Bank fee income declined sharply in 2020 as the effect of COVID reduced spending and financial activity in the Australian economy.
According to the latest Reserve Bank bank fee survey, fee income from both households and business was down, with the total falling 6.7 per cent to A$11.4 billion.
Fee income of $3.5 billion from households was down 10 per cent, which is the largest decline since 2010, when the banks reduced their exception fees.
The fall was due to lower income from credit cards, which makes up 39 per cent of the total, and personal loans. Income from housing loans increased.
Income from deposit accounts fell 18 per cent, due to lower activity such as currency conversion and money transfers, and fewer international ATM transactions.
COVID-related fee waivers also had an impact, contributing to lower income from exception fees and overdraft fees.
Fee income of $7.9 billion from businesses fell 5 per cent, largely due to a fall in merchant service fees from processing card transactions. Reduced consumer spending, the ongoing shift from credit to debit card payments and fee waivers were all factors.
The fall in merchant service fees was the biggest decline since 2004, when interchange fees were overhauled.
Income from business deposit services also declined, while income from loans remained steady.