Financial Analysis of Commonwealth Bank of Australia

This article provides a critical evaluation of the practices and financial decisions of Commonwealth Bank of Australia with reference to Corporate Social Responsibility (CSR) principles. It also discusses the ethical violations and theories related to the bank's actions.

Running head: FINANCIAL ANALYSIS
Financial Analysis
Name of the Student
Name of the University
Author Note

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FINANCIAL ANALYSIS
Table of Contents
Introduction......................................................................................................................................2
Discussion........................................................................................................................................2
Conclusion.......................................................................................................................................2
References........................................................................................................................................2

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Introduction
In 1911, the Act of Commonwealth Bank established the Australian Commonwealth
Bank of (CBA). The ‘Andrew Fisher labor government’ introduced it. In very short time period
for the time, the bank had both general bank business and savings. It was the bank was also the
first Australian bank to get guarantee of government of federation.
The CBA or Commbank is a multinational bank carrying on operations in New Zealand,
Asia, the United Kingdom and the United States. It provides a range of financial
services including retail, business and institutional banking, funds management, superannuation,
insurance, investment and broking services (Carnegie 2016). As on the date of August 2015, the
Commonwealth Bank listed as the is the largest company in Australia on the Australian
Securities Exchange as of August 2015. The Commonwealth Bank is also the largest bank in
the Southern Hemisphere,
Discussion
Critical evaluation of CBA’s practices and financial decisions described in the background
above with reference to the Corporate Social Responsibility (CSR) principles
As per the reports presented by the CBA the various corporate social responsibility
policies includes the various commitments that the company make in the report like ensuring
honesty, professionalism and fairness in dealing with the customers. As per the corporate
governance statements, the Common Wealth Bank Group is committed for ensuring the various
policies and practices like managing the frauds, countering money laundering, and political
donations (Bank 2014). The vision is to secure and increase the financial welfare of the
communities, customers and the businesses.
The objectives of the CBA are as follows:
 To provide competitive and cost effective financial service and banking
 To enable the customers transact with confidence and convenience
 To enhance and protect the customer wealth

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 to generate effective return for millions of the Australian customers who owns their
shares and also through the process of superannuation
The various financial decisions of the CBA:
 The Bank provides finance to more than 2 million customers and pays interest to
more than 11 million retail savings and account holders.
 The annual payroll expenditure the banking group is more than $5 billion.
 The CBA is the Australia’s fourth largest taxpayer; it has paid more than $3 billion
tax in the financial year of 2017.
 The group has delivered a range of financial literacy programs to more than 280000
students across the world
 Various healths and well being programs has been conducted by the banking group.
The ethical Principles of the Commonwealth bank of Australia:
Ensuring Respect: The CBA treats with each other the way they would like to be treated.
Compassion: The CBA bring compassion and kindness to the dealings with others – They are
aware of human vulnerabilities and act to suspend judgment, showing humanity, generosity, and
appreciation (Dell'Atti et al. 2017).
Trust: The CBA keeps trust in each other demonstrates honesty and dignity in the interactions.
The trust is earned and build in the belief that person in the other side has our best interests at
heart.
Leadership: They invest in leadership and believes that everyone can lead change and make a
difference.
Authenticity: The CBA commits to be true and fair.
However, the CommInsue has pointed out the fraud that took place that involved the
bank. According to them, the bank has been accused to manipulate the medical intuitions so the
insurance claims ate rejected. it involved misuse of the medical reports that includes deletion of

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the files and forcing the doctors to change their opinion by changing the description of the
diseases so that the insurance claims of the clients are rejected. This contrasts with the
fundamental strategy of the bank and had an negative impact on the company’s reputation.
Do sustainability and socially responsible outcomes really matter for CBA? Discuss.
According to the sustainability report of 2017, it can be said that the sustainability and the
social responsibility plays an important role for the banking company. The outcomes really
matter to them. The following example highlights and gives a vivid description of the activities
of the company considering the social responsibility and the sustainability (Herbohn, Gao, and
Clarkson 2017).
In May 2013, the CBA group announced the new vision declaring the enhancement of the
financial well being of the people, community and the businesses. The new vision focuses on
culture, desire to improve and innovate. A new sustainability framework has been introduces
which states:
Sustainable business practices: The sustainable business practices and operation that has been
embedded by the business includes a strong governance, a management system that is well
established, transparent reporting and responsible procurement.
Responsible financial services: The approach to the provision of financial products and services
to be more responsible
Better work force: To attract and sustain a talented workforce and a proper diversification of the
existing one
Contribution to community and action: To contribute programs those are impactful to the
communities with the help of beneficial partnership
Environmental stewardship: to measure and reduce the existing environmental feet prints and
provide efficient solutions to help the customers and the employees to reduce theirs (Sethi,
Martell and Demir 2017).
Various CSR and Sustainability Services:
 The CBS has provided 24 hours real time banking

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 Various initiatives to reduce the carbon by 20%
 Increased the work flexibility
 Many programs and educations conducts to make students aware of the financial banking
Ethical principles violated
The various principles of ethics include:
Beneficence: The beneficence principle guides the makers of choice for analyzing what is right.
This focus is on the good things .This beneficence principle is also related to the utility principle
that states that there should be attempts to produce the highest ratio of ethics over unethical. This
stipulates that ethics theories should strive to get the highest amount of good for tyhje benefit of
the public in general (Bowie 2017). In this context, the management of CBA has violated the
principle and has done no good to the insured patients who cannot obtain their insurance claim.
Least Harm: Similarly, this principle deals with the circumstances in which there is no choice
that is helpful. In such cases, decision makers seek to make choice as to cause the minimum
harm to do it to the least number of people. The scam case as reported by the CommInsue tells
that the innocent customers have lost their medical insurance amounts in this fraud case, which is
a harm.
Respect for Autonomy: This principle states that the process of management should focus on
allowing the individuals to be autonomous. This helps in making them able to make decisions
that they can apply to their own lives. Thus, people should have control over their lives as much
as possible because they are the only people who completely understand their type of lifestyle
chosen.
Justice: The of justice states that the managers who takes decision should highlight the actions
that are true and fair for the people who are involved. The ethical decisions should be able to be
stable with the ethical theory unless mitigating conditions that can be justified exist in the case.
This also means that cases with extenuating situations must contain a major and essential
difference from related cases that justify the conflicting decision (Thompson 2018). The CBA
customers had faced injustice in the fraud case conducted by CBA.

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The commonwealth Bank of Australia in the fraud case as pointed by CommInsue has
made a fraudulent action of manipulating the doctors so that their claims of the insured patients
are rejected. This is a case where all the above mentioned principles are violated. This is a case
where innocent patients are harmed. This is against the mentioned commitments and can harms
the reputation.
Ethical violations with reference to relevant ethical theories
The ethical theories helps in the process of decision making and provides guides for
taking the actions there are four broad categories of the ethical theories. The categories are:
Deontology: This class of ethics stares that the people should stick on to the committed
obligations and duties when occupied in the arriving at a decision when ethics are in play. That is
the person should chase their obligation to another individual or society as keeping ones duty is
what is considered correct in terms of ethics.
Utilitarianism: Ethical theories of Utilitarian are based on the skill in predicting the penalty of an
action. In this case, the choice that results the highest help to the many people is the one that is
fairly correct (Newton 2017). An act of a utilitarian management is troubled with the attainment
of the maximum wellbeing. It does not always related with justice, autonomy or beneficence for
person if oppressing the people leads to the solution that advantages a bulk of people.
Rights: When it comes to theories on rights, it is propsed by a society, therefore, they are highly
sheltered and mqximum priorities are given. The Rights of virtue are considered valid and
ethically correct since a large population does the endorsement. The people may also impart
rights upon others if they have the skill and funds to do so.
Values: In this theory of virtue. The judgment of a person is done by their character rather than
by the actions that move away from their common manners. It takes in hand the reputation,
motivation and morals of the individuals into consideration while rating an odd and unbalanced
conduct that is taken as immoral (Kara 2017).
The Commonwealth clearly has violated the above-mentioned theories and has gone against
their virtues.

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Conclusion
However, The Insurance arm of Commonwealth Bank, ‘CommInsue’ which is one of the
Australia’s largest insurers pointed out in various fraudulent practices such as misusing of
medical reports, deletion of files and forcing the doctors to change their opinions so that client
claims can be rejected, altering the description of diseases and delaying payouts. The discussion
deals with the examination of the management and policies of the bank.

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References
Bank, C., 2014. Sustainability Report 2010. Small Medium Enterprise Development Bank
Malaysia Berhad.
Bowie, N.E., 2017. Business ethics: A Kantian perspective. Cambridge University Press.
Carnegie, G.D., 2016. The accounting professional project and bank failures: The case of the
early 1890s Australian banking crisis. Journal of Management History, 22(4), pp.389-412.
Dell'Atti, S., Trotta, A., Iannuzzi, A.P. and Demaria, F., 2017. Corporate Social Responsibility
Engagement as a Determinant of Bank Reputation: An Empirical Analysis. Corporate Social
Responsibility and Environmental Management, 24(6), pp.589-605.
Guerrette, R.H., 2015. Ethical Theories and Moral Narratives in Art: A Gallery Tour Through
the Corporate Moral Forest.
Herbohn, K., Gao, R. and Clarkson, P., 2017. Evidence on Whether Banks Consider Carbon Risk
in Their Lending Decisions. Journal of Business Ethics, pp.1-21.
Kara, H., 2017. Research Ethics-Ethical Theories
Newton, M.T., 2017. A Comparison of Ethical Theories.
Sethi, S.P., Martell, T.F. and Demir, M., 2017. An evaluation of the quality of corporate social
responsibility reports by some of the world’s largest financial institutions. Journal of business
ethics, 140(4), pp.787-805.
Thompson, D.F., 2018. The possibility of administrative ethics. In Classics Of Administrative
Ethics (pp. 79-92). Routledge.