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5232.0 - Australian National Accounts: Financial Accounts, Jun 2009  
Previous ISSUE Released at 11:30 AM (CANBERRA TIME) 25/09/2009   
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SECTORAL ANALYSIS


NON-FINANCIAL CORPORATIONS

Summary

Private non-financial corporations raised a net $10.8b (excluding derivatives and accounts payable) during the June quarter 2009. They repaid $17.8b in loans and issued $29.7b in shares. Net redemption of debt securities during the quarter was $1.3b. These transactions resulted in total borrowings outstanding of $860.2b and total equity on issue of $957.1b.

PRIVATE NON-FINANCIAL CORPORATIONS, NET ISSUE OF EQUITY AND BORROWINGS
Graph: Private non-financial corporations, net issue of equity and borrowings


During the June quarter 2009, total liabilities of national public non-financial corporations decreased by $1.1b. Liabilities of state and local public non-financial corporations decreased by $1.5b to $135.2b..


Private non-financial corporations debt to equity ratio

From the end of June 2007 to the end of June 2009, the value of equity on issue decreased by $316.1b whereas the value of debt outstanding rose by $193.5b. During the June quarter 2009, private non-financial corporation debt decreased by $40.8b and equities on issue increased by $95.2b. The original debt to equity ratio decreased from 1.27 to 1.10 and the adjusted ratio decreased from 1.51 to 1.41. The adjusted ratio reflects the removal of price change from the original series.

DEBT TO EQUITY RATIO - JUNE 1995 BASE
Graph: DEBT TO EQUITY RATIO – JUNE 1995 BASE



FINANCIAL CORPORATIONS

Summary

During the June quarter 2009, financial corporations had $75.8b of liability transactions on a consolidated basis. The liability transactions were: banks, $58.3b; pension funds, $33.3b; other depository corporations, -$22.2b; central borrowing authorities, $11.8b; financial intermediaries n.e.c., -$11.3b; central bank, -$8.6b; life insurance corporations, $3.8b and other insurance corporations, $0.3b.


Banks

Transactions of financial assets of banks were net $52.9b during the quarter. Major transactions in bank assets holdings were: loans, net $27.7b, of which $41.3b were lent to households; bonds, net $20.3b of which $6.9b were issued by central borrowing authorities, $6.4 by financial intermediaries n.e.c. and $.6.2b by national general government; deposits, net $13.5b of which $16.3b accepted by rest of the world; derivatives, net -$13.0, of which -8.6b were settled by the rest of the world.

During the quarter, liability transactions of banks were currency and deposits of $29.0b, one name paper of $21.6b, loans of $13.9b, equities issuance of $5.3b and bonds issuance of $4.9b. These were offset by net settlement of derivatives of $13.9b and redemptions of bills of $4.7b.


Other depository corporations

Transactions of other depository corporations liabilities were net -$22.2b during the June quarter 2009. Main contributors were derivatives of -$6.7b, other accounts payable of -$4.9, loans of -$4.5b, bonds of -$2.8b, one name paper of -$2.8b.

Transactions of assets during the quarter were net -$8.8b. The main contributors were the settlement of derivative contracts, net $6.8b and repayment of loans, net $6.0b. These were offset by purchase of one name paper of $2.4b and accumulation of other accounts receivable of $2.9b.


Life insurance corporations

At the end of June quarter 2009, the financial assets of life insurance corporations were $223.1b, an increase of $11.6b from the previous quarter. Net transactions were $3.5b and valuation increases were $8.1b. During the quarter, there were increases in equity holdings of $9.8b, one name paper of $3.0b. This was offset by sales of bonds of $1.8b. Pension fund claims against the reserves of life offices increased by $7.9b following net transactions of $1.8b and valuation increases of $6.1b.

Households' claims against the reserves of life offices increased by $3.6b following net transactions of $1.1b and valuation increases of $2.5b.


Pension funds

Net equity in reserves of pension funds was $966.7b at the end of the June quarter 2009, an increase of $64.4b. This follows net transactions of $33.3b and valuation increases of $31.1b during the quarter. Asset holdings increased by $62.1b to $909.9b following net transactions of $26.4b and valuation increases of $35.7b.


Other insurance corporations

Net transactions of financial assets of other insurance corporations were $1.0b during the June quarter 2009. The main contributor was other accounts receivable of $3.0b and currency and deposits of $1.6b. This was offset by sales of bonds of $1.9b. During the June quarter, net liability transactions of other insurance corporations were $0.3b, driven mainly by other accounts payable of $1.4b and prepayments of premiums and reserves of -$1.3b.


Central borrowing authorities

Total liabilities of central borrowing authorities was $179.9b at the end of the June quarter 2009. During the quarter, the authorities issued bonds of $11.2b, one name paper of $2.3b, and repaid $1.3b of loans. Net asset transactions during the quarter were $2.6b, the main contributors being issuance of loans, $3.9b, and purchases of one name paper of $2.1b. These were offset by withdrawals of deposits, $2.7b, net settlement of derivatives, $1.7b and sales of bills, $1.2b.


Financial intermediaries n.e.c.

At the end of the June quarter 2009, net liabilities of financial intermediaries n.e.c. were $514.0b, with shares and bonds on issue of $139.6b and $269.0b respectively, and loan borrowings of $63.3b. Net liability transactions of financial intermediaries n.e.c. were -$11.3b during the quarter, driven by the net redemption of bonds of $10.4b and net redemption of one name paper of $1.3b. During the quarter, transactions in financial assets were -$2.1b. Major contributors were repayments of loans of $8.7b, sales of bonds of $2.7b. These were offset by net purchases of equities of $4.5b.


Net flow of currency and deposits to banks

Transactions in currency and deposit liabilities of banks during the June quarter 2009 were net $28.0b. There were transactions in currency and deposit assets of private non-financial corporations, $11.1b; rest of world, $6.4b; pension funds, $6.4b; households, $3.9b and financial intermediaries n.e.c., $2.4b. These were offset by withdrawals by central borrowing authorities, $2.7b; national general government, $1.3b and ;banks, $1.0b.

CURRENCY AND DEPOSITS LIABILITIES, BANKS
Graph: Net flow of currency and deposits to banks



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

At the end of the June quarter 2009, life insurance corporations held $129.5b in shares and other equity (58.0% of their financial assets), of which $105.5b was in resident companies and $24.0b was in non-resident companies; $47.3b in bonds (21.2% of their financial assets), of which $38.2b was in bonds issued by domestic institutions and $9.1b in bonds issued by non-residents; and $17.0b in short term securities (7.6% of their financial assets).

At the end of the June quarter 2009, pension funds held $433.1b in shares and other equity (47.6% of their financial assets), of which $292.2b was in resident companies and $140.9b was in non-resident companies. They held $146.5b of the net equity in life office reserves (16.1% of their financial assets); and $99.2b in bonds (10.9% of their financial assets), of which $60.9b were bonds issued by domestic institutions and $38.3b were bonds issued by non-residents.

Graph: Financial Accounts, Quarters (June 1988 to current) ; Consolidated Subsector/Instrument, Assets, Total, Original


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

At the end of the June quarter 2009, households had claims against the reserves of life insurance corporations of $61.5b and pension funds of $966.7b. Pension funds had claims against the reserves of life insurance corporations of $146.5b. Life insurance corporations invested $129.4b through fund managers, and pension funds invested $418.8b through investment managers.

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


Financial asset portfolio of other insurance corporations at end of quarter

The graph below shows that at the end of the June quarter 2009, other insurance corporations held $34.1b in shares and other equity (27.0% of their financial assets), of which $24.3b was in resident corporations; $37.9b in bonds (30.0% of their financial assets), of which $34.0b was issued by resident corporations; and $10.6b of short-term securities (8.4% of total financial assets).

Graph: Other insurance corporations, assets


Central borrowing authorities net issue of debt securities

During the June quarter 2009, central borrowing authorities issued bonds of $11.2b and one name paper of $2.3b.

Graph: Central borrowing authorities - net issue of debt securities


Financial intermediaries n.e.c. net issue of debt securities

During the June quarter 2009, financial intermediaries n.e.c. had net redemption of bonds of $10.4b and a net redemption of one name paper of $1.3b..

Graph: Financial intermediaries n.e.c. net issue of debt securities


GENERAL GOVERNMENT

Summary

During the June quarter 2009, consolidated general government transactions resulted in a net change in financial position of -$13.4b.

The net change in financial position for national general government was -$11.1b. The liability transactions of national general government during the quarter were $36.6b, with the main contributors being bonds issued in Australia of $16.7b, one name paper issued in Australia of $13.3b and other accounts payable of $7.0b. These were offset by settlements of derivatives of $1.1b. During the quarter asset transactions for national general government were $25.5b, with the main contributors being currency and deposits of $13.2b and one name paper of $7.5b. At the end of the quarter, national general government had total liabilities of $271.6b and total financial assets of $244.0b.

Transactions in state and local general government financial assets were $1.8b in the June quarter 2009, while transactions in total liabilities were $4.2b, resulting in a change in financial position of -$2.3b. At the end of the quarter, state and local general government had total liabilities of $142.1b and total financial assets of $87.8b.


Change in financial position
Graph: Change in financial position


National government issue of debt securities

The graph below illustrates the national general government’s bond issuance. The net issuance of treasury bonds was $16.6b during the quarter.

Graph: National government issue of debt securities


HOUSEHOLDS

Summary

Households change in financial position was $0.4b during the June quarter 2009. During the quarter, households borrowed a total of $33.1b in the form of loans. On the asset side, net contributions to life insurance and pension fund reserves were $34.4b. Householders' transactions in currency and deposits were $2.8b and they purchased net $2.4b in equities during the quarter.

At the close of the quarter, households' stock of financial assets was $2,182.2b. This was an increase of $103.6b from the previous quarter, following net transactions of $34.7b and valuation increases of $68.9b. Major asset holdings were net equity in reserves of life insurance corporations and pension funds of $1,028.2b, currency and deposits of $597.7b, equities of $259.5b and unfunded superannuation claims of $195.4b.


Household net borrowing and debt to liquid asset ratio

Of the net $33.1b loans borrowed by households during the June quarter 2009, bank loans accounted for $41.3b and financial intermediaries n.e.c., -$8.1b. June quarter 2009 has seen less internal securitisation compared to March quarter 2009. For detail on the ABS treatment of internal securitisation, refer to page 6 of the December quarter 2008 publication.

The graph below illustrates that the debt to liquid assets ratio at the end of June 2009 was at 153.3%, a decrease of 1.1 percentage points on the previous quarter. The ratio was influenced by an increase of 2.5% in total outstanding household borrowings and an increase in total liquid assets of 3.23%. The major contributors to the increase in liquid assets were equities, up 11.2%. This was offset by decreases in one name paper of 7.7%.

Graph: Household net borrowing and debt to liquid asset ratio


Insurance and pension claims

During the June quarter 2009, households' net equity in reserves of pension funds increased by $64.4b, made up of $33.3b in transactions and $31.1b in valuation increases, bringing household net equity in pension funds to $966.7b. Net equity in reserves of life insurance corporations increased by $3.6b, made up of $1.1b transactions and $2.5b valuation increases, bringing the household net equity in life insurance to $61.5b. Net transactions in households' unfunded superannuation claims were $2.3b and prepayments of premiums and claims against reserves in other insurance corporations were -$0.7b during the quarter.


REST OF THE WORLD

Summary

Non-residents had net transactions of $50.5b in Australian financial assets during the June quarter 2009, resulting in $1,777.4b of Australian financial assets being held by non-residents, up $14.5b from the March quarter 2009. Valuation decreases were -$36.0b. The main contributors were net purchases of equities, $24.2b, net purchases of bonds, $22.1b, of which $17.4b was issued by banks. Net purchases of one name paper was $14.7b. These were offset by withdrawals of currency and deposits of $9.2b and settlement of derivatives of $9.0b.

Australian residents had net transactions of $39.1b in foreign financial assets during the June quarter 2009. The total value of foreign assets held by Australian residents increased to $1,051.5b at the end of the quarter. Of this, $17.1b were valuation decreases. The main contributors were net transactions in currency and deposits, $19.1b, net purchases of bonds, $12.6b and net transactions in loans and placements, $10.1b. These were offset by net settlement of derivatives, $9.2b.


Net purchases of equities

During the June quarter 2009, non-residents acquired a net $24.2b in equities, an increase of $2.5b compared with the March quarter 2009 estimate.

Graph: Net purchases of equities by non-residents


Net purchases of bonds

Non-residents acquired $22.1b of Australian bonds during the June quarter 2009, a decrease of $7.6b compared with the March quarter 2009 estimate

Graph: Net purchases of bonds


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