Irish banks make three times more per customer

AIB and Bank of Ireland customers are being ripped off, with the banks making nearly three times as much profit per customer as their European counterparts, a study shows.

The study by Wall Street financiers JP Morgan found AIB and Bank of Ireland earn the most profit per customer of Europe’s leading banks.

The average profit per customer in AIB and Bank of Ireland is €341 a year, nearly three times the European average of €123.

The Consumers’ Association of Ireland said the study proved the banks are “creaming profits at their clients’ expense”.

Mortgage customers with AIB and Bank of Ireland are also being fleeced compared to their European counterparts. Bank of Ireland make €707 a year per mortgage holder and AIB €693, more than three times the European average of €221.

The report looked at the financial year 2003, in which AIB made pre-tax profits of €1.011bn, and Bank of Ireland made pre-tax profits of €1.13bn.

Both AIB and Bank of Ireland rejected claims the report shows they are ripping off customers.

But Consumers’ Association of Ireland’s finance spokesman Eddie Hobbs said the report showed Irish bank customers are paying a high price for the failure of the Government and the Competition Authority to protect consumers.

“This report shows clearly that the Irish banks have been creaming their customers for years because of a failure to enforce competition policy since 1991.

“The banks have been allowed make excessive profits in a duopoly. Only recently has the near impossibility of switching accounts been tackled,” he said.

Mr Hobbs said that even the general secretary of the Irish Bank Officials Association, Larry Broderick, believes the Irish banking system is rotten to the core and added that the report from a respected merchant bank such as JP Morgan was further proof of this.

“The Competition Authority should now get the entire Irish banking sector by its inner organs and force it to play fair with Irish consumers. I am not talking about a bite on the backside,” he said.

An AIB spokesman rejected the claim it was ripping off customers and said it took the report with a pinch of salt as it did not believe true like-for-like comparisons were made.

He said the profit per customer ratio was based on post-tax profits. “If pre-tax profits were applied they would show that while the differences still exist they are far less material,” he added.

Bank Of Ireland also denied ripping off customers and said a transnational report of this nature was fraught with dangers. A spokeswoman said the report contained assumptions about customer numbers and other factors which the bank does not make public.