New York, NY (PRWEB) April 30, 2014
Canada fared better with the financial meltdown than the United States and Europe. It was the first of the G-7 countries to propel itself out of the recession. Over the past five years, consumption-based growth drove Canada's economy. A significant proportion of this consumption was debt financed. Since the global economic conditions were uncertain at best and the Canadian dollar appreciated significantly over the past five years, export based growth was limited. This increase in Canadian consumers' appetite for debt benefited the Loan Administration, Check Cashing and Other Services industry by increasing demand for consumer financing, home loans and mortgages.
Nonetheless, the competition in the industry remained tough and the low interest rate on loans reduced the fees that industry operators could charge for their services, which kept revenue growth subdued and spurred consolidation trends within the industry. Consequently, industry revenue is expected to increase at an annualized rate of 1.0% to $10.6 billion in the five years to 2014. However, revenue is expected to fall 0.2% in 2014 due to an expected decrease in Canadian consumers' demand for more credit-based consumption, which could pose a threat to this industry going forward.
According to IBISWorld Industry Analyst Zeeshan Haider, “Over the next five years, loan servicing companies are forecast to focus on developing technology that will lower their reliance on labour, thus further increasing profit margins.” Additionally, consumer demand for lending products in upstream industries will rise as the economy makes a full recovery. Improvements in the housing sector will increase wealth and make consumers more willing to borrow, which will increase demand for loan servicing.
“However, there are significant structural changes taking place in Canada's credit markets, with some analysts proclaiming that Canadians have been taking on too much leverage and there is another credit bubble developing,” says Haider. Moody's presented similar evidence in September 2012 in its report on the consumer credit market in Canada, which warned that Canada's consumption-based growth may not last very long if people are unable to pay their debts and taking on leverage becomes hard. This could potentially threaten the loan administration segment of this industry, which is fed by servicing mortgage, auto and other loans.
For more information, visit IBISWorld’s Loan Administration, Check Cashing & Other Services in Canada industry report page.
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IBISWorld industry Report Key Topics
This Loan Administration, Check Cashing and Other Services loans, most notably mortgages. It does not originate loans, which includes legally arranging and issuing the loan; servicing loans includes performing all of the administrative aspects of the loan. The industry also performs money transmission services, which includes selling and cashing traveler's checks, money orders and cashier's checks, while also renting safe deposit boxes.
Key External Drivers
Industry Life Cycle
Products & Markets
Products & Services
Globalization & Trade
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Barriers to Entry
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