As 2024 comes to a close, a detailed analysis of Canadian finance reveals significant trends and shifts within the sector. The adjusted profits of the Big Six banks reached an impressive $58.77 billion, marking an increase of $1 billion from the previous year. This growth comes amidst a backdrop of changing economic conditions, including a reduction in the Bank of Canada's interest rate, which fell to 3.25% by year-end from 5% in June 2024. This rate cut has provided relief to borrowers, contributing to a mortgage delinquency rate of 0.20% in Q3 2024, a slight increase from 0.14% two years prior but still manageable in the current economic climate [af028f2a].
The financial landscape has also seen significant movements among major banks. TD Bank Group faced a substantial US$4.45 billion penalty related to anti-money laundering failures, which has impacted its reputation and stock performance. Meanwhile, RBC's market capitalization surged to $246 billion, reflecting a nearly 30% increase throughout the year, bolstered by its acquisition of HSBC Canada for $13.5 billion in March, which attracted approximately 780,000 new customers. In contrast, Scotiabank's holdings in Elbit Systems decreased from 2,236,500 shares in 2023 to 557,400 shares, indicating a strategic shift in investment focus [af028f2a].
Additionally, the issue of fossil fuel funding remains pertinent, with Canada's five largest banks collectively financing US$104 billion in fossil fuel projects in 2023. This figure raises questions about the banks' commitments to sustainability amidst growing climate concerns. Looking ahead, the maximum legal interest rate that lenders can charge is set to be capped at 35% in 2025, a significant regulatory change aimed at protecting consumers. Overall, the year 2024 has been marked by both challenges and opportunities for Canadian banks, with a cautious yet optimistic outlook as they navigate the evolving financial landscape [af028f2a].