Title: Detailed Report on Financial Institutions and Market
1FINANCIAL INSTITUTIONS AND MARKET
2INTRODUCTION
- 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
3Australia 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.
4Sources of funds for ANZ
5Sources of funds
- Ordinary Equity Capital
- Retained earnings
- Reserves
- Trading securities
- Derivative financial instruments
- Preference share capital
- Treasury shares
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7Uses 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
8Asset Liability management
- ALM for managing three major kinds of risk
- Interest rate risk
- Liquidity risks
- Foreign currency risk
9Present 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
10Cash Flows for ANZ
- Cash inflows or outflows comprises of
- Premiums
- Expenses
- Redemptions
- Benefits payments
- Bonuses
11Competitive Analysis
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13Comparison
- 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.
14 Participation of ANZ in the financial markets
15Financial 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
16ANZ 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
17Types of Derivative Contracts
18Applicable Regulations
- Framework governing the banking group are
- Government policies
- Carbon pricing policies
- Climatic change policies
- Mitigation policies
- Hedging policies
- Taxation laws
- Compliance with the provisions of FATCA and IGA
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20CONCLUSION
- 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.
21References
- 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
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