Banking News

JPMorgan/East & Partners survey reveals diverging confidence between Top 500 corporations and commer

The third quarterly survey by JPMorgan and East & Partners titled Australian Corporate Banking Quarterly Survey (April–June, 2003) shows two distinctly divergent confidence levels between Australia’s top 500 corporations and the commercial (A$20-1000m annual turnover) business segment.

The joint survey asks Australia’s top 500 corporations and the commercial sector their opinions on credit re-pricing, banking relationships and their future intentions to borrow and repay debt.

"Our survey clearly shows a fracturing in confidence between the big-end of town and the commercial segments. This diverging confidence is evident throughout the survey with top 500 corporations being less inclined to borrow from a bank, undertake capital expenditure and hire staff," said Brian Johnson, JPMorgan’s Banking Analyst.

"In contrast, the commercial segment is becoming even more upbeat on every measure. Given that the commercial segment as opposed to the top 500 corporations are the main drivers of bank profitability, the survey bodes well for business loan demand in early 2004."

The survey also found that the top 500 corporates and commercial segments have differing economic outlooks.

"The top 500 are uncertain about global conditions whereas the commercial segment is positive in its outlook because it considers the domestic economy to be robust," said Stephen Walters, JPMorgan’s Senior Economist.

"With respect to capital expenditure, there are far less top 500 corporates expecting to spend on capital expenditure than the commercial sector. The main reason for this stems from the fact that the top 500 consider the rising Australian dollar to be a disadvantage whereas the commercial sector is benefiting from reduced import costs."

According to East & Partners, both the top 500 corporate and commercial segments are getting harder on the bankers and raising their service expectation levels.

"An across the board five per cent lift has occurred over the last six months in the level of importance placed on a range of service and products criteria amongst the top 500 corporates, the largest single half-yearly jump in the 11 year history of this core demand research," said Mr Dowling, Principle of East & Partners.

"Customer churn is also accelerating as both corporate and commercial bank customers become more aggressive in managing their service-provider relationships in response to increasing competition for their business from banks," he concluded.


Further information:

About JPMorgan: J.P. Morgan Chase & Co. is a leading global financial services firm with assets of $755 billion and operations in more than 50 countries. The firm is a leader in investment banking, financial services for consumers and businesses, financial transaction processing, investment management, private banking and private equity. A component of the Dow Jones Industrial Average, JPMorgan Chase is headquartered in New York and serves more than 30 million consumer customers nationwide, and many of the world's most prominent corporate, institutional and government clients. Information about JPMorgan Chase is available on the internet at www.jpmorganchase.com.

About East & Partners: East & Partners has been researching the Australian and Asia Pacific corporate banking and project finance markets for more than a decade. The company's ongoing research delivers comprehensive insights into customer satisfaction levels, account penetration and market share. Information about East & Partners is available at www.eastandpartners.com.

The next joint survey will be released October, 2003.