ABA CALLS FOR BANKING DEBATE TO BE BASED ON THE FACTS ABA outlines facts on profits and fees Sydney, 23 August, 2001: The Australian Bankers’ Association (ABA) is keen to see any debate on banking based on the facts. David Bell, Chief Executive of the Australian Bankers’ Association, said the Opposition Spokesman on Financial Services and Regulation, Senator Conroy’s assertion on bank profits and fees, posed in a notice of motion in the Senate this afternoon, is incorrect. These are the facts: Profits: Returns in the banking sector are in line with other Australian industries. A comparison of return on shareholder funds shows that telecommunications companies lead, followed by energy, diversified resources and then banks. Australian bank profits are in line with overseas banks. The Reserve Bank of Australia (RBA) recently noted that return on equity (the broadest measure of corporate profitability) is about 17%, which is the same as in the United States and Canada, and below the 23% of UK banks; Bank profits are shared with six and half million direct and indirect shareholders, many of who are retirees who rely on dividends for income. Fees: Fees paid by customers on personal transaction services contribute to only 1% of bank revenue. The RBA has found that the maintenance of bank profitability has been mainly achieved through cost reductions - not increases in fees and charges; The RBA notes that of the $2.15 billion in fees from households, loans fees contribute the largest share - not transaction fees; The RBA’s overall conclusion is the falls in loan margins have more than offset any fee increases, which is particularly the case for housing borrowers. Bank services: Australian banks have invested heavily in ATMs, EFTPOS, phone and Internet banking resulting in more convenience and value for customers than ever before. Not withstanding branch closures, banks are providing increased face-to-face services through GiroPost, supermarkets, newsagencies and pharmacies. Since 1995, the number of bank branches has decreased by 25% from 6,655 to 5,003 but the combined growth in agencies and the GiroPost network means there has been a net increase of face-to-face facilities of 308 or 2.45%. Editors please note: Senator Conroy’s notice of motion Senator Conroy: To move on the next day of sitting (August 23)—That the Senate— (a) notes that banking is the most profitable industry in Australia and that these profits have been caused by increased bank fees, increased bank queues and reduced banking services; (b) notes, in particular, that:                     i.     in the past half year the major banks announced record profits of more than $5 billion and are  headed for profits of more than $10 billion for the full year, and                    ii.            according to the Reserve Bank’s recent update Bank Fees in Australia, banks earned $2.1 billion in fees from households in the past 12 months and that in the past 4 years this income has increased by 75 per cent; and                   iii.            since 1996 banks have closed 1 505 bank branches; and (c) calls upon the Government to immediately negotiate a social charter with Australia’s banks to ensure that all Australians have access to affordable banking services. For Further Information Contact:   Heather Wellard ABA PR Phone: 02 8298 0411 Mobile: 0409 830 439   ENDS