Canadian Personal and Small Business Banking – 2018 Financial Review

  • Revenue
    ($ billions)
     
     2016: 7,7, 2017: 8.4, 2018: 8.6
  • Net income
    ($ billions)
     
    2016: 2.2, 2017: 2.4, 2018: 2.5
  • Efficiency ratio
    (%)
     
    2016: 53.1, 2017: 51.9, 2018: 51.1
  • Average loans and acceptances(1A)
    ($ billions)
    2016: 219.8, 2017: 243.5, 2018: 257.0
  • Average deposits
    ($ billions)
     
    2016: 152.5, 2017: 162.9, 2018: 166.7
(1A)
Total average loans and acceptances includes FirstLine mortgages.

Results(1B)

Table of Results for Canadian Personal and Small Business Banking for the last three years from 2018 to 2016.
$ millions, for the year ended October 31 2018 2017 2016
Revenue
Personal and small business banking $ 8,556 $ 8,033 $ 7,675
Other 49 339 73
Total revenue
Provision for (reversal of) credit losses 8,605 8,372 7,748
Impaired(2B)   760   760   728
Performing(2B) (19) 6 8
Provision for credit losses 741 766 736
Non-interest expenses 4,395 4,348 4,114
Income before income taxes 3,469 3,258 2,898
Income taxes 922 838 738
Net income $ 2,547 $ 2,420 $ 2,160
Net income attributable to:
Equity shareholders (a) $ 2,547 $ 2,420 $ 2,160
Efficiency ratio 51.1 % 51.9 % 53.1 %
Return on equity(3B) 67.2 % 64.3 % 58.7 %
Charge for economic capital(3B) (b) $ (372) $ (367) $ (359)
Economic profit(3B) (a+b) $ 2,175 $ 2,053 $ 1,801
Average assets ($ billions) $ 259.1 $ 246.3 $ 222.6
Average loans and acceptances ($ billions) $ 257.0 $ 243.5 $ 219.8
Average deposits ($ billions) $ 166.7 $ 162.9 $ 152.5
Full-time equivalent employees 14,086 14,709 15,501
(1B)
For additional segmented information, see Note 30 to the consolidated financial statements.
(2B)
As a result of our adoption of IFRS 9 effective November 1, 2017, we now recognize provision for credit losses on both impaired and performing loans in the SBU. In prior years, provision for credit losses on performing loans was recognized in Corporate and Other, with the exception of provision for credit losses on: (i) performing residential mortgages greater than 90 days delinquent; and (ii) performing personal loans and scored small business loans greater than 30 days delinquent, which was recognized in Canadian Personal and Small Business Banking.
(3B)
For additional information, see the “Non-GAAP measures” section.

Financial overview

Net income was up $127 million or 5% from 2017, which included a gain on the sale and lease back of certain retail properties, shown as an item of note. Excluding the gain noted above, net income for the year was up primarily due to higher revenue, partially offset by higher non-interest expenses.

Revenue

Revenue was up $233 million or 3% from 2017.

Personal and small business banking revenue was up $523 million or 7%, primarily due to volume growth, wider spreads and higher fees.

Other was down $290 million or 86%, due to the gain noted above.

Provision for credit losses

Provision for credit losses was down $25 million or 3% from 2017, primarily due to a reduction in allowance for performing loans in the current year, reflective of an economic outlook that has improved since our adoption of IFRS 9 on November 1, 2017.

Non-interest expenses

Non-interest expenses were up $47 million or 1% from 2017, primarily due to higher spending on strategic initiatives that are supporting our transformation into a modern, convenient and relationship-focused bank, partially offset by reductions arising from our continued focus on expense management.

Income taxes

Income taxes were up $84 million or 10% from 2017, primarily due to a lower effective tax rate on the gain in the prior year noted above and higher income in the current year.

Average assets

Average assets were up $12.8 billion or 5% from 2017 due to growth across all products.