Savings companies recover but trust companies decline in 2009

Organization Deposit institutions

Montréal – In 2009, savings companies’ earnings increased compared with 2008, whereas trust companies posted a drop in profitability for the second consecutive year. These conclusions were drawn from the 2009 report on trust companies and savings companies released by the Autorité des marchés financiers (AMF) and tabled today in the Québec National Assembly.

Trust companies – 51% decrease in profitability

Trust companies operating in Québec posted $292.9 million in accumulated profits in 2009, down 51% compared with 2008. This significant decrease is primarily attributable to a lower profit margin, which fell by $756.5 million (73.2%) between 2008 and 2009. It should be noted that trust companies reduced their operating expenses by $352.3 million in 2009 to offset the impact on profit margins. Consequently, the average return on shareholders’ equity dropped from 9.59% in 2008 to 3.98% in 2009.

The value of assets under administration by trust companies was up 13% to $2,735 billion in 2009. This increase is mainly due to the recovery of financial markets in 2009. Assets on the balance sheets of trust companies also rose by 13.4% in 2009, increasing from $107.2 billion in 2008 to $121.6 billion in 2009.

During the past year, Quebeckers accounted for 11.2% of deposits received by trust companies and 27% of their mortgage loans.

As at December 31, 2009, a total of 37 trust companies were licensed to carry on business in Québec—three with a Québec charter and 34 with a federal charter. Thirty of these companies, two with a Québec charter and 28 with a federal charter, were registered with the AMF under the Deposit Insurance Act and therefore authorized to receive deposits from the public.

Savings companies – 53.4% increase in profitability

Savings companies operating in Québec posted sharp increases in profits in 2009 to $685.2 million, up 53.4% over 2008. This increase in profitability is due to a decrease in operating expenses of $1.057 billion in the past year. This decrease in operating expenses helped to absorb the $888.7 million reduction in income during the period.

The average return on shareholders’ equity was 7.66% for all savings companies in 2009, compared with 4.89% in the previous year. Cumulated total assets for all savings companies remained relatively stable at $125.5 billion.

Quebeckers accounted for 9.2% of deposits received by savings companies in 2009 and 13.2% of their mortgage loans.

As at December 31, 2009, a total of seven savings companies with a federal charter were conducting financial intermediation activities in Québec. They were registered with the AMF under the Deposit Insurance Act.

For more information about the trust companies and savings companies industry in Québec, please consult the 2009 annual report (in French only) on trust companies and savings companies on the AMF website, under the heading Publications/Documents regarding the AMF/AMF annual reports.

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

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