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Executive Summary The purpose of this report is to provide an analysis of the profitability of ANZ Bank and RACV using ROE Model then compare the profitability of both firms which used ratios of ROE leverage multiplier asset utilization net margin and net interest margin and give some recommendations for the firm that is underperforming The ANZ Bank is an Authorised Deposit-Taking Institution while RACV is a non-bank financial institution This means they are in different industries Therefore there are some key factors that make them different in other especially in their profitability One of the key factors is the leverage multiplier which will be discussed furthermore in this report Other issues that will be discussed are the risks that most of banks have taken especially in this case is for ANZ Bank Some risks that ANZ Bank has taken are liquidity risk interest-rate risk credit risk and capital risk This report will also explain that RACV has performed better than ANZ Bank during year 2004 although it still has lower ROE than ANZs ROE Hence it is assumed that RACV is underperforming To increase performing RACV there are some recommendations such as restructuring merging or hiring someone professional 1 Introduction 11 Purpose Generally the purpose of this report is to analyze the profitability of bank and non-bank financial institution Particularly this report will discuss ANZ Banks and RACVs profitability to be compared each other also discuss the risks that ANZ Bank has taken 12 Background Bank as a financial institution must be different from a non-bank financial institution in case of using their capital to compete in raising equity capital in the market Hence bank has its own strategy to compete while a non-bank financial institution has its own strategy as well 13 Scope Because the strategy that is used by a bank and a non-bank financial institution can be seen from many perspectives this report will
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