Figures obtained by businessdigest from commercial banks in the last fortnight show that an individual is charged between US$1 and US$5 for a single withdrawal, while companies pay up to US$9. The regional average is US$2 for individuals and US$6 for companies.
To be issued with a draft/RMO, individuals and corporates are parting with between US$8 and US$15. Telegraphic transfers cost between US$15 and US$30 for both corporates and individuals depending on the amount involved. The same amount is charged for deposits received by telegraphic transfers.
Banks are also charging as much as US$20 for a single deposit of bank notes transaction. The average regional charge for the same transaction is US$7.
Some banks are not charging for maintaining clients’ accounts, but others are levying US$3.
Corporates are being charged between US$8 and US$12 per month for monthly account maintenance. FCA inter account transfers cost between US$1 and US$5 depending on the bank for both individuals and corporates.
Service charges for salary processing tariffs cost between US$1,50 and US$4 per entry for manual salary payments. Unclaimed salaries cost between US$4 and US$7.
Companies are being charged between US$7 and US$10 per payroll for late salary submissions.
Most banks have not set a charge for intermediated money transfer tax.
Facility negotiation fees for companies cost 5% of the value of the overdraft or loan.
Between US$4 and US$8 is charged for stop orders.
Accounts closed within six months are attracting a fee of between US$18 and US$25, while reactivation of a dormant account costs between US$20 and US$25.
Services for bonds guarantees, securities and indemnities and bills range between 5% and 10% of the amount at hand.
Charges for letters of guarantee, and guarantees are between 4% and 6% of the amount involved. Letters of credit for foreign inward cost US$75 per credit. Foreign outward for commercial banks cost 10% of the amount being transacted.
Commenting on the bank charges, the immediate past president of the Bankers Association of Zimbabwe (BAZ), John Mangudya, was quoted in a weekly newspaper saying: “We have received the same complaints (over bank charges) from our customers. If we make a regional comparison, our bank charges remain competitive. Across the region it is expensive to visit the banking halls and transact.
“What we are focusing on now is continuous investment in electronic banking, which reduces cost. On interest rates charged by banks, we are working, through moral suasion within the association, to reduce the disparity on interest rates being offered and/or charged by banks.
“This will go a long way in minimising the underlying contagion effect of arbitrage opportunities associated with the disparity. This disparity is not healthy for the economy.”
Banks are currently making money from loan portfolios but given the uncertainty in the deposits levels they are becoming prudent by writing smaller percentages of loans so as to manage the liquidity risk.
The lack of good quality paper like Treasury bills that used to offer good yields at a much lower risk also puts pressure on banks to cover their costs of running the business through other means.
For example, a bank in Zambia would have a huge portfolio in Treasury Bills and government bonds to cover their deposits cost, but in Zimbabwe banks rely on loans alone to cover the costs of running the business.
Bankers interviewed this week said the charges on cash withdrawal and loan arrangement fees were justifiable for most banks.
“These are direct expenses involved in sending the telegraphic transfer and in importing the cash and work done in approving the loan. Compared to the region I would say that Zimbabwe is competitive (although there is scope to reduce),” a CEO with a commercial bank told businessdigest on Tuesday. “Charges like monthly account maintenance, statement requests, are still relatively high but this should correct itself as the economy continues to improve.”
A head of treasury with a local bank said financial institutions had resorted to higher charges to boost their income and support the infrastructure they put in place when the economy was faring better.
“The economy has been on a decline during the past 10 years and this has left a number of them with higher costs and less business to write hence the need to cover costs through increased charges,” the official said.
“Banking is not likely to be a cash cow like it used to be given the lack of assets and competition as well as fewer products on offer. Licenses of different sectors of banks like Commercial banks, Merchant Banks, Discount Houses and Building societies will fall away as more and more products would be offered under one roof.”
Analysts said the future of banks lies on their levels of service.
“Customers would be willing to pay for goods and essential services. Infrastructure of the bank is likely to be more of Internet or card based rather than actual brick and mortar,” said an analyst with a merchant bank.