(15 August 2011 – Australia) East & Partners’ latest Deposit Funding & Debt Index has revealed churn levels for On Call depositors are going in opposite directions for business and retail depositors in response to deposit takers’ strategies.The latest monthly Index, out now, has shown that business depositors are
demonstrating a declining churn outlook from that of only a month ago.
There has been a reduction in planned switching from 29.9 percent of customers
who switched deposit taker in the last month down to 26 percent of business
depositors planning to switch their On Call deposits in the coming month.
The biggest decrease was seen in the Micro Business segment who reported a drop
in expected churn level of 7 percent.
Retail depositors however are expected to increase their churn levels. Relative
to last month retail customer are looking to a 10 percent increase in churn –
40.3 percent of retail depositors having switched in the last month with 44.2
percent expecting to switch in the coming month.
Paul Dowling, East & Partners’ Principal Analyst said “In both business and
retail markets, these On Call deposit monthly churn rates are high and represent
a major challenge for deposit takers. Retail depositors are considerably more
aggressive than business customers in their switching behaviour, a difference
driven by two key factors – business depositors are way less sensitive to rate
triggers; i.e. they need higher rates to induce a change of provider than retail
depositors. And considerably more business sector deposits are tied to credit
facilities”.
“These outcomes as East monitors them monthly have profound outcomes for the
ways in which deposit takers manage their books.” Mr Dowling added.
About East & Partners’ Deposit Funding & Debt Index
An ongoing, monthly analysis among Australia’s Top 500 companies as well as a
robust, structured sample of corporate businesses, SMEs and Micro businesses.
Based on data sourced from APRA, the data is subjected to a set of standardised
analysis run by East & Partners to produce the Index’s set of ratio indicators.
The Index focuses on key market measures including business versus retail
deposit volume ratio, the ratio of deposit versus lending by bank by market
segment, deposit market share and the total market deposit funding index.
Also reported each month are unique segmentations based on depositor size and,
importantly given BASEL III’s impact, the Index also splits On Call and HYOD
deposit volumes by segment from Term Deposits across 3, 6 and 12 month tenures –
hot and sticky deposit business flows, tied versus free deposit balances,
deposit churn forecasts and rate triggers for depositor switching.
Note: Business Depositor Segments
Institutional – A$530 million plus
Corporate – A$20-530 million
SME – A$5-20 million
Micro – A$1-5 million
For more information or to interview our Principal Analyst, please contact:
Sian Dowling
Marcomms & Client Services
East & Partners
t: 02 9004 7848
m: 0420 583 553
e: sian.d@eastandpartners.com