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5232.0 - Australian National Accounts: Financial Accounts, Dec 2011 Quality Declaration 
Previous ISSUE Released at 11:30 AM (CANBERRA TIME) 29/03/2012   
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SECTORAL ANALYSIS


NON-FINANCIAL CORPORATIONS

Summary

Other private non-financial corporations borrowed a net $27.2b (excluding derivatives and accounts payable) during the December quarter 2011. They had net issuance of $17.8b in shares and other equities, borrowed $5.7b in loans and net issuance of $8.5b in bonds. This was offset by a reduction in accounts payable by $8.2b and net maturities of $4.6b in short term debt securities. These transactions resulted in total borrowings outstanding of $1,767.4b (excluding derivatives and accounts payable) and total equity on issue of $938.6b.

OTHER PRIVATE NON-FINANCIAL CORPORATIONS, Net issue of equity and borrowing
Graph: OTHER PRIVATE NON-FINANCIAL CORPORATIONS, Net issue of equity and borrowing


During the December quarter 2011, private non-financial investment funds had net issuance of $3.3b in equity and net issuance of $1.0b of bonds. This was offset by the reduction in loans worth $1.7b. Total liabilities of national public non-financial corporations increased by $0.2b to $15.6b, entirely made of market price changes. Liabilities of state and local public non-financial corporations decreased $1.4b to $197.7b, with net transactions of $2.2b. The stock decrease was mostly due to a reduction in unlisted shares and other equity of $3.5b related to market price changes.


PRIVATE NON-FINANCIAL CORPORATIONS DEBT TO EQUITY RATIO

From the end of December 2009 to the end of December 2011, the value of equity on issue decreased by $95.0b and the value of debt outstanding increased by $26.7b. During the December quarter 2011, private non-financial corporation debt increased $5.1b and equities on issue decreased $23.2b. The original debt to equity ratio increased from 0.93 to 0.95 and the adjusted ratio decreased from 1.03 to 1.01. The adjusted ratio reflects the removal of price change from the original series.

Private non-financial debt to Equity ratio, June 1995 Base
Graph: Private non–financial debt to Equity ratio, June 1995 Base



FINANCIAL CORPORATIONS

Assets and liabilities of Financial corporations

Outstanding at end
Transactions during
Other changes during
Outstanding at end
Sep Qtr 2011
Dec Qtr 2011
Dec Qtr 2011
Dec Qtr 2011
$b
$b
$b
$b

Assets of Financial corporations
Central bank
73.1
13.7
-2.3
84.5
Banks
2 448.2
-5.7
0.9
2 443.4
Other depository corporations
311.6
-9.3
-5.8
296.5
Pension funds
1 188.3
27.9
-10.2
1 206.1
Life insurance corporations
228.4
-0.6
0.7
228.5
Non-life insurance corporations
139.6
-
-0.9
138.7
Money market financial investment funds
23.1
0.5
-
23.6
Non-money market financial investment funds
240.7
-3.3
-9.4
228.0
Central borrowing authorities
275.6
4.5
1.2
281.4
Securitisers
282.7
-1.2
-
281.5
Other financial corporations
80.1
0.1
-2.0
78.2
Liabilities of Financial corporations
Central bank
73.4
13.8
-2.6
84.6
Banks
2 499.8
-8.4
-4.4
2 487.0
Other depository corporations
356.3
-14.9
-6.2
335.2
Pension funds
1 266.8
29.0
-9.8
1 286.0
Life insurance corporations
233.8
-0.7
-2.2
230.9
Non-life insurance corporations
160.2
1.3
0.6
162.1
Money market financial investment funds
24.6
0.3
-0.7
24.2
Non-money market financial investment funds
344.0
5.2
4.0
353.2
Central borrowing authorities
288.3
0.4
-0.9
287.8
Securitisers
278.5
-6.0
4.3
276.8
Other financial corporations
75.0
-0.6
-0.5
73.8

- nil or rounded to zero (including null cells)



Summary

During the December quarter 2011, financial corporations had $19.4b of liability transactions on a consolidated basis. The liability transactions were: pension funds $29.0b; central bank $13.8b; non money market investment funds $5.2b; non life insurance corporations $1.3b; central borrowing authorities $0.4b; money market investment funds $0.3b; offset by negative liability transactions in; other depository corporations $-14.9b; banks -$8.4; securitisers -$6.0b; life insurance corporations -$0.7b; and other financial corporations -$0.6b.


Banks

Transactions of financial assets of banks were net -$5.7b during the quarter. Major transactions in bank assets holdings were in deposits of -$16.3b, of which -$6.5b was made by other depository corporations and -$10.5b by the rest of world. The other major contributor was a reduction in bond holdings worth $12.4b, of which -$7.4b of national general government bonds, -$3.7b of securitisers bonds and -$2.2b of central borrowing authorities bonds. During the quarter, net liability transactions of banks were -$8.4b, of which -$15.0b were in short term loans and placements, -$9.8b in bond etc issued offshore, -$4.8b in the acceptance of bills of exchange, all offset by issuances of one name paper worth $16.9b.


Other depository corporations

Other depository corporations net transactions of financial assets were -$9.3b in December quarter 2011. The main contributor to this decrease was deposits accepted by banks of -$3.3b, and a reduction in the holdings of bonds worth $2.2b. The net liability transactions of other depository corporations was -$14.9b during the December quarter. The main contributor to this decrease was deposits of -$8.1b.


Pension funds

Net transactions of total financial assets of pension funds was $27.9b in December quarter 2011. The main contributor to this increase was equity holdings with net transactions of $26.2b, of which $12.2b where issued by Other private non-financial corporations. Net equity in reserves of pension funds was $1,279.2b at the end of December quarter 2011, an increase of $19.5b since September quarter 2011. This follows net transactions of total liabilities of $29.0b and valuation decreases of $9.8b. Asset holdings increased by $17.8b to $1,206.1b, following net transactions of $27.9b and valuation decreases of $10.1b.

Households' claims against the reserves of pension funds increased by $19.5b to $1,278.0b, following transactions of $29.8 and a valuation decrease of $10.3b.


Life insurance corporations

At the end of December quarter 2011, the financial assets outstanding of life insurance corporations were $228.5b, an increase of $0.1b since September quarter 2011. Net asset transactions were -$0.6b, leaving valuation increases worth $0.7b. During the quarter, pension funds' claims against the reserves of life offices increased by $1.3b to $158.3b, following net transactions of $3.1b and a valuation decrease of $1.8b.

Households' claims against the reserves of life offices decreased by $4.5b to $51.4b, following net transactions of -$3.9b and a valuation decrease of $0.6b.


Non-life insurance corporations

Net transactions of financial assets of non-life insurance corporations was equal to zero in the December quarter 2011. During the quarter net liability transactions of non-life insurance corporations were $1.3b, driven by long term loans and placements of $0.7b.


Money market investment funds

Total assets of money market investment funds was $23.6b at the end of December quarter 2011, $16.2b was in holdings of one name paper, of which $14.2b was issued by banks, as well as $5.1b of deposits. During the quarter total unlisted equities issued by money market investment funds decreased by $0.5b to $24.1b, with net transactions of $0.3b. Net transactions of total financial assets of money market investment funds was $0.5b driven by an increase in net transactions in one name paper holdings of $2.1b, of which $2.4b was issued by banks.


Non money market investment funds

Total assets outstanding of non-money market investment funds decreased by $12.7b to $228.0b with net transactions of -$3.3b, of which -$7.2b was in equities. At the end of December quarter total liabilities of non-money market investment funds had increased by $9.2b to $353.2b, with net transactions of $5.2b and $4b of revaluation changes.


Central borrowing authorities

Total liabilities of central borrowing authorities was $287.8b at the end of December quarter 2011, a $0.5b decrease on the previous quarter. During the quarter there were $5.0b worth of bonds maturities, this was offset by a reduction in other accounts payable of $2.1b and net lending of $1.6b. Net asset transactions during the quarter were $4.5b, mostly contributed to by loans and placements borrowed of $6.9b.


Securitisers

At the end of the December quarter 2011, securitisers had net liability transactions of -$6.0b and liabilities outstanding of $276.8b. The main contributor was bonds worth $259.1b, with -$3.7b worth of net transactions. Net assets of securitisers was $281.5b at the end of December quarter 2011 with net transactions of -$1.2b. The major asset loans and placements decreased by $1.6b to $276.3b in the December quarter with net transactions of -$1.5b.


Net flow of deposits to banks

Net transactions in transferable deposit liabilities of banks during the December quarter 2011 were $ 4.5b. The major deposit contributors where households $4.9b, other private non-financial corporations $3.6. These were offset by withdrawals by rest of world of $2.0b, national public non-financial corporations $1.3b, and the state and local general government worth $1.1b. Transactions in other deposits liabilities of banks during the quarter where -$3.3b, of which -$15.5 was contributed by the rest of world. This was slightly offset by increased deposits by households of $11.8b.

CURRENCY AND DEPOSITS LIABILITIES, Banks
Graph: CURRENCY AND DEPOSITS LIABILITIES, Banks



Financial asset portfolio of life insurance corporations and pension funds at end of quarter

At the end of the December quarter 2011, pension funds held $694.4b in shares and other equity (57.6% of their financial assets), of which $501.7b was in resident companies and $192.7b was in non-resident companies. They held $158.3b of the net equity in life office reserves (13.1% of their financial assets) and $113.1b in bonds (9.4% of their financial assets), of which $65.4b were issued by domestic institutions and $47.7 were bonds issued by non-residents.

At the end of the December quarter 2011, life insurance corporations held $26.9b in bonds (11.8% of their financial assets), of which $22.9b were issued by domestic institutions and $4.0b were bonds issued by non-residents.

Assets of pension funds and life insurance corps
Graph: Assets of pension funds and life insurance corps



Financial claims between households, pension funds, life insurance corporations, rest of world and investment managers at end of quarter

At the end of the December quarter 2011, households had claims against the reserves of pension funds of $1,278.0b and life insurance corporations of $51.4b. The rest of world had net equity in reserves of pension funds of $1.2b and life insurance corporations of $0.8b. Pension funds had claims against the reserves of life insurance corporations of $158.3b. Life insurance corporations invested $162.9b through fund managers, and pension funds invested $509.8b through investment managers.

Diagram: Financial claims between households, pension funds, life insurance corporations, rest of world and investment managers at end of quarter


Financial asset portfolio of non-life insurance corporations at end of quarter

The graph below shows that at the end of the December quarter 2011, non-life insurance corporations held $44.7b in bonds (32.2% of their financial assets), of which $40.6b was issued by resident corporations, and $4.1b was issued by non-residents. They held $44.7b in equities (32.2% of their total financial assets), $30.3b of which was issued by resident corporations and $14.4b issued by non-residents. They held $14.9b in deposits (10.7% of total financial assets), and $13.5b in one name paper (9.7%).

Assets of non-life insurance corps.
Graph: Assets of non-life insurance corps.



Central borrowing authorities net issue of debt securities

During the December quarter 2011, central borrowing authorities issued $5.0b in bonds and redeemed $0.7b of one name paper.

NET ISSUE OF DEBT SECURITIES, Central borrowing authorities
Graph: NET ISSUE OF DEBT SECURITIES, Central borrowing authorities



Securitisers' net issue of debt securities

During the December quarter 2011, securitisers redeemed $2.1b worth of one name paper and $3.7b worth of bonds.

NET ISSUE OF DEBT SECURITIES, Securitisers
Graph: NET ISSUE OF DEBT SECURITIES, Securitisers



GENERAL GOVERNMENT

Summary

During the December quarter 2011, consolidated general government transactions resulted in a net change in financial position of -$15.8b.

The net change in financial position for national general government was -$12.1b. The liability transactions of national general government during the quarter were $14.0b, with the main contributors being bonds issued in Australia worth $17.0b and unfunded superannuation claims of $1.1b. This was partially offset by settlements of derivatives $2.7b and maturities of one name paper worth $1.7b. During the quarter, asset transactions for national general government increased $1.9b, with the main contributors being deposits of $10.6b and equity holdings of $1.0b. This was offset by bonds maturities of $2.0b, net loans and placements repayments of $1.1b and settlements of derivatives worth $0.7b, At the end of the quarter, the national general government had total liabilities of $455.9b and total financial assets of $240.2b.

Net transactions in state and local general government financial assets were -$0.7b in December quarter 2011, with the main contributors being reductions in deposits accepted by banks of $1.2b This was offset by holdings of equity issues by other private non-financial corporation of $0.5b. Net transactions in total liabilities were $3.0b, the main contributor being an increase in long term loans and placements of $3.4b. This was offset by settlements of other accounts payable of -$0.4b . These transactions resulted in a net change in financial position of -$3.7b. At the end of the quarter, state and local general government had total liabilities of $239.1b and total financial assets of $177.5b.


Change in financial position
CHANGE IN FINANCIAL POSITION, General government
Graph: CHANGE IN FINANCIAL POSITION, General government



National government net issue of debt securities

The graph below illustrates the national general government’s debt security issuance. The net issuance of treasury bonds was $17.0b during the quarter.

Net Issue of debt securities, National general government
Graph: Net Issue of debt securities, National general government



HOUSEHOLDS

Summary

Households' change in financial position was $16.0b during the December quarter 2011. During the quarter, households had liability transactions of $25.0b, of which $17.9b was borrowed in the form of loans and a $7.5b increase of accounts payable. On the asset side, net contributions to life insurance and pension fund reserves were $25.9b. Householders' transactions in deposits were $17.0b, net transactions on prepayment of premiums and reserves were $0.2b, while net claims on unfunded superannuation were $1.1b. These were offset by a reduction in accounts receivable of $4.5b and sales of equities of $0.6b.

At the end of the quarter, households' stock of financial assets was $2,672.2b. This was an increase of $33.8b from the previous quarter, following net transactions of $40.9b and valuation decrease of $7.1b. Major asset holdings were net equity in reserves of $1,333.6b, deposits of $682.6b, equities of $212.4b, unfunded superannuation claims of $267.3b and other accounts receivable of $93.1b.


Household net borrowing and debt to liquid asset ratio

Of the net $17.9b loans borrowed by households during the December quarter 2011, bank loans accounted for $20.7b and loans from other depository corporations accounted for $1.1b. These were offset by net loan repayments of $2.6b to securitisers, $0.6b to the rest of world, $0.5b to national general government, and $0.2b to state and local public non-financial corporations.

The graph below illustrates that the debt to liquid assets ratio at the end of December 2011 was at 172.8%, a decrease of 1.5 percentage points on revised September 2011 data. The ratio was influenced by an increase of 1.0% in total outstanding household borrowings, which was offset by a greater increase in total liquid assets of 1.9%. The major contributor to the increase in liquid assets was deposits which increased by 2.5%.

Household Debt to liquid assets ratio
Graph: Household Debt to liquid assets ratio



Insurance and pension claims

During the December quarter 2011, households' net equity in reserves of pension funds increased by $19.5b, made up of $29.8b in transactions and $10.3b in valuation decreases, bringing household net equity in pension funds to $1,278.0b. Net equity in reserves of life insurance corporations decreased by $4.5b, made up of -$3.9b transactions and $0.6b valuation decreases, bringing the household net equity in life insurance to $51.4b. Household's unfunded superannuation claims were $267.3b with net transactions of $1.1b. Prepayments of premiums and claims against reserves in non life insurance corporations were $50.3b during the quarter, with net transactions of $0.2b.


REST OF THE WORLD

Summary

Non-residents had net transactions of $5.6b in Australian financial assets during the December quarter 2011 and a valuation decrease of $33.8b, resulting in $2,066.9b of Australian financial assets being held by non-residents, down $28.2b from the revised September quarter 2011. The main contributors were net issuance of bonds of $20.7b, of which $18.8b was issued by national general government, net purchases of equities of $18.3b, of which $15.4b was issued by other private non-financial corporations, and net issuance of one name paper of $2.8b, of which $5.6b was issued by Banks. These were partly offset by reduction in deposit holdings by $17.9b of which $17.5b was accepted by Banks, net loans repayments worth $15.6b, of which $10.2 was to Banks, and net purchase of one name paper worth $2.8b of which $5.6 is issued by banks.

Australian residents had net transactions of -$3.6b in foreign financial liabilities during the December quarter 2011. The main contributors were reduction in deposits of $9.8b, short-term loan repayments of $3.4b, and derivative settlements worth $1.8b . These were partly offset by sales of unlisted shares and other equity worth $6.8b. The total value of foreign assets held by Australian residents decreased to $1,212.2b at the end of the quarter, $30.0b lower than in September 2011. Of this $26.4b were valuation decreases.


Net purchases of equities

During the December quarter 2011, non-residents acquired a net $11.4b in equities, an increase of $3.7b compared with the September quarter 2011 estimate.

NET PURCHASES OF EQUITY
Graph: NET PURCHASES OF EQUITY



Net purchases of bonds

Non-residents acquired $20.7b of Australian bonds during the December quarter 2011, an increase of $4.4b compared with the September quarter 2011 estimate.

NET PURCHASES OF BONDS
Graph: NET PURCHASES OF BONDS



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