Financial Institutions and Market

This presentation provides an overview of the Australian financial system and focuses on the role of ANZ in driving its functionalities. It covers topics such as sources and uses of funds, asset liability management, cash flows, competitive analysis, ANZ's participation in financial markets, derivatives market, and applicable regulations.

FINANCIAL INSTITUTIONS
AND MARKET

INTRODUCTION
The Australian financial system comprises of activities that involve
borrowing and lending funds in addition to transmit of the ownership
of financial claims.
Some of the services are:
 Authorised deposit-taking institutions
 Insurance
 Superannuation
 Financial markets
 Payment systems

Australia and New Zealand
Banking Group
 Australia and New Zealand Banking Group (ANZ) is a most
significant bank in Australia
 It has worldwide presence and offers a wide range of financial
operations both in domestic as well as overseas market.
 This report would entail in describing how ANZ has driven up the
functionalities of the financial system of Australia through its
activities and performance.

Sources of funds for ANZ

Sources of funds
 Ordinary Equity Capital
 Retained earnings
 Reserves
 Trading securities
 Derivative financial instruments
 Preference share capital
 Treasury shares

Uses of funds
 Purchases
 Interest payments
 Payment of collaterals
 Amortised values of loan origination expenses
 Payment of share-based compensation expenses
 Payments of leases
 Tax implications

Asset Liability management
ALM for managing three major kinds of risk
 Interest rate risk
 Liquidity risks
 Foreign currency risk

Present Value of Money
 It is very clear that 1 AUD of today is not equivalent to 1 AUD
tomorrow due tot its potential earning capabilities.
 Therefore to ascertain the net present value of expected cash inflows
ANZ takes risk free rate as discounting rate and considers time value
of money

Cash Flows for ANZ
Cash inflows or outflows comprises of
 Premiums
 Expenses
 Redemptions
 Benefits payments
 Bonuses

Competitive Analysis

Comparison
 ANZ has sound financial position with increased profitability in
year 2014 as compared to year 2013 with consistent results in term
of solid ROE and ROCE.
 The efficiency ratio of the bank remained below 50% as compared
to the industry.
 ANZ’s operating expenses are comparable to the other 3 national
banks of Australia.
 There has been a revenue growth and PAT by 8% as compared to
the other players in the industry.

Participation of ANZ in the
financial markets

Financial Market Presence
ANZ is listed on the ASX and is involved in share( both equity and
preference shares) and bond trading facilities.
ANZ banking group is active member at following stock exchanges :
Stock Exchange Trading
Australian Securities
Exchange (ASX)
ANZ convertible preference shares, ANZ
capital notes, senior debts, subordinate bonds
Channel Islands Stock
Exchange
Subordinated debts of ANZ
Luxembourg Stock Exchange Senior and subordinate debts of ANZ Limited
and debts and non-cumulative trust securities

ANZ in Derivatives Market
Derivatives are the hedging instruments for ANZ banking group.
Types of derivatives transacted by ANZ banking group
 Swaps
 Forwards
 Futures
 Options
 Contracts and agreements

Types of Derivative Contracts

Applicable Regulations
Framework governing the banking group are:
 Government policies
 Carbon pricing policies
 Climatic change policies
 Mitigation policies
 Hedging policies
 Taxation laws
 Compliance with the provisions of FATCA and IGA

CONCLUSION
 ANZ banking groups are one of the largest national banks in
Australia
 It is the driving factor of the Australian financial system in
diversification aspired by economy since last few years.

References
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banks became less risky individually but posed greater risks to the financial system at
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dec 2016
Haldane, A.G., 2013. Rethinking the financial network. In Fragile stabilit 舩舩 tabile
fragilit 舩 (pp. 243-278). Springer Fachmedien Wiesbaden. Viewed on 28th dec 2016
Huang, X., Zhou, H. and Zhu, H., 2012. Assessing the systemic risk of a heterogeneous
portfolio of banks during the recent financial crisis. Journal of Financial Stability. 8(3).
pp.193-205. Viewed on 28th dec 2016
Davis, K., 2011. The Australian financial system in the 2000s: dodging the bullet. The
Australian Economy in the 2000s. pp.313-314. Viewed on 28th dec 2016.
Schwartz, C., 2010. The Australian government guarantee scheme. Reserve Bank of
Australia Bulletin. pp.19-26. Viewed on 28th dec 2016.

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