Principles of Financial Markets | Banking Industry
Added on 2019-11-20
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Running head: PRINCIPLES OF FINANCIAL MARKETS Principles of Financial MarketsName of the Student: Name of the University: Author’s Note:
1PRINCIPLES OF FINANCIAL MARKETS Executive Summary This paper has been constructed in order to explain about the organizationsCommonwealth Bank and Westpac Bank. The vision and mission statement of the companies areeven explained in this paper. The background of the Australian banking sector is even explained.The fundamental evaluation has been undertaken by taking help of the bottom up and top downanalysis. The top down analysis is possible with the help of the rate of inflation, unemploymentand GDP growth of the country. Furthermore, the impact on the Australian economy on theconcerned organizations is even explained. The bottom up analysis is possible by undertaking theevaluation of the financial ratios of the organizations.
2PRINCIPLES OF FINANCIAL MARKETS Table of ContentsIntroduction......................................................................................................................................3Banking Industry background of Australia......................................................................................3Mission Statement of the organizations...........................................................................................4Top-down Analysis..........................................................................................................................5Bottom-up Analysis.......................................................................................................................10Recommendations and Summary..................................................................................................19Reference List................................................................................................................................21
3PRINCIPLES OF FINANCIAL MARKETS IntroductionIn the current terms of the business, it has been of countless spirit for an investor toundertake an effective evaluation of the organization or the industrial sector before undertakingan investment. This evaluation can be undertaken by taking assistance of the bottom-up and thetop-down evaluation. Along with this, it can be cited that top down assessment aids the investorsto disclose a bigger picture of the economy that is to be represented and even the industry itself.Conversely, the approach of bottom up discloses an image that is micro-economic with respect tothe organization that has been taken into consideration (Bodie 2013). The concerned report willbe helpful for undertaking a fundamental evaluation on two organizations that are listed in theAustralian Stock Exchange. The organizations that have been taken into consideration areWestpac and Common Wealth Bank of Australia (CWB). This research will be done on the basisof the bottom-up and top-down evaluation of the financial figures that are available for both theorganizations. By depending on the outcomes, appropriate suggestions can be attained from themindset of the investors. Banking Industry background of Australia It has been observed that the establishment of the Banking Act 1959 has been one of theinfluential factors that have aided Australia in enhancing their banking sector. There has been astable evolution in the performance of the asset in the banking sector, which in a way hasassisted in the overall growth of the Australian economy. There have been numerous banks thathave been licence and are therefore within the banking sector of Australia. The constancy of thebanking sector has been developed by the enhancement in the capital in the current quarters ofthe financial year (PwC 2017). The other significant step that has been uncovered by the bankingsector of Australia is inclusive of concentrating on the Liquidity Coverage Ratio (LCR).
4PRINCIPLES OF FINANCIAL MARKETS The evaluation of financial stability of Australia discloses that significance has beenstressed on the performance of the assets of the banks in Australia. During the year 2016, a keystep has been creating loans for the organizations. The significant decisions and the competitivepressures that are undertaken by the country have been done with the help of assessing thedevelopment and the growth of numerous cities. The pattern of the banking sector in Australia isinclusive of evaluating critically the valuations of the commercial property. The extent of thecompetition in the banking sector has been consistent. This is the significant factor that the sectorhas developed over the past few years. The democracy of the free market of Australia has evenassisted in reaching the present condition of the sector (Delen, Kuzey and Uyar 2013). Theenhancement of the banking sector has been inclusive of the significance of the banks that arepresent and the even their securitization. Furthermore, the third transformation has been in thesharing of the assets. Lastly, the development has been dependent on the fall in the existence ofthe financial organisations, constructing societies and the credit unions. Mission Statement of the organizationsCommonwealth Bank of Australia and Westpac has been two significant banks that arefunctioning in Australia. The mission statement of the Commonwealth Bank of Australia has been to promote thecapital of their priceless customers. This is to make sure that the desires of their customers arefulfilled. The vision of the bank has been to develop the financial wellness of their customers.This is inclusive of the trust and the loyalty of the customers by safeguarding their communitiesand their business (Commbank.com.au. 2017).
5PRINCIPLES OF FINANCIAL MARKETS The vision of Westpac has been to assist the customers who are present all over the globein prospering and growing. They want to provide extensive service to their customers byassisting them in their development. The mission of the organization has been to provide greaterreturns to their customers, professional businessmen and other stakeholders. They even want therelationship with their customers to be trustworthy and strong. The company wants themselves tobe the most effective place for their employees. They want to flourish on the style of leadershipand construct a company that is efficient in creating long term bonding (Westpac.com.au. 2017). Top-down Analysis Top-down analysis can be assessed by taking help of the EIC approach that is evenknown as the Economy, Industry and Company process. Bryce (2017) has cited that industry assessment comes on top during the process of top-down analysis. It has been viewed that the economy of Australia is a prospering one. In thepresent situation, the development of the GDP has been observed to be pretty good. This can beanalysed by looking at the present rate of growth of the GDP by around 4.40%.
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