This drop is not surprising given the decline in Business Confidence over recent months from 118.7 in January to 108.9 in March as measured by the Roy Morgan Research Business Confidence Survey carried out each month across Australia with a sample of over 2,000 businesses per month. A major reason for the drop in confidence is that more businesses (51%) now think that it is a bad time to invest in growing the business which is a big increase from 44% in February. With businesses feeling less like borrowing in these uncertain times and banks obviously more prudent in lending, a drop in satisfaction is likely to be one of the outcomes.
Not all businesses have such a pessimistic outlook with micro businesses (turnover less than $ 1 m PA) having the lowest level of confidence but they make up 89% of businesses. The most optimistic are the medium / large businesses (turnover $5m + PA). Between February and March, satisfaction with banks among micro customers fell by 0.8% points, small businesses fell by 0.7% points but medium / large businesses increased their satisfaction by 1.4% points.
Business Banking Satisfaction
Source: Roy Morgan Research Business Banking Survey, June 2010 – Mar 2012, average 6 monthly sample n = 6,753.
Norman Morris, Industry Communications Director, Roy Morgan Research, says:
“Currently businesses still rate the satisfaction with their banks well below the level given by their personal customers. The latest comparison of the two market segments is for March 2012 where business bank customer satisfaction was 65.6% compared to 79.0% for consumers.
"The current publicity around out of cycle interest rate increases continues to be focused on home loan customers, with little attention given to the plight of business customers. Two areas where all of the four majors score poorly with their business customers are to do with them not maintaining regular contact and not following developments in their business or industry.
“Westpac remains the leader among the big four in business customer satisfaction ( 67.4% ) but over the last month the NAB has got a lot closer in second place and is now only 1.6% points behind them compared to 3.6% a month ago in February. The NAB has been the biggest winner among the big four over the last 6 months gaining 6.0% points compared to the big four average of 3.2% points. Bendigo with 85.6% however remains well ahead of the big four and over the last 6 months they have increased their lead even further with a gain of 6.4% points compared to the big four average of + 3.2% points. The ANZ remains narrowly ahead of the CBA but over the last 6mnths their lead has largely been eroded as they only increased their satisfaction by 0.9% points compared to the CBA with a gain of 3.5% points.
“For the micro segment (annual turnover less than $1m), Westpac is the best performer among the big four with 67.5%, followed by the NAB (65.9%), ANZ (63.6%) and CBA (62.8%). The ANZ (66.8%) leads the big four in the small business segment (annual turnover $1m to $5m) and Westpac (71.7%) leads the medium / large segment (annual turnover $5m+).
“We have seen that not all industries share the same outlook for the economy and it is likely that this will impact on how the relationship between banks and their business customers is likely to be impacted over the next 12 months.”
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The Roy Morgan Research Business Survey interviews over 13,000 Businesses per annum covering the full range of industries and business sizes so as to represent all the businesses covered by the ABS. The survey covers all aspects of business finance so as to be comparable with the well established personal finance survey which interviews over 50,000 per annum. The combined surveys represent well over 60,000 interviews per annum, giving them unique ability for in depth understanding of the two markets and the ability to understand the link between personal and business banking.
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