Banks deny collusion on fees

“Banks are not price-fixing, and fees and charges are reflective of the cost for providing the services,” she said. Schnoor yesterday told the Joint Select Committee inquiring into finance and legal affairs at the Office of the Parliament, Port of Spain that bank fees and service charges “were adjusted” only three times over the last ten years. Some banks had no increases during the same period, and online and mobile banking options have remained free, she said.

For many fee categories, she said, “the inflation adjusted fee increases have actually been negative over the last ten years.” In preparation for the inquiry, Schnoor said, “because BATT does not collate or have knowledge of the strategic decision making process of any individual member bank, we engaged the services of an international accounting firm to collate information in aggregate on the industry.” Compared to similar services provided by banks in the region, Schnoor said, almost all fee categories in TT were lower. She noted that the survey carried out by the accounting firm found that fees and charges represent seven to 11 percent of total revenue of all banks, and the banking sector’s profitability per customer and per account has declined over the last ten years.

There were many reasons for the decline in profitability with the main reason being, she said, “tremendous increases in operating costs in all banks over the same period.” The firm also found, she said, that net interest margins in the banking industry are at their lowest levels in over a decade and all loan major categories, current interest rates are lower than they were a decade ago.

Deposit rates have also declined over the same period, she said, “this is directly due to a build up of liquidity in the sector.” She added, “As a reference point deposits have grown from $50 billion to now over $110 billion in the last decade.” She said that profitability in the banking industry has marginally increased “at a CAGR (compound annual growth rate) of 1.2 percent over the last decade with declines in key metrics such as ROA (return on assets) and ROE (return on equity).

Schnoor said that over the past decade the eight commercial banks (BATT’s membership) have provided over $4.6 billion in taxes to Government and over $11.8 billion in dividends to shareholders, the majority being TT nationals. Asked if $4.6 billion in revenue over the past 10 years was not low given profitability, Schnoor said, that the banking sector is the second largest contributor to the GDP (Gross Domestic Product) in the country.

Noting that it was important for clients to have access to information, she said, there was need for financial education and financial literacy