Topics: Bank, Retail banking, Commercial bank Pages: 34 (10007 words) Published: April 13, 2013
Letter of Transmittal2
Executive Summary5
1. Introduction6
2. Comapany Overview6
2.1 Background Information6
2.2 Products and Services7
2.3 Key business activities7
3. External Environment Overview8
3.1 Firm’s Industry Review8
3.2 Effects of current state of the economy9
3.3 PEST Analysis11
3.4 Porter’s 5 Forces11
4. Internal Analysis12
4.1 Corporate Governance Analysis12
4.2 McKinsey Seven ‘S’ Framework13
5. Financial and Strategic Analysis15
5.1 Time-series Analysis15
5.2 Cross-sectional Analysis16
5.3 Common Size (Vertical) Analysis16
5.4 Trend (Horizontal) Analysis17
5.5 Ratio Analysis17
5.6 Dividend Policy19
6. SWOT Analysis20
7. Scenario Analysis20
7.1 Grow organically in Western Australia20
7.2 Growth by acquisition21
7.3 Expand overseas22
7.4 Scenario discussion22
8. Supporting the strategy24
9. Conclusion27
11. Appendix32
Appendix 11.1 – International Operations32
Appendix 11.2 – NPAT Financials33
Appendix 11.3 – Local Network34
Appendix 11.4 – 2010 Awards34
Appendix 11.5 – PEST Analysis34
Appendix 11.6 – Porter’s 5 Forces40
Appendix 11.7 – Common Size Analysis for CBA 200942
Appendix 11.8 – Trend Analysis for CBA 200943
Appendix 11.9 – Ratios Table for the “big four” 2007-200944
Appendix 11.10 – Dividend Paid from 2007 to 200945
Appendix 11.11 – Dividend History for Commonwealth Bank of Australia45
Appendix 11.12 – SWOT Analysis46
Appendix 11.13 – OECD Forecasts50
Appendix 11.14 – Chinese Resources Figures51
Appendix 11.15 – Australia’s trade balance51
Appendix 11.16 – Interest rates of major economies52
Appendix 11.17 – GFC effect on Retail deposits52
Appendix 11.18 – Leasing, Branch and ATM growth Analysis53
Appendix 11.19 – Overdraft Headroom54
Appendix 11.20 – Cost of equity, beta and debt ratios55
Appendix 11.21 – Breakdown of overdue loans55
Appendix 11.22 – Pro-forma financials56
Appendix 11.23 – Default rates and EBITDA sensitivity used in analysis57
Appendix 11.24 – Share Price Performance58

Executive Summary
The purpose of this report is to evaluate the performance of the Commonwealth Bank of Australia (CBA) with a view to recommending a financially justified growth strategy for the next 3-5 year strategic planning horizon. The bank provides a wide range of financial products and services to retail, institutional and corporate clients. Together with its major competitors, NAB, WBC and ANZ, they form the ‘four pillars of banking’ in Australia. In order to evaluate the CBA’s position, various tools have been used, such as PEST analysis to examine macro-environment factors, Porter’s five forces to assess the group’s position as well as Mckinsey 7S Framework to evaluate the group’s structure. The report also examines financial ratios of the CBA as well as its competitors. The outcome of our ratio analysis has showed that CBA has performed well throughout the Global Financial Crisis (GFC) and is currently in a sound financial position, performing above that of its peers. We have identified the expansion of the Group’s branch and ATM operations in Western Australia to deliver the best results to stakeholders. This will be done by building on its recently acquired assets of BankWest, and realising synergies generated in the integration of BankWest’s operations. Furthermore, the population and economy of Australia is expected to grow steadily as it emerged from the GFC and that domestic growth will generate superior returns than elsewhere considering the present state of the global economy. This report comprises of historical data from the financial years ending 2007, 2008 and 2009 from publicly available sources. We have not used the 2010 financials as they were released during the course of constructing this report. The opinions and forecasts included in this report have not been verified and involve subjective judgment and analysis and are...
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