Commercial Banking and Finance
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BFF2401 Commercial Banking and Finance
Written Assignment (10%)
This individual assessment task is designed to test a student’s achievement of objectives 1–6.
The total mark is 20 marks (weight: 10% of total assessment). Word limit: 1,200 words
(±10%), excluding references and appendices.
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Topic: Essay on Banks’ Performance Analysis
The DuPont framework is an important analytical tool for evaluating the effects of various
financial and operational factors on banks’ Return on Equity (ROE).
a. Based on the theoretical DuPont model, explain three (3) strategies that banks can
adopt to increase their ROE. Elaborate any risk implications or shortcomings
associated with each strategy.
Guide: 300 words, 6 marks.
b. Find annual (yearly) data to calculate and graph Return on Equity, Return on Assets,
and Leverage Multiplier for the top four Australian banks over 2015-2020.
Based on your graphs, conduct trend and peer analyses for each of the three ratios, and
provide insights into these banks’ operational, investment, and funding strategies. These
insights must be based on in-depth research into the banks’ annual reports or media
releases.
Guide: 500 words, 10 marks. You must provide three (3) graphs, one for each ratio.
Your graphs must be presented in the main text of the essay together with the
discussion, while your data and calculated ratios must be shown in the appendix.
Note: Appendices are not included in the word limit.
c. Can you forecast the future trend in ROE for Australian banks given the current
economic climate? Give reasons to support your answer.
Guide: 200 words, 4 marks.
Note: Approximately 200 words are recommended for introduction and conclusion
together. Subheadings should be used to separate parts a, b and c.