The Financial Health and Banking Channel Usage
of Canadian Households
April 8, 2009
Canadian Financial Monitor

The Canadian economy is weakening. According to RBC Economics Research, a rebound
in economic growth is anticipated in the second half of 2009 and will continue to gain
strength into 2010.
5
Real GDP
4
3
Annual % Change
2
1
0
Q1'07 Q2'07 Q3'07 Q4'07 Q1'08 Q2'08 Q3'08 Q4'08 Q1'09 Q2'09 Q3'09 Q4'09 Q1'10 Q2'10 Q3'10 Q4'10
-1
-2
-3
-4
Source: Statistics Canada (Q1’07 to Q4’08) RBC Economics Research (Q1’09 to Q4’10)
Canadian Financial Monitor 2

Despite all the negative numbers, Canada is still expected to be in a better position than many
other nations during this global economic crisis.
GDP % Change Previous Year
-3 -2 -1 0 1 2
2009** United Kingdom
Japan
Germany
Italy
France
United States
Canada
2010**
Source: IMF. **Forecast.
And while more Canadians have lost their jobs, unemployment rates are still higher in many
other developed countries.
France 8.1%
Germ any 7.2%
United
7.2%
States
Italy 6.7%*
Canada 6.6%
United
6.3%
Kingdom
Japan 4.5%
* The chart above shows unemployment rate in Dec. 2008 for all countries except Italy data in Sep. 2008. Source: OECD and
Bloomberg. Picture: TopNews.in
Canadian Financial Monitor 3

How has the economic
downturn impacted the
financial health of Canadian households?
Canadian Financial Monitor 4

$400,000
Net Worth = Total Assets – Total Debt
$350,000
$300,000
The wealth of Canadians (i.e. household net
worth) has ceased growing. After 4 years of
$250,000
steady growth, average household net worth has $200,000
declined for 2 consecutive years starting in $150,000
2007. $100,000
$50,000
$0
2000 2001 2002 2003 2004 2005 2006 2007 2008
Average Canadian Household Net Worth
Net Worth = Total Assets – Total Debt
Much of the wealth loss happened in the last $259,673 $258,833
quarter of 2008. After reaching a high in
Q2’08, average household net worth dropped
$248,654 $248,705
by 4% over the next two quarters.
Q1'08 Q2'08 Q3'08 Q4'08
Average Canadian Household Net Worth
Canadian Financial Monitor 5

A break down of the assets held by Canadians - % share of dollars – Total 2008
Average Market Value of Total Assets
$312,172
7
Real estate remains the single 31
biggest asset held by most
Canadians.
62
Total Households
Real Estate Investable Assets Automobiles
It has provided home owners with
some protection from the stock Non
Investable Household
market meltdown; percentage Net Worth
Assets
Investable
Debt
declines 2007 to 2008 on real estate % change - 2008 vs 2007 Assets
(non investable assets) have offset Total Households -1 -11 7 5
declines in investable assets.
Net Worth = Total Assets – Total Debt
Investable Assets = Chequing/Savings, GICs, Bonds, Stocks and Mutual Funds
Non Investable Assets = Real Estate and Automobiles
Debt = Credit Cards, Mortgages, Loans and Lines of Credit
Canadian Financial Monitor 6

$100,000
$90,000
Over the past 10 years, Canadians have $80,000
accumulated debt at a higher rate than $70,000
income growth. Average household debt has $60,000
increased by 44% over the past 10 years $50,000
$40,000
whereas household income grew by only
$30,000
28% over the same period. $20,000
$10,000
$0
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
Average Household Debt Average Household Income
% of Households
55 54
53 53
The percentage of Canadians who are
51
Heavy Borrowers is increasing. This
suggests that the increase in overall
consumer debt is being driven by Heavy 25 25 25 25 25
20
22 21 22
24
Borrowers.
Debt Free Light Borrowers (Households with < Heavy Borrowers (Households with
$100,000 in debt) $100,000 or more in debt)
2004 2005 2006 2007 2008
Canadian Financial Monitor 7

Average Outstanding Balance (000’s)
$125
$116
Much of the rise in overall household debt is $95
$104
$107
being driven by mortgages. Over the past
few years, Canadians have taken out
increasingly larger mortgages; the average
mortgage balance has increased by almost $29
$32 $32 $31
1/3 in the past 4 years. $18 $19 $18 $18 $19
$24
$11 $11 $12 $11 $11
$5 $5 $6 $6 $6
Credit Cards Mortgages Loans Secured LOC Unsecured LOC
2004 2005 2006 2007 2008
Canadian Financial Monitor 8

How are Canadians reacting to the economic slowdown? Like others around the world, we are
cutting household spending.
Cut back on household spending, % yes
South Korea 87%
Argentina 84%
Turkey 84%
Mexico 83%
France 81%
China 80%
United States 80%
Great Britain 77%
Brazil 76%
India 76%
Australia 75%
Italy 75%
Russia 73%
Japan 73%
Total 72%
Canada 70%
Belgium 70%
Poland 68%
Spain 68%
Czech Republic 59%
Germany 59%
Sweden 52%
Netherlands 45%
Source: Ipsos Global Economic Meltdown; a poll of 22 Countries; December 2008
Q. Given the current state of the global economy, have you and your family had to cut back in your household spending recently?
Canadian Financial Monitor 9

Much of the reduction in consumer spending is on entertainment, vacations and luxury items.
% cutting back – average of all countries
Entertainment 76%
Vacations 73%
Luxury Items 72%
Clothing 59%
Energy Consumption 53%
Gasoline/Driving 47%
Groceries 41%
Cell Phone 33%
Cable TV 23%
Education 11%
Source: Ipsos Global Economic Meltdown; a poll of 22 Countries; December 2008
Q. What are the specific things that you and your family are cutting back on these days? Base: respondents who have cut back
Canadian Financial Monitor 10

Average
monthly
expenditure
$177 $169
$155 $151 $153 $165
$131 $132
While the average monthly expenditure has $107
$91 $97
$81
declined …
Eating out (Restaurants/Bars) Recreation (eg. movies, concerts, Clothing/Footwear
sporting events)
Q1'08 Q2'08 Q3'08 Q4'08
% of Households who have
spent money on
88 90 91 91
70 76 78 79
… the frequency of eating out, attending 55 56 59 56
movies, concerts or sporting events and
purchases of clothing or footwear has
remained relatively unchanged. Eating out (Restaurants/Bars) Recreation (eg. movies, concerts,
sporting events)
Clothing/Footwear
Canadian Financial Monitor 11

I am confident that the financial institutions I deal with have the financial strength to
survive in the current financial climate
% strongly agree (top 3 box on a 10 point scale)
51
49
46 46
39
Canadians still have a high level of confidence
towards their financial institutions. This is
especially true amongst older Canadians.
Total Households Under 35 35 to 49 50 to 64 >=65
* Source: Ipsos’s Market Now (Field work conducted between January 1 and 14, 2009).
Canadian Financial Monitor 12

This chart shows the incidence of Canadians using the various channels over
the past month.
100
90
The percentage of Canadians banking online is 80
70
approaching 60% and is almost as widely used as 60
50
Tellers. 40
30
20
10
0
2000 2002 2004 2006 2008
Teller ABM Online Banking Phone Banking
48 49
43
38 37
33
And the of Canadians using 3 or more channels
continues to steadily increase. 16
13 12
1 Only 2 Only 3 or more
2004 2006 2008
Canadian Financial Monitor 13

The information in this report primarily comes from Ipsos Canada’s
Canadian Financial Monitor.
The Canadian Financial Monitor (CFM) was launched in 1999 to address a
market need for an all encompassing study to track the ongoing financial health,
product holdings, banking habits, household expenditures and attitudes of
Canadians.
Results for CFM are collected from a large sample of 12,000 representative
Canadian households.
Information is collected on a monthly basis using a mail diary.
CFM captures a wide array of products including Chequing, Savings, GICs,
Bonds, Stocks, Mutual Funds, Credit Cards, Mortgages, Loans, Lines of Credit,
Life Insurance, Car and Home Insurance and Specialty Insurance.
The channel usage habits (i.e. Online, Phone, ABM, Teller), attitudes and
sentiments of Canadians are also monitored.
Canadian Financial Monitor 14

CFM is a large study (actual sample size for 2008)
Total Canada = 12,004
Toronto = 1,519
Montreal = 1,400
Vancouver = 672
BC Alb Sask Man Ont Que Atl
1,643 1,120 463 554 4,418 2,805 1,001
Canadian Financial Monitor 15

For more information about this presentation, please contact
Michael Hsu
Ipsos Reid Corporation
416-572-4406
michael.hsu@ipsos.com
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evaluating the report for services of Ipsos. No other use is permitted.
Canadian Financial Monitor 16