Australia and New Zealand bank which is also known as ANZ provides several services and product of banking to its customers, institutions, businesses and individual in the country. This bank has registered itself in Australian stock exchange. Mainly, it is operating 3 segments: retail, institutional and commercial. All the commercial banking services are provided by this bank to its clients. It also accepts the foreign currency and does international payment (Bloomberg, 2017).
This is the fourth largest bank of Australia in terms of market capitalization. This bank is a result of a merger between union bank of Australia and bank of Australia in 1951.
Major shareholders:
Major shareholders of the company are those who like to be indulged in the stock trade either as seller or buyer. Hence, these major shareholders of a company decide the share price of the company, demand and supply concept is used in this. Thus in this report major shareholders of the company has been analysed (ANZ, 2017).
This picture depicts that the largest shareholder of the company is HSBC custody nominee with a 20.27% of total shares. HSBC custody nominee is holding the shares of ANZ to facilitate many services to its clients. The second largest shareholder of the company is J P Morgan Nominees Australia limited with a share of 13.62%. Another shareholder of the company with more than 5% shares is National Nominee limited and Citicorp nominees pty limited (Dixonand Monk, 2009).
More, nominee of the shares might be used to preserve ambiguity of beneficial shareholders like if an investor who is wealthy wishes to own some shares without disclosing identity in public. Hence the shareholder of the company are very strong and helps the company to enhance the share price in the market.
Management of the company:
Management of a company must be crucial as management is a pillar of an organization. Every organization need a strong team of management to control over entire activities and it is also responsible towards the company to enhance the operations of the company and diversify the market of the company.
The management of ANZ is quite attractive. The management team of ANZ consists many well-known managers who works for the company to make it the top bank of the Australia. Management team consists David Hisco, who is the chief executive officer with more than 30year experience, David Brickbank, who is general counsel and company secretary of the company, he is working with the company since 2012,
Michal Bullock, who is chief operating officer and responsible for project portfolio and technology of the bank along with property functions, Astrud Burgess, who is head of marketing and responsible for development and continue growth of bank, Felicity Evans who is general manager of human resource and responsible for leading programmes, strategies and policies for supporting the employment of the company, Paul Goodwin, Mark Hiddleston, Bruce Macintyre, Liz Maguire and so on are some name of the management team of the company who handles every phase of the company and help the company to develop and grow fast and expand the business in other countries too.
Directors of the company:
Directors of a business are those person in a management group who supervises and leads a specific area of a company or a project. The role of the directors in an organization is very senior as they have ultimate responsibilities over the performance of the company (Hillier, Grinblatt and Titman, 2011). Normally the director of an organization make a control over all the activities of the company and have the right to choose the management team accordingly.
The directors of ANZ are Vishnu Shahaney, Ajay Mathur, MuhamadinRostian and Sonny Samuel. Vishnu Shahaney is the president director of the organization. Many senior management positions are held by him such as in corporate, institutional, transaction banking and risk in his long career with ANZ. Vishnu has provided a significant role in his career and helped the company to grow more.
Ajay mathur is the vice president of the company. Whereas Muhamadin and sonny is the director of the company. It has been analysed that all of them are performing very well to make to company to reach the heights. The analysis report of all them describes that they helped a lot to the company to be more financial strong.
Compensation of directors and top executive:
Compensation of directors and top executive depict the total amount paid by the company to the directors and top executive of the company. This compensation includes all the salaries, bonus and extra incentive of the directors and executive.
Further, the study over ANZ depict that the company offers the fix remuneration as well as variable remunerations to the directors and top executives. ANZ provides the salary to the directors according to the market. It also offers many rewards to the directors and top executives to motivate, retain and attract the new ones.
In fixed remuneration, company offers cash salary, nominated benefits and superannuation contribution. It is reviewed by the company on regular basis whereas the variable remuneration of the company depends over the performance of the directors and top executive of the company.
Thus it could be said that the compensation of ANZ is quite attractive as well as motivation to retain an employee for a long time and this is the reason that all the directors are working with the organization from a long time.
Equity composition including new issues:
Equity composition is the shareholder equity which has been repurchased by the company from the investors. This amount is subtracted in financial statement of the company from total equity so that the smaller number of shares could be represented for the investors whereas the new issue of the company includes the new shares which have been issued by the company for the investors. This number of shares are added in the total equity of the company.
Equity composition and new issue of ANZ depict that the company has composited some shares of the company as well as company has introduced some new shares in the market. Through analysing the financial report of the company, it has been depicted that the company has reduced the number of shares of the company to strengthen the financial performance of the company. New shares has been introduced by the company to make a control over the share price as well as raising the funds through equity later on.
Thus it has been depicted that both strategies has been opted by the company in single financial year to enhance the performance of the company.
Debt structure and source of debt:
Debt structure is a part of capital structure which depict that how the firm would enhance its growth and operations by using the debt as a source of the company. Debt comes in a bond issue, long term note payable form (Gapenski, 2008). Debt structure depict that the source from debt must be in such a form that company could repay the amount without any financial loss or risk to the debt holders of the company.
The debt structure of ANZ is quite attractive as the below table depict that the debt equity ratio of the company is just 0.37 that depict that the total debt of the company in comparison of equity is just 38%. Whereas the debt ratio depict that the total short term and long term debt of the company in comparison of total assets of the company is just 2.40% that depict that company could easily repay the total debt amount.
But it is suggested to the company to enhance the debt fund as it will be non-risky and in that case, company would have enough amount to enhance the operations and other activities of the company.
|
Debt structure ratio |
|
|
debt equity ratio |
0.379882 |
|
debt ratio |
0.024008 |
|
WN |
|
|
Debt |
21964 |
|
Equity |
57818 |
|
Total assets |
914869 |
Dividend policies of a company depict that which policies have been opted by the company to pay the dividend amount to the employees. 2 type of policies are there: relevant dividend theory and non-relevant dividend theory (ANZ, 2017). Relevant theory depict that a fair dividend amount must be paid to the shareholders whereas another one depict that instead of giving the dividend, company must retain the dividend and invest it for expanding the business.
ANZ follows the relevant theory and offers great dividend to its shareholders. The dividend provided by the company is quite attractive that’s why shareholders get attract towards the shares to buy more (4 traders, 2017).
|
dividend Growth Model |
|
|
Price |
24.35 |
|
Dividend |
0.8 |
|
Growth |
-12.4366 |
|
DGM |
-12.4037 |
|
Calculation of growth rate |
|
|
Dividend |
2758 |
|
EPS |
202.6 |
|
Net income |
5709 |
|
Shareholder equity |
5790 |
|
-12.4366 |
Mergers and restructuring:
Merger and restructuring depict that the merge of a company with other company and restructuring depict the total changes in the financial structure of the company. Restructuring normally takes the place at the time of merger of acquisition.
The ANZ is a result of a merger between union bank of Australia and bank of Australia in 1951. Earlier there were two banks and both come together to form a new bank and thus the ANZ has taken place (ANZ, 2017). The capital structure of the company has totally changed due to merge as a new company. All the strategies and policies have been opted by the company according to former policies and run the operations accordingly.
Evaluation over the performance of the company:
The current performance of the company is as follows:
|
Calculation of market to book ratio |
|
|
Market price |
32 |
|
Book price |
20 |
|
Market to Book ratio |
1.6 |
|
Calculation of EVA |
|
|
Net profit |
5709 |
|
Equity cost |
1335.54 |
|
EVA |
4373.46 |
|
Calculation of ROC |
|
|
Net income |
5709 |
|
Dividend |
0 |
|
Debt |
21964 |
|
Equity |
57818 |
|
ROC |
0.071557 |
|
Calculation of ROE |
|
|
Net income |
5709 |
|
Shareholder equity |
57818 |
|
ROE |
0.098741 |
|
Calculation of ROA |
|
|
Net income |
5709 |
|
Total assets |
914869 |
|
ROA |
0.00624 |
The above ratios depict that the ratio of market to book is 1.6:1. That means the market price of the company is quite strong and company is performing very well in the market. EVA of the company depict about the economic value added. This depict that the economic value of the company is $ 4373.46 (Morningstar, 2017).
ROC of the company depict about the total return over the capital of the company. It has been analysed through the calculations that the total return on capital is 7.16%. ROE and ROA depict about return on equity and return on assets (Yahoo finance, 2017). The above table depict that the ROE is 9.87% and ROA is 0.62%. This depict that the performance of the company is quite strong.
Calculation of the value of the stock:
Value of stock is calculated by using the Gordon model of dividend. This has been calculated by dividing the expected dividend from required rate of return and then by subtracting the growth rate from it (Jiashu, 2009).
|
Calculation of CAPM |
|
|
RF |
0.0268 |
|
RM |
0.006525 |
|
Beta |
0.18254 |
|
Required rate of return |
0.023099 |
|
dividend Growth Model |
|
|
Price |
24.35 |
|
Dividend |
0.8 |
|
Growth |
-12.4366 |
|
DGM |
-12.4037 |
|
Calculation of growth rate |
|
|
Dividend |
2758 |
|
EPS |
202.6 |
|
Net income |
5709 |
|
Shareholder equity |
5790 |
|
-12.4366 |
|
Share price |
47.07007 |
Compare with current market price:
The share price is 47.07 whereas the market share price is 24.35 which depict that the performance of the company is quite string but the share price of market of ANZ is undervalued (Bloomberg, 2017). Company could take some steps to enhance the price of the shares.
Investment decision:
Through analysing the reports of the company, it could be concluded that the company is performing very well the financial position of the company is very strong but the dividend of the company has been deducted from last 2 years (yahoo finance, 2017). Growth rate of the company is depicting a growth of -12.5% yearly whereas the market to book ratio depict a ratio of 1.6 which depict that the share price of the company in market is quite good. It has also been analyzed that the share price of market is 24.35 whereas it must be 47. That depict that the company is undervalued.
Through the study over the company it has been concluded that the investors must invest in the company to enhance the investment quickly.
Conclusion:
Through this study it could be concluded that the ANZ is the top leading bank of Australia and the financial performance of the company is also strong so the investors must invest in this bank.
References:
4 Traders. Australia & New Zealand Banking group limited. Accesses April 24, 2016, https://www.4-traders.com/AUSTRALIA-AND-NEW-ZEALAND-6492549/company/
ANZ. 2017. Annual Reports. Accessed April 24, 2016, file:///C:/Users/lenovo/Downloads/1312271_1995545299_43cq2ptbywqxht-1551%20(1).pdf
ANZ. 2017. Half year result announcement. Accessed April 24, 2016, https://www.shareholder.anz.com/
ANZ. 2017. Home. Accessed April 24, 2016, https://www.shareholder.anz.com/
Bloomberg. “Austrian Government bonds”, Accessed April 24, 2016, https://www.bloomberg.com/markets/rates-bonds/government-bonds/australia
Bloomberg. Australia & New Zealand Banking group limited. Accesses April 24, 2016, https://www.bloomberg.com/quote/ANZ:AU
Dixon, A.D. and Monk, A.H., 2009. The power of finance: accounting harmonization’s effect on pension provision. Journal of Economic Geography, 9(5), pp.619-639.
Gapenski, L.C., 2008. Healthcare finance: an introduction to accounting and financial management. Health Administration Press.
Hillier, D., Grinblatt, M. and Titman, S., 2011. Financial markets and corporate strategy. McGraw Hill.
Jiashu, G., 2009. Study on Fair Value Accounting——on the essential characteristics of financial accounting [J]. Accounting Research, 5, p.003.
Morning star. “Balance Sheet”, Accessed April 24, 2016, https://financials.morningstar.com/balance-sheet/bs.html?t=ANZ®ion=aus&culture=en-US.
Morning star. “Equity and Debt”, Accessed April 24, 2016, https://investors.morningstar.com/ownership/shareholders-overview.html?t=ANZ
Yahoo Finance. All ordinary shares. Accessed April 24, 2016, https://in.finance.yahoo.com/quote/%5EAORD/history?period1=1429727400&period2=1461349800&interval=1wk&filter=history&frequency=1wk
Yahoo Finance. ANZ. Accessed April 24, 2016, https://in.finance.yahoo.com/quote/ANZ.AX/history?p=ANZ.AX
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