Ranking no block to ANZ's lending

By RICHARD BRADDELL

ANZ Bank's poor showing in customer satisfaction surveys may not be the cruel blow to performance it suggests.

The bank has consistently sat at the bottom of customer satisfaction surveys by Auckland University's marketing department, and in surveys commissioned by other banks, but that has not stopped it increasing its share of the highly valued home mortgage market.

According to the director of Massey University's Centre for Banking Studies, David Tripe, ANZ and ASB, which happens to be most popular with customers, are the only banks in the big five to lift their home loan market share in the past 18 months.

But while ASB's performance is a continuation of a long-term trend, ANZ's is of recent origin and may owe more to its increasing use of mortgage brokers.

In so doing, it has mirrored its Australian parent, which wrote a quarter of the home loans issued in Australia in the past 12 months.

Australian sharebrokers have questioned the impact on lending margins of lending through mortgage brokers because they take a slice of the margin.

But Mr Tripe said the trailing commissions, which provide mortgage brokers ongoing income during the life of the loan, also provide an incentive for brokers to make sure customers stay with the bank, and long-term customers are much more profitable.

He said it was difficult to produce unequivocal evidence that ANZ's poor customer satisfaction levels were impeding performance, for instance by forcing up the amount the bank had to pay to attract retail funds, but there was evidence of a greater reliance on wholesale money.

"Because of the way information is reported in the banks' disclosure statements, it is hard to tell whether the ANZ Bank's deposit business is being upset by its public profile."

With the exception of the BNZ, it was paying more over the last three quarters to borrow money, although, in common with BNZ, that picture might have been distorted by the structure of its financing.

Mr Tripe also said there was anecdotal evidence that the ANZ's customer image had improved slightly, a view reinforced by ANZ spokeswoman Samantha Shaw, who said that was shown in recent "preliminary" surveys.

She said ANZ's image had not been helped by five years of very rapid change in which it cut its costs from close to 80 per cent of income to less than 55 per cent. With that out of the way, the bank was concentrating on its customer relationships.