Bank Management | Assignment

Running head: BANK MANAGEMENT
Bank management
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1BANK MANAGEMENT
1.
This year, financial service sector is facing a stimulating period such as “Westpac
Banking Corporation”. With the lesser growth of economy and historically lower interest rates
the operating environment has also become more tough. The bank has continuously faced
uncertainity around APRA’s capital requirements (Authority, 2017), impending for additional
controlling activities, and low earning interest rates and higher acquiescence costs.
Recently the Reserve Bank of Australia has cut official interest rates of 0.5 percent by a
quarter, as to defend the Australian economy from the financial outbreak of the coronavirus
outburst.
In the reduction case of the RBA’s first cash rate Westpac was the first of the major
banks to react since October. The bank has announced that passing the cut in full to debtors.
The economic viewpoint for Australia remains perplexing to make softer global
environment. It is anticipated that the Interest rates are expected o remain very small. The RBA
has concentrated the cash rate from 1.5% to 0.75% over the year. It is expected in early 2020 that
a further rate amended to 0.5%. At this level of rate there would be a limited options for RBA to
changed further if the economy goes down. At this low levels of interst rates, there will be a
important stress on margins. There are several deposits that are fundamentally at a floor beyond
which they can not be repriced down. Additionally Invested capital earnings and liquidity are
increasingly lower since the financial collection rolls over to much lesser interest rates
(tradingeconomics.com, 2020).
Concerning about the lending environment, the bank significantly challenged on the
impact of lowering the interest rate and it will create a demand for falling in a substantiality in

2BANK MANAGEMENT
lending. Credit quality persisted comprehensive over the year, a reasonable deterioration in
delinquencies on the “housing loans” with 0.88% of loan balances more than 90 days due. It
mostly replecates a some increases in tension and slowdown in housing income in ceratian parts
of the country, it increases the time to take for people to clear their loans when they require to
sell. It is remain very low at just 0.08% of the impaired assets to total exposure, while lending
business, “impaired assets to total exposure” was rise just 3 basis points to 0.62% over the last 6
months. The bank has fully funded with the new deposite of the customer.
2.
The “Reserve Bank of Australia” reduced the cash rate by 25 basis point to a new record
low of 0.25% in the next alternative move as to peer all over the world to alleviate the
coronavirus effect. Elaborately it can be said that they will not raise the target of cash rate until
development is being achieved towards full occupation and remains assured that the inflation
will be within 2% to 3% target. In that concern the policy makers wish to launch a 3 year funding
capability for the system in banking with AUD of 90 billion.