Absa replies:

Finweek English Edition - - Letters -

Gavin Op­per­man, group ex­ec­u­tive se­cured lend­ing, re­sponds to Charl Stry­dom’s let­ter: I do un­der­stand and ac­knowl­edge that cus­tomers are find­ing them­selves in a dif­fi­cult sit­u­a­tion. We are also ex­pe­ri­enc­ing sim­i­lar con­di­tions and in the cur­rent op­er­at­ing en­vi­ron­ment lenders have found their costs ris­ing.

Our fee struc­tures and those be­ing levied re­main within the Na­tional Credit Act’s stip­u­lated struc­tures that banks are al­lowed to re­cover. In terms of the Act, banks aren’t al­lowed to in­crease in­ter­est rate con­ces­sions – ie, change in­ter­est rate pric­ing. In the past, ad­min­is­tra­tion fees were cross-sub­sidised from in­ter­est mar­gins. Also, given the pre­vail­ing and chang­ing eco­nomic con­di­tions, fund­ing for banks has be­come in­creas­ingly more ex­pen­sive, re­sult­ing in mar­gin ero­sion. Given those rea­sons it has be­come ev­i­dent that we levy costs in­curred by the bank to the ap­pro­pri­ate cost items – ie, run­ning costs to the ad­min­is­tra­tion fee charge.

The run­ning costs in­clude the likes of credit mon­i­tor­ing, col­lec­tions, func­tion­al­i­ties, state­ment mail­ings, se­cu­rity and ser­vicere­lated ad­min­is­tra­tion and the tech­no­log­i­cal ca­pa­bil­ity. All of those en­able us to of­fer a bet­ter ser­vice to cus­tomers. Con­sid­er­ing mar­ket de­mands, Absa also deemed it nec­es­sary to in­tro­duce ad­di­tional ser­vices to their clients, which in­clude the debt re­pair line and risk mit­i­gant of­fi­cers (RMOs) who as­sist clients in dis­tress and need guid­ance as to how to man­age their debt bur­den.

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