CORPFIN7040: Financial Institutions Management II - Report Writing - Finance Assignment Help

Assignment Task:

Problem 1 

(i) From the internet, download the annual reports for 2017, 2018 and 2019 for the Big 4 Banks in Australia: 

• Commonwealth Bank of Australia (CBA) 

• Australia and New Zealand Banking Group (ANZ) 

• National Australia Bank (NAB) 

• Westpac Group (WBC) 

(ii) For each of these banks and for each year, calculate the following ratios: 

• Return on Equity (ROE) 

• Return on Assets (ROA) 

• Equity Multiplier (EM) 

• Profit Margin (PM) 

• Asset Utilization Ratio (AU) 

(iii) Explain, in your own words, how you would interpret each of the ratios above. Then go and download historical data for these ratios for the major banks in Australia. 

(iv) Hence explain how the Big 4 Banks have performed with respect to each of these ratios for 2017-2019 (compared to the historical ratios). 

Problem 2

In lectures, we discussed that if the maturity of assets exceeds the maturity of liabilities, then an increase (decrease) in interest rates will cause the value of assets to fall (rise) by more than the value of liabilities. 

In lectures, we looked at the spreadsheet on myuni (Go to ‘Modules’ > ‘Spreadsheets Used in Lectures’ > ‘Lecture2Examples.xlsx’) and looked at a numerical example to illustrate this fact. Suppose you are trying to use this spreadsheet (Cells A1: G16) to find the market value of five- year loans for CBA and the market value for one year deposits issued by CBA. 

(i) What is the interest rate on five-year loans issued by CBA?

(ii) What is the interest rate payable by CBA on one-year deposits?

(iii) What is the discount rate that you would use in cell B1 to do this valuation?

(iv) What do you think are the limitations of this spreadsheet model?

(v) Can this model be used to find the market value of equity for CBA?

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