Banks usually adjust their charges at the beginning of each year. Over the past two years, banks have struggled to bring down bad debt, grow revenue and deal with rising costs and low credit demand. Consequently, the contest for customers is fierce.
Standard Bank, SA's largest banking group by assets, said it would not raise prices next month for personal clients, while business banking fees would increase on average by 3,5% next year. Prices had also been restructured and simplified.
"Our decision comes at a time when the economy is sluggish and consumer and business confidence is low," said Standard Bank's director of products, Sugendhree Reddy.
Nedbank personal banking and client value managing executive Anton de Wet said the bank would increase charges either below or in line with inflation, though some fees would remain free or unchanged. He said the relatively higher increases were limited to traditional banking channels and cash handling where input costs, such as security, wages, transport and insurance, had increased significantly.
For instance, staff and cash handling costs had increased 8,3% and 34,2% this year, he said.
First National Bank spokesman Steve Higgins said the bank adjusted fees annually in June the average increase this year was 5%, with many entry-level product fees actually declining.
A spokesman for Absa, SA's largest bank in terms of local customer numbers, said it was too early to say when its fees would be adjusted for next year, or by how much. In March, Absa raised its fees by less than 5%, the first time the bank had adjusted them since June 2009.
Gavin Opperman, CEO of Absa Retail, predicted at the time that in future, banks would copy cellphone companies, which give customers the option to prepay for services. Such a pricing model effectively gave a customer direct control over their costs, Opperman said.
He said bank fees had become a sensitive issue and that they were being cited by customers as one of the main reasons they switched banks.
A Banking Association SA sector overview showed that the cost-to-income ratios for SA's banks this year had increased to 55,9% in September compared with 54,6% in the corresponding month a year earlier.
Operating expenses increased to R93,1bn in September from R83,8bn a year earlier.
The figures indicated falling efficiency, though the average return on investment and assets had improved over the period.
In recent years, bank charges have come in for strong criticism and the government has promised to toughen the powers of the Financial Services Board to regulate the market conduct of the financial sector, including banks and insurers. While fees are a key source of income for the banks, the government insists they are still too high.
The national consumer commissioner, Mamodupi Mohlala, is also keen to engage with banks, particularly on penalty fees for unsuccessful debit orders.
Source: Business Day via I-Net Bridge
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