Bank electronic transfers are still too costly, the Central Bank of Malta governor said as he called for more competition in the banking sector.

Josef Bonnici said bank charges linked to electronic transfers were on the high side, even if conducted by the customer.

He was speaking at the unveiling of the CBM’s Annual Report 2015 this morning when he urged domestic banks to “move with the time” by reducing costs of transactions and become more competitive.

Prof. Bonnici said the country needed a prudent banking system but it also needed a more competitive and efficient system. He said the costs linked to the electronic system was subsidising the prevalent cheque and cash culture, which was more expensive to maintain.

“I cannot understand why you go to a shop and still find two credit card processing machines,” he said, adding the CBM was throwing its weight behind the Consumer and Competition Authority, which last year listed a number of recommendations to address the lack of competition.

Prof. Bonnici said he believed bank lending rates for small and medium enterprises were still too high despite having dipped throughout 2014 and 2015.

The creation of a development bank could go a long way to absorb the higher risk linked to smaller operators while stimulating investment in the sector, Prof. Bonnici said.

His comments were welcomed by GRTU President Paul Abela, who said he expected quicker action by the competition authority on its one-year-old report.

The Central Bank annual report said loans to the energy, construction and real estate sectors contracted further but loans to other sectors of the economy exited negative territory last year and registered positive growth.

House loans remained the biggest source of credit provision by banks, however they dipped slightly last year.

The core domestic banks had assets equivalent to 235 per cent of GDP and a return on equity of 9.9 per cent, which was in line with what ECB was considering as an adequate return.