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Australian Banks Collect Billions In Fees
Australian banks charged their customers a collective $12.7 billion in fees last financial year, which represents an increase of nine per cent from the previous year, according to new data from the Reserve Bank of Australia.
Business felt most of the burden of the growth in fees, with banks earnings from the sector growing a whopping 20 per cent to almost $2.2 billion despite flat corporate lending growth.
The business sector bore the brunt of the growth in charges, with fee income from that sector leaping 20 per cent to almost $2.2 billion – despite flat corporate lending growth.
A lot of the increase in fees charged to businesses was driven by fees on existing loans, as lenders re-priced their loan books to accommodate higher funding costs the central bank says.
The RBA said businesses that used only part of their loan facilities were the hardest hit.
“Fees on undrawn loan facilities appear to have risen significantly,” the RBA said.
According to the RBA, households paid $5 billion in fees during the last financial year, representing an increase of 3 per cent on the previous year. Fees charged on mortgages and personal loans were the primary driver for the increase.
Fees charged on mortgages leapt 17 per cent to $1.235 billion as borrowers refinanced their loans and switched from fixed to variable rate loans whilst interest rates were falling last year.
Fee income derived from personal lending to households rose 14 per cent, whilst fees earned from unsecured credit card lending increased by eight per cent.
84 per cent of all exception fees levied was paid by households, or almost $1 billion, a figure which was unchanged from the previous year as exception fees on home loans fell by six per cent.
This was offset by a 13 per cent rise for exception fees on personal loans and a 10 per cent increase on credit card fees.
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