FACTS ON SMALL BUSINESS BANKING
Sydney, 28 July, 2004: The Australian Bankers’ Association (ABA) says it is important to note that Reserve Bank of Australia (RBA) data shows that small businesses are saving $1.5 billion[1] a year from lower interest rate margins.
A media release, issued today at the Small Business Ministerial Council meeting in Hobart, by New South Wales Minister for Small Business, David Campbell, claimed that bank fees were too high.
The figures included in the Minister’s media release did not reflect the $430 million in annual bank merchant service fee reductions, a proportion of which benefits small businesses. This fee saving was published in a report by the Reserve Bank in July this year.
David Bell, Chief Executive of the ABA, said: “The small business banking market is highly competitive. Fifty-five institutions provide over 800 different debt finance and business transaction accounts. The number of product providers has increased 25% in the last two years.”
“All banks and the wider industry are working to further improve the small business market. Recently, the ABA established the Small Business Consultative Forum to hear directly from small business representatives on how the banks can improve their operations.”
In addition, the RBA notes that small business activity is increasing in volume and this is the reason for increases in bank fee revenue from this sector.
“Fee income from business deposit accounts increased by 7 per cent in 2003, broadly in line with growth in the previous year. Within the total, income from account-servicing charges increased by more than transaction fee income. The increase in fee income from business deposit accounts appears to be due to increases in the number of accounts and transactions, with unit costs for operating business cheque accounts generally falling in 2003, in some cases offsetting the rises that occurred in 2002. In aggregate, the banks sourced around three-quarters of their business deposit fee income from small businesses, with the high share likely to reflect the greater number of small business accounts and transactions.” [2]
For further information:
Heather Wellard
ABA Public Relations
Phone: 02 8298 0411
Mobile: 0409 830 439
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