Canada’s Big Six banks earned a little over $6 billion in the second quarter, but competitive pressures and narrowing mortgage margins were a common theme.

Here’s a look at some of the more interesting mortgage-related items in their Q2 financials.

Royal Bank of Canada

Q2 net income: $1,506 million (C$1.00 per share)
13% increase from Q2 2010

• Insured mortgages accounted for 24% of RBC’s residential mortgage portfolio (Source)
• Residential mortgage loans value rose 6% year-over-year (Source)
• According to David McKay, head of Canadian Banking at RBC:  There have been some “very aggressive” pricing strategies in the marketplace around mortgages, “not just HELOCs in the marketplace, but in mortgages in general, as we go through what is traditionally a very competitive spring mortgage season.” (Source)
• CEO Gordon Nixon said RBC is seeing some “pretty unusual activity” in terms of aggressive pricing in the mortgage market, which “is probably having the biggest pressure on margins.” He says:  “…our people are going to back away from cutting profitability…because some of the activity we’ve seen in the mortgage market…imply very low margins to say the least.” (Source)
• “I think our mortgage specialist sales force allows us to originate very, very strong volumes in a cost effective manner,” said David McKay. “There is no doubt we feel that is a competitive advantage along with solid volumes through our traditional branch channels…” (Source)

TD Bank

Q2 net income: C$1,332 million (C$1.46 per share)
13% increase from Q2 2010

• TD marked their second-best quarter on record
• “Loan growth was within expectations for the quarter and strong volume growth is expected to continue through fiscal 2011 driven by residential mortgages and commercial lending.” (Source)
• Excluding acquisitions and segment transfers, average loan volumes were up 12% year-over-year, primarily in residential mortgages and commercial loans. (Source)
• “So far year-over-year we continue to be the largest grower in market share in…both HELOC and real estate secured lending,” said Tim Hockey, head of TD’s Canadian Banking operations. “We have a very attractive mortgage product right now which is growing very, very fast.”
• “…we think within days we will kick over C$200 billion in total real estate secured lending and that makes us the number one player in Canada.” (Source)

Scotia Bank

Q2 net income: $1,540 million (C$1.36 per share)
38% increase from Q2 2010 (1.12 in 2010)

• “Scotiabank experienced market share gains in residential mortgages…” said Rick Waugh, Scotiabank President and CEO (Source)
• Residential mortgage volume stood at $136.7 billion in Q2, a 10.7% increase year-over-year (Source)
• Residential mortgage market share grew to 20.47% in Q2, up from 20.28% in the second quarter of 2010 (Source)
• Anatol von Hahn, head of the Canadian Banking operations, said:  “In short, what we’re seeing is…our existing customers as their mortgages come due are opting to go in large part into variable rate mortgages…they have got a much lower interest rate or yield…new customers are opting into the same product—the variable rate product.”
• “What we expect is, and what we see our customers doing is…looking and waiting until interest rates go up before they’ll lock-in for the five-year fixed.” (Source)

CIBC

Q2 net income: $678 million (C$1.60 per share)
2.7% increase from Q2 2010

• CIBC Retail Markets is expected to face slower growth in demand for mortgages and household credit. (Source)
• “The lagged impacts of the earlier recession on credit quality will continue to fade, allowing for an improvement in delinquencies and a reduction in personal bankruptcies.” (Source)
• Personal Banking was helped by higher volumes in cards, mortgages and deposits, but partially offset by lower spreads (Source)
• CIBC’s mortgage balance sat at $140.9 billion (Source)
• Mortgage market share held steady at 13.7% for a 2^nd place ranking (Source)
• “The competitive force right now in lending broadly and in mortgages is fairly strong,” said President and CEO Gerald McCaughey. “So, looking forward, our plan is for net interest margins to stabilize and be relatively flat, but it’s going to be somewhat dependent on the degree of…competitive pressure in the marketplace.” (Source)

BMO

Q2 net income: $800 million (C$1.34 per share)
7% increase from Q2 2010

• In its economic outlook, the bank said higher interest rates and stricter mortgage qualifying rules “will likely temper activity in the housing market, slowing growth in residential mortgages.” (Source)
• The bank’s residential mortgage balance (owned and managed) stood at $65.6 billion in Q2, up from 63.6 billion in Q2 2010 (Source)
• Net interest margin decreased seven basis points due to continued low interest rates in a competitive environment resulting in lower mortgage…spreads. (Source)
• “…I think we would have all anticipated a bit of relief from a rate increase perspective,” said Frank Techar, President and CEO of Personal and Commercial Banking. “Because interest rates have remained very low, we’re still seeing customer preferences focused on lower spread variable rate mortgages, when we would have anticipated this perhaps would have changed by this point in the year.” (source)
• Techar said BMO has added more than 1,000 employees, many of them mortgage specialists. (Source)

National Bank

Q1 net income: $295 million (C$1.48 per share)
13% increase from Q2 2010

• National’s Personal Banking revenues rose $13 million, “mainly due to higher loan volumes, especially consumer and mortgage loans” (Source)
• Mortgage volume increased to $26.5 billion as of April 2011, up from $24 billion a year earlier (Source)
• The 10% year-over-year increase in personal loans is mainly attributable to volume growth in mortgages. (Source)
• “We believe that there will probably still (be) high single-digit growth in mortgages going forward, but they are definitely going down,” said Rejean Levesque, executive vice-president of Personal and Commercial Banking. (Source)

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Steve Huebl, CMT