Banks fees maintain growth
(25 May 2009 – Australia) The RBA has released its latest banking fee survey which shows, despite scrutiny, an eight percent rise in fees, the same increase as last year.
The Reserve Bank of Australia (RBA) said that bank fees rose to A$11.6 billion for the calendar year 2008, up by nearly A$1 billion from the year before.
The RBA indicated that, as has been the case for a number of years, banks’ domestic fee income grew less quickly than their balance sheet assets in 2008.
For both businesses and households, the growth in fee income appears to have been mainly the result of greater use of banking services, rather than higher unit charges, the RBA added.
Both business and household fees were up by eight percent on last year at A$6.7 billion and A$4.8 billion respectively. For businesses, however, this is an increased growth rate compared to the last 2 years of three percent in 2006 and 7 percent in 2007.
The big mover in fees for businesses was bank bill fee income, which includes charges for arranging bank bill facilities and accepting or endorsing bank bills, which increased by 15 percent over 2008.
Fee income from business loans increased by 12 percent, which the RBA said was consistent with the strong growth in business credit over the 2008 financial year, which reflected strong underlying demand for debt funding from businesses, as well as increased intermediation of business finance amid the turbulence in capital markets.
Following a recommendation of a recent Senate Inquiry into bank fees and charges, banks’ exception fees were collected for the first time.
The RBA defined the exception fee as a fee charged by a bank when a customer breaches the terms of a banking product, typically by making a late payment, overdrawing a deposit account or exceeding a credit limit.
In 2008, exception fees totalled A$1.2 billion, around 10 percent of banks’ total fee income. Around 83 percent of exception fees were levied on households, mainly on their deposit and credit card accounts.
The RBA indicated that, as has been the case for a number of years, banks’ domestic fee income grew less quickly than their balance sheet assets in 2008.
For both businesses and households, the growth in fee income appears to have been mainly the result of greater use of banking services, rather than higher unit charges, the RBA added.
Both business and household fees were up by eight percent on last year at A$6.7 billion and A$4.8 billion respectively. For businesses, however, this is an increased growth rate compared to the last 2 years of three percent in 2006 and 7 percent in 2007.
The big mover in fees for businesses was bank bill fee income, which includes charges for arranging bank bill facilities and accepting or endorsing bank bills, which increased by 15 percent over 2008.
Fee income from business loans increased by 12 percent, which the RBA said was consistent with the strong growth in business credit over the 2008 financial year, which reflected strong underlying demand for debt funding from businesses, as well as increased intermediation of business finance amid the turbulence in capital markets.
Following a recommendation of a recent Senate Inquiry into bank fees and charges, banks’ exception fees were collected for the first time.
The RBA defined the exception fee as a fee charged by a bank when a customer breaches the terms of a banking product, typically by making a late payment, overdrawing a deposit account or exceeding a credit limit.
In 2008, exception fees totalled A$1.2 billion, around 10 percent of banks’ total fee income. Around 83 percent of exception fees were levied on households, mainly on their deposit and credit card accounts.
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