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Email this5:41 pm
December 12, 2009
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Though we only have access to Tangerine Bank's financial statements via the financial data returns from OSFI, because it is its own subsidiary, rather than simply a branch like Motive Financial (Canadian Western Bank) or Simplii Financial (CIBC), the parent is at least obligated to provide separate financial data.
It's been awhile since we've looked at Tangerine's financials:
Balance sheet (as at month end September 30th, 2022):
Assets:
Residential Mortgages. $9.4 billion
- Of which: Insured. $950 million
- Uninsured. $8.5 billion
Non-residential mortgages. $4.1 billion
Land, buildings, and equipment, net of accumulated depreciation. $37 million
Total assets: $48 billion
The lion's share of their reported assets is $36 billion held as deposits with central banks, governments, and other financial institutions. I'm uncertain what this represents. It may represent customer deposits that it has pledged on behalf of its parent, Scotiabank, to support its required regulatory deposits, but am not completely certain.
Liabilities:
Deposits:
- Non-registered. Individuals: $27 billion (including about $1.2 billion in CAD equivalent foreign currency deposits)
- Other, including non-individuals/corporations: $1.3 billion (including about $50 million in CAD equivalent foreign currency deposits)
- Tax-sheltered. $6.3 billion
Shareholder's equity
Common shares. $400 million
Retained earnings. $2.0 billion
Total: $2.4 billion
That number is interesting because it has historically been between $3-3.5 billion, meaning the business is doing so well, Scotiabank has been able to take out additional capital of the business rather than hold it on Tangerine's balance sheet.
Income statement (as at quarter ended September 30, 2022):
Total interest income: $850 million
Total interest expense: $280 million
Net interest income: $560 million
Non-interest income (inclusive of service charges and credit card fees): $130 million
Total net interest and non-interest income $680 million
Non-interest expenses (including salaries of $100 million): $331 million
Net income for the quarter before income tax provisions ($90 million): $345 million
Net income for the quarter: $251 million
Some of that Scotia will pay itself as a dividend, and some of it it will compound to Tangerine's retained earnings.
But, assuming that continues for the next four months, that provides Scotia with over $1 billion in potential dividends to pay itself (if it paid out all of its net income, which it wouldn't/couldn't). A few years ago, it was generating $500 million in net profit, so you can see the business is still doing very, very well and is very efficient.
Cheers,
Doug
7:05 pm
September 7, 2018
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Thanks very much for this most useful analysis Doug.
I knew that Tangerine was doing well, but I did not realize they were doing so really, really well. Nice if Scotiabank can receive a billion dollar dividend from Tangerine. Those of us who own Scotiabank shares certainly like this!
7:32 am
December 12, 2021
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Thanks Doug for the info
That for sure a great news for those of us who go way way way over cdic with tangerine
7:58 am
May 24, 2016
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Thanks Doug.
8:21 am
March 30, 2017
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made a $1B and basically online only and practically no physical location due to covid.
No wonder they are very selective who they give their promo rate to, cuz they can afford to...
9:44 am
March 15, 2019
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savemoresaveoften said
made a $1B and basically online only and practically no physical location due to covid.
Can they still make $1B if they were totally a standalone operation and not leverage off the BNS infrastructure?
10:11 am
September 7, 2018
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COIN said
savemoresaveoften said
made a $1B and basically online only and practically no physical location due to covid.Can they still make $1B if they were totally a standalone operation and not leverage off the BNS infrastructure?
If you remember, Oaken Financial had (and still has) leverage off the Home Group but yet it had considerable financial challenges several years ago - needed an infusion of financing by Buffett who I believe took some ownership. While Tangerine probably has some benefit with leverage off BNS, the analysis presented by Doug points to an efficient well-run FI with impressive results. Too bad we can't view Oaken's financial statements and do a comparison to Tangerine. That would be interesting.
11:50 am
December 12, 2009
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canadian.100 said
If you remember, Oaken Financial had (and still has) leverage off the Home Group but yet it had considerable financial challenges several years ago - needed an infusion of financing by Buffett who I believe took some ownership. While Tangerine probably has some benefit with leverage off BNS, the analysis presented by Doug points to an efficient well-run FI with impressive results. Too bad we can't view Oaken's financial statements and do a comparison to Tangerine. That would be interesting.
We can do a bit of a comparison with Oaken Financial, in the context of Home Capital Group's results. Their business model is quite different than Tangerine's, and it's true that Tangerine is mainly built around banking and deposits (i.e, their mortgage and loan book is less than a third their deposit book), but a comparison to Home Capital Group is more of a pure-play comparison than, say, to CIBC or Canadian Western Bank (in trying to compare to Simplii Financial and Motive Financial). Oaken doesn't directly offer mortgages and loan products; it's strictly just a source of (usually) lower cost funding than the broker channel (the current rate situation with the broker ISAs has turned that traditional thesis on its head somewhat). They also have far fewer staff than Tangerine, dedicated strictly to Oaken, as things like their banking platform, systems, and mobile apps, they outsource to external banking software providers (similar to EQ Bank). So you can't directly compare things like staffing just related to Oaken, but if you look at Home Capital Group and EQB Inc. as entire entities and compare them to Tangerine, they're comparable.
In terms of efficiency ratios go, HCG, EQB, and CWB publicly report those and they are always consistently among the most efficient banks (sometimes even in the high 30s, but usually in the low to mid 40s). The Big Five banks will range from the upper 40s to mid 50s, and HSBC Canada will range from the mid 50s to upper 50s.
Credit unions' efficiency ratios are not directly comparable to banks, and it's not a GAAP or international accounting standard metric so may not always be directly comparable to each other, but they are generally in the low 70s to low 80s. (Remember, lower is better when it comes to efficiency.) You might be surprised to learn that Cambrian Credit Union (parent of Achieva Financial) has one of the lowest overall efficiency ratios I've seen for a credit union—upper 40s to low 50s! So that is a well-oiled machine, and they've not been on merger mania like Access Credit Union, either. 
For its part, despite its recent layoffs, branch closures, and efficiency push, Coast Capital Savings remains in the low 80s—at the high end of their 10-year range. So whatever they're doing, they just seem to be either (a) bad allocators of capital, (b) bad at management execution, or (c) a combination of A + B.
Cheers,
Doug
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