Canada’s biggest credit card issuers are scrambling to figure out how to cope with a surge in demand from Canadians who have moved to cities like Vancouver and Toronto in recent years.
In the last three months, Canada’s largest credit card issuer issued a record $5.2 billion in credit cards, and issued a total of more than $1.1 billion worth of credit cards to Canadians.
“There are some significant challenges,” said Eric McLean, vice president of credit card programs at CIBC.
“You’re trying to adapt, and it’s really a balancing act.”
CIBC’s Credit Card Credit card issuances are up by more than 2 per cent in the last year.
Credit card companies that issue the most cards to Canadian consumers are now taking steps to prepare for a sudden influx of Canadians.
Here are the top banks and credit card companies in Canada with the most credit card debt.
Citibank is the largest Canadian bank by total deposits.
Credit Card Issuers Credit card debt issued to Canadians by banks increased by 1.5 per cent to $5,724 billion in the three months ended March 31, up from $567 billion in March 2017.
Citigroup, which issued $4.4 billion of creditcards, was the second largest Canadian issuer.
It had the second highest total credit card issuance for the quarter at $4,958 billion.
In contrast, TD Bank, which also issued $3.5 billion of Canadian credit cards last year, was third.
CIBC issued $2.5 trillion of creditcard debt in the third quarter of this year, up by about 2 per a cent from the previous quarter.
TD Bank was the third largest issuer in Canada for the third straight quarter, but creditcard issuers Bank of Montreal and BMO both had declines in the quarter.
Canadian Bankers Association President Doug Porter said the increase in credit card sales is not good news for the financial sector.
“It means they’re losing money and they’re not spending it,” Porter said.
Credit cards are the second-largest type of credit issued by Canadian banks.
Canadian banks issued $1 trillion of Canadian-issued credit cards in the year to March 31.
“Credit card issuors are not investing in their core businesses and they are not paying dividends to shareholders,” Porter added.
CIBA’s McLean said the bank is monitoring the credit card market closely and is looking for ways to increase its exposure to the market.
Citicorp, which is the biggest Canadian creditcard issuer, issued $5 billion in Canadian creditcards in the second quarter of the year.
Bank of Nova Scotia issued $6.3 billion of US credit cards and the third-largest issuer in the country.
The bank has about $7 billion in total credit-card debt, about one-third of the total of the top five issuers in Canada.
TD’s McLeod said that credit card revenue growth is driven by consumer spending, especially for credit cards with higher fees and annual fee requirements.
CIBB’s Porter said that while the bank has a strong reputation in the US, its credit ratings are downgraded by Moody’s Investor Services.
He said the rating agency is concerned about the bank’s debt and said the company needs to improve its financial resilience to meet the increasing demand for credit.
CIBO’s McLeod said the financials are healthy and the company is doing well.
“The business is healthy,” McLeod added.
The Canadian Association of Bankers has been issuing credit cards for the past 30 years.
The association issued $7.2 trillion in Canadian-issue credit cards as of March 31 of this to date.
The top Canadian banks have the most debt issued: CIBC, TD, Bank of America, and CIBC National.
Bank Canada issued $964 billion of foreign-issued cards in Canada in the fourth quarter of 2017, up 7 per cent from $732 billion the previous year.
The Bank of Canada’s total credit cards issued in Canada was $7,845 billion as of the end of March.
CreditCard Issuers Canadian banks are also the biggest issuers of credit-default swaps, or collateralized debt obligations, with an estimated $1,066 billion outstanding as of May 31, according to Citi.
The average credit card holder has about 1.6 times more debt than the average Canadian.
CIBE’s McLeary said he is worried about the impact of the rising interest rates on credit card balances.
“We’re worried about how this will affect our balance sheets,” he said.
The rise in demand for Canadian credit has been driven by a surge of young people moving to cities such as Vancouver and Edmonton.
“Young people have a lot more disposable income, and they have more disposable assets that they can put into a vehicle,” McLeood said.
“This is not the first