14 June 2017
Sydney, 15 June 2017: The number of customer transactions, loans and accounts are increasing but growth in fees paid by households and businesses remains low, the Australian Bankers’ Association said today.
“The past year has seen little change in bank fees paid by households, at the same time as more than 900,000 new home loans were provided by banks, and half a million new credit card accounts were opened,” ABA Chief Executive Anna Bligh said.
“This is due to a combination of factors including strong competition, more low-fee and no-fee products being offered, and the industry’s efforts to educate customers about how to minimise the fees they pay.”
The ABA report1 released today, Fees for banking services, shows the average weekly bank fees paid by households is $9, the same amount it has been over the past five years.
“We know how important transaction accounts are for bank customers to do their day-to-day banking and virtually every Australian has one. Pleasingly, the amount households paid in 2016 in fees for their transaction accounts was at its lowest level in 15 years.
“At the same time, we’re seeing more people using their transaction accounts more often,” Ms Bligh said.
“Also, mortgage fees relative to the number of home loans provided to customers were the lowest on record and fees for credit cards relative to the amount of credit accessed remained at the lowest level in more than a decade.”
Ms Bligh said bank fees paid by businesses for loans were also low when compared to the increase in lending.
“Over the past year, the increase in fees of 2.4 per cent was well below the 8 per cent increase in business loans.
“Large businesses accounted for 58 per cent of bank service fees from business loans,” she said.
Other key findings include:
- Fees as a proportion of banks’ operating income is 13 per cent, well below the peak of 18 per cent in 2003.
- Credit card fees as a proportion of the total balance outstanding is 3.7 per cent, which is around the same as the past 10 years.
- Bank fees relative to their assets (the bulk of which is loans) is at a record low of 0.37 per cent.
A copy of the report is available here.
Contact: Stephanie Arena 0477 470 677
1The ABA’s report is based on the Reserve Bank of Australia’s banking fees survey, also released today. The ABA data is different to the RBA data for personal loans, (and hence aggregate fees paid by households), because of a discrepancy in the treatment of data for personal loans for one bank. This results in ABA data showing aggregate fees paid by households were flat while RBA shows a very small rise. The RBA has included the full amount of the discrepancy in their data this year, while the ABA did not have sufficient information to allocate the data accurately. Both the ABA and RBA will review the treatment of this discrepancy next year.
“…banks can go back to their normal processes and that is working out what’s right for every single customer, on an individual tailored basis with a proper assessment. That is the best thing for the customer.”
Access to credit opens up opportunities and fulfills aspirations. Getting it right requires the right balance between consumer protections and the flow of credit.
Interviewed by AM’s Peter Ryan, ABA CEO Anna Bligh talked about the substantial drop in loan deferrals since their peak during the pandemic, falling from 900,000 to 300,000.