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Banks cream off N$6 billion from transactional fees

Mon, 10 October 2016 15:44
by Linekela Halwoodi
News Flash

Namibian banks have creamed off N$5.9 billion in transaction related fee income from locals between 2014 and this year (August), The Villager has learned.
The amount is close to the whole budget earmarked for the ministry of education to drive the education sector for a full financial year by the Ministry of Finance from their budget.
Ironically while the banks are allowed to make profits like all the other entities operating in the Namibian economy investigations by The Villager have shown that in some cases banking consumers are subjected to transactional charges without really understanding the way the system works.
Transactional fees are charged when bank clients transact with plastic money in acquiring goods and services or when withdrawing or depositing cash.
In 2014, banks made N$2.1 billion, while in 2015 the transaction fees increased to N$2.3 billion while this year so far, the banks have made N$1.5 billion in transaction related fee income.
Banks operating in Namibia have been under scrutiny on transparency of bank transaction fees, although the determination or legal framework relating to the disclosure and transparency of bank fees and charges has been in existence since 1999.

“The legal framework has thus been in existence since inception of the Banking Law in Namibia, requiring banks to be open and transparent with their fees. The only challenge experienced in that respect was that the fee structures were deemed to be complex, and as such it was difficult to compare fees and charges among banks,” Director of Strategic Communications and Financial Sector Development at Bank of Namibia (BoN), Emma Haiyambo said.
BoN is currently doing a study to understand the cost structures of commercial banks for the different products and services offered to customers in order to provide better insights.
The Determination on Disclosure of Bank Fees, Charges and Commission (BID-13) requires banking institutions on an annual basis to make formal statutory submissions to the Bank of Namibia on their latest fees for the new calendar periods.
“Commercial banks are expected to display in a prominent and open manner, on notice boards in the branches and banking halls of their banks as well as on the internet and websites, all their fees structures regarding their products and service offerings,” Haiyambo said.
BoN said transaction related fee income also includes all non-interest income earned as a direct result of any service rendered by the reporting banking institution at a fee levied on the basis of standardized tariffs.
“In analyzing the above fees, it is also important to note that the increase could be attributed to a number of factors. The increase could be attributed to the annual increase in fees and charges, increase in the number of banks in the industry, and also due to the increase in the volumes of transactions,” Haiyambo added.
Commercial banks such as Bank Windhoek Holdings (Ltd) recorded a sound performance for half of the year that ended in December 2015 with a profit after tax for that period at N$455.9 million an increase of 26.4% year on year.
Earlier this year, The Villager reported that commercial banks were owed over N$73 billion in loans according to statistics that were made available by the BoN.
The loan debt stood at N$6.1 billion from N$67.4 billion during the 2014 financial year.
During the 2015 financial period, a total of N$80.5 billion worth of deposits were made, compared to the total deposits in 2014 which stood at N$73.5 billion. This translated into a healthy loan-to-deposit ratio (LTD ratio) in 2014 and 2015 which stood at 91.7% and 92%, respectively.
It has been previously reported that Namibians have a tendency to live beyond their means, and therefore have contributed high to the import bill.
According to information released by the central bank also, Namibians are importing luxurious items and this is not compensated in exports therefore has negative impact.