Big Four banks Sentiment Scores drop in September

(19 October 2006 – Australia) Australia’s major domestic banks appear to be losing the battle to improve customer sentiment among their smaller business banking customers with all Big Four banks posting weaker Sentiment Scores in East & Partners’ Business Banking Sentiment Index for September 2006.East’s monthly Business Banking Sentiment Index, which monitors businesses
turning over A$1 to 100 million, reveals that business banking customers rated
commercial banks more poorly in September than in August.

Businesses awarded their business banks a Sentiment Score of just 43.7 (out of
100) compared with 43.8 in August. It is the third consecutive month the
Sentiment Score has dropped – from its highest point of 45.0 in June.

The Sentiment Score is an aggregated score of four different measures of
customer sentiment – Empathy, Satisfaction, Loyalty and Advocacy. The scores are
a rating not responses to a Yes/No question.

St George was the best performing bank in terms of overall customer sentiment,
receiving a Sentiment Score of 55.0 compared with 54.9 in August.

By contrast, the Big Four banks – ANZ, Commonwealth Bank, National Australia
Bank and Westpac – were not rated as highly by their business banking customers
in September as they were in August.

CBA saw its Sentiment Score drop for the third consecutive month to a new low of
39.8.

ANZ improved its Sentiment Score in August but slipped backwards in the
September Index to 44.4 from 45.1 last month. NAB also decreased slightly to
45.5 in September compared with 45.6 in August. Westpac slipped backwards to
39.8 from 40.5 last month.

Bank of Queensland and HSBC continue to improve their Sentiment Scores; albeit
only slightly in the case of HSBC which moved to 48.2 from 48.1 last time. BOQ
saw its Sentiment Score improve to 50.8 compared with 50.4 in August.

Micro Businesses (A$1 to 5 million) are the least happy customers, rating the
banks a Sentiment Score of just 33.7 for September compared with 34.7 last
month. Again, this is a continuing trend.

SMEs (A$5 to 20 million) also rated their banks less highly in September, giving
their business banks a Sentiment Score of just 38.4 in this September Index,
down from 39.2 last month.

Lower Commercial (middle market) companies (A$20 to 100 million), on the other
hand, rated their banks more highly for the third month in a row, awarding banks
a Sentiment Score of 60.9 compared with 59.3 in August.

Businesses in Queensland once again felt the most positive towards their
commercial banks with businesses there awarding the banking sector a Sentiment
Score of 50.7 in September, up from 50.3 in August.

Business banking customers in Victoria and NSW were less positive, giving the
banks Sentiment Scores of 46.3 and 37.1 respectively.

“If things don’t improve the overall Sentiment Score will be in the 30s within a
few months which is further evidence, if any were needed, that the relationship
between banks and their customers is becoming shallower and more tenuous,” East
& Partners senior consultant Paul Bartholomew said.

“It’s Micro Businesses and SMEs which are dragging the scores down, indicating
that the smaller the business the less happy they are with what banks are
offering. A large proportion of these companies do not view themselves as having
a relationship with their bank.

“Interestingly, the Satisfaction component of the Sentiment Score improved in
September but the Advocacy ratings continue to deteriorate, meaning that
customers might be relatively satisfied with their banks but they certainly
wouldn’t go as far as recommending them,” Mr Bartholomew said.

“We’ve been hammering this point for some time, but it’s patently clear that a
great deal of effort’s going into acquiring new business customers at the
moment, but less in keeping existing ones happy. That’s a very expensive
business model, especially if smaller business customers are being lured on
price,” he said.

About East & Partners’ Business Banking Sentiment Index


The East & Partners Business Banking Sentiment Index is a monthly survey of
business customer sentiment towards banks, providing a monitor of customer
satisfaction, loyalty, advocacy and empathy towards business banks. Each month
East & Partners’ research team will conduct telephone interviews with a sample
of 500 businesses nationally, turning over A$1 to 100 million per annum,
comprising:

For more information please contact:

Paul Bartholomew
Senior Consultant
East & Partners
T: 02-9004 7848
M: 0410 400 156
E: paul.b@eastandpartners.com