🍁 Net Interest Margin (NIM) of Big 6 Canadian Banks (Q3 2022 - Q3 2024)

• 🔹 NIM is around 1.5% for Big 5, including trading capital.
• 🔹 Excluding low-interest-earning trading assets, NIM rises above 2%.
• 🔹 Despite rate hikes and cuts by the Bank of Canada (and the Fed), NIM has remained stable.
• 🔹 Write-off rates remain low at 0.09% to 0.29% (last year), reflecting cautious risk strategies.

NIM & Write-offs Percentages for 2024 Q3:

• TD: NIM (1.71%) & Write-offs (0.18%)
• RBC: NIM (1.59%) & Write-offs (0.12%)
• Scotiabank: NIM (1.48%) & Write-offs (0.31%)
• BMO: NIM (1.52%) & Write-offs (0.20%)
• CIBC: NIM (1.50%) & Write-offs (0.18%)
• National Bank: NIM (0.72%) & Write-offs (0.06%)

NIM is a major factor in bank profitability, but other key elements include:

• Operating costs: Efficiency is crucial—banks with lower non-interest expenses (e.g., salaries, operations) can increase profits even with a low NIM.
• Non-interest income: Banks rely on other incomes (e.g., monthly fees, trading income, wealth management) to boost earnings.
• Default risks: Higher risks can bring higher rewards, but defaults reduce profits. Each quarter, banks account for future credit losses through Provision for Credit Losses (PCL), which is treated as an expense.