Canadian corporations experienced a modest increase in net income before taxes (NIBT) in the first quarter of 2024, as reported by Statistics Canada. The aggregate NIBT rose by $898 million, a 0.6% increase from the previous quarter, bringing the total to $160.1 billion. This increment was primarily propelled by gains in the financial sector, though it was tempered by declines in the non-financial sector.
The financial sector demonstrated robust performance with a 4.9% rise in NIBT, amounting to an additional $2.3 billion and culminating in $48.2 billion for the quarter. Six out of thirteen financial industries saw improvements, underscoring the sector’s broad-based strength.
Significant contributions came from the banking and other depository credit intermediation industry, which reported a $3.2 billion boost in NIBT. This surge was largely due to an increase in net interest income and other revenues. The life, health, and medical insurance carriers also bolstered the sector’s performance, with NIBT rising by $2.4 billion due to reduced expenses linked to actuarial liabilities.
However, the property and casualty insurance carriers experienced a notable setback, with a $1.7 billion decline in NIBT. This decrease was driven by reduced revenues and higher expenses, particularly within the automobile insurance segment.
In contrast, the non-financial sector saw a downturn, with NIBT dropping by $1.4 billion, a 1.2% decline from the previous quarter, settling at $111.9 billion. This decrease was observed across 18 of the 39 non-financial industries.
A major contributor to this decline was the wholesale industry, specifically the other wholesalers sector, which saw a significant $1.2 billion drop in NIBT, translating to a 16.6% decrease. This was driven by a $1.4 billion reduction in operating revenue, primarily due to lower sales among farm product merchant wholesalers.
The petroleum and coal products manufacturing industry also reported a substantial decrease in NIBT, falling by $1.1 billion or 20.8%. This decline was influenced by a $1.2 billion drop in operating revenue, linked to decreasing prices of energy and petroleum products. Additionally, the oil and gas extraction industry recorded a $101 million decline in NIBT.
The transportation sector faced challenges as well, with NIBT in transportation, postal and couriers services, and transportation support activities industries declining by $332 million, or 5.1%. This reduction was mainly due to a downturn in rail transportation, evidenced by lower railway freight loadings.
Despite the overall decline in the non-financial sector, the motor vehicle and trailer manufacturing industry offered a partial offset with an increase in earnings. The industry’s NIBT rose by $714 million, driven by a reduction in expenses, providing a slight cushion against the broader sectoral decline.
The first quarter of 2024 presented a mixed financial landscape for Canadian corporations. While the financial sector’s robust performance contributed to a slight overall increase in NIBT, significant declines in key non-financial industries highlighted ongoing challenges. These dynamics underscore the diverse economic conditions across different sectors and suggest a need for targeted strategies to bolster areas experiencing downturns.