This is a group assignment. My task is do a introduction . And anaylsis the assets in part A. Do not need do anaysis about libility composition. Because it is my group member. We choose the two bank as example. Theay are commonwealthbank (AU) and Morgan Stanley(US).
Semester 2, 2020 CORPFIN 2501- FINANCIAL INSTITUTIONS MANAGEMENT II SMALL GROUP DISCOVERY EXPERIENCE Group Assignment This assignment is to be done in a group of maximum four students. Group members can be from different tutorial classes. The maximum word limit is 4500 words. Appendices (including, for example calculations) can be attached and will not be counted in the word limit. All of the sources you have cited in your assignment must be included in a reference list, which is placed at the end of your report before the appendices. The assignment should be submitted electronically via the Turnitin Assignment tool on MyUni by one member for the whole group by 11.59pm on Friday, Oct 30th (week 12) The link for the Turnitin Assignment tool has been created under the Assignment page entitled “SGDE Group Assignment- Turnitin Submission” on the MyUni site. You can upload your assignment directly by following the prompts. A bonus of 2.5 marks (or 12.5% of the possible maximum mark allocated for the assignment) is applied for early submission of the assignment (by 11.59pm on Tuesday,Oct 27th ). If the assignment is submitted later than this time, then the bonus is not applied. A late assignment submission will be penalised by a 1 mark reduction (or 5% of the possible maximum mark for the assignment) for each day that it is late. The main objective of this assignment is to understand banks’ activities and risks and to analyse the impact of the financial crisis on the banks’ activities, financial performance and risks. You are required to use 2 banks (commercial and/or investment banks) ; one Australian bank and one US bank. You can choose to use the same type or different types of banks. The time period of analysis is from 2007 to 2010 (inclusive) to capture the impact of Global Financial Crisis that developed in late 2008. This assignment requires an in-depth analysis on the financial statements of the banks you have selected. The information required (financial reports, market and industry analysis etc.) can be downloaded from the banks’ websites and other sources. Financial Institutions Management II - Semester 2 2020 2 Part I: Asset and Liability Composition (50% of marks) Present a clear and concise analysis on fund (capital) raising activities (liability + equity composition) and asset portfolio allocation (asset composition) of the banks reflected in the banks’ balance sheets. In your analysis you have to clearly explain the major differences of the banks’ asset and liability compositions and the impacts of the 2008 global financial crisis on the banks’ asset and liability +equity compositions. Assessment details: a. Explain the motivation for choosing the banks Why did you think the banks you chose would make an interesting comparison? Possible reasons might be size, location, areas of operation, or core activities. b. Compare and discuss changes in asset and liability compositions of the banks over the sample period : Examine the compositions of the assets and liabilities from 2007 to 2010 for each bank. You may want to focus on four types of assets and four types of liabilities (i.e three largest types of assets and liabilities, and include the other smaller types in one group). Compare and explain how the asset and liability compositions have changed over the sample period, especially during the crisis periods. Explain how you think the global financial crisis affected the asset and liability compositions. c. Explain potential risks faced by the banks due to the asset and liability compositions and their changes. Hint: You should not only be noting the quantitative change of assets and liabilities, but also possible reasons as to why the change occurred e.g. market conditions, changes in cost of funds, changes in needs of the bank. For example, assignments that state ‘liability A changed by X%, as the cost of funds increased’ would get a significantly better mark compared to, ‘liability A changed by X%’. You do not need to do this for every asset or liability, nor do you need to go into extreme depth, but you should make an attempt to understand why a change has occurred. The notes of financial statements can be useful for this! Financial Institutions Management II - Semester 2 2020 3 Part II: Financial Performance Analysis (50% of marks) Critically analyse financial performance of the banks and discuss the impacts of the global financial crisis and the European debt crisis on the performance of the banks. In undertaking the performance analysis, you are required to use the Return on Equity (ROE) decomposition model discussed in topic 2. This model provides a starting point for examining a financial institution’s performance by decomposing its financial ratios. In order to obtain a better understanding about the banks’ performances, not only do you need to analyse key performance indicators, but also identify trends in those indicators. Assessment details: a. Discuss changes in ROEs and the sources of the changes in ROEs for each bank over the sample period : o How has the profitability (ROE) for each bank changed over the sample period? o What have been the reasons of the changes in ROEs ? Decompose the ROE into the main components: ROA and EM to identify the driving factors (strengths and weaknesses) of the ROE. Analyse further the sources of ROA by breaking down the ROA into its components: Asset Utilisation and Profit Margin ratios. Identify the sources of the changes in Asset Utilisation and Profit Margin ratios by looking into the components of asset utilisation (i.e the income ratios) and profit margin (i.e the expense ratios) in more detail. b. Explain how the global financial crisis affected the banks’ profitability. Note: Information about ROE items is available in Consolidated Income Statements (Statement of Earnings/Income) and Balance sheets in financial reports. Additional readings for this part: (Topic2_App2A(Lange3e) from Lange, Saunders and Cornett, 3rd edition and Topic 2_App7A(Saunders) from Saunders 7th ed ) are available in the “Readings” folder within Modules on MyUni. Similarly to part I, when you are discussing ratios or multiples do not just state the quantitative change. It is important to try to understand why the change occurred. Simply stating ‘The ROE for 2008 is X and the ROE for 2009 is Y, this is a big change!’ is not useful analysis. Should you wish to move into a finance related role, comparing companies using multiples is a fairly common task for interns & graduates, so this is good practice! --End of Assignment-- Slide 1 Commonwealth Bank of Australia ACN 123 123 124 Results Presentation For the half year ended 31 December 2009 10 February 2010 2 Disclaimer The material that follows is a presentation of general background information about the Group’s activities current at the date of the presentation, 9 February 2011. It is information given in summary form and does not purport to be complete. It is not intended to be relied upon as advice to investors or potential investors and does not take into account the investment objectives, financial situation or needs of any particular investor. These should be considered, with or without professional advice when deciding if an investment is appropriate. 3 Agenda Ralph Norris, CEO – Company Update and Outlook David Craig, CFO – Financial Overview Questions and Answers 4 Notes 5 Overview Another solid financial result Challenging operating environment Disciplined strategy execution continuing to deliver Investing for the future Cautiously optimistic for calendar 2011 6 Snapshot – 1H11 Results* Cash earnings ($m) 3,335 +13% ROE (Cash) 19.2% +70bpts Cash EPS ($) 2.14 +12% DPS ($) 1.32 +10% Cost-to-Income 45.4% 70bpts NIM 2.12% (6bpts) RBS ($m) 2,227 +2% IB&M ($m) 865 (12%) BPB ($m) 858 +6% Bankwest ($m) 369 +10% Wealth Management ($m) 453 +10% NZ (NZD $m) 419 +15% Total Assets ($bn) 650 +4% Total Liabilities ($bn) 614 +4% FUA ($bn) 199 +3% RWAs ($bn) 286 (4%) Provisions to Credit RWAs 2.25% +21bpts Tier 1 Capital 9.71% +61bpts Tier 1 – UK FSA 13.5% +110bpts WAM – New Issuance (yrs) 4.4 - Deposit Funding (%) 60% +4% Liquid Assets ($bn) 93 +4% * All movements on prior comparative period. Financial Strong balance sheet Capital & Funding Operating Performance by Division 7 Dec 10 vs Dec 09 Cash NPAT ($m) 3,335 13% Statutory NPAT ($m) 3,052 5% ROE 19.2% 70bpts Cash EPS ($) 2.14 12% Dividend per Share ($) 1.32 10% Another solid financial result 8 Return on Equity (Cash) 18.8% 21.5% 21.7% 20.4% 15.8% 18.7% 19.2% 2005 2006 2007 2008 2009 2010 1H11 9 Return on Assets Cash NPAT ($bn) Assets ($bn) 352 383 440 488 620 646 650 3.5 4.1 4.5 4.7 4.4 6.1 3.3 - 0 0 1 1 1 1 1 2 2 0 100 200 300 400 500 600 700 2005 2006 2007 2008 2009 2010 1H11 Half Year Group ROA (%) 1.1% 1.0% Banking ROA 0.9% 10 A clear, focussed strategy Australia’s finest financial services organisation Customer Satisfaction Business Banking Trust and Team Spirit Technology and Operational Excellence Profitable Growth 11 Strategy continues to deliver 1, 2, 3, 4 - Refer note slide at back of presentation for source information Business Customer Satisfaction 3 Products per customer 2 CBA Ranking* Total Market Equal 1st Large (>$50m) 1st Medium ($5m to $50m) Equal 1st Small ($1m to $5m) Equal 2nd Micro (<$1m) equal 3rd firstchoice satisfaction 4 cba peers 2.64 a ve ra g e n u m b e r o f p ro d u c ts a t th e f in a n c ia l i n s ti tu ti o n 4 major banking groupscba peers a ve ra g e n u m b e r o f p ro d u c ts a t th e f in a n c ia l i n s ti tu equal="" 3rd="" firstchoice="" satisfaction="" 4="" cba="" peers="" 2.64="" a="" ve="" ra="" g="" e="" n="" u="" m="" b="" e="" r="" o="" f="" p="" ro="" d="" u="" c="" ts="" a="" t="" th="" e="" f="" in="" a="" n="" c="" ia="" l="" i="" n="" s="" ti="" tu="" ti="" o="" n="" 4="" major="" banking="" groupscba="" peers="" a="" ve="" ra="" g="" e="" n="" u="" m="" b="" e="" r="" o="" f="" p="" ro="" d="" u="" c="" ts="" a="" t="" th="" e="" f="" in="" a="" n="" c="" ia="" l="" i="" n="" s="" ti="">