Bank charges report: Almost all of SA’s banks lower their fees

Tables incl. Capitec pleased its offer’s become a serious threat to traditional role players.

PRETORIA – Capitec (JSE:CPI) is still the bank with the lowest bank fees, according to the Solidarity Research Institute’s third bank fees report. The report also shows that all the banks, with the exception of Nedbank (JSE:NED), have lowered their fees in 2012.

In reaction, Capitec commented that the bank is encouraged by the findings of the report and feels that Solidarity did indeed “compare apples with apples.”

“The report (also) goes further and exposes the hidden costs and limitations in some of the low cost options in the market that were created to compete with Capitec Bank,” the bank said.

In the comparison FNB came second, Absa (JSE:ASA) third and Standard Bank (JSE:SBK) fourth, with Nedbank in last position. Last year Nedbank was third.

However, not all the banks were in agreement that apples were compared with apples.

Comment and comparisons

Sugendhree Reddy, head of personal markets at Standard Bank, said that the bank would provide comment once it had an opportunity to study the report in detail. “A cursory read of the press release reflects a few discrepancies in terms of some of the figures quoted. For example, some accounts from other banks do charge out-of-bundle fees while most of Standard Bank’s packages are all inclusive. An important point to note is that only about 2% of our customer base pays the stop order fee referred to in the press release,” she said.

Jo-Ann Du Plessis, Head of Pricing from FNB Core Banking Solutions said that the bank fully supports independent pricing studies and encourages customers to be aware of various pricing options and accounts suitable to their needs, but that customers should not forget value adds such as eBucks, free ADSL, airtime and fuel rewards. This was not included in the comparison.

“FNB offers an online bank charges calculator to assist customers to choose the best account to suit their lifestyle and banking needs,” she said. In the report Solidarity mentions this calculator, but says that it is “deeply hidden” on the website and that it is “doubtful if any normal client will ever find it.”

Nedbank said it welcomed the findings, but will comment more fully when a full review of the report has been done.

Bobby Malabie, Chief Executive for Absa Retail and Business Banking, said that the bank was delighted that the report confirmed the competitiveness of Absa’s new offers (including the low-cost account Transact and the Value Bundles offers).

“We are also delighted to see that the study commends Absa’s commitment to pricing simplicity and transparency. The report signifies a major step in our journey to making our customers lives easier. This includes reducing banking costs for our customers that appreciate ease of banking, value for money and being rewarded for their loyalty,” he said.

The reason for the lower fees is reported to be pressure from consumers.

Capitec’s Global One account remains the cheapest account for the second year running with an average cost for eight different user profiles of only R55.50 per month. This is a further 15.9% lower than last year.

“We are pleased that our offer has become a serious threat to the traditional role players,” Capitec commented.

In comparison, Nedbank’s cheapest account is the Savvy Electronic account with an average cost of R112.61 per month, which is also 4.5% more expensive than the previous year.

Solidarity warns that all bank clients have different needs and transaction patterns that would not necessarily match those used in the study. The report also states that it is technically difficult, but not impossible, to compare bank charges from one year to the next as interest rates change, new account types are introduced and others are phased out. “Sometimes banks deliberately push up fees in one type of account to encourage clients to move to other existing accounts in the bank,” the report reads.

In Capitec’s case the report mentions that although the fees are the lowest, there are some limitations to the one account offered – such as the fact that it still doesn’t offer a facility for a credit card, overdraft facility or chequebook. CEO Riaan Stassen has mentioned that credit cards were in the pipeline for 2014. “Capitec also offers cellphone banking now, but at the moment it is still somewhat limited,” the report reads. “Its internet banking services, however, compares well.”

In the past, one of the significantly higher fees for FNB clients, was withdrawing money from another bank’s ATM. The report states that from 2012 this seems to be something of the past. “Its fees to use another bank’s ATM is now in line with the other ‘Big Four’, but Capitec’s fee for this transaction is still much lower.”

The report also comments on the level of user-friendliness of each bank’s website, stating that Standard Bank’s is a bit confusing and that it can take long to get to the relevant information needed.

Although Nedbank offers fewer account options for its clients, the report states that this makes it easier to understand. Nedbank also does not seem to segment its clients as much as the other ‘Big Four’ banks in terms of income levels, Solidarity’s Research Institute said in the report.

How the study works

For the analysis, accounts were taken which fits with the socio-economic profiles of the majority of Solidarity’s members and support base. In most cases, the research institute said in the report, these were basic and intermediary accounts from the five banks. Importantly, Solidarity includes any interest that could be earned during the month and subtracts this from the bank charges for that particular month. In accounts where you have to maintain a minimum balance to qualify for the lower bank fees, the interest lost due to this requirement is also taken into account.

Elements like the cost of credit cards, overdrafts and other services that don’t form part of the core of transaction accounts, were not included in the analysis and comparison.

In one of the user profiles, for example, Solidarity took an imaginary person who spends about R10 500 per month. He uses electronic bank channels and also limits his transactions per month. He only withdraws money (R500) twice a month from a point-of-sale and uses his debit card to pay for items three times a week. He has five debit orders and four stop orders on his account and he makes three EFTs. He also adjusts one of his stop orders once a month. He uses his bank’s sms notification service and only queries his balance once a month. He can maintain a minimum balance in his account and abides by all the rules of the account. He does not deposit cheques and does not withdraw money from an ATM.

Each bank’s cheapest account in 2011 and 2012

(Charges calculated as an average of eight transaction profiles, the effect of interest or forgone interest excluded.)

Bank

Cheapest account in 2011

Costs in 2011

Costs in 2012

Cheapest account in 2012

Difference

Capitec

 

Global One Account

R66,00

R55,50

Global One Account

-R10,50

-15,9%

FNB

 

Smart – Unlimited

R74,53

R60,95

Smart – Unlimited

-R13,58

-18,2%

Absa

 

Silver Package

R148,14

R91,05

Silver Value Bundle

-R57,09

-38,5%

Standard Bank

Classic Cheque – Fixed Fee

R134,89

R109,81

Achiever – Electronic

 

-R25,08

-18,6%

Nedbank

 

Savvy – Electronic

R107,79

R112,61

Savvy – Electronic

R4,82

4,5%


Comparison of average cost per account across the user profiles

Average bank costs of the eight user profiles (penalty fees have been excluded, but the effect of interest or lost interest included)

 

Bank, account and option

Average monthly cost

1

Capitec Global One (R37.74 interest)

R20.76

2

FNB – Smart Cheque – Pay as you use (Fee Saver) (R31.27 lost interest)

R43.22

3

FNB – Gold – Pay as you use (Fee Saver) (R31.27 lost interest)

R43.22

4

FNB Platinum – Pay as you use (Fee Saver) (R31.27 lost interest)

R43.22

5

FNB Smart Unlimited

R60.95

6

FNB Smart Pay as you use (Fee Saver) (R17.37 lost interest)

R71.35

7

FNB Smart Cheque Unlimited

R90.05

8

Absa Silver Value Bundle

R91.05

9

Standard Bank Elite Refund (R34.74 lost interest)

R108.59

10

FNB Gold Unlimited

R108.95

11

Standard Bank Achiever Electronic

R109.81

12

Nedbank Savvy Electronic Bundle

R112.61

13

Absa Gold Value Bundle

R121.05

14

Nedbank Transactor Plus Bundle

R124.29

15

FNB Platinum Unlimited

R131.95

16

Nedbank Everyday Current Bundle

R133.61

17

Standard Bank Elite Fixed Fee

R135.44

18

Absa Flexi

R141.48

19

Nedbank Transactor Plus Pay as you use

R151.20

20

Standard Bank Elite Pay as you transact

R155.75

21

Absa Platinum Value Bundle

R161.05

22

FNB Smart Zero Monthly fee

R166.08

23

Absa Current Standard Fee

R171.68

24

Absa Gold Current Standard Fee

R179.68

25

Nedbank Current Pay as you use

R227.80

This table represents an extremely simplified picture of the results of the study. For more detailed results the detailed tables and graphics in the report should be studied.

For the full report click here

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