Behind the numbers
In last week's Insight we compared credit union deposit growth to the Big 6 banks at a national level. Now let's take a look and see how the numbers break down on a regional basis.
National averages can be misleading because not every region is experiencing the same economic growth. Ontario and BC in particular carry a disproportionate share in both dollar and percentage terms.
This is reflected in the growth rate of chartered bank deposits. For the five-year period 2017-2022 Banks experienced annual deposit growth of almost 9% in both BC and Ontario. Manitoba, Saskatchewan and The Atlantic all grew in the 7.5%-7.9% range, while Alberta trailed at 6.5%.
However, with the exception of Ontario credit unions failed to keep up. While Ontario CUs kept pace with the banks by recording 0.2% higher annual growth, the other regions lagged banks - often dramatically:
The loss of deposit share is particularly concerning in BC, where credit unions have a strong foothold and plenty of room to grow. In the Prairies, the strong market share enjoyed by credit unions will be at risk if the growth gap continues.
The elephant in the room, however, is Ontario. While credit unions have been keeping pace with chartered banks, a 3% share of deposits is tiny. While this figure is somewhat distorted by the large volume of commercial deposits held in Toronto-area bank branches, the opportunity is obvious. This is highlighted by comparing the addressable market in dollar vs percentage terms:
What is the real opportunity in Ontario, and why haven't credit unions been successful in capturing market share? We'll cover Ontario and the Greater Toronto Area in the next Insight.