billion) and borrowings decreased by $282 million (down 76.1% to $89 million), an increase of $5.1 billion (up 11.2% to $51.0 billion). However, liquid assets increased only $296 million (up 6.0% to $5.2 billion) resulting in a decrease in liquidity to 11.6% (down 40 bps from 12.0%).
Deposits at caisses increased by $1.1 billion (up 18.7% to $6.7 billion), securitizations increased by $143 million (up 51.4% to $422 million) and borrowings decreased $429 million (down 67.5% to $207 million), a net increase of $769 million (up 11.7% to $7.3 billion). Liquid assets decreased by $27 million (down 5.4% to $478 million) resulting in a decrease in liquidity to 6.9% (down 80 bps from 7.7%).
4Q-2018 vs 3Q-2018
7Sector Outlook Fourth Quarter Ended December 31, 2018
Sector deposits increased by $2.4 billion (up 5.0% from $48.6 billion), securitizations increased by $337 million (up 5.1% from $6.6 billion) and borrowings decreased by $0.7 billion (down 68.9% from $1.0 billion), a net increase of $2.1 billion (up 3.7% from $56.2 billion) from last quarter. Liquid assets increased by $26 million (up 0.5% from $5.7 billion), but due to the faster growth in deposits and borrowings, liquidity decreased 30 bps (from 11.3%).
Efficiency Ratio (before dividends/interest rebates)
4Q-2018 vs 4Q-2017
As shown in Table 3, sector efficiency ratio improved to 77.7% (down 150 bps from 79.2%) from the year earlier quarter. Credit unions improved to 80.2% (down 180 bps from 82.0%) and caisses to 63.6% (down 80 bps from 64.4%).
4Q-2018 vs 3Q-2018
Compared to last quarter, sector efficiency worsened by 180 bps (from 75.9%) reflecting increases at credit unions of 190 bps (from 78.3%) and caisses of 150 bps (from 62.1%).
3Q-2018 Ontario Sector vs. Canadian Sector
Although operating expense as a percent of average assets for the Ontario sector (1.88%) was 4 bps better than the Canadian sector (1.92%), the efficiency ratio (75.9%) was 500 bps worse than the Canadian sector (70.9%). The gap is wider than in 3Q-2017 when the spread was 410 bps (Ontario at 79.0% and Canadian Sector at 74.9%).
Credit Quality (delinquency greater than 30 days)
4Q-2018 vs 4Q-2017
As shown in Table 5, total loan delinquency increased to 65 bps (up 1 bp from 64 bps) from the year earlier quarter. Credit unions reflected an increase to 65 bps (up 6 bps from 59 bps) and caisses decreased to 66 bps (down 31 bps from 97 bps).
Residential mortgage loan delinquency increased to 46 bps (up 2 bp from 44 bps) in the year earlier quarter. Credit unions reflected an increase to 46 bps (up 1 bp from 45 bps) and caisses increased to 46 bps (up 5 bps from 41 bps).
Commercial loan delinquency increased to 103 bps (up 15 bps from 88 bps) from the year earlier. Within the sector, commercial loan delinquency increased at credit unions to 107 bps (up 20 bps from 87 bps) and decreases at caisses to 80 bps (down 21 bps from 101 bps).
4Q-2018 vs 3Q-2018
Compared to last quarter, total delinquency for the sector increased by 11 bp (from 54 bps) reflecting increases at credit unions of 13 bps (from 52 bps) and decreases at caisses by 2 bps (from 68 bps).
8Sector Outlook Fourth Quarter Ended December 31, 2018
Residential mortgage loan delinquency for the sector increased by 5 bps (from 41 bps) reflecting increases at credit unions of 4 bps (from 42 bps) and at caisses of 6 bp (from 40 bps).
Commercial loan delinquency for the sector increased by 31 bps (from 72 bps) from the previous quarter reflecting increases at credit unions of 37 bps (from 70 bps) and decreases at caisses of 9 bps (from 89 bps).
Growth4Q-2018 vs 4Q-2017
Compared to the previous year, total sector assets increased to $63.4 billion (up $6.3 billion or 11.0%). This was largely due to growth in residential mortgage loans to $35.0 billion (up $4.5 billion or 14.8%) and commercial loans to $16.3 billion (up $1.4 billion or 9.3%). As shown in Table 4, the annual growth of residential mortgage loans matches the highest annual growth rate of the last ten years. Within the sector, credit unions increased total assets to $55.3 billion (up $5.5 billion or 11.0%) reflecting growth in residential mortgage loans to $30.7 billion (up $4.0 billion or 15.0%) and commercial loans to $14.3 billion (up $1.1 billion or 8.6%). Caisses total assets increased to $8.2 billion (up $790 million or 10.7%) mainly attributed to growth in residential mortgage loans to $4.2 billion (up $499 million or 13.4%) and commercial loans to $2.0 billion (up $256 million or 14.4%).
4Q-2018 vs 3Q-2018
Total assets for the sector increased by $1.4 billion (2.3% from $62.0 billion) from last quarter reflecting growth of $1.0 billion (3.1% from $33.9 billion) in residential mortgage loans and commercial loans of $323 million (2.0% from $16.0 billion). Within the sector, total assets in credit unions increased by $1.2 billion (2.2% from $54.0 billion) reflecting increases of $928 million (3.1% from $29.8 billion) in residential mortgage loans and commercial loans of $273 million (2.0% from $14.0 billion). Caisses total assets increased by $214 million (2.7% from $8.0 billion) reflecting growth of $118 million (2.9% from $4.1 billion) in residential mortgage loans and commercial loans of $50 million (2.5% from $2.0 billion).
3Q-2018 Ontario Sector vs. Canadian Sector
Ontario sector total assets growth rate of 10.3% was 270 bps higher than the Canadian sector (7.6%) attributable to growth in residential mortgages loans of 15.3% (vs 8.3%), commercial loans of 10.8% (vs 9.1%) and agricultural loans of 15.5% (vs 11.7%).
9Sector Outlook Fourth Quarter Ended December 31, 2018
Sector Balance SheetsAs at $millions
Sector Credit Unions Caisses Populaires4Q-
2018 3Q-2018 4Q-2017
4Q-2018
3Q-2018
4Q-2017
4Q-2018
3Q-2018
4Q-2017
ASSETS Cash and Investments 6,714 6,642 6,576 5,842 5,799 5,720 871 843 855
Personal Loans 2,343 2,348 2,307 1,696 1,699 1,653 647 649 654Residential Mortgage Loans 34,972 33,926 30,451 30,748 29,820 26,726 4,224 4,106 3,725Commercial Loans 16,300 15,977 14,912 14,269 13,996 13,136 2,031 1,981 1,775Institutional Loans 102 89 118 39 41 42 63 48 76Unincorporated Association Loans 94 89 82 86 79 72 8 9 10Agricultural Loans 2,061 2,093 1,898 1,886 1,919 1,749 176 174 148
Total Loans 55,873 54,522 49,767 48,724 47,554 43,378 7,149 6,968 6,389Total Loan Allowances 147 144 120 122 112 90 26 32 31
Capital (Fixed) Assets 508 498 495 468 460 457 40 38 38Intangible and Other Assets 498 513 457 352 364 317 147 150 139
Total Assets 63,446 62,031 57,174 55,264 54,064 49,782 8,181 7,967 7,391 LIABILITIES
Demand Deposits 20,810 20,340 19,286 17,810 18,210 17,062 3,000 2,130 2,224Term Deposits 18,522 16,869 15,645 16,575 15,061 13,800 1,947 1,808 1,845Registered Deposits 11,715 11,414 10,787 9,954 9,719 9,204 1,761 1,695 1,583Other Deposits 0 0 0 0 0 0 0 0 0
Total Deposits 51,047 48,624 45,718 44,339 42,991 40,066 6,707 5,633 5,652Borrowings 295 949 1,007 89 609 371 207 341 636Securitizations 6,984 6,647 5,686 6,562 6,280 5,407 422 367 279Other Liabilities 726 1,510 696 617 594 544 108 915 152Total Liabilities 59,051 57,729 53,107 51,607 50,474 46,388 7,444 7,255 6,719 MEMBERS' EQUITY & CAPITAL Membership Shares 65 65 63 63 63 60 2 2 2Retained Earnings 2,627 2,594 2,416 1,984 1,976 1,849 642 618 568Other Tier 1 & 2 Capital 1,683 1,624 1,571 1,609 1,550 1,485 73 74 87AOCI 20 19 17 1 1 1 19 18 16Total Members' Equity & Capital 4,394 4,302 4,067 3,657 3,590 3,395 737 712 673Total Liabilities, Members' Equity & Capital 63,446 62,031 57,174 55,264 54,064 49,782 8,181 7,967 7,391
Totals may not agree due to rounding
10Sector Outlook Fourth Quarter Ended December 31, 2018
Sector Income Statements% of Average Assets (except as noted)
Sector Credit Unions Caisses Populaires CanadianSector¹
4Q-2018 3Q-2018 4Q-2017 4Q-2018 3Q-2018 4Q-2017 4Q-2018 3Q-2018 4Q-2017 3Q-2018Interest and Investment Income Loan Interest 3.29% 3.23% 3.12% 3.32% 3.26% 3.16% 3.06% 2.99% 2.87% 3.17% Investment Income 0.20% 0.24% 0.23% 0.17% 0.19% 0.17% 0.39% 0.56% 0.61% 0.25%Total Interest and Investment Income 3.49% 3.46% 3.35% 3.49% 3.45% 3.33% 3.46% 3.55% 3.47% 3.41% Interest and Dividend Expense Interest Expense on Deposits 1.21% 1.16% 1.06% 1.24% 1.19% 1.09% 1.02% 0.98% 0.85% 1.15%
Rebates/Dividends on Share Capital 0.07% 0.06% 0.06% 0.07% 0.05% 0.06% 0.04% 0.06% 0.05% 0.00%Dividends on Investment/Other Capital 0.03% 0.02% 0.04% 0.04% 0.03% 0.04% 0.00% 0.00% 0.04% 0.06%Other Interest Expense 0.26% 0.26% 0.23% 0.27% 0.26% 0.23% 0.24% 0.25% 0.23% 0.10%
Total 0.37% 0.34% 0.33% 0.38% 0.34% 0.33% 0.28% 0.31% 0.32% 0.16%Total Interest and Dividend Expense 1.58% 1.50% 1.39% 1.62% 1.53% 1.42% 1.31% 1.28% 1.17% 1.31% Net Interest and Investment Income 1.91% 1.97% 1.96% 1.87% 1.92% 1.90% 2.15% 2.26% 2.30% 2.10% Loan Costs 0.06% 0.06% 0.04% 0.05% 0.05% 0.03% 0.08% 0.10% 0.08% 0.08%Net Interest and Investment Income after Loan Costs 1.85% 1.91% 1.92% 1.81% 1.87% 1.88% 2.07% 2.16% 2.22% 2.02%
Other (non-interest) Income 0.50% 0.50% 0.51% 0.48% 0.47% 0.48% 0.69% 0.67% 0.72% 0.55%Net Interest. Investment and Other Income 2.35% 2.40% 2.43% 2.29% 2.34% 2.36% 2.76% 2.84% 2.94% 2.57%
Non-interest Expenses
Salaries & Benefits 1.06% 1.06% 1.11% 1.09% 1.09% 1.14% 0.84% 0.86% 0.88% 1.08%Occupancy 0.18% 0.18% 0.19% 0.18% 0.18% 0.19% 0.15% 0.18% 0.15% 0.18%Computer. Office & Other Equipment 0.19% 0.19% 0.19% 0.18% 0.18% 0.19% 0.23% 0.19% 0.22%
0.67%Advertising & Communications 0.12% 0.11% 0.12% 0.11% 0.11% 0.12% 0.14% 0.14% 0.12%Member Security 0.08% 0.08% 0.08% 0.09% 0.08% 0.08% 0.07% 0.07% 0.07%Administration 0.16% 0.15% 0.17% 0.15% 0.15% 0.16% 0.19% 0.19% 0.29%Other 0.11% 0.11% 0.13% 0.10% 0.10% 0.12% 0.17% 0.17% 0.19%
Total Non-interest Expenses 1.90% 1.88% 1.99% 1.91% 1.89% 2.00% 1.78% 1.80% 1.92% 1.92%
Net Income/(Loss) Before Taxes 0.45% 0.52% 0.44% 0.38% 0.45% 0.36% 0.98% 1.04% 1.02% 0.65% Taxes 0.10% 0.11% 0.08% 0.08% 0.09% 0.08% 0.23% 0.23% 0.12% 0.12%Net Income/(Loss) 0.37% 0.43% 0.36% 0.31% 0.37% 0.28% 0.75% 0.81% 0.89% 0.53% Average Assets (millions) $60,435 $59,694 $54,596 $52,586 $51,999 $47,491 $7,848 $7,695 $7,104 $221,499
¹Includes Ontario sector, as reported by Canadian Credit Union Association, Third Quarter 2018;Totals may not agree due to rounding
11Sector Outlook Fourth Quarter Ended December 31, 2018
Sector Balance SheetsSector Credit Unions Caisses Populaires
% Increase/(Decrease)
from
% Increase/(Decrease)
from
% Increase/(Decrease)
from4Q-2018 3Q-2018 4Q-2017 4Q-2018 3Q-2018 4Q-2017 4Q-2018 3Q-2018 4Q-2017$millions $millions $millions
ASSETS Cash and Investments 6,714 1.1% 2.1% 5,842 0.8% 2.1% 871 3.3% 1.8%
Personal Loans 2,343 -0.2% 1.6% 1,696 -0.2% 2.6% 647 -0.3% -1.0%Residential Mortgage Loans 34,972 3.1% 14.8% 30,748 3.1% 15.0% 4,224 2.9% 13.4%Commercial Loans 16,300 2.0% 9.3% 14,269 2.0% 8.6% 2,031 2.5% 14.4%Institutional Loans 102 14.6% -13.2% 39 -5.5% -6.2% 63 32.0% -17.0%Unincorporated Association Loans 94 5.9% 14.1% 86 8.0% 19.1% 8 -12.3% -21.3%Agricultural Loans 2,061 -1.5% 8.6% 1,886 -1.7% 7.8% 176 1.0% 18.5%
Total Loans 55,873 2.5% 12.3% 48,724 2.5% 12.3% 7,149 2.6% 11.9% Total Loan Allowances 147 2.4% 22.3% 122 8.4% 35.2% 26 -18.8% -15.7% Capital (Fixed) Assets 508 2.1% 2.7% 468 1.8% 2.6% 40 5.0% 4.6% Intangible and Other Assets 498 -2.9% 9.1% 352 -3.3% 10.8% 147 -2.2% 5.3%Total Assets 63,446 2.3% 11.0% 55,264 2.2% 11.0% 8,181 2.7% 10.7% LIABILITIES
Demand Deposits 20,810 2.3% 7.9% 17,810 -2.2% 4.4% 3,000 40.8% 34.9%Term Deposits 18,522 9.8% 18.4% 16,575 10.1% 20.1% 1,947 7.7% 5.5%Registered Deposits 11,715 2.6% 8.6% 9,954 2.4% 8.2% 1,761 3.9% 11.2%Other Deposits 0 0.0% 0.0% 0 0.0% 0.0% 0 0.0% 0.0%
Total Deposits 51,047 5.0% 11.7% 44,339 3.1% 10.7% 6,707 19.1% 18.7% Borrowings 295 -68.9% -70.7% 89 -85.4% -76.1% 207 -39.3% -67.5% Securitizations 6,984 5.1% 22.8% 6,562 4.5% 21.4% 422 15.1% 51.4% Other Liabilities 726 -51.9% 4.2% 617 3.8% 13.5% 108 -88.2% -28.9% Total Liabilities 59,051 2.3% 11.2% 51,607 2.2% 11.3% 7,444 2.6% 10.8% MEMBERS' EQUITY & CAPITAL Membership Shares 65 0.5% 4.1% 63 0.3% 4.5% 2 6.1% -5.4% Retained Earnings 2,627 1.3% 8.7% 1,984 0.4% 7.3% 642 4.0% 13.1% Other Tier 1 & 2 Capital 1,683 3.6% 7.1% 1,609 3.8% 8.4% 73 -0.5% -15.3%Accumulated Other Comprehensive Income 20 2.7% 17.8% 1 -39.6% -30.0% 19 5.4% 20.9%
Total Members' Equity & Capital 4,394 2.1% 8.0% 3,657 1.9% 7.7% 737 3.5% 9.6%Total Liabilities, Members' Equity & Capital 63,446 2.3% 11.0% 55,264 2.2% 11.0% 8,181 2.7% 10.7%
12Sector Outlook Fourth Quarter Ended December 31, 2018
* Totals may not agree due to rounding
13Sector Outlook Fourth Quarter Ended December 31, 2018
Sector Balance SheetsAs a percentage of Total Assets
Canadian Sector¹ Credit Unions Caisses Populaires CanadianSector¹
4Q-2018 3Q-2018 4Q-2017 4Q-2018 3Q-
2018 4Q-2017 4Q-2018 3Q-2018 4Q-2017 3Q-2018
ASSETS Cash and Investments 10.6% 10.7% 11.5% 10.6% 10.7% 11.5% 10.6% 10.6% 11.6% 13.7%
Personal Loans 3.7% 3.8% 4.0% 3.1% 3.1% 3.3% 7.9% 8.2% 8.8% 5.0%Residential Mortgage Loans 55.1% 54.7% 53.3% 55.6% 55.2% 53.7% 51.6% 51.5% 50.4% 50.3%Commercial Loans 25.7% 25.8% 26.1% 25.8% 25.9% 26.4% 24.8% 24.9% 24.0% 24.8%Institutional Loans 0.2% 0.1% 0.2% 0.1% 0.1% 0.1% 0.8% 0.6% 1.0% 1.1%Unincorporated Association Loans 0.1% 0.1% 0.1% 0.2% 0.1% 0.1% 0.1% 0.1% 0.1% 0.3%
Agricultural Loans 3.2% 3.4% 3.3% 3.4% 3.6% 3.5% 2.1% 2.2% 2.0% 3.8% Total Loans 88.1% 87.9% 87.0% 88.2% 88.0% 87.1% 87.4% 87.5% 86.4% 84.9% Total Loan Allowances 0.2% 0.2% 0.2% 0.2% 0.2% 0.2% 0.3% 0.4% 0.4% -0.3% Capital (Fixed) Assets 0.8% 0.8% 0.9% 0.8% 0.9% 0.9% 0.5% 0.5% 0.5% 0.8% Intangible and Other Assets 0.8% 0.8% 0.8% 0.6% 0.7% 0.6% 1.8% 1.9% 1.9% 0.9%Total Assets 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%LIABILITIES
Demand Deposits 32.8% 32.8% 33.7% 32.2% 33.7% 34.3% 36.7% 26.7% 30.1% 37.3%Term Deposits 29.2% 27.2% 27.4% 30.0% 27.9% 27.7% 23.8% 22.7% 25.0% 32.0%Registered Deposits 18.5% 18.4% 18.9% 18.0% 18.0% 18.5% 21.5% 21.3% 21.4% 15.0%Other Deposits 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.2%
Total Deposits 80.5% 78.4% 80.0% 80.2% 79.5% 80.5% 82.0% 70.7% 76.5% 84.5% Borrowings 0.5% 1.5% 1.8% 0.2% 1.1% 0.7% 2.5% 4.3% 8.6% 5.7% Securitizations 11.0% 10.7% 9.9% 11.9% 11.6% 10.9% 5.2% 4.6% 3.8% 0.0% Other Liabilities 1.1% 2.4% 1.2% 1.1% 1.1% 1.1% 1.3% 11.5% 2.1% 2.8% Total Liabilities 93.1% 93.1% 92.9% 93.4% 93.4% 93.2% 91.0% 91.1% 90.9% 93.0%MEMBERS' EQUITY & CAPITAL Membership Shares 0.1% 0.1% 0.1% 0.1% 0.1% 0.1% 0.0% 0.0% 0.0% 0.6% Retained Earnings 4.1% 4.2% 4.2% 3.6% 3.7% 3.7% 7.9% 7.8% 7.7% 5.5% Other Tier 1 & 2 Capital 2.7% 2.6% 2.7% 2.9% 2.9% 3.0% 0.9% 0.9% 1.2% 1.0% AOCI 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.2% 0.2% 0.2% 0.0% Total Members' Equity & Capital 6.9% 6.9% 7.1% 6.6% 6.6% 6.8% 9.0% 8.9% 9.1% 7.1%Total Liabilities, Members' Equity & Capital 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
¹Includes Ontario sector, as reported by Canadian Credit Union Association, Third Quarter 2018
14Sector Outlook Fourth Quarter Ended December 31, 2018
* Totals may not agree due to rounding
15Sector Outlook Fourth Quarter Ended December 31, 2018