Banks’ brand values hit hard as reputation fallout continues to bite

Australia’s big four banks suffered a $1.1bn drop in brand value, led by ANZ, as the revelations from the Royal Commission into the sector damaged the big four’s reputations in 2018, a report has claimed.

According to Brand Finance’s annual report into Australia’s most valuable brands, Telstra retained top position, despite a 7% drop in value, while Coles and Woolworths jumped past the banks to become the nation’s second and third most valued names.

Despite the drop, Australia’s banking sector remained the most valued industry making up 27% of the nation’s total brand value, the report found. Retail was in second place with 21.6% of the nation’s value and telecoms at 12.7%.

Of the big four banks, ANZ suffered the biggest drop of 13% to $9.1bn while Westpac dropped 2% to $7.3bn. The CBA was static at $10.6bn while the NAB gained 4% to $8.6bn.

Mark Crowe, Managing Director of Brand Finance Australia, said about the banks’ mixed fortunes: “The banks’ brand value and brand strength have suffered in the aftermath of the Financial Services Royal Commission.

“While the banks underlying financial performance is sound, the adverse impact on brand equity will require significant brand investment to mitigate against erosion of brand revenues over the next 12 to 18 months.”

AMP also suffered from the Royal Commission’s fallout with the value of its brand slumping 29.1% during 2018, the report claimed.

Brand Finance calculates the value of a brand based upon the net economic benefit the owner would achieve by licensing the name in the open market.

The banks’ indifferent fortunes saw Woolworths and Coles, which picked up 23% to $11.2bn and 31% to $11.0bn respectively, take the CBA’s and ANZ’s positions in the second and third places in Australia’s top ten.

Crowe attributed the grocers’ improvement to the investment made by the businesses: “Woolworth’s revival has continued, moving up 2 places to become Australia’ second most valuable brand.

“Strong customer metrics and improved brand investment have seen Woolworths remain ahead of Coles, which has also moved up two places to claim the third rank following an increase in brand value of 31%.

“If current growth trends were to continue, Woolworths will again challenge Telstra for the most valuable Australian brand in coming years.”

Among smaller brands, the greatest gain was by EnergyAustralia which saw its value surge by 95.3%, Amcor and also picked up 74.9% and 68.3% respectively.

Qantas was one of the biggest gains in brand value among Australia’s top brands, showing a 3.2% increase.

The airline industry also recorded the highest reputation value according to Brand Finance with the auto sectors, brewers and tech brands slightly behind.

“Qantas’ brand performance is quite exceptional given that enterprise value has decreased by 8%,” said Crowe.

“This result highlights the importance of the iconic brand to the company as it deals with increasing competition on its domestic and international routes. Brands in the airline sector have been to the fore in Australian aviation with both Jetstar (28%) and Virgin Australia (16%) also recording strong increases in value”

Globally, Telstra came in at 173rd, down from 121st last year. Among the international brands, Amazon came in as the most valuable US$197.9bn, up 24.6% from last year, moving well ahead of second placed Apple which picked up 5% to US$153bn and Google which gained 18.1% to US$142.8.

Microsoft surged 47.4% to US$119.6bn to displace Samsung in fourth place after the South Korean giant slumped 1.1% to finish with US$91.3bn.


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