Irish consumers enjoy some of the cheapest banking services in the world, according to new research. Paul Cullen, Consumer Affairs Correspondent, reports.
Bank customers here pay an average of €59 a year for core day-to-day banking services, less than half the world average and 10 per cent cheaper than in the UK, according to a report on world banking by consultants Capgemini. Only China and the Netherlands cost less than Ireland.
The results may surprise some consumers, as they coincide with record profits by the banks. Last year, AIB made €2.3 billion in profits, Bank of Ireland made €1.39 billion and Ulster Bank made €569 million.
However, the Irish Banking Federation claims increased profitability is due to greater efficiency and the growth of the economy rather than profiteering at the expense of the consumer. It says bank profits in Ireland are no higher than the average for the EU and competition is driving down prices.
The IBF's findings appear to be at odds with a report by the European Commission, which last year found that Ireland's banks were the most profitable in Europe.
The Consumers' Association of Ireland last night acknowledged that the banking market had improved for consumers but said there was still "considerable scope" for further improvement. "The Irish banks only changed when they were forced to, but outsiders have dragged them kicking and screaming into competition," said chief executive Dermot Jewell.
Ireland is one of the cheapest countries in the euro zone for personal loans and for mortgage credit, according to European Central Bank figures, and fees and charges have fallen consistently over recent years.
The IBF also points out that while Ireland and the United Kingdom are the only two European countries where annual fees are not charged on credit cards, interest rates in both these countries are about average for the region.
Banking charges for small businesses are also cheaper in Ireland than in the UK, according to the federation.
The standing account charge in Ireland is €3.83 a month, compared to €12.57 in the UK, for instance, and cheque lodgement fees are 20 cent here, compared to 40 cent across the Irish Sea.
Ireland has one of the lowest levels of market concentration but one of the highest levels of penetration by foreign banks. Two of the top five banks in Ireland are foreign, compared to none in the UK, France, Italy and Spain.
Since 2005, when a personal switching code was introduced, more than 32,000 customers have switched their business between banks.