Log In
Register
Home
Topic RSS
Facebook
Twitter
Email this4:36 pm
December 12, 2009
Offline
As I was trolling through Big 5 banks' 2023 annual reports on a lazy Saturday (yes, I know, what does that say?), one highlight that stood out in Scotiabank's annual report was their claim that Tangerine was Canada's sixth largest bank now in terms of personal banking deposit market share, but that is indeed correct, with National Bank of Canada having just over $39 billion in personal banking deposits to Tangerine's $47 billion.
For Tangerine's totals, I used the consolidated balance sheet data from October 31, 2023, on the OSFI financial data returns site. For National Bank of Canada's data, I used the infographic on numbered page 32 of their 2023 annual report.
Cheers,
Doug
5:29 pm
September 7, 2018
Offline
I just looked at the net income (profit) of each of these 2 banks (source the OSFI site) to the end of the 3rd quarter.
The net income for National Bank was $2,567,000,000 while the net income for Tangerine was "only" $598,715,000. Obviously must be related to the type of business each is concentrating on. National Bank would appear to be way ahead of Tangerine related to bottom line net income.
5:47 pm
August 30, 2023
Offline
I was just thinking whether going above the 100K limit CDIC in Tangerine would be a problem?
But with your info above (@Doug) probably it is SAFE.
6:13 pm
April 27, 2017
Offline
canadian.100 said
I just looked at the net income (profit) of each of these 2 banks (source the OSFI site) to the end of the 3rd quarter.
The net income for National Bank was $2,567,000,000 while the net income for Tangerine was "only" $598,715,000. Obviously must be related to the type of business each is concentrating on. National Bank would appear to be way ahead of Tangerine related to bottom line net income.
Also, having more personal deposits does not say much about the overall size/amount of business. Return on assets would be a better reflection of performance.
It’s unfair comparison anyway; Tangerine is a subsidiary and is used by the parent for a specific purpose.
7:36 pm
December 12, 2009
Offline
zgic said
I was just thinking whether going above the 100K limit CDIC in Tangerine would be a problem?
But with your info above (@Doug) probably it is SAFE.
Absolutely, zgic. Tangerine has relatively little mortgages on its books. It is has surplus liquidity in the form of customer deposits. That actually makes it one of the safest Canadian banks, in my view, with so little mortgages on their books.
I went over my CDIC limit with Tangerine many times and would do it again.
Cheers,
Doug
7:40 pm
December 12, 2009
Offline
canadian.100 said
I just looked at the net income (profit) of each of these 2 banks (source the OSFI site) to the end of the 3rd quarter.
The net income for National Bank was $2,567,000,000 while the net income for Tangerine was "only" $598,715,000. Obviously must be related to the type of business each is concentrating on. National Bank would appear to be way ahead of Tangerine related to bottom line net income.
I echo what mordko is saying. Obviously, National Bank of Canada is still larger by other metrics, in part, because they have many more business lines and markets than Tangerine. They're also just larger as a whole.
I point this out for two reasons. One, to illustrate's growth rates in terms of nominal value of its personal deposits and number of personal deposit clients is far higher than many of the Big 5 banks plus National Bank of Canada. Second, because it has nearly 10x the deposits of its $5-7 billion mortgage book, it has more than ample, or surplus, liquidity relative to its Canadian peers. On that basis, it is one of the safest Canadian banks.
Cheers,
Doug
8:48 pm
October 21, 2013
Offline
Interesting. Any idea how many depositors that represents, or how big a slice of the deposit pie?
4:21 am
December 12, 2009
Offline
Loonie said
Interesting. Any idea how many depositors that represents, or how big a slice of the deposit pie?
Unfortunately, Tangerine hasn't updated their number of unique client accounts in awhile, only saying that it is above "2 million customers" (this would include some of their small business banking customers, of course, but their number of business deposits to individual deposits is quite minimal.
As to the amount of total federally-regulated deposits, CDIC insured or not, that number can be obtained, but would take some time to compile from the publicly-traded banks' annual reports. In the meantime, we can quickly get the amount of CDIC insured deposits as at March 31, 2023, from the CDIC 2023 annual report was $1,082,000,000,000 ($1.082 trillion), across 86 CDIC member institutions (domestic banks, foreign banks or foreign bank subsidiaries, trust companies, and loan or mortgage companies). (As at CDIC's 2023 fiscal year end, CDIC had $8.1 billion in cash and marketable securities as funding available for bank resolutions, representing 0.75% of that insured deposits number, and an untapped $32 billion credit line from the Government of Canada, which represented 2.77% of insured deposits. (Note with An Act of Parliament or possibly just an Order-in-Council, that borrowing limit can be increased, and it has grown from $25 billion a few years ago.)
Hope that helps (for now),
Doug
5:51 am
March 30, 2017
Offline
Doug said
I echo what mordko is saying. Obviously, National Bank of Canada is still larger by other metrics, in part, because they have many more business lines and markets than Tangerine. They're also just larger as a whole.
I point this out for two reasons. One, to illustrate's growth rates in terms of nominal value of its personal deposits and number of personal deposit clients is far higher than many of the Big 5 banks plus National Bank of Canada. Second, because it has nearly 10x the deposits of its $5-7 billion mortgage book, it has more than ample, or surplus, liquidity relative to its Canadian peers. On that basis, it is one of the safest Canadian banks.
Cheers,
Doug
If deposit is almost 10x the size of its mortgage book, that means the rest are used for personal and small biz loans as they don’t have other major business lines ? Also if deposit is $50b, liquidity requirement is only 5% (can’t remember exact req), so they can leverage to $1T plus in lending. somehow the numbers don’t seem to add up from a business stand point,
6:03 am
April 27, 2017
Offline
I am guessing that the “spare” cash pile is used by Scotia in some way.
6:08 am
March 30, 2017
Offline
mordko said
I am guessing that the “spare” cash pile is used by Scotia in some way.
maybe thats the reason. I thought Tangerine has to be totally separated from BNS for both assets and liabilities in order to be separately insured by CDIC.
Guess they can lend it to BNS at cost too.
7:39 am
September 7, 2018
Offline
savemoresaveoften said
If deposit is almost 10x the size of its mortgage book, that means the rest are used for personal and small biz loans as they don’t have other major business lines ? Also if deposit is $50b, liquidity requirement is only 5% (can’t remember exact req), so they can leverage to $1T plus in lending. somehow the numbers don’t seem to add up from a business stand point,
If I remember correctly, Scotiabank paid around $3 billion for ING which became renamed as Tangerine. If Tangerine is generating a profit of perhaps $800 million a year, (if the profit for 3 quarters was $598 million) why would you say that the numbers don't seem to add up from a business point of view? $800 million a year profit on an original investment of $3 billion doesn't seem like that bad a decision. Tangerine seems to be doing better each year.
7:48 am
March 30, 2017
Offline
canadian.100 said
If I remember correctly, Scotiabank paid around $3 billion for ING which became renamed as Tangerine. If Tangerine is generating a profit of perhaps $800 million a year, (if the profit for 3 quarters was $598 million) why would you say that the numbers don't seem to add up from a business point of view? $800 million a year profit on an original investment of $3.1 billion doesn't seem like that bad a decision and Tangerine seems to be doing better each year.
not talking about profit but where do all the Tangerine deposit goes.
$50B+ in deposit
only $5B in mortgage
After liquidity requirement, there are still close to $1 trillion they can deploy to earn income. And actually I guess yes earning $800MM on either $50B (no leverage) or a $1 trillion (with leverage) sounds like a poor return.
9:02 am
September 7, 2018
Offline
savemoresaveoften said
not talking about profit but where do all the Tangerine deposit goes?
$50B+ in deposit
only $5B in mortgage
After liquidity requirement, there are still close to $1 trillion they can deploy to earn income. And actually I guess yes earning $800MM on either $50B (no leverage) or a $1 trillion (with leverage) sounds like a poor return.
I suspect the deposits you are focussing on, are “loaned” to Scotiabank and/or affiliated companies where the funds can and do earn profits etc. Also Tangerine pays dividends to Scotiabank. When I have time I will research it. I am sure there are others in this blog who already know the answer to your question.
9:57 am
December 12, 2009
Offline
savemoresaveoften said
not talking about profit but where do all the Tangerine deposit goes.
$50B+ in deposit
only $5B in mortgage
After liquidity requirement, there are still close to $1 trillion they can deploy to earn income. And actually I guess yes earning $800MM on either $50B (no leverage) or a $1 trillion (with leverage) sounds like a poor return.
canadian.100 said
I suspect the deposits you are focussing on, are “loaned” to Scotiabank and/or affiliated companies where the funds can and do earn profits etc. Also Tangerine pays dividends to Scotiabank. When I have time I will research it. I am sure there are others in this blog who already know the answer to your question.
While I used to believe that, I now believe they can't 'loan' their deposit funding sources to Scotiabank to fund Scotiabank-originated mortgages. Rather, these deposits just 'sit' on Tangerine's balance sheet as surplus liquidity. It may also be somewhat more 'temperamental' and prone to shifts between financial institutions than, say, a Big 5 bank, so it helps to have that extra 'cushion'. Yes, they're paying out extra interest expense for their comparatively small mortgage and credit card, line of credit, and now personal installment loan books, but they also have comparatively minimal operating expenses relative to the major banks. For a bank to have a total deposit book larger than Laurentian Bank and a personal banking deposit book larger than National Bank, but have staffing levels equivalent to, say, an EQ Bank, that's impressive.
You also have to remember interest expense is based on the "average interest rate" paid, as a lot of those funds will be in chequing accounts, in GICs at various rates and terms, and in HISAs at non-promotional rates.
All told, since they're not lending out deposits on a nearly 1:1 basis like the major banks, so offer compellingly low risk from that standpoint.
Cheers,
Doug
3:21 pm
September 7, 2018
Offline
Doug said
While I used to believe that, I now believe they can't 'loan' their deposit funding sources to Scotiabank to fund Scotiabank-originated mortgages. Rather, these deposits just 'sit' on Tangerine's balance sheet as surplus liquidity. It may also be somewhat more 'temperamental' and prone to shifts between financial institutions than, say, a Big 5 bank, so it helps to have that extra 'cushion'. Yes, they're paying out extra interest expense for their comparatively small mortgage and credit card, line of credit, and now personal installment loan books, but they also have comparatively minimal operating expenses relative to the major banks. For a bank to have a total deposit book larger than Laurentian Bank and a personal banking deposit book larger than National Bank, but have staffing levels equivalent to, say, an EQ Bank, that's impressive.
You also have to remember interest expense is based on the "average interest rate" paid, as a lot of those funds will be in chequing accounts, in GICs at various rates and terms, and in HISAs at non-promotional rates.
All told, since they're not lending out deposits on a nearly 1:1 basis like the major banks, so offer compellingly low risk from that standpoint.
Cheers,
Doug
I agree. I had some interaction with Scotiabank management whom I know and I think you and I do agree that Tangerine is well run and quite profitable - you are correct they are a very low overhead operation, so for sure there is a big cushion of cash, and high liquidity. It would appear to me that Tangerine "has got it right." I realize that some posters won't deal with Tangerine at all but Tangerine has attracted significant business and remember that no FI can please everyone.
Please write your comments in the forum.