Financial Analysis of Anz and Nab
|[Financial Analysis of ANZ and NAB |
| Group Assignment |
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Both ANZ and NAB show similar patterns of fluctuation. Before 2008, the ROE for both banks remained higher than 14%, implying that the ratios were healthy and attractive. Over the 5 year, the ROE of ANZ is higher than that of NAB except in 2008, with the highest in 2007 where it peaked at 20.16%. However, after 2009, the ROE of both banks experienced an upward trend and approached the benchmark of 14%, getting close to safety.
In 2011, ANZ’s ROE managed to exceed 14% and reached 14.93%, which lifts it into the safe zone. Yet, NAB’s ROE remains under 14%, making it less attractive to investors. In general, ANZ consistently generated a higher ROE than NAB with an average ROE of 14.57% as compared NAB’s 12.82%.
3) Capital Adequacy Ratio (CAR)
Australian banks are required to maintain a minimum ratio of total eligible capital to total risk-weighted assets of 8.0%, of which a minimum of 4.0% must be held in Tier 1(find definition in Appendix) capital in Basel I (APRA, 1999) and 7% must be held in Basel II(Davis, 2010). Both banks had more than the minimum 4% and were consistently over 6% for the past 5 years. As Basel II (find definition in Appendix) was only implemented in 2008, both banks had more than