The bank fees reform, which came into effect in July 2008, has saved customers NIS 400 million, according to an analysis by "Globes" of banks' financial reports for the first and second quarters of 2009.
The aggregate revenue of Israel's top five banks was NIS 6.68 billion in the first half of 2009, compared with NIS 6.7 billion in the first half of 2008. The banks' aggregate income from fees on securities transactions rose to NIS 1.53 billion in the first half from NIS 1.36 billion in the corresponding half. The increase in this item was due to the increase in trading volume and securities' prices on the Tel Aviv Stock Exchange (TASE).
The bank fees reform mainly applied to fees on checking accounts, particularly management fees and credit line fees.
Bank Hapoalim (TASE: POLI) made NIS 2.2 billion in fees in the first half, down 7.4% on the corresponding half, mainly because of the sale of Bank Yahav for Government Employees Ltd. to Mizrahi Tefahot Bank (TASE:MZTF). Bank Hapoalim reported that its checking account management fees fell 6.3% and that its revenue from credit line fees fell 36% over the period.
Bank Leumi (TASE: LUMI) made NIS 1.7 billion in fees in the first half, down 6.3% from the corresponding half, and its revenue from credit line fees fell 37%. Altogether, the bank fees reform cost the banks NIS 290 million a year.
The three mid-sized banks saw an increase in their revenue from fees. Israel Discount Bank (TASE: DSCT) made NIS 1.3 billion in fees in the first half, up 9.5% on the corresponding half. First International Bank of Israel (TASE: FTIN1;FTIN5) made NIS 691 million in fees in the first half, up 11.5% on the corresponding half. Mizrahi Tefahot Bank (TASE:MZTF) made NIS 622 million in fees in the first half, up 15.8% on the corresponding half. Excluding Bank Yahav, the increase was 4.1%.
The goal of the bank fees reform was to simplify the banks' fees structure and reduce the number of fee by two-thirds from 198 to 72. Some fees were cancelled and others were consolidated. The reform set two types of fees for checking accounts: direct transactions by telephone, Internet, or ATMs; and transactions via bank tellers.
Supervisor of Banks Rony Hizkiyahu's goal was not to lower the fees, but to increase their transparency by eliminating duplicate fees in which customers paid more than once for the same service. The Bank of Israel hoped that increased transparency would boost competition, and lead to lower fees.
Published by Globes [online], Israel business news - www.globes-online.com - on October 15, 2009
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