Analysis of Banking Sector in Australia: A Comparative Study of Westpac and BOQ

Corporate Accounting 1
CORPORATE ACCOUNTING
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Corporate Accounting 2
Executive summary
The paper presents analysis of the banking sector in Australia. It also present analysis of
Westpac and BOQ based on their latest financial statements. Based on the analysis, WBC
was found to be doing relatively better than its counterpart. The WBC seems to enjoy high
cash flow over the period unlike BOQ which is currently experiencing relatively low cash
flows. Further, by looking at their equity and debt ratios, it is evident that both companies
would offer relatively good investment opportunity for existing and potential investors.

Corporate Accounting 3
Table of Contents
Executive summary....................................................................................................................2
Introduction................................................................................................................................4
OWNERS EQUITY...................................................................................................................4
Item of equity reported in BOQ and Westpac Banking Group..............................................4
Comparative Analysis of the debt and equity position of BOQ and Westpac.......................6
CASH FLOWS STATEMENT..................................................................................................7
Item reported in Westpac Banking Corp and BOQ the cash flows statement........................7
Comparative Analysis of BOQ and Westpac Banking Based on the Three Broad Classes of
the Cash Flows......................................................................................................................9
OTHER COMPREHENSIVE INCOME STATEMENT........................................................10
Items Reported In Westpac Banking Corp and BOQ’s Other Comprehensive Income
Statements.............................................................................................................................10
Reasons for the items not being reported in the Income Statements....................................11
Comparative analysis of items reported in other comprehensive income statement............11
Evaluation on whether the other comprehensive income ought to be included in assessing
performance management of the company...........................................................................12
ACCOUNTING FOR CROPORATE INCOME TAX............................................................12
Tax expenses reported by BOQ and Westpac......................................................................12
Effective tax rate of BOQ and Westpac Banking Corp........................................................12
Deferred Tax Assets/Liabilities............................................................................................13
Comment on any increase or decrease in the deferred tax liabilities or assets.....................13
Cash Tax Amount.................................................................................................................13
Cash tax rate for BOQ and WBC.........................................................................................14
Explanation of the difference cash tax rate between book tax rate......................................14
Conclusion................................................................................................................................14
List of References....................................................................................................................15

Corporate Accounting 4
Introduction
BOQ and WBC are some of the largest banks in Australia. Basically, WBC is amongst the
second largest banks in terms of market cap (Westpac Banking Corp 2017). It is second in
terms of the market cap and is the chief credit card producers within the country. On the other
hand, BOQ is the oldest banking operating in Australia headquartered in Queensland. It
employs a total of 48,556 staff who are said to operate across its 200 branches (Bank of
Queensland 2017). The bank offers form of the financial services comprising of retail
banking, insurance, credit insurance, accident insurance, motor vehicle insurance, small
business loans and saving accounts (Morningstar 2017).
OWNERS EQUITY
Item of equity reported in BOQ and Westpac Banking Group
Based on Westpac statement of the changes in the equity, it is evident that some of the items
included in this statement were reserves, share capital, retained profits as well as the non-
controlling interests. In the case, of the reserves, there were several items reported under this
single item. Some of these items comprised of net other comprehensive incomes which was
around 98 million, share based payments as well as other income of around 1 million.
Further, items reported under share capital included dividend reinvestment plan of around
1,452 million, exercise of the employees share rights and options of around 11 million, the
purchase of the shares or around -43 million and acquisition of the treasury shares of amount
-40 million. On the other hand, the items reported on the retained profit section included
dividends on the ordinary shares of around 6,291 as well as other investments contributing to
-4 million (Westpac Banking Corp 2017). On overall, the amount of equity attributable to the
shareholders included dividend on the ordinary share of around -6,291 million, dividend
reinvest plan of around 1,452 million, share based payment of 98 million exercise of the
employees share rights and options of around 11 million. Additionally, there purchase of the