The CLI peaked at a level of 115.5 in the second quarter of 2007 before the onset of the financial crisis pushed it to a low of 97.7 in the first half of 2009.
The downward pressure in the CLI over the past two quarters is mostly a product of weak growth in both retail sales and employment. In addition, provincial manufacturing sales have deteriorated alongside the global economy.
“Tepid job creation and deteriorating global economic growth represent significant headwinds for the BC economy and could lead to softer commercial activity in coming quarters,” said Brendon Ogmundson, BCREA Economist. “However, an almost unprecedented decline in long-term interest rates may help to stimulate investment activity and soften the impact of slower economic growth.”
“The nuance is the Big Five are fighting but is it really competitive? There have always been questions about the competitiveness of the Canadian market when we pay the highest account fees and highest mutual fund fees in the world.”
ING Direct has opened about 70,000 new chequing accounts since Thrive launched seven months ago. Currently, it is opening 300 to 400 new accounts each day, Aceto said.
Peter Routledge, a bank analyst at National Bank Financial in Toronto, pointed out that while the industry is perhaps more competitive than it was a year ago, Canadian banks still enjoy very healthy profits in the domestic market.
“Within a price regime established by an oligopoly, there’s more competition, but the regime is still pretty attractive for the banks,” he said. “They make very attractive returns.”
Still, consumers can find good deals. Even if they want to stick with their financial institution, competing offers can be used as leverage when sitting across the table from the banker.
“My advice is to negotiate with your primary bank,” McVay said.
“There are few lives that go without setbacks. If you’re dealing with your primary bank, it’s more likely they will be accommodative than if all they have is your mortgage or a line of credit.”
Copyright CREA reprinted with permission