Question

As indicated by the Reserve Bank's 2019 Annual Bank Fee Survey, which of the following represented the largest component of the fee income that banks received from businesses?

a) Account-keeping fees
b) Transaction fees
c) Loans
d) Overdraft fees

Answer 1

The largest component of fee income banks received from businesses according to the Reserve Bank's 2019 Annual Bank Fee Survey was from loans. Banks earn most of their revenue through interest charged on these loans.

Step-by-step explanation:

According to the Reserve Bank's 2019 Annual Bank Fee Survey, the largest component of the fee income that banks received from businesses was from loans. Banks generate revenue by issuing loans and charging interest on them. This is fundamental to their function as financial intermediaries between savers and borrowers. The more a bank lends, the more income it can potentially earn from the interest charged. Consequently, while banks do charge for services such as account-keeping, transactions, and overdrafts, it is the interest from loans that typically constitutes the most substantial part of their fee income from businesses.