The Irish Bankers' Federation has challenged what it claims to be a misleading and inaccurate view that financial institutions are making excessive profits at the expense of their customers.
The IBF, which is the industry body representing 60 banks and subsidiary operations, has stressed that Irish financial institutions are ranked 11th out of 23 countries in terms of their profitability. When adjusted for the $691 million fraud at AIB's US subsidiary Allfirst last year the banks move up to 9th place, coming in behind Portugal, according to a footnote to the statement.
IBF has also highlighted the fact that bank charges have increased by an average of 3.1 per cent since 1994 and that the sector makes a substantial contribution to the Irish economy.
"The facts and figures make nonsense of claims that Irish banks are the most profitable in Europe, that we have a major banking infrastructure deficit here relative to our European counterparts and that bank customers here pay over the odds for current account services," IBF director general, Mr Jim Bardon said yesterday.
The IBF response follows record profits at AIB and a report by Davy Stockbrokers which suggests the Republic's two biggest banks could be yielding more than €170 million a year by not paying interest on customer current accounts.
The IBF insists that the Irish banking sector is competitively strong and profitable and compares favourable with other countries. It states that up to 50 per cent of bank customers who operate current accounts do not pay transactions charges and that the average charge for those who do is around €50 a year.
At the same time the industry claims that the cost of charges applied when customers make cash withdrawals, or use direct debits or cheques, have increased by 3.1 per cent since 1994 compared with a 29.5 per cent rise in inflation in the same period.
The IBF states that the overall cost of personal banking in Ireland compares favourably with other EU countries.
"Comparing the cost of a shopping basked of financial products such as a current account, mortgage, personal loan and credit cards, Ireland features in the lower (cheaper) section of the European cost league," according to the association.
The banks have a network of 900 branches and have more outlets per one million inhabitants than countries such as the UK, the Netherlands, Sweden and Greece.
In terms of the sector's contribution to the Irish economy, the IBF points out that Irish financial institutions employ 36,000 staff, compared with 16,000 10 years ago.
