Financial Risk Management: Analysis of Major Banks in Australia

BAFN307 FINANCIAL RISK MANAGEMENT: PROTECTING
THE ENTERPRISE
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Contents
INTRODUCTION......................................................................................................................3
QUESTION 1.............................................................................................................................3
What are the major sources of funds for banks in Australia? What are the major uses of
funds for banks in Australia?..................................................................................................3
QUESTION 2.............................................................................................................................4
ANALYSIS OF LATEST FINANCIAL REPORTS.............................................................4
QUESTION 3.............................................................................................................................6
(a) What is the Australian Prudential Regulation Framework and what are the
objectives?..............................................................................................................................6
(b) Search APRA’s website for the current policy on Bank’s lending asset growth. What
is the outcome for the major banks and do you agree or disagree with APRA’s present
position?.................................................................................................................................7
QUESTION 4.............................................................................................................................8
REFERENCES...........................................................................................................................9
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INTRODUCTION
Financial risk management is a management function wherein the entity tries to create
economic value with the use of financial instruments. These financial instruments are used by
the entity to manage the various exposures that the company faces from the different types of
risks being the operations risks, credit risks, market risks, foreign exchange risks, shape risks,
volatility risks, liquidity risks, and etc. In the current report, the financial analysis is done for
the four major banks of Australia being the Australia and New Zealand Banking Group
Limited, Commonwealth Bank of Australia, National Australia Bank, and Westpac Banking
Corporation. The first half year results for year 2018 are being analysed and results are
provided as follows (Bessis, 2015).
QUESTION 1
What are the major sources of funds for banks in Australia? What are the
major uses of funds for banks in Australia?
The financial results for the half year for financial year 2018 have been analysed for the
Commonwealth Bank of Australia to get an understanding of the carious sources from which
the bank is able to fulfil its fund requirements, and the ways it is utilising the same. the major
source of getting funds as evident from the financial reports tend to be the proceeds from the
issue of debt securities, issuance of loan capital, issue of share capital, dividend income from
shares purchased, proceeds from the sale of property, plant and equipment earlier invested in,
interest received on acquired investments, the premium and investment income on the
insurance product, proceeds from available-for-sale investments, proceeds from sale of
insurance assets at fair value, public borrowings and etc.
The major areas where these funds are being utilised are observed to be the interest payments,
the day to day expense payments, payment of income taxes, purchases of available-for-sale
investments, purchases of insurance assets, repayment of public borrowings, purchases of
property, plant, and equipment, payments for acquisition of investment, purchases of
intangible assets, payment of dividends, redemption of debt securities, purchase of treasury
shares, redemption of loan capital, and etc.
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