The public in Israel paid banks more fees in the first half of 2021. This emerges from the report published yesterday by the Bank of Israel’s Supervisor of Banks. The increase is mainly due to an 18% growth in credit card fee payments in the first half of 2021 compared to the previous year.
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According to the bank’s survey, in the first half of 2021, the average credit card fee was NIS 13.1 per month, compared with NIS 11.1 in the previous year. This increase is probably due to the increase in the number of Israelis who traveled abroad in 2021 compared to 2020, since the income is mainly due to “transactions and withdrawals in foreign currency” commissions. During the period under review, Isracard, for example, raised the commission rate for foreign exchange transactions from 2.7% to 2.9% in June 2021 (Max is 3% and Cal is 2.8%).
According to the Bank of Israel, the average amount of credit cards in Israel per customer continues to rise and today stands at 1.7 cards per customer, compared with 1.67 in 2020 and 1.18 a decade ago in 2011.
In terms of the overall cost of account management, the commissions average NIS 8.2 per month (compared to NIS 7.7 in 2020 and NIS 9.2 in 2019). The cost of running the current account averaged NIS 10.7 per month, a decrease of 5.5% compared to 2020. According to the Bank of Israel, the decrease is due to a 35% decrease in fines received by Israelis for the need to repay bills in accounts where insufficient coverage is provided. Which characterized more accounts in the Corona period.
The area that generates the most commissions is trading and holding securities – 33% of the total commissions. This is the same commission rate as measured in 2020. It is important for the Bank of Israel to promote customers ‘awareness of securities trading fees, since this activity, such as buying and selling shares and bonds, is cheaper among the banks’ competitors – the investment houses. The banks actually benefit from the public’s lack of knowledge.
In the first three quarters of 2021, for example, the revenues of the five largest banks from securities operations amounted to NIS 1.9 billion – an increase of 12% compared with the corresponding period in 2020. These revenues accounted for 4.1 %% of the banks’ revenues in this period, which amounted to NIS 4.4 billion, compared with 5.2% in the corresponding period.
Regarding the management of investments in the Bank, the banks enjoy a double commission, since they charge a commission for buying and selling Israeli securities at a rate of 0.3% -0.2%, as well as securities management fees (formerly shift fees) amounting to 0.5% -0.3%. These are higher commissions than those charged by investment houses, whose buying and selling commissions are 0.09% -0.07%.
According to the Bank of Israel, banks are growing at a faster rate than the fee collection rate. The ratio of commission income to assets in Israeli banks today stands at 0.75 in the industry, compared with 0.76 in 2020. In 2019 the ratio was 0.92 and so in 2018. According to the Bank of Israel, the decrease was due to an increase in the total assets of the banking system of approximately 6.5% in annual terms, which exceeded the increase in commission income of approximately 6%.
From 2008 to mid-2021, banks’ commission income fell by 45%. In 2008, the banking rules were enacted, which set a uniform tariff for all banking corporations in Israel. Uniformity and publicity, according to the Bank of Israel, pushed prices down.