Submission to the Inquiry into the Post-Global Financial Crisis Banking Sector Fees

The financial crisis has had two opposing effects on banks' fee income.^[13] First, heightened competition for deposit funding has seen banks reduce and remove exception fees on deposit and transaction accounts for both businesses and personal customers. On the other hand, the repricing of credit and liquidity risk on loans and bank bill facilities has resulted in an increase in fees, particularly on undrawn loan facilities held by businesses. The net effect of these changes has been a decline in the ratio of fee income to assets, from 0.7 per cent in mid 2007 to 0.5 per cent in mid 2010. (The ratio peaked in 2001 at 0.9 per cent.) The results of the most recent survey, for banks' 2011 financial years, will be published in the June Reserve Bank Bulletin. Preliminary results suggest that these trends have continued.

Footnote

See Reserve Bank of Australia (2011), ‘Banking Fees in Australia’, Bulletin, June, pp 23–27 and Reserve Bank of Australia (2010), ‘Submission to the Inquiry into Competition within the Australian Banking Sector’, Submission to the Senate Economics References Committee Inquiry into Competition within the Australian Banking Sector, 30 November. [13]