🍁 Net Interest Margin (NIM) of Big 5 Canadian Banks

In the past 2 years, NIM has ranged from 1.39% to 1.75%, with a weighted average always above 1.5%.

🔹 Key Insights

• 1️⃣ NIM across all interest-bearing assets (including trading capital) ranged from 1.39% (Scotiabank, Q2 2023) to 1.75% (TD, Q4 2023).
• 2️⃣ Pre-pandemic, effective NIM (weighted avg.) was ~1.8% (2015-2019) but declined to ~1.55% post-COVID, reflecting intensified competition for deposit and loan rates.
• 3️⃣ Largest U.S. banks such as J.P. Morgan, Bank of America, and Citigroup had higher NIM in the past quarter due to riskier loan portfolios (e.g., more business loans), which also means higher default rates.

🔹 NIM & Write-offs Percentages for 2025 Q1

• • TD: NIM (1.67%) & Write-offs (0.20%)
• • BMO: NIM (1.64%) & Write-offs (0.15%)
• • RBC: NIM (1.61%) & Write-offs (0.10%)
• • Scotiabank: NIM (1.54%) & Write-offs (0.28%)
• • CIBC: NIM (1.51%) & Write-offs (0.14%)

🔹 Factors Affecting Bank Profitability

• • 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 income sources (e.g., monthly fees, trading income, wealth management) to boost earnings.
• • Credit risks: Higher risks can bring higher rewards (higher NIM), but then defaults and Provision for Credit Losses (PCL) reduce profits.