Deposit and Fixed Income Report Fall 2011

Welcome to the Fall 2011 edition of the Deposit and Fixed Income Advisory Service (DFIAS), Investor Economics’ research covering deposits, guaranteed interest annuities, fixed income securities, fixed income investment funds, and principal‐protected notes. The current edition includes a number of new features: •The Big Picture section includes Investor Economics’ forecast for deposits through 2020, originally published in the 2011 edition of the Household Balance Sheet Report. •Also in the Big Picture, we have added exhibits that look at two macro factors intimately connected to the growth and prospect for deposits: trends on the demand for household credit and the evolution of the income and expenditures of the household sector. •As part of our tracking of industry news, we have included a commentary on the banks’ quarterly results, highlighting some of the challenges and opportunities each institution experienced during the period. •This issue contains two special features. One looking at how credit unions and small banks from western Canada are trying to diversify their operations through the e‐banking platform; another on recent trends in mobile banking, highlighting how some institutions are using mobile technologies in brokerage, insurance and—outside of Canada—for payments. •Finally, the section on structured notes now has lenses that show Principal at Risk Notes (PARNs) in addition to Principal Protected Notes (PPNs). We now track the number of PARNs outstanding, new issues, asset classes and underlying investments. Also, as with previous editions, each individual section of the report looks in detail at the major trends underpinning the evolution of the different products populating the deposit and fixed income continuum. The sections consider the marketplace from a number of vantage points, including distribution channels, product structure, interest rate/pricing factors, term to maturity, liquidity, transactions, segmentation by account size, and provincial distribution. Each section begins with key takeaways, and exhibits are accompanied by commentary. We conducted interviews with several companies in order to better understand how they see the marketplace and the challenges ahead. We thank all those who lent their time to this research. Their comments and perspectives are reflected throughout the report CANNEX Financial Exchanges’data on fixed‐term deposit transaction activity metrics and pricing is also part of this research. Quarterly transactions by number, dollar volume, maturity and average account size present a powerful perspective on term deposit activity in the intermediated advice channels.