Local banking fees in keeping with Western trends - study

A just-concluded study by the local think tank, Caribbean Policy Research Institute (CaPRI), has found that the significant increase in fees charged by local banks is in keeping with trends in many Western economies since the early 1990s.



The CaPRI study has confirmed the findings in a study by the Consumer Affairs Commission (CAC) which has reported a significant increase in the rates and fees charged by commercial banks in Jamaica 2009-2013.



However, while the CAC’s study appeared to suggest that the fees were unusually high, CaPRI has noted that the local fees are in keeping with trends elsewhere in Western economies.



CaPRI says its study provides some preliminary support for the conjecture that Jamaican banks increased fees in a bid to maintain profit levels amid declining interest revenues.



The trends suggest that decreasing net interest income and net fees and commissions caused profits to fall in 2006.



The banks responded to the declining profits by increasing both net interest income and net fees and commissions in 2007.



CaPRI notes that the net fees and commissions decreased slightly between 2008 and 2009 when the increases in net interest income were sufficient to maintain the trend of increasing profits.



However, these fees rose significantly between 2009 and 2011 to compensate for the decline in net interest income in 2009.



The study has concluded that there is not much the government or regulators can do to ensure lower fees, CaPRI argued that consumer power could force the banks to change.



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