Financial Industry of Australian and New Zealand Bank and Commonwealth Bank of Australia

Running Head: Australian Financial Industry
Financial Industry of Australian and New Zealand Bank and Commonwealth Bank of Australia
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Australian Financial Industry 2
Executive Summary
The finance industry provides the medium through which borrowers and suppliers of
funds interact. It is also the medium through which monetary policies are exercised in an
economy. There are several players in this sector but this paper lies emphasis on banks in
particular the Australian and New Zealand (ANZ) Bank and the Commonwealth Bank of
Australia. This paper seeks to identify the various factors which affect operations and thus
productivity in this sector. It also performs a comparative analysis on the two banks performance
in 2017. The Commonwealth bank emerges as the more profitable of the two despite its shortfall
in liquidity which needs to be improved for optimal performance.
The finance industry is composed of firms offering financial services in the economy by
both domestic and foreign financial institutions. Financial services include; money market
dealings, service provision, building society operations, financial assets investments, and non-
depository finance. The financial sector players include Authorized Deposit Taking institutions
(ADIs) which are banks, credit unions, building societies and insurance and superannuation
firms, the financial markets, that is, debt, equity and derivatives markets (Reserve Bank of
Australia, 2016).
The Australia’s financial services regulation is recognized as the world’s best practice as
it provides a transparent and secure base for expansion within the region. Australia has one of the
largest pool of uncontestable funds under management globally. Australia is one of the major
centers of capital markets and is ideally placed as a center for the Asia Pacific region. The
growth of its investment funds sector is attributed its financial services strength which arise from
its mandated retirement savings scheme, advanced business infrastructure and a highly
multilingual workforce (Ibisworld.com.au, 2018).
Australia has the world’s largest private wealth market. The wealth composition is
however changing from more cash wealth to more superannuation (pension funds) and equity.
There has been witnessed a growing private equity sector owed to an increased demand by
emerging and expanding businesses for equity funding. Another contributing factor to this trend
is an increase in institutional investors in Australia (Fintech.treasury.gov.au, 2018).

Australian Financial Industry 3
Table of Contents
Introduction.................................................................................................................................................4
Australian and New Zealand Bank...............................................................................................................4
History of ANZ Bank.................................................................................................................................5
Commonwealth Bank of Australia...............................................................................................................6
History of the CBA...................................................................................................................................6
Top down Analysis.......................................................................................................................................7
Bottom up Analysis......................................................................................................................................9
Conclusion.................................................................................................................................................10

Australian Financial Industry 4
Financial Industry of Australian and New Zealand Bank and Commonwealth Bank of Australia
Introduction
In this paper more emphasis will be laid on banks. Australia has 53 banks 14 of which are
predominantly Australian owned. They are all listed in the Australian Securities Exchange
market either independently or through the parent company. In Australia there is no government
owned bank. They are regulated by the Australian prudential Regulation Authority, APRA which
provides information on the licensing and regulation of banking businesses. Banks have in recent
times diversified into fund management and insurance.
The payment and clearing and settlement systems ensure the smooth functioning of
financial institutions by ensuring safe, efficient and reliable services. The categories of payment
include cash transactions which consist of notes and coins and are cleared through the
Australian Cash Distribution Exchange System, paper transactions which include cheques and
paper based instruments and are cleared by the Australian Paper Clearing System, direct entry
and finally consumer electronics such as ATMs and smart cards to name just but a
few.www.aima.australia.org .
The retail banking sector in Australia has been growing with a reduction of the credit
unions due to mergers, acquisitions purchase or conversion to banks. The four largest domestic
banks in the Australian market are the Australian and the New Zealand Bank (ANZ),
Commonwealth, National Australian Bank and Westpac Banking Corporation. The foreign banks
in Australia normally conduct wholesale banking but the recent times has seen some diversify
into retail banking. The top4 foreign companies include ING, HSBC, Citigroup and Robobank
(Reserve Bank of Australia, 2016).
Australian and New Zealand Bank
“Building a sustainable future for our business, shareholders, staff, customers, and communities.
Achieve and maintain the highest standards of corporate governance and continuous disclosure.
“We want the best talent working at ANZ - no matter who they are – where they are from.
Diversity of ideas and amorous experiences is key to our success” vision
Values: integrity, collaboration, accountability, respect and excellence.