ANZ bank Financial Analysis Assignment 2022

ANZ bank 1
ANZ bank Financial Analysis
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2.5. Latest share or bond issuance
ANZ bank issued three major bonds between April 2015 and May 2019. The funds raised
from bond issuance were meant to finance the bank’s retail investments as well as sustainable
development goals (SDGs). Issuance of bonds by ANZ bank was as a result of favourable
market conditions that supported domestic lending. Traditionally, the bank relied on its
deposits to funds its investment opportunity. However, the recent growth in the banking
industry has seen lending outpacing deposit growth. As a result, the bank turned to low-cost
domestic lenders for funding.
In April 2015 ANZ Banking Group issued a floating rate bond. The sale of the five-year bond
helped the bank to raise over $2.5 billion which was used to finance long term investment
projects (Thompson, 2016). Likewise, ANZ issued an SDG bond in February 2018. The bond
was issued in the European capital markets and raised over €750 million. The funds raised
from the bond was used to the bank’s expenditures and loans that promote SDGs projects.
The SDG bond was priced at 15 basis over five years. The €750 million raised was used by
the bank to finance its projects relating to economic, environmental and social benefits such
as clean water, renewable power, schools, hospitals and green buildings (ANZ, 2018).
The latest bond to be issued by the bank was on 20 March 2019. The fixed-rate $100 million
bond is spread over five years and is expected to mature on 20 March 2024. The bond was
issued to retail and institutional investors at a 1.05-1.10 % margin rate. The bond was offered
at an initial minimum application amount of $10,000 and a subsequent multiples amount of
$1,000. So far, bond has raised $500 because of its unlimited which allowed
oversubscriptions (Daley, 2019).
ANZ bank prefers issuance of domestic bonds because they are cheaper as compared to the
long term financial loans offered by financial institutions. Domestic bonds are 3.10 percent

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more affordable compared to loan secured from financial institutions. Lastly, the bonds are
long term debts which the bank promise to pay at maturity date. In most cases, capital
structure comprises of capital and debts. Issuance of bonds means that the percentage of
investment funds using debts would increase. In other words, the bank depends on debts to
finance its investment and financial activities (Daley, 2019).
2.6. PE ratios and share price movement over three years
Price-earnings (P/E) ratio is used by investors to make a purchase decision for given stock.
The higher the P/E ratio, the higher the expected earnings growth in the future. P/E ratio is
calculated by dividing current stock price by Earnings per Share (EPS) (English, 2011). On
the other hand, EPS refers to the earnings a company makes from a single common share.
EPS is calculated by diving net profit by common stock.
ANZ bank had profits of $5,720 million, $6,421 million, and $6,416 million at the end of
2016, 2017 and 2017 financial years, respectively. On the other hand, the banks common
stock stood at 3,026 million, 3,043 million, and 3,026 million at the end of 2016, 2017, and
2018 financial years respectively (ANZ, 2018).
The company’s EPS between 2016 and 2018 is calculated, as shown below.
2016 2017 2018
Profit 5720 6421 6416
Common Stock 3026 3043 3026
EPS 1.89 2.11 2.12
ANZ bank’s financial year-end on 30 September annually. The market stock prices at the end
of 2016, 2017, and 2018 financial years were $27.63, $29.60, and $28.40 respectively. The
bank’s P/E ratio is calculated as shown below.