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Detailed Report on Financial Institutions and Market

Financial institutions are corporations which provide services as intermediaries of financial markets. Read this document to know about various activities that are involve in borrowing and lending funds.

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Detailed Report on Financial Institutions and Market

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  1. 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 • • • • •

  2. 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. •

  3. Ordinary Equity Capital • Retained earnings • Reserves • Trading securities • Derivative financial instruments • Preference share capital • Treasury shares •

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  5. Purchases • Interest payments • Payment of collaterals • Amortised values of loan origination expenses • Payment of share-based compensation expenses • Payments of leases • Tax implications •

  6. ALM for managing three major kinds of risk Interest rate risk • Liquidity risks • Foreign currency risk •

  7. 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 •

  8. Cash inflows or outflows comprises of Premiums • Expenses • Redemptions • Benefits payments • Bonuses •

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  10. 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. •

  11. 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 Australian Exchange (ASX) Trading ANZ convertible preference shares, ANZ capital notes, senior debts, subordinate bonds. Securities Subordinated debts of ANZ Channel Exchange Islands Stock Luxembourg Stock Exchange Senior and subordinate debts of ANZ Limited and debts and trust securities non-cumulative

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

  13. 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 •

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  15. 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. •

  16. Nijskens, R. and Wagner, W., 2011. Credit risk transfer activities and systemic • risk: How banks became less risky individually but posed greater risks to the financial system at the same time. Journal of Banking & Finance. 35(6). pp.1391- 1398. Viewed on 28thdec 2016 Haldane, A.G., 2013. Rethinking the financial network. In Fragile stabilit舩穆 舩 (pp. 243-278). Springer Fachmedien Wiesbaden. Viewed on 28thdec • tabile fragilit舩 2016 舩穆 Huang, X., Zhou, H. and Zhu, H., 2012. Assessing the systemic risk of a • heterogeneous portfolio of banks during the recent financial crisis. Financial Stability. 8(3). pp.193-205. Viewed on 28thdec 2016 Journal of

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