ANZ Bank: A Detailed Financial Analysis and Performance Review

This report provides a comprehensive financial analysis of ANZ Bank, evaluating its performance in 2017 compared to 2016, highlighting improvements in key financial ratios such as net profit margin, return on assets, and return on equity. It discusses the bank's strong fundamentals and future prospects, including the likelihood of mergers and acquisitions, strategic fit, and motivations. The report also explores how ANZ can improve its operations through technology and customer experience. Furthermore, it addresses ethical considerations in case of insolvency, outlining legal procedures and factors influencing the bank's performance, including economic, socio-cultural, technological, legal, and environmental factors. Finally, the report recommends the stock as a good buy based on the financial analysis and positive indicators such as EPS and PE ratio.

qwertyuiopasdfghjklzxcvbnmqwerty
uiopasdfghjklzxcvbnmqwertyuiopasd
fghjklzxcvbnmqwertyuiopasdfghjklzx
cvbnmqwertyuiopasdfghjklzxcvbnmq
wertyuiopasdfghjklzxcvbnmqwertyui
opasdfghjklzxcvbnmqwertyuiopasdfg
hjklzxcvbnmqwertyuiopasdfghjklzxc
vbnmqwertyuiopasdfghjklzxcvbnmq
wertyuiopasdfghjklzxcvbnmqwertyui
opasdfghjklzxcvbnmqwertyuiopasdfg
hjklzxcvbnmqwertyuiopasdfghjklzxc
vbnmqwertyuiopasdfghjklzxcvbnmq
wertyuiopasdfghjklzxcvbnmqwertyui
opasdfghjklzxcvbnmqwertyuiopasdfg
hjklzxcvbnmrtyuiopasdfghjklzxcvbn
mqwertyuiopasdfghjklzxcvbnmqwert
yuiopasdfghjklzxcvbnmqwertyuiopas
FINANCIAL MANAGEMENT

ANZ Bank
1. The performance of ANZ bank is better in 2017 as compared to 2016. This can be
easily observed from the ratio analysis and the financial performance. There has been
a strong increment in the entire ratio indicating a positive year for the company. The
net profit margin has increased indicating a strong control in the operating expenses
(ANZ Bank, 2017). Further, the return on assets and return on equity has increased
indicating a good use of the resources. In addition, the earnings per share have
increased thereby indicating that the company has done better in 2017.
2. ANZ will succeed in the future because of the strong fundamentals and the strong
financial position. Moreover, the trend of the ratio and the financial position indicates
that the company will do better in the forthcoming years. The financial position of the
company remains intact and being a pioneer in the field of banking it has the ability to
capture the market and flourish (Deegan, 2011). Thereby, as the banking services will
increase, the prospect of the banks will grow thereby will lead to success in the
coming period.
3. Likelihood of a merger
Merger
a. Market share and branding
There has been a very keen competition discovered between the different companies of this
industry. These completions have made all the firms to work in their best and efficient
manner thus leading to a feasible growth in the segment. Thus the profitability of the
operations is dependent on how efficiently the process of the merging takes place (Adra &
Barbopoulos, 2018).
b. Strategic Fit
The firms in the banking sectors need to have a specific strategy which can be used by them
to maintain the organizational structure and the corporate entity. Also if the strategies of two
organizations are almost having the same objectives then the condition becomes more
favorable for them to merge and combine together to become a single entity (ANZ Bank,
2017).
c. The motivation of the merger and acquisition
2

ANZ Bank
The decision makers have the great responsibility to decide whether or not to merge.
Therefore when the deal is carried out, both the firms should have the mutual consent and
financial position which is favorable. The buyer should be aware of all the in and out of the
firm with which it is going to merge and hence he should be highly motivated and learned
while conducting the deal for merging (Alexandridis & Travlos, 2010).
4. ANZ can prosper and function more effectively when it can use the concept of
technology in a better fashion. The presence of digital projects will provide major
boost to the functioning of the company. Moreover, the bank should find innovative
means of improvement in the experience of customer. When it caters to the taste of
the customer then it will have more reach and availability. This will enhance the base
of the customer and will provide to be a revenue generator. Moreover, the bank
should seek to enhance the retail base as it will provide momentum and give a strong
boost in terms of market capture.
5. An ethical consideration when the firm becomes Insolvent
The term insolvency describes the position of the firm not able to pay its dues and also it
defines the legal procedures which its needs to undertake while dealing with this condition.
Under the Insolvency Act 1986 it has been clearly mentioned that the company can continue
trading if the directors can:
a. Reach the creditors and make an informal deal with them.
b. Have a company voluntary agreement.
c. Reviving the company by clearing its dues by selling the assets in order to make
the business continue.
Also, the company is provided with the option of winding up which means that the company
will be liquidated into cash and the creditors will be paid using the funds gained by the
liquidation process. There should be proper measures taken by the firms in order to check
whether they have been in the insolvent condition or not (Bodie et. al, 2014). All the above
mentioned legal factors should be taken into account if there is a state of insolvency
experienced by the firm.
6. Analysing the ANZ bank
3

ANZ Bank
a. Economic factors:
The ANZ bank is easily influenced by the changes in the environment. The banking
industry is related to the economy of the nation directly. The revenue generation, the
recession period analysis of the bank and the types of methods used by it to overcome
these situations helps to define the overall affect over the capital structure of the
banks. The inflation rates also affect the capital position of the bank and thus lead to
the changes in the values of currency which is caused by the change in the value of
the US Dollar, creating an uncertain and unstable environment for the bank. The
foreign investors are very clever and assess the economic condition of the bank very
carefully before providing them with the funds (ANZ Bank, 2017).
b. Socio-cultural factors:
The customers of the bank are tempted if they are provided the services with ease.
The cultural influences define the customers change in behaviours because of the
change in necessities and the new banking options. The people also ask for financial
advice from the banking institutions as they want to invest their money in a place
where it will profitable. The crowd moves towards that institution which provides the
best and easiest assistance which have made the part of technology to increase in at
the drastic manner in the banking industry.
c. Technological factors:
The ANZ bank has launched many programs which can be accessed by the customers
in their smart phones. Earlier in the days even to make small changes in the account,
the customer was forced to visit the branch. But it is no more a hustle to change or
make transactions because of the improvement in the technological filed. Many banks
have launched their personal app which helps the customers to make the banking
transactions using the internet (ANZ Bank, 2017). Also the banks have started ,the use
of the debit and credit cards which uses magnetic encrypted strips to store data. Also,
few methods of swipe an,d slide of cards have been introduced in some of the
advanced countries like Canada.
d. Legal factors:
The banks should follow all the guidelines strictly. The banking industry has been
enforced with a lot of laws and guidelines which helps it to act ethically in the
4

ANZ Bank
environment. These help the bank to maintain a good and rigid relationship with its
customers.
e. Environmental factors:
The use of the digital recording techniques has to lead to the less usage toe of the
papers and thus have also helped to save the environment. Also the customer site,
action has increased by the use of such sources. Also almost all the banks, making
transactions are now possible by the use of the internet which has to lead to the
reduction of the environmental footprints (Davies & Crawford, 2012).
7. Going by the overall study and evaluation of the ratios, it can be said that ANZ has
strong fundamentals and has the potential to be a money maker. It is highly
recommended for the investment purpose as the EPS and PE ratio is positive. The
company even pay dividend of 0.80$ indicating a strong business (ANZ Bank, 2017).
At the current level, the stock looks promising as per the fundamental analysis.
Hence, the stock is a good buy as per the financials and other information.
5

ANZ Bank
References
Adra, S., & Barbopoulos, L.G. (2018). The valuation effects of investor attention in stock-
financed acquisitions. Journal of Empirical Finance, 45, 108-125.
https://doi.org/10.1016/j.jempfin.2017.10.001
Alexandridis, D.P., & Travlos, N. (2010). Gains from Mergers and Acquisitions Around the
World: New Evidence. Financial Management, 39(4), 1671-1695.
https://doi.org/10.1111/j.1755-053X.2010.01126.x
ANZ Bank. (2017). ANZ Bank Annual report and accounts 2017 [online]. Retrieved from:
http://shareholder.anz.com/annual-report-annual-review [Accessed 6 May 2018]
Bodie, Z., Kane, A. and Marcus, A. J. (2014). Investments. McGraw Hill
Davies, T. and Crawford, I. (2012). Financial accounting. Harlow, England: Pearson.
Deegan, C. M. (2011). In Financial accounting theory. North Ryde, N.S.W: McGraw-Hill
6