Recent interest rate cuts are having minimal impact on the plight of small business customers, according to new research, which shows only two lenders have passed on the latest cut in full.
The research comes from financial comparison website RateCity.com.au, which has a database of more than 100 lenders.
According to RateCity, 32 lenders have so far announced standard variable home loan rate cuts since the Reserve Bank cut the cash rate by 25 basis points on June 5.
“Only two lenders – ANZ and Unicredit WA – have so far passed on the full 25 basis point rate cut,” RateCity spokesperson Michelle Hutchison said in a statement.
“The average rate cut out of these lenders was 20 basis points, which is 80% of the RBA rate cut.”
However, Hutchison said this is an improvement from last month, when RateCity found on average only 64% of the RBA’s 50 basis points was passed on to variable home loan customers.
“Two rate cuts in a row, totalling 75 basis points, is a significant hit for lenders. But we expect most lenders to pass on about 20 basis points by the end of the month,” Hutchison said.
But if bad news in Europe continues to place pressure on funding costs, Hutchison said it’s likely lenders will “creep rates higher in small bursts out of cycle… or continue to hold back a portion of future RBA rate cuts”.
The news comes on the back of the latest Roy Morgan Research Business Banking Satisfaction Report, which shows satisfaction among business customers fell by 0.8% to 64.3% last month.
Roy Morgan is quick to point out this is the third consecutive month of declines. Among the six major banks (the big four plus Suncorp and St George), Suncorp was the best performer (67.6%).
Among the big four banks, the largest movement was seen from ANZ, which declined by 2.4%. Over the last 12 months, ANZ is now down by 3.5%, while NAB is the biggest improver, up 3%.
The overall market leader among the big four in May was Westpac (66.8%), followed by NAB (64.7%), Commonwealth Bank (61.6%) and ANZ (61.5%).
In the micro business segment, which represents businesses with turnover less than $1 million per annum, Westpac remains the leader among the big four (67%), followed by NAB (64.8%).
However, NAB has closed the gap considerably over the past 12 months, having improved by 2.7% compared to a drop of 1.2% by Westpac.
CBA currently ranks fourth among micros, which has a major impact on CBA’s overall performance in the business market as 89% of businesses are in this segment.
But in the small business segment (turnover of $1-5 million per annum), CBA is the best performer among the big four, although it only has a narrow lead over Westpac and NAB.
ANZ is currently performing poorly in this segment (57.7%) due to a 5% decline over the past year, which is in sharp contrast to the 5.1% gain seen from NAB.
According to Roy Morgan’s Norman Morris, satisfaction with banks by their business customers remains below the level of their personal customers (around 14% lower) for all the major banks.
“It would appear that the banks are doing a relatively poor job of meeting the more complex and potentially riskier needs of their business customers,” Morris said in a statement.
“They continue to get low ratings on issues such as ‘following developments in your business’ and ‘maintaining regular contact with you’.”
“With a slowing of household and business credit growth, there will be a temptation to reduce contact with customers even more.”