Bank fee income from households down

Banks extracted $4 billion in fees from households last financial year - a heck of a lot, but still less than the year before.

In fact 2010/11 was the second year in a row that fees the banks charged to households fell, according to an annual survey by the Reserve Bank of Australia (RBA) published on Thursday.

The total of $4 billion in 2010/11 was down by $300 million from 2009/10.

And it was $1.2 billion lower than the record $5.2 billion raked in by the banks two years earlier in 2008/09.

"This fall was largely a result of a decline in exception fees on transaction deposit accounts," the RBA said.

Exception fees include those annoying charges for overdrawing your savings account by the tiniest amount, or for getting your monthly credit card payment in a day late, thanks to the two days it took one bank to get your money to the other bank next door.

But it's not just the exception fees.

Account servicing and transaction fees on deposit accounts have been coming down as banks compete to attract deposits in the wake of the global financial crisis that had disrupted wholesale money markets.

In 2010/11, fee income on households' deposit accounts totalled $1 billion, compared with $2.1 billion at the peak in 2007/08.

The slow housing market has hit fee income on home loans as well, with the take from that cash cow falling to $1.2 billion in 2010/11 from $1.4 billion in 2009/10.

But the banks have been making up for it with a bigger haul of fee income from their business customers.

Fees from business accounts rose to $7.3 billion in 2010/11, from $6.9 billion in 2009/10.

The rise was mainly the result of increased fees on loans and bank bills - marketable IOUs the banks issue on behalf of business customers - and went against the tide of a fall in total business lending in the year.

Overall, bank fee income rose slightly in 2010/11, returning to the 2008/09 level of $11.3 billion after a fall to #$11.2 billion in 2009/10.

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