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Commercial Bank Management Group Assignment Instructions 25574 Commercial Bank Management – Group assignment 1

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Commercial Bank Management Group Assignment Instructions 25574 Commercial Bank Management – Group assignment 1. Group formation ? This assignment is to be completed in groups of up to 4 students. Students must form groups by themselves. Groups may be formed by students from different tutorials. ? Your group will be allocated one of the banks listed below. The allocation will occur after groups are finalised. ? To form groups, please email me your allocation: harald.scheule@uts.edu.au 2. Report formatting ? The scope of this assignment is limited to 10 pages not including appendices and cover sheet. Use standard fonts (think Calibri, Times New Roman, Arial) and font sizes, and reasonable line spacing options. There is no specific word count. ? All calculations have to be shown and central assumptions stated (can be in appendix). ? Referencing. If you mention financial data then you don’t need to reference the annual report every single time. If you draw on the annual report (or other sources) to provide an explanation of the underlying drivers, then reference appropriately. 3. Submission ? ? ? ? ? ? ? Assignments are to be handed in Canvas on the page Assessment – Group assignment. Any group member can submit. The file name will take the form: “Bank Name – Group Number”. Late submission will result in a zero marks if handed in after due date Only one submission per group is required. If you submit multiple times, we will mark latest submission. For all questions you will need to download the latest annual reports available for your selected bank. For question 5, you also need to download the latest annual reports of comparable banks. There are 2 aspects to answering every question: o Report/calculate: present the data in a clear and concise way. In the main body, graphs are to be preferred over lengthy tables. In the appendix you may add lengthy tables that show calculations. o Interpret: what do your calculations mean? HD assignments will also include a 3rd aspect: a careful exploration of the underlying drivers. Which underlying events or management decisions have led to these results? 4. Questions Question 1 (8 marks) A. Analyse the assets and liabilities of your bank over the last five years, focusing on both the trend evolution of total assets and liabilities, as well as changes to the asset and liability mix. (3 marks) B. Analyse the profitability of your bank over the last five years by reporting the overall evolution in income (dollar numbers) as well as using ratio analysis, with a focus on the latter. (5 marks) 2 25574 Commercial Bank Management – Group assignment Question 2 (4 marks) A. Analyse the off?balance sheet items of your bank over the last five years. (2 marks) B. Analyse the book and market value of equity of your bank over the last five years and compare the difference between the two. (2 marks) Question 3 (5 marks) Look at the bank’s capital risk and calculate two (and only two) measures or ratios related to capital risk. Interpret these ratios and comment on how the risk has changed over the last 5 years. Question 4 (5 marks) Look at the bank’s liquidity risks and calculate two (and only two) measures or ratios related to liquidity risk. Interpret these ratios and comment on how the risk has changed over the last 5 years. Question 5 (8 marks) Perform a peer group comparison A. Select 2 banks that are comparable to your bank. Motivate why they are comparable. (2 marks) B. Compare your bank’s performance and risks to these 2 other banks. (6 marks) 5. Method 1. For this assignment, use group consolidated results. They consolidate the results of all entities, including wholly?owned subsidiaries. 2. Use the annual report – no interim/quarterly reports. 3. Restatements. You may notice that reported numbers change depending on the year they are reported. For example, the annual report of 2019 may report that the loan balance at the end of 2019 was 75.5. The annual report of 2020 may report that the loan balance at the end of 2019 was 76.1. This is due to new information being available about the particular item. The general rule is to use the most up to date number you can find, in this example the 2020 number. 4. The annual report is one item of information that can be used, but it is not the only one. Additional information, both from the bank as well as trusted sources can be used to write the report. Reference appropriately. 5. Use of data from services such as FactSet. This is allowed, but great caution is needed when analysing and interpreting. For example, FactSet reports sales figures and EBITDA for banks, which are two measures that do not have real meaning in the context of banking. Banks don’t have “sales”, they have interest income and non?interest income. EBITDA is misleading given the peculiar asset and liability structure of banks. Similar arguments can be made for non?financial company liquidity ratios. In addition, reported numbers may differ from those in the annual report. 3 25574 Commercial Bank Management – Group assignment 6. List of banks ANZ BNP Banco Santander Bank of America Bank of Queensland Barclays Bendigo and Adelaide CBA Citi Crédit Agricole Crédit Suisse Deutsche Bank HSBC ING ICBC JPMorgan Chase & Co. Lloyds Macquarie NAB Rabobank Royal Bank of Canada UBS Wells Fargo Westpac 7. Contact If you have any further questions, you can contact me at harald.scheule@uts.edu.au. Please make sure to mention your full group name (Bank name + Number). E?mails containing this information will be prioritized over e?mails that lack these identifiers. 4 Question 1 (8 marks) A. Analyse the assets and liabilities of your bank over the last five years, focusing on both the trend evolution of total assets and liabilities, as well as changes to the asset and liability mix. (3 marks) B. Analyse the profitability of your bank over the last five years by reporting the overall evolution in income (dollar numbers) as well as using ratio analysis, with a focus on the latter. (5 marks)