Bank lending to aboriginals on the rise, BMO says

Bank lending to Canada’s aboriginal communities has soared as land claims treaties and development agreements with oil and mining companies boost aboriginal communities’ ability to borrow, BMO Financial Group says.

BMO said its portfolio of commercial aboriginal mortgages, loans and deposits was $2.5 billion as of April 30, up 21 per cent compared to the year earlier period.

That compares with an historical average increase of around 15 per cent in the portfolio, Stephen Fay, head of aboriginal lending for BMO, said in an interview Thursday.

“It’s kicked up a lot in the last 12 months and we don’t see that decreasing any time soon,” Fay said following a conference call with reporters to highlight the bank’s involvement in aboriginal communities.

The webcast was timed to coincide with National Aboriginal Day, an annual event held on June 21 to recognize and celebrate the contribution of aboriginal people to Canada.

Bank lending to aboriginal communities is on the rise because government land claim settlements and private sector development agreements have given those communities more cash flow, Fay said.

“Any time you want to put a shovel in the ground to get ore or oil, chances are you standing on aboriginal land,” Fay said. “It’s just made dealing with communities much easier because cash streams are more available.”

Resource heavy western Canada is reaping most of the benefits but northern Ontario’s mineral-rich Ring of Fire region has the same potential once it comes on stream, Fay said.

“We believe we’re on the cusp of a new era of prosperity and growth for our people,” J.P. Gladu, president and chief executive officer of the Canadian Council of Aboriginal Business, said on the conference call with BMO. “Our people are succeeding in wineries, fashion, construction, gas and even the re-emerging forestry sector.”

While acknowledging other reports show aboriginals seriously lag non-aboriginal Canadians on critical metrics such as higher education, Gladu said aboriginal businesses help create wealth that allows their band councils drive their own agendas instead of being dependent on government handouts.

The value of goods and services created by aboriginal businesses is expected to eclipse $13 billion, Gladu said, while the number of aboriginal entrepreneurs is outpacing the number of non-aboriginal entrepreneurs by a ratio of 4 to 1.

BMO’s aboriginal portfolio represents about 2 per cent of the bank’s total commercial portfolio, Fay said.