Smaller interest rate spreads and a decline in corporate business tempered the growth of services produced by deposit-accepting intermediaries last year, Statistics Canada said today.

The value of services produced by chartered banks, trust companies, caisses populaires and credit unions rose 2.4% to $56.9 billion.

This was less than half the annual average growth rate of 5.1% during the previous seven years, the government agency noted.

StatsCan said strong growth in treasury and investment services was offset by declines in corporate and institutional finance and fiduciary services.

Institutions continued to consolidate their corporate loan portfolios and shift fiduciary services to larger wealth management portfolios, which included broader investment services.

Net interest income grew a mere 1.3% to $30.4 billion in 2004 as continuing low interest rate spreads between interest charged to lenders and paid to depositors hindered revenues.

During 2004, banks and credit unions slashed their provision for credit losses by 51.1% to $1.5 billion.

Non-interest income rose 3.7% to $26.5 billion, owing entirely to retail and treasury and investment banking.

The value of treasury and investment banking services rebounded 9.2% to $11 billion last year, reversing two consecutive annual decreases. The gain put this segment at its highest level since the survey began in 1996.

Self-directed and full service brokerage and mutual fund business experienced strong growth, both due to higher volumes and improved market conditions.

Strong mutual fund sales and a positive RRSP season, along with improved market appreciation, helped to drive this growth. RRSP contributions totalled nearly $28.8 billion, up 4.5% from 2003.

The electronic financial services portfolio produced services worth $5.9 billion, a 3% increase over 2003. A volatile segment, electronic financial services growth was below its average annual growth during the last seven years.