Cba Lags In Customer Satisfaction

The Age

Friday September 29, 2006

By MARC MONCRIEF, BANKING REPORTER

FIGURES from pollster Roy Morgan show the customer satisfaction gap widening between a lagging Commonwealth Bank and its peers, and analysts warn the situation will continue to reduce the bank's market share.

In Roy Morgan's August poll, 62.4 per cent of CBA customers said they were satisfied, only 0.1 of a percentage point better than a year before. This compared with ANZ's 2.1 percentage point improvement to 75.2 per cent and National Australia Bank's 68.3 per cent, up 3.7 percentage points.

Wilson HTM analyst Brett Le Mesurier said investors watched the figures as a leading indicator of the bank's potential to increase market share.

"I don't want to state the obvious, but if people like dealing with the bank, they will buy more of (the bank's) products," Mr Le Mesurier said.

"One could look at these figures and say ANZ and National Australia Bank are going to grow market share at the expense of CBA and Westpac."

Westpac was the only bank among the Big Four to fall in the estimation of its customers, by 1.5 percentage points. However, 67.4 per cent of Westpac's customers were satisfied, placing it third among the Big Four, well above CBA.

CBA's numbers reflect more than a year under the leadership of chief executive Ralph Norris. Mr Norris took over the bank on a platform of customer service domination last June, setting a goal for CBA to be the most customer-friendly bank within three years.

Mr Le Mesurier called such a goal "a big ask", but at an analyst briefing, CBA head of retail banking Michael Cameron pleaded for patience. "As you know, these figures move around a bit from month to month," he said. He said that over the past 12 months, the bank had hired 550 new people, opened more branches, changed hours and redesigned products.

The changes would continue, but he expected it would "take some time" before they began to affect external customer satisfaction surveys.

He said internal surveys showed complaints had fallen by 52 per cent since July last year.

CBA head of lending products Geoff Austin said the largest branch network in Australia positioned the bank well to deal with a rising interest rate environment.

As the Reserve Bank pointed to an "increase in mortgage arrears, largely reflecting the general lowering of credit standards that has occurred over the past decade", Mr Austin said arrears at CBA were steady, both in mortgages and personal loans, and an index of the probability of defaults was falling.

Most defaults come from non-bank lenders, which take on riskier borrowers at higher interest rates.

Mr Austin also warned that coaxing balance transfers onto credit cards with zero-interest honeymoon periods could undermine the value of loans as consumers transferred debt out of mortgages.

He said CBA refused to enter into this product line and might lose some market share as a result.

KEY POINTS

? The satisfaction gap widens between CBA and its peers.

? CBA's retail banking head pleads for patience.

? ANZ and NAB are expected to increase market share.

© 2006 The Age

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