You are required to write an individual assignment report based on the following criteria (see section 2). First, download the latest annual report of a (only ONE) bank. You can choose any bank listed in any stock market in the world. However, you should only choose a bank which provides sufficient information to address the following issues. For those who choose Malaysian bank, download the annual report from the following link: https://www.bursamalaysia.com/market_information/announcements/company_announceme nt
(a) Report and classify the loans in the bank’s balance sheet. For example, you can classify
according to types of credit; that is security, borrower, tenure, sector of the economy, region,
purpose and products (refer to lecture 1 for the grouping). You should classify the loans
according to available information in the annual report in terms of value and %. To provide
more depth in your analysis; you can compare with its peers (e.g. compare with another two
(b) Report on the capital adequacy management of the bank. For example, focus on the tier 1,
tier 2 and total bank capital (Basle) as reported in the annual report. List down in detail its
component of tier 1, 2 and total bank capital. To provide more depth in your analysis; you
can compare with its peers (e.g. compare with another two banks).
(c) Report on the bank’s credit risks management and lending policies based on the available
information provided in the annual report.
(d) Based on your findings in (a), (b) and (c); critically discuss the impact of current global
financial crisis on the bank’s profitability, liquidity and competitiveness. Among the
suggested areas you can focus on are: lending exposure of the particular bank. Do they have
any large exposure (>20%) of its loan portfolio to a certain segment of the economy which is
affected by the current global Covid-19 pandemic and lockdown? Will their bank capital be
severely depleted due to expected loan defaults in the coming months? In Malaysia, the debt
moratorium will expire in September. Can their credit risks management and lending policies
withstand financial distress in coming months? On the basis of your findings, you can
propose to either invest on the bank’s shares or bonds. Or you may recommend shorting the
bank’s shares. If possible, try to unveil/identify any interesting (unique) information you can
find in the bank’s balance sheet.
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