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After bond yields spiked in the spring, there was hope that Canada's banks would soon get a boost to their bottom lines.

For quite a few quarters, the Big Six watched their net interest margins tumble, meaning the difference between the rates at which they borrow and lend money shrank as long-term yields collapsed. (The banks typically borrow money for short periods of times and then lend it out at the higher long-term rates.)

But when long-term yields shot higher in the spring – the 10-year Canadian bond yield jumped 75 basis points in the last fiscal quarter – basic math dictated that the Big Six should start making more money on their loans.

The reality: net interest margins barely responded. And bank executives now stress these margins probably won't improve for a few quarters.

In part, that's because competition for loans is intense right now, meaning the banks are undercutting each other on pricing.

But it's also a result of how the loan market is structured. Client deposits are a bank's major source of funding, and the interest rate paid on deposits fluctuates with the market. Long-term loans, however, often come with fixed rates, so the bank can only re-price them when they come due – or in the case of residential mortgages, when the homeowner re-finances every five years.

"What happens generally is that your liabilities – your deposits – reprice faster than assets," Janice Fukakusa, Royal Bank of Canada's chief financial officer, said in an interview.

That message was widely repeated across the Big Six. Louis Vachon, National Bank of Canada's CEO, said it will likely take "four to six quarters" for the banks to really benefit – provided bond yields remain at their current levels.

While the banks could use that boost much sooner, especially if higher rates slow their mortgage growth, there is a silver lining: when rates first tumbled, it took just as long for them to drag down the lending margins, Mr. Vachon said.

This also doesn't mean higher yields aren't helping the banks at all. RBC noted that the bank's large pension obligation was made more much manageable because the better rates improved the fund's solvency.