Banking and financial markets

select a large deposit-taking bank and a large life insurance company, and support your answers to the questions below with relevant data taken from their reports and accounts.
a. Compare and contrast the latest year-end balance sheet structures of the bank and the life insurance company.

b. Analyse how the differences in the roles of the two types of organisation are reflected in the differences in the structure of their balance sheets.

c. Answer the following questions, which relate to the bank only:

(i) Justify the use of:
Two appropriate financial ratios to measure the bank’s profitability and one appropriate ratio to measure the efficiency of the bank.

(ii) Compare and contrast how the bank’s profitability and efficiency has varied over the last five years.

(iii) Analyse the reasons for the changes that you have identified in (ii) above.

Assignment Guidance Notes
Part a
To obtain the material that you need, use either:
The balance sheets from the companies’ latest annual reports or the companies’ balance sheet information from Bloomberg.
Use pie charts to compare and contrast the companies’ holdings of different assets and liabilities.

Part b
Explain why the bank holds the different types of assets and liabilities shown in its balance sheet, why it holds them in the proportions shown and how, and why, they differ from those held by the life insurance company.

Part c
(i) You will need to research the different ways that profitability and efficiency can be measured in a bank. You will then need to justify the ratios that you use by emphasising their advantages, recognising any limitations and using supporting references.

(ii) Use the ratios to compare and contrast how profitability and efficiency have varied over the last five years. This part of your answer must be supported with the use of relevant data from Bloomberg or from the bank’s last five years’ reports and accounts. You should include graphs based on the use of this data.

(iii) To analyse the reasons for the changes that you have identified in (ii), you will need to consider changes in the organisation and in its external environment, including in the financial markets.
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