Improvement in trust companies' results and decline in savings companies' profitability in 2010

Deposit institutions

Montréal - The 2010 annual report on trust companies and savings companies published by the Autorité des marchés financiers (AMF) and tabled today in the Québec National Assembly reveals steady growth in trust companies' earnings compared with 2009 but lower profits for savings companies during the same period.

The report also indicates that the regulatory debt and liquidity ratios were generally observed in 2010, but that liquidity ratios have been falling since 2008.

Returns on shareholders' equity and on total assets have declined sharply since 2006. The economic recovery in 2010 has led to higher rates of return, without however reaching the levels posted in the years prior to the financial crisis.

Trust companies - 125.5% increase in profitability

Trust companies posted net profits of $660.6 million in 2010, compared with $292.9 million in 2009. This increase is mainly due to a 204% increase in profit margins.

As at December 31, 2010, trust companies held $119.8 billion in assets, compared with $121.6 billion in the previous year. Some 37% of these assets were held by three companies.

In 2010, Quebeckers deposited $11.9 billion with trust companies, or 11.1% of total deposits, and took out $5.4 billion in mortgage loans with these companies, or 21.9% of total mortgage loans.

The report also notes a 10.5% increase in the value of assets under administration by trust companies, which rose from $2,735 billion in 2009 to $3,023 billion in 2010. This increase is mainly a result of the financial market recovery. A slight decline, from 19.1% last year to 16.4% in 2010, in the proportion of assets under administration for clients residing in Québec was also observed. Fiduciary activities were concentrated within two companies, which accounted for 76.9% of assets under administration in 2010.

As at December 31, 2010, a total of 39 trust companies carried on business in Québec, three with a Québec charter and 36 with a federal charter. Thirty of these companies were registered with the AMF under the Deposit Insurance Act and were therefore authorized to receive deposits from the public.

Savings companies - 16.9% drop in profitability

In 2010, savings companies generated net profits of $569 million, down from $685.2 million posted in 2009. This decline is due to a 17.1% rise in operating expenses, while total income remained stable.

Assets of savings companies stood at $127.4 billion in 2010, compared with $125 billion in 2009, and were mostly shared by two companies holding 86.5% of assets.

In 2010, Quebeckers deposited $10.1 billion with savings companies, which represents 8.7% of total deposits received, and were granted $9.7 billion in mortgage loans by these companies, or 12.4% of all mortgage loans granted.

As at December 31, 2010, a total of seven savings companies with a federal charter were licensed to conduct financial intermediation activities in Québec. They were registered with the AMF under the Deposit Insurance Act.

New guidelines

On January 1, 2011, the AMF published a new guideline on capital adequacy requirements for trust companies and savings companies. This guideline replaces the legal and regulatory requirements that previously governed debt and liquidity ratios.

In April 2010, the AMF also published three new guidelines on business continuity management, investment management and derivatives risk management.

International Financial Reporting Standards (IFRS)

We remind you that savings companies and trust companies must apply IFRS for fiscal years beginning on or after January 1, 2011.

For more information about trust companies and savings companies in Québec, please consult the 2010 annual report on savings companies and trust companies (pdf - 1 MB)This link will open in a new windowUpdated on June 6, 2011 (in French only).

The Autorité des marchés financiers ("AMF") is the regulatory and oversight body for Québec's financial industry.

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