Financial Institutions and Market

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FINANCIAL INSTITUTIONS AND MARKET
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INTRODUCTION

• The Australian financial system comprises of
  activities that involve borrowing and lending
  funds in addition to transmit of the ownership of
  financial claims.
• Some of the services are
• Authorised deposit-taking institutions
• Insurance
• Superannuation
• Financial markets
• Payment systems

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Australia and New Zealand Banking Group

• Australia and New Zealand Banking Group (ANZ) is
  a most significant bank in Australia
• It has worldwide presence and offers a wide range
  of financial operations both in domestic as well
  as overseas market.
• This report would entail in describing how ANZ
  has driven up the functionalities of the
  financial system of Australia through its
  activities and performance.

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Sources of funds for ANZ
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Sources of funds

• Ordinary Equity Capital
• Retained earnings
• Reserves
• Trading securities
• Derivative financial instruments
• Preference share capital
• Treasury shares

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Uses of funds

• Purchases
• Interest payments
• Payment of collaterals
• Amortised values of loan origination expenses
• Payment of share-based compensation expenses
• Payments of leases
• Tax implications

7
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Asset Liability management

• ALM for managing three major kinds of risk
• Interest rate risk
• Liquidity risks
• Foreign currency risk

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Present Value of Money

• It is very clear that 1 AUD of today is not
  equivalent to 1 AUD tomorrow due tot its
  potential earning capabilities.
• Therefore to ascertain the net present value of
  expected cash inflows ANZ takes risk free rate as
  discounting rate and considers time value of
  money

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Cash Flows for ANZ

• Cash inflows or outflows comprises of
• Premiums
• Expenses
• Redemptions
• Benefits payments
• Bonuses

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Competitive Analysis
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Comparison

• ANZ has sound financial position with increased
  profitability in year 2014 as compared to year
  2013 with consistent results in term of solid ROE
  and ROCE.
• The efficiency ratio of the bank remained below
  50 as compared to the industry.
• ANZs operating expenses are comparable to the
  other 3 national banks of Australia.
• There has been a revenue growth and PAT by 8 as
  compared to the other players in the industry.

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Participation of ANZ in the financial markets
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Financial Market Presence

• ANZ is listed on the ASX and is involved in
  share( both equity and preference shares) and
  bond trading facilities.
• ANZ banking group is active member at following
  stock exchanges

Stock Exchange Trading
Australian Securities Exchange (ASX) ANZ convertible preference shares, ANZ capital notes, senior debts, subordinate bonds
Channel Islands Stock Exchange Subordinated debts of ANZ
Luxembourg Stock Exchange Senior and subordinate debts of ANZ Limited and debts and non-cumulative trust securities
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ANZ in Derivatives Market

• Derivatives are the hedging instruments for ANZ
  banking group.
• Types of derivatives transacted by ANZ banking
  group
• Swaps
• Forwards
• Futures
• Options
• Contracts and agreements

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Types of Derivative Contracts
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Applicable Regulations

• Framework governing the banking group are
• Government policies
• Carbon pricing policies
• Climatic change policies
• Mitigation policies
• Hedging policies
• Taxation laws
• FATCA and IGA

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CONCLUSION

• ANZ banking groups are one of the largest
  national banks in Australia
• It is the driving factor of the Australian
  financial system in diversification aspired by
  economy since last few years.

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References

• Nijskens, R. and Wagner, W., 2011. Credit risk
  transfer activities and systemic risk How banks
  became less risky individually but posed greater
  risks to the financial system at the same time. 
  Journal of Banking Finance.  35(6).
  pp.1391-1398. Viewed on 28th dec 2016
• Haldane, A.G., 2013. Rethinking the financial
  network. In  Fragile stabilit??tabile fragilit? 
  (pp. 243-278). Springer Fachmedien Wiesbaden.
  Viewed on 28th dec 2016
• Huang, X., Zhou, H. and Zhu, H., 2012. Assessing
  the systemic risk of a heterogeneous portfolio of
  banks during the recent financial crisis. 
  Journal of Financial Stability. 8(3). pp.193-205.
  Viewed on 28th dec 2016
• Davis, K., 2011. The Australian financial system
  in the 2000s dodging the bullet.  The Australian
  Economy in the 2000s. pp.313-314. Viewed on 28th
  dec 2016.
• Schwartz, C., 2010. The Australian government
  guarantee scheme.  Reserve Bank of Australia
  Bulletin. pp.19-26. Viewed on 28th dec 2016.

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