Bank satisfaction not guaranteed

The decision by Australia's major banks to lift mortgage rates has come back to haunt them, with customer satisfaction levels falling last month.

By InvestSMART · 27 Mar 2012

By InvestSMART ·
27 Mar 2012

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The decision by Australia's major banks to lift mortgage rates has come back to haunt them, with customer satisfaction levels falling last month.

THE decision by Australia's major banks to lift mortgage rates when the Reserve Bank left official rates steady has come back to haunt them, with customer satisfaction levels falling last month.

And in what could make things interesting when rates rise, the first bank to move can expect to get hit the hardest.

Satisfaction with the big banks declined in February to 79.3 per cent, down from 79.6 per cent in January, after the RBA decided to keep rates on hold last month.

ANZ's home-loan customers recorded the biggest fall in satisfaction, according to figures from Roy Morgan Research.

''It appears that the first bank to make an upward movement in their home-loan rate suffers the greatest negative impact on customer satisfaction because of the widespread adverse publicity it attracts,'' Roy Morgan director Norman Morris said.

The fall came despite ANZ's rate increase being the lowest of the big four.

NAB, which gained the top position in customer satisfaction late last year, continues to lead the majors, with a 78.7 per cent approval rate. However, NAB suffered the biggest fall generally in satisfaction levels among the major banks, falling 0.8 percentage points during February, largely due to business customers.

It was followed by ANZ, on 77.9 per cent, which was off 0.7 percentage points. Westpac suffered a 0.5 percentage-point hit after pushing through one of the biggest mortgage rate rises. Commonwealth Bank's satisfaction rating of 77.3 per cent was off slightly.

The customers of Australia's smaller banks recorded greater satisfaction, with Bendigo and Adelaide Bank, on 89.8 per cent, outpacing its bigger rivals.

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Frequently Asked Questions about this Article…

Why did bank customer satisfaction fall in February after the RBA kept rates steady?

Customer satisfaction fell because Australia's major banks lifted mortgage rates even though the Reserve Bank kept official rates on hold. Roy Morgan Research reported overall satisfaction with the big banks declined to 79.3% in February from 79.6% in January.

How do mortgage rate increases affect bank customer satisfaction?

According to Roy Morgan director Norman Morris, the first bank to push up its home‑loan rate tends to suffer the biggest hit to customer satisfaction due to widespread adverse publicity. In short, mortgage rate increases can directly lower how customers view their bank.

Which bank recorded the biggest fall in home‑loan customer satisfaction?

ANZ's home‑loan customers recorded the biggest fall in satisfaction, even though ANZ's rate increase was the smallest among the big four banks, according to Roy Morgan Research.

Which major bank led in customer satisfaction among the big banks?

NAB continued to lead the major banks with a 78.7% approval rate, though it also suffered the largest general fall in satisfaction among the majors in February (down 0.8 percentage points), largely due to business customers.

How did the other big four banks perform in February satisfaction ratings?

Roy Morgan showed ANZ at 77.9% (down 0.7 points), Westpac fell by 0.5 percentage points after one of the biggest mortgage rate rises, and Commonwealth Bank sat at 77.3%, down slightly.

Are smaller banks getting better customer satisfaction than the big banks?

Yes — customers of smaller banks reported higher satisfaction. Bendigo and Adelaide Bank outpaced its bigger rivals with an 89.8% satisfaction rating.

What does Roy Morgan Research say investors should watch about banks and rate moves?

Roy Morgan highlights that the timing of a bank's mortgage rate change matters: the first bank to lift home‑loan rates often faces the largest negative publicity and hit to customer satisfaction, so investors should monitor which banks move rates first and customer sentiment trends.

Can mortgage rate decisions by banks influence investor views of bank stocks?

The article notes that mortgage rate rises affected customer satisfaction and generated adverse publicity for early movers. While it doesn't give direct investment advice, everyday investors can infer that rate decisions and resulting shifts in customer sentiment may be relevant when evaluating bank reputations and performance.