This paper "Financial Policies of Westpac Banking Corporation" focuses on Westpac which is a first-ever financial institution in Australia that provided banking services to the citizens. It the second largest bank in the country in terms of market capitalization. Apart from Australia, the bank has operations in New Zealand and the Pacific regions…
The bank is listed on the Australian Stock Exchange and has made a satisfactory performance over time. Financial Policies of Westpac Banking Corporation related to Capital Structure In 2008, Westpac went into a strategic alliance with St. George Bank Limited in a merger operation. In that merger, the exchange ratio of St. George Bank Limited to Westpac Bank was 1.31. This means that the valuation of the assets of St George was at a higher level than that of Westpac, and therefore the shareholders of St George have got a better valuation as compared to the shareholders of Westpac. The bank went into a merger policy because it wanted to make more use of its resources and have a better financial health (Rosenbaum and Pearl, 2009, p. 36). This would also help the bank to survive in the long run. At this juncture to retain the positive sentiment of the investors, Westpac announced a special dividend of $ 1.25 per share. This has a positive impact on the prices of the shares and the prices seem to go up; therefore, it is a deliberate step on part of the company to keep a stable position in the securities market. Dividend Payout Policies of Westpac The financial history of the company reveals that dividend has been paid by the company bi-annually in the month of July and at the end of the year, December. The dividend yield for the stockholders had ranged from 0.56 to 0.86. The returns that the shareholders have got by investing in the company is well understood by the dividend yield paid ever time (Gallagher, 2003, p. 194). The mean and the standard deviation of the yield have been calculated. Mean 0.736666667 Standard Deviation 0.108857705 The average yield of the dividend has been 0.736. A dividend payout ratio of 70% per share would encourage the shareholders to invest more money in the stock and to hold the stock for a longer period of time. These dividends are directly transferred to the accounts of the shareholders. The company generally adopts any of the two dividend payout policies- the Dividend Reinvestment Plan (DRP) in which the retained earnings that the company generates are capitalized by the company instead of being distributed (Modigliani and Miller, 1958, p. 282). This is often known as the growth schemes by which the company acquires more assets or uses the money for productive purposes. The second option that the company takes is to distribute the dividends to the shareholders. The shareholders who look forward to short-term investments and do not want to engage their money in the long term in the stocks of Westpac would prefer the second option because they would be getting a dividend yield of an average of 70% within 6 months time. For example, in the year 2010, the company paid out dividends at a ratio of 64.9% (Westpac Group, 2012). The share price of Westpac that time was at an average of 23.24. Thus it is lucrative stocks for the investors who would hold the stock for a minimum period of 1 year. Buyback of Shares by Westpac Most of the companies in Australia goes for a share buyback for avoiding the risk that any bigger firm may take over the business (Doan, Yap, and Gannon, 2011, p. 69). Westpac followed on the similar line to keep the capital structure fundamentally strong. The company announced the buyback of shares as a strategy for successful management of its finances. The cash profit of the bank from interest income and other supplementary services got increased by 10% during this time. ...
Cite this document
(“Financial Policies of Westpac Banking Corporation Essay”, n.d.)
Retrieved from https://studentshare.net/finance-accounting/103090-corporate-finance-ii-essay
(Financial Policies of Westpac Banking Corporation Essay)
“Financial Policies of Westpac Banking Corporation Essay”, n.d. https://studentshare.net/finance-accounting/103090-corporate-finance-ii-essay.
Interest Charges PROFITABILITY Profit Margin Net Income 3.45% 3.77% 2.20% Poor Sales Return on Assets Net Income 3.50% 3.97% 2.27% Poor Total Assets Return on Equity Net Income 7.54% 5.82% 5.64% Poor Common Equity Commentary on the financial performance and position of Benson Corporations By taking a critical view of the performance of Benson Corporation, the company is more on a declining side.
Name Professor Institution Course Date Countrywide Financial Corporation (CFC), founded by Angelo Mozilo and David Loeb engaged in banking, home financing (mortgage), capital markets, insurance and global operations (Eastburn, 2011). All these worked, with each depending on the other, to make the corporation grow into, among others, the leading in the States, with offices in most states.
A bank cannot lend all its deposits as this would interfere with unplanned withdrawals. In regard to the article attached, the writer is highlighting about the protection of the public against the banks regarded as too big to fail. His idea is on increasing the initial deposit the banks make to the central bank in essence.
During 2002, Hong Kong and Shanghai Banking Corporation (HSBC) launches a new positioning strategy which is encapsulated in its slogan "The World's Local Bank." Recognizing the diversity of culture in the nations where it operates, HSBC ensures the satisfaction of every customer wherever he/she is in the world by launching its commitment in providing the products and the services that he/she needs.
Corporate governance is a complex concept as it deals with many different economic happenings.Looking at a broader perspective corporate governance can be regarded as a set of procedures, customs, guidelines, rules and regulations affecting the way a corporation is planned, directed, governed or controlled.
The author says that today, Westpac is a well-established organization that employs more than 27,000 employees in its domestic as well as international operations. Westpac concentrates its activities in Australia, New Zealand, and the Pacific. Westpac is ranked in the top 10 listed companies.
This recession has had a negative impact on the financial and banking sector. In 2010, large banks in Europe and the U.S were facing a financial crisis. In this essay, I will discuss the government’s role when it comes to regulating and stabilizing the economy in the
But surveys also tell that those banks will face serious challenges to cope with changing trends of global financial systems. Flexibility and efficiency scalability will be under serious threats if their IT
8 Pages(2000 words)Term Paper
GOT A TRICKY QUESTION? RECEIVE AN ANSWER FROM STUDENTS LIKE YOU!
Let us find you another Essay on topic Financial Policies of Westpac Banking Corporation for FREE!