- πΉ NIM is around 1.5% for Big 5, including trading capital.
- πΉ Excluding low-interest-earning trading assets, NIM rises above 2%.
- πΉ Despite rate hikes and cuts by the Bank of Canada (and the Fed), NIM has remained stable.
- πΉ 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 crucialβbanks 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.