Answer To: Assessment Type: Written Report – individual assessment Topic: This assignment covers contemporary...
Sumit answered on Aug 15 2021
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In this paper I have analyzed the share price of Australia and New-Zealand Bank for the year
2018 and 2019 and the major reasons for the significant changes in the share prices of the bank.
In this paper I have also analyzed the effect of COVID 19 on the share prices of the bank. In this
paper I have used the information available on the website of the bank. The information used
were daily share prices of the bank, Major financial highlights during the year which has affected
the share price and major Financial results during the year.
Introduction:
Australia Stock Exchange is one of the world’s leading financial market exchanges. It operates at
the heart of the globally attractive, deep and liquid Australian financial markets. As an integrated
exchange offering, ASX provides a full suite of services including listings, trading, clearing,
settlement, technical and information services, and other post-trade services. It operates markets
for a wide range of asset classes including equities, fixed income, commodities and
energy. ASX’s network and data center are connected to leading financial hubs. Speed,
reliability, state-of-the-art technology and the diversity of the user community, are fundamental
to the success of the Sydney-based ASX Australian Liquidity Centre.
The Australia and New Zealand Bank was incorporated in 1977, but its origins can be traced
back to 1835. The bank is a multinational banking and financial services company having it
headquarter in Melbourne. ANZ is one of the top ten largest listed companies in Australia by
market capitalization, one of four major banks in Australia (by total assets) and the largest bank
in New Zealand (by total assets). The bank currently operates in more than 33 markets across
Australia, New Zealand, Asia, Pacific, Europe, America and the Middle East.
Analysis:
(a). Share Prices in 2018:
(i). The Maximum share price of the bank during the year was $30.80. The Minimum share price
of the bank during the year was $$26.08 and the Closing Price was $28.18 (Table 3). The share
price of the bank has been very volatile during the year (Table 1). The major reasons for this was
that the profit of the company remained same as the last year. The operations of the company
have remained stable during the year. The major reasons for fall in share prices are the change of
board structure with several members retiring during the year, sale of both Pensions and
Investments businesses to IOOF and Life Insurance businesses to Zurich, as well as the sale of
Life Insurance business in New Zealand to Cigna. Also, the bank completed the complex
separation of six retail and wealth businesses in Asia.
(ii). Major Highlights of the financials for the year 2018 were:
The Operating Income of the company has fallen from 19816 in 2017 to 19214 in 2018.
Operating expenses increased from 8967 in 2017 to 9248 in 2018. Return on Equity has fallen
from 11.70% in 2017 to 11% in 2018. The Earning per share of the bank has fallen from 232.70
cents in 2017 to 223.40 in 2018. Net profit of the company has fallen from 6406 million dollars
in 2017 to 6400 million in 2018.
Slowing Housing market, increased lending rules implemented by the government and ongoing
legal battles have impacted the financial of the bank. The Cash Profit of the Bank fell by 5%
during the year. The major reason for increased expenditure during the year were increased
customer costs and increase in remediation costs. In effort to reduce cost during the year the
bank had to lay off more than 5000 employees, this has affected the credibility of the bank and
loss of faith of the investors. Even though the net profit was reduced during the year, the bank
maintained the same dividend per share which increased the share price of the bank. Some of the
positives for the company were, significant reduction in Bad-Debts amount to $1 Billion Dollars,
New Impaired Assets have reduced and due to lower credit losses the bank has sold the retail
business in Asia to consolidate its position in other countries and to reduced the overall risk
profile of the Bank.
(b). Share Prices in 2019:
(i). The Maximum share price of the bank during the year was $29.30. The Minimum share price
of the bank during the year was $26.08 and the Closing Price was $ (Table 3). The share price of
the bank has been stable during the year (Table 2). The major reasons...