AUSTRALIAN BANKS ANALYSIS

Australian Banks Analysis



Australian Banks Analysis

Introduction

Australia is one of the best examples of economic growth, driven at first by its trade relationship with Britain. The country has evolved from an agricultural and mining system into a new era tertiary services. At the same time it has diversified and modernized, with low interest rates and significant changes in the labor system.

This framework has meant that Australia is characterized by a strong banking system highly effective and efficient, which has abandoned the supremacy of commercial banks in this area to modernize and make way for a diversified system that includes commercial banking, trust, investment, estate and mutual credit. Property companies, life insurance companies, pension plans, construction companies play an important role in this system (Maisel, 2011, Pp. 69).

The entire system is monitored by a central bank, The Reserve Bank, in which state and private banks have contact, but not fully under their authority. In recent years, federal and state governments have proceeded with the privatization of its shares in the bank. All this has made Australia one of the 10 world economic powers, from a protectionist economy to a competitive economy. The major Australian banks, called "big four" commercial banks are Commonwealth Bank, National Australian Bank, Westpac , Australian and New Zealand Bank.

Discussion

The industry of banking is considered to be a significant source for financing almost every business. The basic assumption that indicates the financial performance of the banks is based on the discussion and researches which have shown the increasing performance of the banks based on the financial indicators leads to improved activities and functions of the banks. The subject of financial research and performance has advanced with the management and finance fields. It has also been argued that there exist three principles of the factors that can improve the performance of the banking institutions, based on the size of the institution, management of the assets and the operational efficiency. There are still less studies that have been published on the effect that these factors may have on the performance of the banks, most importantly of the commercial banks (Goss, 2008, Pp. 45).

The performance of the banks based on their financials is dependent upon multiple factors such as analysis of the financial ratios, benchmarking, and measurement of the performance with respect to the budget. It is also clear from the existing literature that a number of limitations are associated to the financial ratios. Management of the assets, the size of the bank and their operational efficiency is use collectively in order to investigate the relationship that prevails between them and the financial performance of the banks.

The performance of a bank has been described as the financial performance of the organisations is based on the criteria of their return and risk. The relationship between that prevails between the return and risk is acceptable, therefore, the greater the risk, the greater would be the expected return (Saita, 2007, Pp. 58).

Banking is all about the management of ...