Some commercial banks are reportedly pushing for a hike in service charges, including those on consumers’ transactions via automated teller machines, according to market insiders on Thursday.
While the banking sector slashed service fees in the wake of public criticism over “corporate greed” last year, some lenders are seeking to go back on their decision, highlighting an overall drop in earnings.
The banking services include remittances, Internet banking and the use of ATMs. Between 2011 and 2012, lenders faced criticism for providing what critics called hefty dividends to shareholders, while declining to cut service fees.
The fees that had reached up to 3,000 won ($2.6) per transaction currently range between zero and 1,500 won.
“Some lenders, however, are seemingly lobbying financial regulators in a bid to retrieve their reduced income in service fees and their comprehensive net profit,” an analyst said.
He said it seemed that the Financial Supervisory Service was receptive to the move.
“Some regulatory officials at the FSS recently said that bank fee hikes could be one of the options to consider.”
Meanwhile, the FSS has the official position that the final decision of raising the fees is up to banks as it has no authority over such decisions.
An FSS official said the state-run Korea Institute of Finance was likely to analyze a number of factors in determining fees including banks’ spending on the operation of ATMs.
“We will wait until the result comes,” the official said.
In 2011, right before the banking sector were pressured to lower the fees, lenders posted a robust combined profit on the back of their record-high earnings from service charges.
Their 2011 earnings came to about 12 trillion won, up 29.2 percent from 9.3 trillion won a year earlier.
Noticeably, their earnings from service fees, including those on transactions via ATMs, marked an all-time high of 4.9 trillion won, compared with 4.4 trillion won in 2010.
The previous record for earnings from service charges was 4.7 trillion won, in 2007.
Some bank officials argue that service fees in the local market are not high compared to those of developed countries.
“Korean banks’ service charges are lower than those in major countries, including the United States,” a local banker said.
He also said service fees are being discounted through a variety of preferential treatment policies.
A recent survey showed that customer confidence in banking continued to fall.
According to the 2012 global consumer banking survey by Ernst & Young, 44 percent of Koreans said they lost trust in the industry after the eurozone financial crisis.
By Kim Yon-se (
kys@heraldcorp.com)
