Non-bank lenders sliding out of favour

THE move by non-bank lenders to pass on their higher funding costs to borrowers has resulted in poor customer satisfaction results for the September quarter.

Non-bank lenders sliding out of favour

THE move by non-bank lenders to pass on their higher funding costs to borrowers has resulted in poor customer satisfaction results for the September quarter, which could accelerate the flow of business back to the banks.

A Nielsen survey found that, apart from Wizard, approval ratings for non-bank mortgage lenders such as RAMS and Aussie Home Loans had been hit hard by the liquidity crunch.

RAMS, which has sold its brand and distribution network to Westpac for $140 million, suffered a 5.5-point fall for the quarter, while Aussie Home Loans was down 6.3 points.

Nielsen client services director Simone Bryant said the RAMS decline was modest, given the lender's widely publicised funding problems.

However, it could accelerate as funding pressures flowed through to customers in the form of higher rates.

Nielsen and rival firm Roy Morgan Research came to different conclusions about ANZ, with Nielsen finding the leader among the Big Four in customer satisfaction had suffered a sharp fall, and Roy Morgan concluding the bank had consolidated its position.

ANZ was found to have posted the biggest fall of the Big Four in the Nielsen poll, down 4.1 points to 69.8 per cent.

This enabled the nation's fifth-biggest bank, St George, to overtake its rival at the head of the table on 72.6 per cent, down only 0.5 per cent.

Roy Morgan Research, on the other hand, found ANZ had extended its lead over second-ranked Westpac in the month of October.

Among the top five banks, though, ANZ was still at No2, after table leader St George.

Satisfaction ratings in the banking industry are seen as an early indicator of likely market-share movements.

All the nation's big banks have been investing heavily in more frontline staff and better branch networks as they compete for more business in an environment of moderating lending growth.

Former ANZ boss John McFarlane handed over to Mike Smith on September 30, so the bank's poor result in the Nielsen survey for the September quarter can be sheeted home to him.

Ms Bryant said ANZ's drop in customer satisfaction could provide rivals with an opportunity to take market share.

"(But) a bright spot for ANZ was the high regard in which it continued to be held by customers of other banks,'' she said, noting ANZ was the leading, second-choice bank for the third consecutive quarter among customers switching their main financial institution.

The big mover in both surveys was CBA, which was the only bank among the top five in the Nielsen survey to lift customer satisfaction for the second consecutive quarter.

While CBA was also the biggest mover in the Roy Morgan survey over the 12 months to October, the nation's biggest lender still ranked last of the top five.

Furthermore, its progress stalled in recent months in the Roy Morgan survey.