Investment Report on Westpac & Commonwealth Bank
Investment report of
Westpac Banking Corp. & Commonwealth Bank of Australia
Table of Contents
Executive Summary………………………………………………….……………...1
Introduction…………………………………………………………………………...2
Overview of the Current Financial Market……………………………………......2
Ratio Analysis………………………………………………………………………. 3
Return Measurement: Percentage Return……………………………...……...3
Risk Measurement: Reward-to-Risk…………………………………..……..…4
Market Value Measurement: P/EPS………………………………...…...……..5
Profitability Measurement: Net Interest Margin…………………………..……6
Conclusion and Recommendation………………………………………………...6
Appendices…………………………………….……………………………………..7
Reference list…………………………………………………………………..…....8
Executive Summary
This report is prepared to evaluate and recommend the investment in Westpac Banking Corporation or Commonwealth Bank of Australia. In the current crisis of the financial industry, the banking system is losing investors’ confidence and is facing high risks. The report provides the ratio analysis in risk and return measurement, market value measurement, and profitability measurement in medium- and long-term investments based on the past 7- to10- year data.
Risk and return measurement
CBA has an average of 12.48% rate of return comparing to WBC 13.62%. After taking the risk element into account, CBA offers a 0.09 reward in 5-year investment and 0.097 in 10-year investment per unit of risk in contrast to 0.039 and 0.089 offered by Westpac in the respective periods.
Market value measurement
CBA has a slightly higher P/E ratio than WBC over long-term investment, indicating the higher future expected growth.
Profitability measurement
CBA has a higher net interest margin, showing its stronger profitability position.
Besides the quantitative factors, Commonwealth Bank of Australia is merging with Bank West and St. Andrew’s to expand its market in Western Australia and services in the insurance sectors. The future growth of the group will
Westpac Banking Corp. & Commonwealth Bank of Australia
Table of Contents
Executive Summary………………………………………………….……………...1
Introduction…………………………………………………………………………...2
Overview of the Current Financial Market……………………………………......2
Ratio Analysis………………………………………………………………………. 3
Return Measurement: Percentage Return……………………………...……...3
Risk Measurement: Reward-to-Risk…………………………………..……..…4
Market Value Measurement: P/EPS………………………………...…...……..5
Profitability Measurement: Net Interest Margin…………………………..……6
Conclusion and Recommendation………………………………………………...6
Appendices…………………………………….……………………………………..7
Reference list…………………………………………………………………..…....8
Executive Summary
This report is prepared to evaluate and recommend the investment in Westpac Banking Corporation or Commonwealth Bank of Australia. In the current crisis of the financial industry, the banking system is losing investors’ confidence and is facing high risks. The report provides the ratio analysis in risk and return measurement, market value measurement, and profitability measurement in medium- and long-term investments based on the past 7- to10- year data.
Risk and return measurement
CBA has an average of 12.48% rate of return comparing to WBC 13.62%. After taking the risk element into account, CBA offers a 0.09 reward in 5-year investment and 0.097 in 10-year investment per unit of risk in contrast to 0.039 and 0.089 offered by Westpac in the respective periods.
Market value measurement
CBA has a slightly higher P/E ratio than WBC over long-term investment, indicating the higher future expected growth.
Profitability measurement
CBA has a higher net interest margin, showing its stronger profitability position.
Besides the quantitative factors, Commonwealth Bank of Australia is merging with Bank West and St. Andrew’s to expand its market in Western Australia and services in the insurance sectors. The future growth of the group will