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Westpac’s decreased profit shows flawed ideas

MEDIA RELEASE
Finsec
The finance sector union

2 November 2006

Westpac’s decreased profit shows its business model is flawed

Finsec, the bank workers’ union, is calling on Westpac to change its business model in light of its decline in profitability in New Zealand. Westpac announced a decrease in its annual profit today.

“Westpac has operated an old fashioned business model that alienated its customers and shows in its financial performance,” said Finsec Campaigns Director, Andrew Campbell.

“Of all the banks operating in New Zealand Westpac invests the least to make a dollar. Its cost to income ratio is significantly lower than the other banks and we see this as a failure to invest in its business that is denting its profitability,” said Campbell.

“The Westpac model of cutting cost, outsourcing work and driving staff to sell more and more products to customers has not increased its profit and is disliked by customers. Westpac regularly has the lowest customer satisfaction scores in the industry and we believe this is in response to the business model they are following,” said Campbell.

“Last week ANZ bank announced an increased profit on the back of increased investment in its business. We are calling on Westpac to further change its business model because the model doesn’t work for customers, staff or the business,” said Campbell.

“We want to see the bank make significant investment in its customers. This means investing in staff training, reducing staff turnover and putting more money into its front line services,” said Campbell.

“Westpac staff want to see the company do well, but this will mean changes to how it currently operates. Now that Westpac is a New Zealand bank, it should do business in a way that benefits New Zealanders more,” said Campbell

ENDS

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