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Banks are successfully convincing consumers to sign up, but not all of them are having as much luck converting new cardholders to new card users.

Dechaine noted that Bank of Nova Scotia, Royal Bank and TD Bank had the strongest growth metrics in 2014, as they flooded the market with new cards and got customers to actually use them. Bank of Montreal, CIBC and National Bank had weaker purchase volume growth.

Scotiabank led the way with 16-per-cent growth in the number of cards in circulation during 2014. More importantly, it had the highest compound annual growth rate in purchase volumes since 2008 and exceeded the industry average in 2014.

“For a bank that has historically operated a sub-scale cards business, we believe the convergence of these trends is a clear indication of its improving market presence,” Dechaine said.

But the banks are already shifting downmarket to the next battleground for growth: TD renewed efforts to push its MBNA portfolio, CIBC co-branded a Tim Hortons’ card, Scotiabank purchased a 20% stake in Canadian Tire’s credit card business, and Royal Bank has a balance transfer marketing campaign.

These moves make perfect sense given how much profit is available in the category. Credit-card spreads have widened in recent years due to cheaper funding costs and strong credit quality, and the banks want to bolster growth in loans and receivables as lower-end credit card customers are more likely to keep balances.

Dechaine noted that a downmarket push would drive net interest income growth at a time when banks are facing slowing domestic loan growth.

Yet investors might want to be cautious on these moves, because of weaker Canadian economic growth and the potential for a substantial pullback in employment.

The banks’ strategies warrant a close look, but it’s hard to argue against a source of growth for the Canadian banking sector — particularly in a business that has proven to be so profitable in the past.