Australian banks aren’t doing that well from service fees despite the widespread perception that these having been increasing, according to a study by management consultancy A.T. Kearney.
Bank service fee revenue adjusted for asset growth fell by almost 50%, from 0.85% in 2002 to 0.44% in 2012, as this chart shows.
The real returns are the difference between the variable mortgage rate and the cash rate – the bank margin. These too, however, have declined as this chart shows:
“Contrary to public perception, overall margins have not increased but have in fact declined pre-GFC and have remained relatively stable since then,” A.T. Kearney says in its report Banking on Our Future.
However, even these reduced margins have produced more and more revenue because the size of the banks’ business has grown.
Net loans doubled from $1.1 trillion in 2004 to $2.2 trillion by 2012, while the net interest margins declined slightly from 2.30% to 2.13% over the same period. m
Profit for the collective banks increased from $17 billion in 2005 to $26 billion in 2012.
This growth has been fuelled by a surge in net interest income, which doubled from $30 billion in 2005 to $60 billion in 2012.
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