In 2022 interest rates were at a record low and the big banks in Australia made nearly $30 billion in in profits (Lannin 2022). Many Australians took advantage of record low interest rates to enter the housing market and this contributed to the profit made by the banks. Lanin (2022) writes:

The combined cash profit for the country's biggest banks rose 6 per cent to $28.5 billion dollars… That is even though the banks' net interest margin - the amount it charges for borrowing compared to what it pays for finance - fell to a record low of 1.77 per cent...

During the COVD-19 pandemic, the big banks made reductions to expenses and simplified their businesses and they also wrote more loans (Lannin 2022). Now, in 2023, the Reserve Bank has been increasing the official cash rate on a regular basis and the big banks have been passing this onto customers as higher interest rates. While higher interest rates for homeowners makes money for the banks, some homeowners in Australia have been struggling to meet their repayments. Lannin (2022) outlines that as a result, banks are now watching for an increase in bad loans and defaults.

Required

(a) Compare a five-year trend analysis of the National Australia Bank and ANZ Group for:

(i) net interest income

(ii) profit from continuing operations

(iii) earnings per share

(iv) dividend per share

(b) Calculate the return on assets and return on equity for each for the past three years. Explain the factors that would be contributing to the banks’ differing return on assets and return on equity.

(c) Morningstar Sustainalytics provides high-quality, analytical environmental, social and governance (ESG) research, ratings and data to institutional investors and companies. Visit the company ratings section of their website (https://www.sustainalytics.com/esg-ratings) and compare the ESG ratings of the four major Australian banks.