All of Australia's big four bank registered increases in their satisfaction level for September. However, the biggest gain was logged by the National Australia Bank (NAB) which enjoyed an 80.3 per cent satisfaction rating.

It is a 3.8 per cent gain over 12 months and the highest rating achieve by any major Aussie bank since research firm Roy Morgan started the survey in 1996. Most of the strong satisfaction rating NAB got was from non-home loan customers. However, among home loan customers, NAB's satisfaction rating actually went down 1.4 per cent over 12 months.

The decline could possibly be linked to the bank pocketing part of the recent overnight cash rate reductions made by the Reserve Bank of Australia, instead of passing the entire key lending rate cut.

Westpac registered a 1 per cent increase in its satisfaction rating, the Commonwealth Bank of Australia (CBA) 0.7 per cent and ANZ 0.5 per cent.

Some of the smaller banks actually enjoyed higher customer satisfaction ratings compared to any of the big four. Bankmercu got a 93.7 per cent satisfaction rating, followed by Heritage Bank 90.7 per cent, Bank SA 88.7 per cent and Bendigo Bank 87.6 per cent.

While NAB and Westpac got some thumbs up from customers, investment bank Goldman Sachs gave the two Australian lenders a thumbs down due to concerns over lower loan growth and weaker margins which could limit share price growth.

In a note to clients, Goldman Sachs' banking analyst Benjamin Koo lowered Westpac's rating to sell from neutral following estimated that Westpac's second-half result would highlight a relatively weaker trend in pre-provision operating profit (PPOP) growth at 1.2 per cent half-on-half.

Mr Koo also downgraded NAB ratings to neutral from buy because of a $250 million provisions for bad and doubtful debts the bank made last week. It was the second down NAB after Macquarie recommended a neutral from outperform rating as Macquarie waits for further clarity of NAB's fiscal year 2012 result.

Goldman Sach's estimated PPOP growth rate is 4.3 per cent for NAB and 1.7 per cent for ANZ.

NAB Chief Executive Cameron Clyne explained the $250 million before tax economy-cycle adjustment to lower domestic growth expectations and a delayed economic recovery in Britain.

Analysts considered NAB's $250 million under-provisioned in comparison to the three other major Aussie banks. In contrast, ANZ has a $457 million provision, CBA $403 million and Westpac $345 million.

The adequacy of NAB's credit controls would be known when the Victorian Supreme Court issues this week its decision on more than $1 billion in provisions, also called collateralized debt obligations, that NAB booked against derivatives in 2008.

NAB shareholders claimed the bank did not properly disclose information that led NAB to increase the provision during the global financial crisis to $1.1 billion from $181 million, which led to the lawsuit.

RELATED STORIES