BDC Fact #6
Between 2003 and 2007, The Business Development Bank of Canada grew their loan book from $6.3 billion to $8.8 billion, about 39%. During the same four fiscal years, The Royal Bank of Canada grew its small business and wholesale loan book 48%, from $52.4 billion to $77.4 billion.
Considering that RBC spent $82.8 million on donations and sponsorships alone last year, and another ~$500 million on marketing and advertising, does it not strike you as remarkable that in a thriving economy, BDC grew its portfolio practically in line with Canada’s largest bank?
BDC’s “other expense” line was $60.5 million for the last fiscal year. Marketing and advertising would be a subset of that number. RBC likely outspent BDC well in excess of 10x on marketing and brand building, each and every year since 2003.
Despite a very talented team, increased headcount and a great brand, RBC was unable to grow its loan book by more than 9% versus the BDC during that period. Why would that be?
I’ve enjoyed your series on the BDC. Investigations of such government entitities can always be an eye-opener.
The BDC can probably grow its business faster than the RBC since it is backed by the full faith of the Federal government, and thereby is blessed with cheaper financing costs than private entities. It can pass these costs on to borrowing customers, undercutting the folks at RBC. No?
Are there numbers showing the cost that RBC would have to pay for issued debt relative to the BDC? Does the BDC indeed offer customers better rates?