Big banks risk more unhappy customers by not passing on rate cuts in full: Roy Morgan

Mortgage holders' dissatisfaction with the major banks is likely to grow if the majors continue their policy of not passing on rate cuts in full, or if they raise them independently of any future RBA cash rate changes. By contrast, the satisfaction of non-home loan customers is not affected by banks' reactions to RBA rate decisions.

New banking customer satisfaction figures compiled by researchers Roy Morgan found that while consumers’ satisfaction with the big four banks remained unchanged at 78.4% as of December 2012 – the highest it has been for figures going back to 1996 – satisfaction among home loan consumers sits well below that at 72.9%.

Westpac has the biggest customer satisfaction divide between its home loan and non-home loan customers, of 7.9 percentage points.

According to Roy Morgan, over the past 12 months, satisfaction among customers with home loans has fallen further behind other customers despite five interest rate drops.

Following the last RBA cash rate cut in December of 25 basis points, all the major banks passed on 20 basis points.

At least one more rate cut is expected in 2013, according to the most recent Bloomberg survey of 28 economists.

On an overall basis NAB has the highest customer satisfaction rating of 79.8%, followed by the Commonwealth Bank (79.7%), then Westpac (76.8%) and ANZ (76%).

These figures are still well behind the new mutual banks, with a satisfaction rating of 91.6%. This sector is made up of ME Bank, Heritage Bank, MECU Limited, QT Mutual Bank, Teachers Mutual Bank and Victoria Teachers. Building societies have a satisfaction rating of 90.2%, and credit unions 89%.

“The extensive publicity being given in 2012 to banks not passing on the full reduction in the cash rate is likely to have impacted adversely on home loan customers, as the gap in satisfaction at the start of the year was much less,” says Norman Morris, industry communications director at Roy Morgan Research,

“A reduction in the loan rate would normally be expected to be seen as a positive by borrowers unless it is perceived to be less that it should.

“The increase in non-home loan customer satisfaction over the year is somewhat surprising as this group is more likely to have suffered interest rate declines on their deposits."

The trend to online banking and associated special deposit rates and less reliance on branches are likely some of the factors contributing to the improvement in satisfaction.

“Despite the somewhat negative ratings that home loan customers are giving their banks, they still rate well above the ratings the business customers give them.

“The home loan customers of the big four banks have a satisfaction rating of 72.9% compared to only 64.3% for their business customers. With over 2 million business customers this is likely to be impacting adversely on their personal ratings of their banks,” he says.