BUILDING societies kept fees largely unchanged during the calendar 2014 year amid increases by other financial institutions, according to data recently released from Bank of Jamaica (BOJ).

Insiders say that the mutual ownership of the building societies allows for fees to largely remain stable.

“As a mutual organisation, Victoria Mutual Building Society (VMBS) is owned by its members, and our aim is to create and return value to them through a range of member benefits. This is what shapes the organisation’s posture towards fees, which is minimal or no transaction fees,” stated Richard Powell, president & chief executive officer at VMBS, in response to Jamaica Observer queries on the BOJ data released last month.

One fee increase

VMBS offered the least number of fee increases in the year, only increasing the telegraphic transfer of funds by 8.0 per cent, according to the BOJ data.

“Our business model differs from stockholder institutions, which focus on profit maximisation and the payment of dividends to relatively small groups of shareholders,” Powell reasoned, adding that VMBS focuses on providing value by way of higher saving rates, lower mortgage rates and no or low fees. “For the reasons stated above, the reported surpluses of a mutual building society do not reflect the value returned to the members by way of pricing benefits related to its product and service offerings. To that extent, therefore, the reported returns on equity are lower than they would have been, had fees and charges been applied at prevailing market rates.”

The undistributed surplus at VMBS stood at $75 million up to three months ending March 2015 and $948 million for its December year-end, according to BOJ data.

Comparatively, Jamaica National Building Society (JN) and Scotia Jamaica Building Society (SJBS) earned $1.38 billion and $399 million, respectively, as an undistributed surplus as at March 2015, according to BOJ prudential data released this week.

First priority

“The JNBS has a history of mutual or cooperative ownership. This means our first priority is to recover costs, while offering the best deal for our members,” stated Claudine Allen, executive, enterprise contact centre, JN, in response to Business Observer queries.

JN increased the minimum balance fee up 33 per cent, in-branch withdrawals up 21 per cent and standing orders by roughly 100 per cent. It stated that some costs were outside of its control.

“These fees are based on the cost of providing the service plus a small mark-up. Many of these costs are incurred outside of the society, such as those requiring collaboration with correspondent banks. The increase in the cost of inputs has resulted in increased fees. In more recent years, increases have been caused by new local and international regulations imposed on financial institutions, such as those designed to reduce money-laundering risks,” stated Allen.

SJBS increased its point of sale transactions between 4.0 and 17 per cent for Scotiacard holders and increased its audit confirmation fee by 5.0 per cent, according to BOJ data.

Residential mortgage loans at the three building societies stood at $30.4 billion for VMBS, $51.2 billion for JN and $21.4 billion for SJBS as at March 2015.

In 2014, a number of commercial banks increased fees for withdrawals and late credit card payments. Increases usually ranged between 10 and 33 per cent, but some odd fees jumped well beyond 100 per cent.