Bank Revenues

and Profits
Fast facts

The bottom line

The majority of
Canadians are
shareholders in Canadas
banks

When banks are profitable, they are stable. When banks succeed,
the economy and communities prosper.

87 per cent of Canadians

have favourable views of
Canadian banks

A profitable banking industry works for Canada and Canadians. Banks provide jobs directly and
indirectly, create tax revenues, distributes dividend payments and donate to charities in Canada and
worldwide. Profits also expand the capital base of banks, which in turn maintains the stability of the
system, ensuring the safety and security of Canadians deposits.

75 per cent of Canadians

give banks a good
performance rating when it
comes to being stable and
secure

What is the difference

between revenues and
profits?

Revenues
Provisions for Credit
Losses (PCL)
Expenses
Taxes

Revenues are generated from the selling of a business

= Profits
products and services before expenses and taxes. Profit,
also known as net income, is left after setting aside funds for
credit losses and accounting for expenses and taxes. The six largest banks net income in 2014 was
$33.3 billion.

Where do bank profits come from?

Banks are involved in several business lines,
such as personal and commercial banking,
capital markets, wealth management and
insurance, generating revenue from a variety
of businesses.
This variety helps yield positive and stable
financial results, which makes for a safe and
secure banking sector that contributes
significantly to Canadas economy.
Banks categorize their revenue into two broad
areas based on how it is generated net
interest income and non-interest income.
Net interest income is generated from what is
known as the spread. The spread is simply
the difference between the interest a bank
earns on loans extended to customers and
Last updated: October 2015

the interest paid to depositors and other

creditors for the use of their money. Fifty-six
per cent of bank revenue earned is net
interest income.
Non-interest income accounts for 44 per cent
of bank revenues. Banks earn this by
providing a variety of value-added services,
including trading of securities, assisting
companies to issue new equity financing,
commissions on securities and wealth
management. Personal service fees for bank
accounts make up about five per cent of total
revenues. The fee for a particular service is
based on the cost of providing it, staff time,
technology and safety measures for any risks
involved and the value-added benefit the
customer receives.

Added together, net interest income and non-interest income form total revenue. From total revenue,
a number of items are subtracted, including expenses for its staff, locations, equipment and
technology. Taxes must also be paid out of total revenues.
Net income (after expenses and taxes) is used, among other things, to:
Expand the capital base of the bank;

Make investments to improve the bank;

Pay dividends to shareholders; and,

Make acquisitions.

How do banks
make money?*
service charges
5%

Distribution of
net income*

How revenues are utilized

other
income
39%

provision for
credit losses

other expenses

reinvested

20%

5%

premises &
equipment

in business

taxes

40%

25%

10%
salaries &
net interest income

benefits

income before

32%

taxes 33%

shareholders

56%

34%

* Gross revenues before taxes (2014)

* Net income before all taxes (2014)

Who benefits from profitable banks?

Canadians do. The banking industry is a success story and its profitability is very important both to
our economy and to individual Canadians.

Banks and their subsidiaries contribute significantly to job creation and to the Canadian labour
market, employing 280,000 employees in Canada.

Canadas six largest banks paid $8.5 billion in taxes in Canada in 2014 to all levels of
government.

Most Canadians are shareholders in Canadian banks either directly through share ownership or
indirectly through pension and mutual funds. Pension funds and RRSPs are some of the main
beneficiaries of the billions of dollars that the banks pay in dividends each year.

Suppliers to the banks, including businesses of all sizes, all over Canada and the world. Banks
made purchases from outside suppliers totaling about $17.7 billion in 2014.

Banks and their employees are also among Canada's top corporate donors and have a long
tradition of community participation. Canadas charities and non-profit community groups receive
multi-million dollar support from banks and every year thousands of bank employees at all levels
donate their time and talent to charitable initiatives. These contributions help support a broad
range of programs, particularly in the areas of education, the arts, youth, the environment, disaster
relief and health care.

Canadian Bankers Association

Canadian Bankers Association

www.cba.ca
cba.ca

Canadians value a strong banking sector

Canadians value a strong and profitable banking sector and are justifiably proud of their banks for
their continued strength and stability. Recent polling 2 found that:

87 per cent of Canadians have favourable views of Canadian banks a number that has increased
by a remarkable 20 percentage points in recent years. Seventy-five per cent of Canadians give
banks a good performance rating when it comes to being stable and secure.

When rating the performance of Canadian banks, 74 per cent of Canadians give banks a good to
excellent rating on protecting the privacy of their personal information and transactions and 70 per
cent agree that banks are good at introducing new technologies that improve the convenience of
banking.

Sixty-seven per cent of Canadians say that having profitable banks means more jobs, better
pension plan returns and a healthier economy.
The bottom line: when banks are profitable, they are stable. Canadians value knowing their banks
are trustworthy and reliable. When banks succeed, the economy and communities prosper.

CBA Tax Statistics

All data from public opinion research conducted by Abacus Data on behalf of the Canadian Bankers Association, December
2014, except where stated.

The Canadian Bankers

Association works on behalf of
domestic banks, foreign bank
subsidiaries and foreign bank
branches operating in Canada
and their 280,000 employees.
The CBA advocates for
effective public policies that
contribute to a sound,
successful banking system that
benefits Canadians and
Canada's economy. The
Association also promotes
financial literacy to help
Canadians make informed
financial decisions.

Canadian Bankers Association

Canadian Bankers Association

www.cba.ca
cba.ca