The downtrend in fees paid by households for their current accounts is continuing. A semi-annual report published today by the Bank of Israel shows that the monthly fees paid in the second half of 2014 averaged NIS 12.80 (the cost was calculated according to a uniform usage profile). This is 2% less than in the first half of 2014. This slow erosion in fees has been going on for several years, with an aggregate 17% drop in this figure since 2010.
The drop in current account fees is attributable to rising public awareness, and stronger bargaining power vis-a-vis the banks. The introduction of more current account tracks also helped. The Bank of Israel ordered the banks to launch two new current account tracks, and imposed a NIS 10 price on the basic track, substantially less than the price of the fee composition included in the track.
Bank of Israel figures show that since these tracks were launched in April 2014, 202,000 customers have joined them. This is a low figure, given the fact that switching to the new tracks is worthwhile for a large proportion of customers. In order to increase the number of those joining, the banks will have to contact all their customers and offer this service by next year.
The semiannual report also shows the average payment for each bank. The figures show that the lowest average monthly cost among the five largest banks was at Israel Discount Bank (TASE: DSCT) - NIS 11 a month, while the highest was at First International Bank of Israel (TASE: FTIN) - NIS 14.30 a month. The lowest monthly cost of all the banks was at Bank of Jerusalem (TASE: JBNK) - only NIS 0.70, after the bank gave its customers a general exemption from current account fees. The most expensive was First International Bank group subsidiary Poalei Agudat Israel Bank - NIS 22.50 per month.
The actual average monthly payment in the second half of 2014 (as opposed to the payment according to the uniform usage profile) was NIS 11.20, down 10%, compared with the first half of the year. The reduction was due to the halving of the minimum charge ordered by the Bank of Israel.
Published by Globes [online], Israel business news - www.globes-online.com - on July 16, 2015
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