Which Australian Bank Has The Best Reputation?

Research company AMR has recently released its annual corporate reputation Index, and the results might be surprising. But before you read on, I must note that I’ve edited this article since I got some figures wrong originally. I apologise for my mistake, but note the conclusions remain the same.

The study measures overall reputation taking into consideration how Australians feel about their products, innovation, workplace, corporate citizenship, and governance, among other criteria.

And despite the relentless advertising campaign, the answer to “Which bank is the most reputable bank?” is definitely not Commonwealth Bank of Australia (ASX: CBA), which came in at number 42 this year, down from number 33 last year.

Australia and New Zealand Banking Group (ASX: ANZ) did better than Commonwealth Bank, at number 31, while National Australia Bank Ltd (ASX: NAB) improved to number 32, and Westpac Banking Corp (ASX: WBC) came in at 36.

The best bank, when it comes to reputation, is ING Direct. But as the subsidy of a Dutch company, you won’t find that one in the S&P/ASX 200 (Index: ^AXJO) (ASX: XJO).

For an ASX listed bank, your best option (reputation-wise) is Bendigo and Adelaide Bank Ltd  (ASX: BEN), which came in at 22nd. Just behind them is Suncorp Group Ltd (ASX: SUN) which came in at 24.

These finding suggest that the public generally thinks better of the smaller banks than the larger ones, perhaps because of scandals that have plagued various departments of the big banks, in recent years.

At the end of the day, however, these reputational issues will be insignificant compared to the impact of a slowing housing market, and greater capital requirements, which will likely require the banks to issue more shares. That means that even if the banks can keep growing profits overall, the earnings per share are much more likely to fall. Ultimately, that will mean lower dividends — which many analysts are already predicting.

In comparison, some industrial companies are robust dividend-payers, but can still offer impressive capital gains…

In fact, some companies just keep on improving earnings, dividends and cashflow -- without having to take on huge amounts of overseas debt.

Arguably, these 3 "new breed" blue chips offer comparable dividend yields to the big banks, but without so much risk of the share price falling.

Many Australians are betting heavily on the banks, and with the end of the mining boom upon us, that might not be so clever, anymore. So if you're interested in ways to diversify your portfolio click here to access our 100% FREE report on 3 Top Blue Chips for 2016.

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Motley Fool contributor Claude Walker has no position in any stocks mentioned. You can follow him on Twitter @claudedwalker. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering adiverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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