The Australian financial system comprises of activities that involve borrowing and lending funds, also, to the transmitting of the ownership of financial claims. Some of the services are:
(Slide 3)Currently, out of the existing 54 commercial banks, Australia and New Zealand Banking Group (ANZ) is a most significant bank which has a 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.
ANZ can raise funds internally and externally from following sources:
Funds are raised by ANZ for the following purposes:
Asset Liability Management for managing three major kinds of risk (Slide 7)
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 the time value of money. Cash inflows or outflows comprises of (Slide 9)
Since ANZ has a sound financial position with increased profitability in the year 2014 as compared to the year 2013 with consistent results in term of solid ROE and ROCE. Although, the efficiency ratio of the bank remained below 50% as compared to the industry. However, ANZ's operating expenses are comparable to the other three national banks of Australia. There has been a revenue growth and PAT by 8% as compared to the other players in the industry
ANZ is listed on the ASX and is involved in share( both equity and preference shares) and bond trading facilities. ANZ Banking group is an active member at following stock exchanges:
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
Derivatives are the hedging instruments for ANZ banking group
The types of derivatives which are transacted by ANZ banking group includes the following:
Trading and transacting position of the institution in the financial derivatives market is an integral part of the sales and trading activities. When these derivative instruments are sold out to customers, ANZ Banking group can control its exposure to the fluctuations of the for-ex and the interest rates in the foreign exchange.
There are various laws which need to abide by every enterprise in an economy. Regulatory Framework governing the banking group are:
ANZ banking groups are one of the largest national banks in Australia that has its reach nationwide as compared to that of other national banks in Australia. It is the driving factor of the Australian financial system in diversification aspired by the economy since last few years.
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Various Sources of Bank Funds, 2017.[Online]. Available through <http://bankofinfo.com/various-sources-of-bank-funds/>. Accessed on 11th January, 2017.
Derivatives, 2017.[Online]. Available through <http://www.caclubindia.com/articles/derivatives-22693.asp>. Accessed on 11th January, 2017.
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