Canadians are hunkering down and saving more money, sparking a swell in deposits, said bank executives at an industry conference in Toronto Thursday.

Bank of Montreal has already boosted its share of deposits and predicts consumers will be more inclined to save than borrow this year.

The Bank of Nova Scotia is also reporting gains in personal deposits.

“When you get unrest in the marketplace, money goes to safe havens,” said Chris Hodgson, head of domestic banking.

GICs and high-interest savings accounts are proving popular and more growth is expected as Canadians flock to the new tax-free savings accounts.

But as deposit levels increase, banks are bracing for even slower demand for residential mortgages because of the souring economy. The growth in deposits, however, is good news for banks, as a relatively cheap source of capital.

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