Repeatedly in two days April 7 and April 8, the automated message system of a large bank reported the deduction of money from customer accounts for service fees.
The first fee is 11,000 dong per month for Mobile Banking service. The second fee is 11,000 dong per month for active message service. As such, each month, accounts using these two accounts lose a fixed amount of 22,000 dong.
These are just two of the dozens of fees that customers have to pay for using current banking services, focusing on accounts and cards in payment and transaction.
For people with a lot of monthly transactions, i.e. money withdrawal and transfer with fees ranging from 2,000 dong, 3,300 dong to 11,000 dong, fees for using banking services are likely to become a bigger concern in the daily life of many people.
With simple demands such as parents in the countryside need to transfer money to their children to study in the city, despite only one move of money transfer and receiving, to be active and be convenient in monitoring the money coming in and out by using the aforementioned services, the two-way fixed amount that the family has to pay is 44,000 dong per month, plus a separate transfer fee for each transaction, plus a fee if their children withdraw money via ATM.
In the above example, in order to reduce costs, the parents simply open one account and one card for their children, and then spend time going to banks to transfer money.
The fees are doubled. Customers both have to pay a fixed monthly fee for “subscription and maintenance of services”, and pay additional fees for each transaction on that service.
That is the fee directly levied on each usage. However, in an indirect way, they are customers’ payment deposits.
Also in the aforementioned large bank, the interest rates paid to customers for non-term deposits are the lowest ever. So far, the bank explains that payment deposits of customers still get interest paid. In fact, the interest rate applicable is just symbolic, with 0.1%/annum.
Meanwhile, payment deposits have played important role in helping banks overcome difficult periods in the past as well as increase profit now.
The recently released reports about business results of banks in 2017 showed that the proportion of payment deposits, non-term deposits has increased rapidly in the structure. If in the previous years, this proportion was about 10 percent then now, many members have increased it to 20-30%.
That is also the trend on increased transactions in the economy, associated with the demand in the population. The larger the demand and transaction scale, the larger payment deposits.
And with the aforementioned proportion, the cheap source of capital with the interest rate of 0.1%/annum has been helping banks dilute the capital mobilisation costs, and improve the Net Interest Margin (NIM). In other words, the larger the cheap capital source, the larger the profits are.
In the previous years, non-term deposit rates were mostly 0.36-0.38%/annum, and have now strongly decreased as mentioned above, along with the increased proportion of sources, so banks are profitable in two ways.
The non-term deposit resources at banks are accrued from small amounts of money that individuals maintain or small balances to serve payment demand. Individual payment fees are not large. They only burst out each time when banks increase fees and then get quiet again.
So far, there have not had any specific comments or explanations from management agency or service providers to customers after recent information about fee increase.
However, non-term deposits and transaction fees for those small amounts are increasingly playing important role in banking profit.
In 2017 and 2018, banks are assigned with credit growth target at just about 15-16%, and total spending assets to popularly increase at less than 20%, not many members are allowed to raise chartered capital to more than 10%. However, more and more banks have reported the growth rate of 30%, 40 percent or even more than 80%.
The motivation to offset differences in the balance of aforementioned criteria has large role from the increase in service fee collection, as well as exploitation value of non-term capital sources.
In addition, it is individual customer accounts that is the basis for many commercial banks to have unexpected increase in revenue in 2017 and the following years, coming from the cross-selling of products and services.
