by Tom Bradley

Oxford defines the word ‘oligopoly’ as, “a state of limited competition, in which a market is shared by a small number of producers or sellers.” This term seems appropriate when talking about the Canadian banks. They have a privileged place in Canadian society.

In the 2019 fiscal year, Canada’s top 6 banks (BMO, CIBC, National, RBC, Scotia and TD) generated net profit of $46.6 billion. As a result, our Bank Profit Indicator, which represents the amount of profit per woman, man and child in Canada, comes in at $1,240 this year.

We feel obligated to report this statistic because (1) it amounts to a big chunk of Canadians’ disposable income and (2) it’s rarely reported. The $1,240 number is after-tax profit, not revenue. Nowhere in the world do banks earn this level of profit from their individual customers.

Note: In doing this calculation, we acknowledge that a portion of these profits is from foreign operations. The vast majority, however, comes from providing banking, investment and insurance services to individual Canadians. The profitability of the banks’ Canadian retail banking and wealth management divisions far exceed what they’re able to achieve elsewhere, both in profit margin and billions of dollars.