Business

High cost of energy and labor factors in high bank fees

The Bahamas continues to be an expensive jurisdiction for commercial banks which, affected by a high percentage of non-performing loans (NPLs), use bank fees to ensure they remain profitable, Governor of the Central Bank of The Bahamas John Rolle said Thursday.

Rolle, who was a guest on the Guardian Radio talk show The Hit Back with Nahaja Black, said the high cost of energy and labor in the country continue to be factors keeping commercial bank fees high.

Rolle said on the show that commercial banks remain profitable and have done better recently than in the past two to three years, however, those banks still need to structure themselves in order to not overburden consumers with fees.

“That is a cost that has to be recovered somewhere else in the operation,” Rolle said.

“You can try to recover some of that by charging higher interest rates on loans, but remember some of the customers who are still paying on their loans, they may not be very high risk customers.

“If the bank charges me too much and I’m a good customer and I keep up my payments, I’m going to go to another bank.

“The cost on those deposit accounts and on those other facilities has gone up and it has either gone up in terms of monthly service fees that are higher on average than they used to be, or you’re getting lower interest rates on average than we had in the past.”

Rolle lamented that “financial institutions have to deal with energy costs” and contended that many consumers don’t take banks’ operational expenses into account when they consider the costs they pay to do business with the bank.

He added that productivity is another burden on banks, which might be reluctant to decrease staffing levels in favor of automation.

“You have to make the operating environment for your financial institutions more efficient,” said Rolle.

“You need fewer people to do the work so you’re saving on labor costs. You try to minimize the amount of physical presence in terms of branch network.

“The goal is not to maximize how many people work in our banks, but really that we keep the costs lower.”

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Chester Robards

Chester Robards rejoined The Nassau Guardian in November 2017 as a senior business reporter. He has covered myriad topics and events for The Nassau Guardian. Education: Florida International University, BS in Journalism

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