Barclays Bank plans to raise the fees charged to customers next month joining a growing list of lenders that have raised transaction tariffs to shore up profitability. The bank is seeking regulatory approvals to change its tariffs, to join Commercial Bank of Africa, NIC, and Standard Chartered which have raised their fees this year. “We wish to notify you that subject to regulatory approval we will review our bank tariff effective November 4, 2015,” said the bank in a statement on its website. Banks are under pressure to increase their transaction-based income as high interest rates dampens appetite for credit by private sector and consumers. NIC was the first bank to review its rates in June before CBA and StanChart did so in August. “They are looking to protect their non-funded (non-interest) income because net interest margins will be squeezed hence the need to recoup,” said Vimal Parmar, head of research at Burbidge Capital. Local banks rely on interest income to drive revenues. As at end of June, interest income constituted 60 per cent of the industry’s total income of Sh226 billion. Market appetite for loans has eased following a rise in lending rates with annual growth in private sector credit shrinking to 20.5 per cent in June from 25.5 per cent the same time last year. Introduction of a loan pricing model pegged on the Central Bank-set Kenya Banks Reference Rate has given banks little room to increase lending rates forcing them to turn to non-funded income to support their profits. Some of the tariffs Barclays Bank is expected to increase include credit card rates. The bank said it would be charging 3.9 per cent per month up from 3.7 per cent on amounts used on the card for purchase of goods if not settled within the grace period. NIC increased over-the-counter withdrawal fees in a move meant to push its clients to use ATM machines, among other channels of accessing cash. The bank charges Sh300 for withdrawal of less than Sh40,000 in the banking hall compared to Sh100 charged for withdrawing more than Sh40,000, which is the maximum amount accessible through ATMs. CBA introduced a fee of Sh350 for withdrawing less than Sh40,000 at the counter while anything above this is free. Standard Chartered introduced monthly tariffs to some of its personal accounts which were previously exempt. The bank’s monthly tariffs are between Sh499 and Sh1,000. Banks were expected to lower transaction fees following policy changes by Central Bank of Kenya and introduction of technological innovations. CBK has presided over the introduction of agency banking, cash centres, cheque truncation and licensed mobile banking products. The changes were expected to yield higher efficiency for banks who in turn were to charge less for their services while benefiting from increased volumes. The lenders are largely yet to pass on the benefits with interest spreads remaining wide in the sector, averaging above 10 per cent. Banks have argued it takes time for them to recoup investments made to implement the innovations before they can lower the fees.
It has applied for regulatory approval to join other banks in Kenya , including Standard Chartered , in allowing it to raise the fees charged to clients as of next year , so it can boost its earnings . The banks are under increased pressure to raise their transaction - based income , since high interest rates are reducing the appetite for credit by the private sector and consumers . Vijay Parmar of Burbidge Capital said , " they are looking to protect their non - funded ( non - interest ) income because net profit margins will be squeezed , hence the pressure to expand " .