Briefly: “Net worth fell by year end” and more news

Previously this week: | MON | TUE | WED | THURS |

By now it should come as no surprise that Canadian household net worth was eroded in the second half of 2008. The per capita loss, released by StatsCan, is at $14,000.

Household net worth on a per capita basis fell from $179,300 at the end of Q2 to $165,300 by year-end. Between the end of Q3 and the end of Q4, $252 billion was lost, accounting for 4.4% of household wealth. It could have been worse: in the U.S., net worth fell by 9%.

Collapsing stock prices had the biggest impact, as the S&P/TSX Composite Index fell 24% in Q4 alone. Financial assets, including direct stock holdings as well as pension values, declined 3.2% in Q4.

On the other side of the ledger, household debt rose by 1.7% to $1.3 trillion by year-end. Canadian households owed 24.5 cents for every dollar of net worth.

Over the final three months of the year, financial institutions altered the composition of their assets, as the Bank of Canada provided extra liquidity. As a result, institutional investors reduced their foreign investment positions in exchange for Canadian short-term paper and bonds.

Lenders invested heavily in domestic bonds, while net new mortgage and consumer credit lending slowed.

National net worth actually increased in Q4, from $179,400 per capita in Q3 to $182,800 per capita (net $6.1 trillion) in Q4.

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Few cutting back on spending

The past six months have seen Canadian household net worth contract significantly, but nearly half the respondents in a recent survey say they have not changed their spending habits.

In launching a new cash-back credit card, Scotiabank released the results of a poll that found 45% of Canadians are spending the same as they did six months ago, while 19% are spending less and 36% are spending more.

Of those who are spending the same amount, 53% say there has been no change in their lifestyle and they have the same basic needs and expenses.

Among those spending less, 27% say they are on a budget, spending more carefully or choosing cheaper alternatives.

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Sun Life expands into Indonesia

Sun Life Financial and CIMB bank — Malaysia’s second largest lender — are expected to sign a deal Monday in Jakarta that will increase Sun Life’s reach in Indonesia.

The new company will be called CIMB Sun Life and will increase Sun Life’s access to the fastest-growing insurance markets in Asia.

The deal will allow Sun Life to distribute its life, accident and health insurance products to Indonesians through CIMB’s extensive retail bank network in the country. Indonesia’s insurance market was worth approximately $4.7 billion in 2007.

(03/16/09)