Canada's biggest banks have been reporting very different rates of growth in their mortgage books, raising questions about whether they are changing their approach to lending amid widespread concerns about housing markets in Vancouver and Toronto.
Among the five banks that reported fiscal third-quarter results over the past two weeks, Bank of Nova Scotia showed the weakest year-over-year growth in the value of its residential mortgages, at just 2.7 per cent. At the other end of the spectrum, Canadian Imperial Bank of Commerce showed the strongest growth at 9.5 per cent.
The other three banks that have reported results were in the middle. Toronto-Dominion Bank's mortgage book expanded 4.7 per cent over last year, Bank of Montreal's expanded 5.2 per cent and Royal Bank of Canada's grew 6.4 per cent.
The banks do not break down their mortgage figures by urban market, so the numbers provide a national reading rather than a local snapshot. Nonetheless, the relatively wide range of growth has left executives facing questions about whether they are chasing market share or prudently surrendering it.
"There is an element of choice, certainly," Brian Porter, Scotiabank's chief executive officer, said during a call with analysts. He added: "On mortgages, we've had low single-digit growth in balances now for some time. It's clear that we've ceded some market share."
Mr. Porter's response is consistent with comments he made earlier this year, when he called the housing markets in Toronto and Vancouver "frothy," and asked the federal government to step in with policies to cool the two markets.
But Scotiabank's slow-growing mortgage book is also a response to business conditions. Sean McGuckin, Scotiabank's chief financial officer, noted that thin margins on mortgages have made growth elsewhere – such as credit cards – look more attractive.
"Overall, we're looking at the profitability of our business mix," Mr. McGuckin said. "And we've noticed from a risk-return standpoint that the return in the mortgage market just wasn't there. We had very thin spreads in certain parts of the year and on certain mortgage types, so we backed off from that because we're trying to drive a more profitable bank."
Just as CIBC's mortgage growth was much stronger, comments from the lender's executives tended to be much more enthusiastic about mortgages, even as they stressed that their approach was prudent.
David Williamson, CIBC's group head of retail and business banking, noted that the bank's mortgage growth was the result of an expanded sales team rather than a policy of undercutting on price. And with respect to big mortgages in Vancouver, he said that the loan-to-deposit ratios there are better than what you would see in the rest of the country.
Laura Dottori-Attanasio, CIBC's chief risk officer, added that the delinquency rates in Vancouver are lower than the national average, reflecting the area's strong and diversified economy.
"We have not changed our risk appetite or our risk strategies," she said. "From a lender's perspective, the real estate market, particularly in the Greater Vancouver Area, continues to be robust."
Canada's largest banks have been pursuing different strategies toward growth in recent years. Their views on the housing market, it seems, are yet another differentiator.