Australia's banks milked $9.8 billion in fees in the 2005-06 year from account holders, with households accounting for $4 billion with many more Australians paying penalty fees on credit cards.
Total domestic fee income earned by banks grew by 6 per cent in 2006, to a whopping $9.8 billion.
While businesses paid $5.7 billion in fees, banks’ fee income from households jumped 10 per cent to $4.0 billion in 2006.
“The growth in fee income appears to have been mainly the result of an increase in the use of banking services rather than higher unit charges,” the RBA said today.
Credit card fees jumpTotal fees paid by households on credit cards jumped 13 per cent in 2006 to $1.02 billion.
Account-servicing and transaction fees on credit cards increased by 9 per cent, which was roughly in line with the growth in the number of credit card accounts and the value of cash advances.
Other credit card fees – which are mainly penalty fees, over-limit fees and foreign currency conversion fees – rose by 21 per cent.
Strong home loan competition
Fee income from housing loans grew by 6 per cent to $800 million, slower than the growth in the number of housing loan approvals.
“This development reflects strong competition among banks for new housing lending in recent years, which has seen banks discounting or waiving loan establishment fees,” the RBA said.
Fee income from personal loans rose by 15 per cent to $500 million, consistent with the strong growth of personal credit in 2006.
The largest component of banks’ fee income from households was fees on deposit accounts, accounting for more than 40 per cent of the total at $1.62 billion.
"Fee income from this segment grew by 9 per cent in 2006, mainly reflecting the growth in the number of accounts and transactions," the RBA said.
The latest survey by the Reserve Bank of Australia (RBA), relating to banks’ 2006 financial year, covered 18 banks which accounted for more than 90 per cent of the total assets of the banking sector in Australia.
A banker's viewThe Australian Bankers Association said today rising transaction numbers was driving bank fee growth.
It own analysis shows that actual unit costs - that is, the cost of each transaction to consumers - was declining.
ABA chief executive David Bel said the RBA figures told a "double good story'' for consumers.
The results showed fees were coming down and interest margins - the difference between the interest rates on bank loans and deposits - were also being squeezed.
In a report commissioned by the ABA, Macquarie University academic Kim Hawtrey found the average unit cost of banking to consumers fell in 2006 and over the past five years had dropped by 5 per cent.
Source: AAP
