[Student ID]

[Student Name]

[Name of Institution]
TABLE OF CONTENTS

Sr. No. List of Contents

1. Introduction

2. Strategy

3. Company Analysis

4. Financial Analysis

5. Balance sheet, net income and net interest income

6. Analysis of accounting system of CBA

7. Conclusion

8. References
INTRODUCTION

The Commonwealth Bank of Australia (CBA) is an organisation which is considered as

multi-national banking institution of Australia which has spread its network in different parts
of the globe like USA, Asia, UK, New Zealand, etc. Th CBA organisation is among the top
100 Australian ASX corporations. This report is based on the company’s analysis and its
conceptual framework of accounting. Also, the information and some data regarding financial
analysis of the organisation are described in the report, which are taken from the Annual
Report, 2019 of the Commonwealth Bank of Australia. The report also focuses on the SWOT
analysis of the firm to find out its financial as well as market conditions.

Strategy

The essential procedure of the organisation i.e., CBA is to turn into a less complex and a
superior bank which conveys adjusted and supportable results for the network, clients, and its
investors. The association is engaged towards turning into a less complex bank by
concentrating on the centre financial organizations and disentangling the association to
diminish costs and build up the ability to contribute, simultaneously by diminishing danger
and making it simpler for the clients to complete things. (Akinyemi, 2009)

The association has made some execution needs which are as per the following: to lead in
retail and business banking, to improve the business, and to be best in advanced. The CBA
has a feeling of conviction that these execution needs will lift the upper hands and position of
the Bank for progress. (Aroney, Gerangelos & Stellios, 2015)

To be focused on the strategy, the organisation has decided to invest in following four
capabilities:

 innovation.
 Price depletion;
 information and investigation; and
 functional hazard and consistence.

Moving further, the purpose of such a strategy is to deliver justifiable results for the
shareholders of the organisation which is only possible when the firm will go ahead with a
balanced approach of making decisions.

COMPANY ANALYSIS
SWOT Analysis

In order to achieve the market as well as the financial conditions of the CBA, here the SWOT
analysis of the organisation is conducted which is as follows;

Strengths of Commonwealth Bank of Australia

 Distribution and Reach: The organisation has a lot of branches in many territories and
is supported by a solid network of distribution which leads in making products
available to maximum number of its clients in a limited period of time.

 Financial Position: According to the annual report of 2019 the Commonwealth Bank
of Australia has a brilliant financial strategy and due to that the organisation has
maintained a strong financial position from 5 years. Also, the organisation has dealt
cleverly with its profit reserves in order to use it in future expenditures.

 Cost Structure: The low-cost structure of the organisation helps it in creating the
product at less cost and in selling it in an economic price due to which the
organisation makes it affordable for each section of customer.

 Return on Capital: In the past, the Commonwealth Bank of Australia has been able to
develop its returns on the capital expenditure which it has raised over its various
projects.

 Labour force: The Commonwealth Bank of Australia trains its employees in order to
upgrade their skill with the change in time. The organisation has invested in various
training programs which lead the firm to develop a successful workforce.

Weaknesses of Commonwealth Bank of Australia

 Research and Development: Even though the organisation has spent more than the
average research and development expenditure for the industry but still it is way less
than a some of its competitors who have innovated some product and have crossed the
firm in this sector.

 Cash flow problems: Cash flow is a part of financial planning which seems to be
absent in the strategy of the Commonwealth Bank of Australia due to which the
situation of diminished cash flow arises.
  Low current ratio: According to the current ratio of the firm, the CBA is below than
the average to meet its short-term financial issues which can lead to some serious
liquidity threats in the upcoming future.

Opportunities of Commonwealth Bank of Australia

 Internet: Now-a-days, internet is the best platform for advertisement and for
enhancement of business. In terms of CBA firm, internet can be the best opportunity
to expand its network throughout the globe to reach its customers.

 Technological developments: Technology keeps bringing new innovations which can

attract customers. Also, it can help in collecting useful data of customers to develop
marketing endeavours.

 Population: The growing population of the world is a serious issue taking place for the
world. But, from the business point of view it is a better opportunity for every
organisation to increase the number of customers.

 E-commerce: E-commerce is one of the most trending business in the present world.
Commonwealth Bank of Australia should gain advantage of this opportunity by
investing some funds in the sector to earn a better revenue.

Threats of Commonwealth Bank of Australia

 Technological developments: Innovative technologies which are getting created by

the competitors of CBA organisation are the biggest threats for the organisation as
they are attracting a large number of customers from this side.

 Due to the fluctuating interest rates, the organisation does not get a stable financial
and economic environment.

 Exchange Rate: The exchange rate keeps fluctuating and due to this the organisation
is affected in a negative manner as it sells on an international level. the whole market
of the firm gets disturbed due to the local issues.

 New entrants: The new companies which are entering the market are purchasing the
maximum share of other existing big companies due to which the market of CBA is
getting disturbed. (Griffiths & Wall, 2011)

FINANCIAL ANALYSIS
In 2019, the CBA firm declared the offer of its worldwide resources the executive’s business
termed as CFSGAM, and also an Indonesian life coverage activity, PTCL. Furthermore, the
organisation likewise made various basic changes to its working portions. This incorporates
combining Bankwest along with Retail Banking Services, moving General Insurance
organizations and Commonwealth Financial Planning from Wealth Management system to
Retail Banking Services and the Small Business banking clients to Business and Private
Banking by relocating them from Retail Banking Services. The business portion execution of
the organisation has been refreshed and introduced on a proceeding with tasks premise to
prohibit these organizations, which are unveiled as ceased activities. Moreover, updates and
change in policies have been made to the assignment of help units and different expenses.
Such progressions have not affected the net benefit of the organisation, yet have brought
about some amendments to the introduction of the Income Statement and the Balance Sheet
of the influenced fragments.

The essential wellsprings of income are premium and expense salary (Institutional Banking
and Markets, Retail Banking Services, New Zealand IFS) and protection premium and assets
the board pay). Incomes and prices taking place between sections are liable to move
evaluating the business strategies. The business segments are overseen depending on the net
benefit of the organisation. The exchange rates are wiped out on combination. (Koop, 2009)

The executives utilise cash reason to assess the execution and it gives the reason to the
affirmation of the Bank’s benefits. The money reason presents the organisation’s basic
functional outcomes, barring different activities that present unpredictability as well as
coincidental mutilations to the present time frame execution of the organisation. Such things,
like, assisting and IFRS unusualness, are determined depending on time span of years and
don't separate among positive and negative alterations. (Hannam, 2013)

According to the report of accounting i.e. the financial report of 2019, the CBA organisation
has amended few of its policies related to both the customers and its stakeholders. Below are
three stats. which show the balance sheet, net income and the net interest income of the bank
for the year 2019 which are compared with the same of previous one or two years.
 1. Balance sheets of CBA. (Annual Report, 2019)

The above given balance sheet statistics give the details of assets, liabilities and the
stakeholder’s equity of the organisation for the years 2018 and 2019 where the fluctuation in
the value of each can be clearly seen. The shareholder’s equity, total assets, and the total
liabilities is not varying very much which shows the balanced accounting of the CBA
organisation.
 2. Income statement of CBA. (Annual Report, 2019)

This above given figure is showing statistics of net income of the CBA for the years 2017,
2018 and 2019. It is clear from the figure that there is neither a too much of hike nor a
reduction in the net income of the organisation throughout these years. According to Annual
Report, 2019, income tax expense of the CBA was least in three years.
2.1 Net Interest Income. (Annual Report, 2019).

Analysis of accounting system of CBA

The important exercises of the Group are done in the business sections underneath. These
portions depend on the circulation channels through which the client relationship is being
overseen.

(i) Retail Banking Services

Retail Banking Services are the services which gives home advance, retail store items and
buyer fund to all Retail Banking Services' clients. Retail Banking Services additionally
incorporates the General Insurance business of the organisation in Australia, which going
through key survey and Commonwealth Financial Planning. (Johnston, 2016)

(ii) Business and Private Banking

Business and Private Banking provides an explicit budgetary organization to the business
directed for relationship and agribusiness customers, edge advancing and trading through
CommSec, private banking to high add up to resources individuals and retail banking things
and changing in accordance with non-relationship regulated free endeavour consumers.

(iii) Institutional Banking and Markets

The customer offering incorporates obligation raising, money related and products value
hazard the executives and value-based financial abilities. The institutional banking and
business benefit the organisation’s major joint part that is corporate and government and
institutional customers developing a relationship the board model dependent on industry
ability and bits of knowledge. Institutional Banking and Markets has universal activities in
US, London, Singapore, Japan, Hong Kong, Malta, China, and New Zealand. (Ong, 2015)

(iv) Wealth Management

This segment incorporates Platform Administration and Financial Advice. CFSGAM and
CommInsure Life have been introduced as ceased tasks. (Saunders, 2014)

(v) IFS and Corporate Centre

The accompanying pieces of the organisation and its business are remembered for
International Financial Services and Corporate Centre, they can be more described as
follows:

•IFS modulate the Indonesian retail and business banking tasks and also the partner interests
in Vietnam and China. It does exclude the Business and Private Banking, Institutional
Banking and Markets and CFSGAM organizations in Asia.

•furthermore, Indonesian extra security activity named as PTCL, has been introduced as a
stopped activity.

•on 1st November, 2018 the offer of TymeDigital SA was finished. This has been described as
a suspended activity.

•Joint Centre includes the consequences of unassigned organisation bolster capacities, for
example, Group Strategy, Investor Relations, and Treasury.

• Group wide end passages emerging on solidification, midway raised arrangements and other
unallocated income and costs.
CONCLUSION

This report concludes the company and financial analysis of one of the top Australian ASX
‘Commonwealth Bank of Australia’. According to the report, organisation has a strategy to
be simply available for its customers with a vision of innovation and cost reduction. Moving
further, SWOT analysis of the organisation shows its strength and weaknesses that how the
firm strategically succeeds and fails in different regions of the market. Also, depending on the
Annual Report of the organisation for the year 2019, the net income, balance sheet and the
net interest income of the organisation are shown. The retail banking section, private banking
and wealth management strategy of the organisation are also elaborated in order to achieve its
accounting analysis.
REFERENCES

 "Commonwealth Bank of Australia Annual Report 2019" (PDF).

 Hannam, Peter (2 May 2013). "Big banks finance reef destruction, activists claim".
Sydney Morning Herald. Retrieved 10 May 2015

 Aroney, N., Gerangelos, P. A., Stellios, J., & Murray, S. L. (2015). The Constitution
of the Commonwealth of Australia. Cambridge, Cambridge University Press.

 Griffiths, A., & Wall, S. (2011). Economics for business and management. Harlow,
Pearson Education Limited.

 Koop, M. (2009). Improvement of Customer Satisfaction in Mortgage Banking A

Customer Satisfaction Audit on Commonwealth Bank of Australia.

 Akinyemi, B. O. (2009). Human Capital Management for Sustainable Competitive

Advantage in the New Economy.

 "Commonwealth Bank and ASIC to settle interest rate-rigging case". ABC News. 9
May 2018.

 "Past leaders". About us: Our company. Commonwealth Bank of Australia. Retrieved
30 June 2017.
 Ong, Thuy (20 May 2015). "Environment campaigners protest in central Sydney over
Commonwealth Bank investment in fossil fuel projects". Australian Broadcasting
Corporation. Retrieved 20 May 2015.

 Saunders, Amanda (10 July 2014). "Australian banks face more pressure over support
for coal projects". Sydney Morning Herald. Retrieved 10 May 2015.

 "ASIC to investigate CBA's life insurance arm". (2016). Financial Review.

 Commonwealth Bank of Australia (2008). "Commonwealth Bank of Australia to

acquire Bank West and St Andrew's".

 Johnston, Eric. 2016. "CBA takes control of Aussie Home Loans".

 "Commonwealth Bank – History – A brief history of the Commonwealth Bank".

About.commbank.com.au. Retrieved 14 July 2012.

 "Moving to Australia - CommBank". www.commbank.com.au. Retrieved 14 February

2018.