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5232.0 - Australian National Accounts: Financial Accounts, Mar 2011 Quality Declaration 
Previous ISSUE Released at 11:30 AM (CANBERRA TIME) 23/06/2011   
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SECTORAL ANALYSIS


NON-FINANCIAL CORPORATIONS

Summary

Other private non-financial corporations borrowed a net $22.6b (excluding derivatives and accounts payable) during the March quarter 2011. They issued $14.4b in shares and other equities, borrowed $7.8b in loans and issued $3.8b in bonds. Net redemption of short term debt securities during the quarter of $3.4b. These transactions resulted in total borrowings outstanding of $781.2b and total equity on issue of $1,129.1b.

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 March quarter 2011, private non-financial investment funds had net issuance of $1.5b in equity and net issuance of $1.1b in bonds. These increases were offset by net redemption of one name paper of $0.4b and net repayment of loans of $0.3b. Total liabilities of national public non-financial corporations increased by $0.3b to $13.3b. Liabilities of state and local public non-financial corporations decreased by $4.4b to $194.7b.


Private non-financial debt to equity ratio

From the end of March 2009 to the end of March 2011, the value of equity on issue increased by $359.3b and the value of debt outstanding decreased by $75.7b. During the March quarter 2011, private non-financial corporation debt increased by $4.2b and equities on issue increased by $19.5b. The original debt to equity ratio decreased from 0.78 to 0.77 and the adjusted ratio decreased from 1.05 to 1.04. 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
Dec Qtr 2010
Mar Qtr 2011
Mar Qtr 2011
Mar Qtr 2011
$b
$b
$b
$b

Assets of Financial corporations
Central bank
71.5
-3.1
0.8
69.1
Banks
2 299.3
31.8
-3.1
2 327.9
Other depository corporations
302.7
-8.7
6.8
300.9
Pension funds
1 131.3
20.6
12.6
1 164.5
Life insurance corporations
242.6
0.7
3.3
246.7
Non-life insurance corporations
133.0
2.8
1.1
136.8
Money market financial investment funds
24.9
-1.5
0.3
23.8
Non-money market financial investment funds
293.6
-6.3
4.8
292.0
Central borrowing authorities
245.7
11.7
3.0
260.3
Securitisers
273.0
-6.6
-
266.4
Other financial corporations
102.9
-2.2
11.9
112.6
Liabilities of Financial corporations
Central bank
71.7
-3.3
0.7
69.1
Banks
2 385.3
5.8
22.8
2 413.9
Other depository corporations
347.4
9.7
5.1
362.2
Pension funds
1 212.8
21.8
13.2
1 247.8
Life insurance corporations
253.3
1.0
3.6
257.9
Non-life insurance corporations
160.3
1.6
-0.6
161.3
Money market financial investment funds
26.9
-1.8
-
25.1
Non-money market financial investment funds
327.6
-5.7
-5.4
316.5
Central borrowing authorities
244.5
16.9
3.3
264.8
Securitisers
269.5
-1.4
-5.7
262.4
Other financial corporations
67.8
0.3
9.2
77.3

- nil or rounded to zero (including null cells)



Summary

During the March quarter 2011, financial corporations had $44.9b of liability transactions on a consolidated basis. The liability transactions were: Central bank, -$3.3b; banks, $5.8b; other depository corporations, $9.7b; pension funds, $21.8b; life insurance corporations, $1.0b; non-life insurance corporations, $1.6b; money market investment funds, -$1.8b; non-money market investment funds, -$5.7b; central borrowing authorities, $16.9b; securitisers, -$1.4b and other financial corporations $0.3b.


Banks

Transactions of financial assets of banks were net $31.8b during the quarter. Major transactions in bank asset holdings were: Loans and placements, net $36.7b of which $24.9b were lent to households and $7.8b were lent to other private non-financial corporations; Deposit holdings, net $12.9b of which $10.2b were deposited with other depository corporations. These increases were offset by derivative settlements $15.9b of which $10.5b were by rest of world and $3.6b were with other depository corporations.

During the quarter, liability transactions of banks were $5.8b with the main contributors being deposits of $32.3b, bond issuance of $2.2b and acceptance of bills of exchange $2.0b. These were offset by derivative settlements $22.3b and one name paper redemptions $6.8b.


Other depository corporations

Transactions of other depository corporations liabilities were net $9.7b during the March quarter 2011. Main contributors to this increase were deposits of $13.9b and other accounts payable $2.6b. These increases were offset by derivative settlements of $8.7b.

Transactions of assets during the quarter were net -$8.7b. The main contributors to this decrease were derivative settlements $8.8b and redemption of one name paper $1.3b. These were offset by loans and placements $2.4b.


Pension funds

Net equity in reserves of pension funds was $1,241.5b at the end of the March quarter 2011, an increase of $33.6b. This follows net transactions of $20.6b and valuation increases of $13.0b during the quarter. Asset holdings increased by $33.2b to $1,164.5b following net transactions of $20.6b and valuation increases of $12.6b.


Life insurance corporations

At the end of March quarter 2011, the financial assets of life insurance corporations were $246.7b, an increase of $4.1b from the previous quarter. Net transactions were $0.7b and valuation increases were $3.4b. During the quarter Pension funds' claims against the reserves of life offices decreased by $1.3b following net transactions of -$3.9b and valuation increases of $2.6b.

Households' claims against the reserves of life offices increased by $0.2b following net transactions of -$0.8b and valuation increases of $1.0 b.


Non-life insurance corporations

Net transactions of financial assets of non-life insurance corporations were $2.8b during the March quarter 2011. The main contributor to this increase was issuance of bonds $1.4b and other accounts receivable $0.9b. During the March quarter, net liability transactions of non-life corporations were $1.6b, driven mainly by net prepayments of premiums and reserves $1.8b. This increase was offset mainly by repayment of loans and placements $0.3b.


Money market investment funds

Total assets of money market investment funds was $23.8b at the end of the March quarter 2011, of which $15.1b was invested in one name paper and $6.3b in deposits. During the quarter, total unlisted equities issued by money market investment funds decreased by $1.8b to $25.1b.


Non money market investment funds

Total assets transactions of non money market investment funds during March quarter 2011 was -$6.3b of which the main contributors were withdrawals of deposits $0.8 and net redemption of bonds $0.6b. These decreases were offset by an increase in net issuance of derivatives $0.9b. At the end of the quarter, total liabilities of non money market investment funds were $316.5b, a decrease of $11.1b from the previous quarter.


Central borrowing authorities

Total liabilities of central borrowing authorities was $264.8b at the end of the March quarter 2011. During the quarter, the authorities borrowed $9.6b in loans and placements and issued $5.4b in bonds. These were offset by net settlement of derivatives of $1.9b. Net asset transactions during the quarter were $11.7b, the main contributors being net lending of loans of $6.8b and issuance of one name paper of $3.0b. These increases were offset by derivative settlements of $2.6b.


Securitisers

At the end of the March quarter 2011, net liabilities of securitisers were $262.4b, with bonds on issue of $236.2b, and one name paper of $14.0b and loans and placements of $9.4b. Net assets of securitisers were $266.4b with the major assets in loans and placements of $261.8b and deposit holdings of $3.4b.


Net flow of deposits to banks

Transactions in transferable deposit liabilities of banks during the March quarter 2011 were net -$1.1b. There were withdrawal in transferable deposit assets of other private non-financial corporationsof $5.1b and rest of world of $2.4b. These were offset by deposits of pension funds of $3.3b, state and local general government of $1.7b and households of $1.7b. Transactions in other deposits liabilities of banks during the quarter were $32.4b of which $17.7b were deposited by rest of world, $7.7b deposited by households and $5.3b deposited by other private non-financial corporations.

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 March quarter 2011, pension funds held $652.5b in shares and other equity (56.0% of their financial assets), of which $463.8b was in resident companies and $188.7b was in non-resident companies. They held $166.5b of the net equity in life office reserves (14.3% of their financial assets); and $114.9b in bonds (9.9% of their financial assets), of which $68.0b were bonds issued by domestic institutions and $46.9b were bonds issued by non-residents.

At the end of the March quarter 2011, life insurance corporations held $26.0b in bonds (10.5% of their financial assets), of which $23.2b was in bonds issued by domestic institutions and $2.8b in 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, life insurance companies, pension funds, rest of world and investment managers at end of quarter

At the end of the March quarter 2011, households had claims against the reserves of pension funds of $1240.3b and life insurance corporations of $60.1b. 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 $166.5b. Life insurance corporations invested $129.5b through fund managers, and pension funds invested $537.2b through investment managers.

Diagram: Financial claims between households, life insurance companies, pension funds, 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 March quarter 2011, non-life insurance corporations held $42.3b in bonds (30.9% of their financial assets), of which $38.3b was issued by resident corporations. They held $13.8b in deposits (10.1% of total financial assets).

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



Central borrowing authorities net issue of debt securities

During the March quarter 2011, central borrowing authorities issued $166.4b of bonds and $20.2b 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 March quarter 2011, securitisers had net redemptions of one name paper $1.2b and bonds $0.7b.

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



GENERAL GOVERNMENT

Summary

During the March quarter 2011, consolidated general government transactions resulted in a net change in financial position of -$18.4b.

The net change in financial position for national general government was -$13.5b. The liability transactions of national general government during the quarter were $8.2b, with the main contributor being bonds issued in Australia of $13.2b. This was partially offset by one name paper redemptions of $3.2b and other accounts payable settlements of $1.9b. During the quarter, asset transactions for national general government were -$5.3b, with the main contributors being redemptions of one name paper, $3.5b, and settlement of derivatives, $3.4b. This was offset by equity issues of $3.4b. At the end of the quarter, national general government had total liabilities of $397.4b and total financial assets of $236.2b.

Transactions in state and local general government financial assets were $6.5b in March quarter 2011, with the main contributor being loans and placements borrowed by central borrowing authorities of $8.3b. This was partially offset by reductions in equity of state and local public non-financial corporations of $5.3b. Transactions in total liabilities were $11.4b, with the main contributors being long term loans and placements of $5.9b and other accounts payable of $3.3b. These transactions resulted in a net change in financial position of -$4.9b. At the end of the quarter, state and local general government had total liabilities of $211.9b and total financial assets of $178.2b.


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 $13.3b 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 $12.6b during the March quarter 2011. During the quarter, households borrowed a total of $22.5b in the form of loans. On the asset side, net contributions to life insurance and pension fund reserves were $19.9b. Householders' transactions in deposits were $10.2b, other accounts receivable transactions were $5.1b, while net claims on unfunded superannuation were $2.4b. These were offset by sales of equities of $1.1b.

At the end of the quarter, households' stock of financial assets was $2,651.3b. This was an increase of $50.6b from the previous quarter, following net transactions of $36.5b and valuation increases of $14.1b. Major asset holdings were net equity in reserves of $1,301.5b, deposits of $646.6b, equities of $279.2b and unfunded superannuation claims of $259.8b.


Household net borrowing and debt to liquid asset ratio

Of the net $22.5b loans borrowed by households during the March quarter 2011, bank loans accounted for $24.9b. Loans from other depository corporations accounted for $4.6b. These were offset by net repayment of $5.5b loans to securitisers.

The graph below illustrates that the debt to liquid assets ratio at the end of March 2011 was at 161.9%, an increase of 1.2 percentage points on revised December 2010 data. The ratio was influenced by an increase of 1.6% in total outstanding household borrowings and an increase in total liquid assets of 0.8%. The major contributor to the increase in liquid assets was deposits which rose by 1.6%. This was partially offset by the decrease in equities which fell by 0.5%.

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



Insurance and pension claims

During the March quarter 2011, households' net equity in reserves of pension funds increased by $33.6b, made up of $20.7b in transactions and $12.9b in valuation increases, bringing household net equity in pension funds to $1,240.3b. Net equity in reserves of life insurance corporations increased by $0.2b, made up of -$0.8b transactions and $1.0b valuation increases, bringing the household net equity in life insurance to $60.1b. Net transactions in households' unfunded superannuation claims were $2.4b and prepayments of premiums and claims against reserves in non-life insurance corporations were $1.0b during the quarter.


REST OF THE WORLD

Summary

Non-residents had net transactions of $19.0b in Australian financial assets during the March quarter 2011, resulting in $2,023.8b of Australian financial assets being held by non-residents, up $30.3b from the revised December quarter 2010. Net transactions were $19.0b and valuation increases were $11.3b. The main contributors were net purchases of bonds $20.0b, of which $8.1b was issued by national general government and $6.0b was issued by central borrowing authorities, and net purchases of deposits $15.3b, of which $15.3b was issued by banks. These were partly offset by settlement of derivatives of $16.9b and sales of equities of $1.9b.

Australian residents had net transactions of $9.0b in foreign financial liabilities during the March quarter 2011. The main contributors were unlisted shares and other equity of $10.8b, long-term loan repayments of $3.3b and other accounts payable of $3.2b. These were partly offset by derivatives settlements of $10.2b. The total value of foreign assets held by Australian residents increased to $1,243.2b at the end of the quarter, $24.0 higher than in December 2010. Of this, $15.0b were valuation increases.


Net purchases of equities

During the March quarter 2011, non-residents acquired a net -$1.9b in equities, a decrease of $26.6b compared with the December quarter 2010 estimate.

NET PURCHASES OF EQUITY
Graph: NET PURCHASES OF EQUITY



Net purchases of bonds

Non-residents acquired $20.0b of Australian bonds during the March quarter 2011, an increase of $12.4b compared with the December quarter 2010 estimate.

NET PURCHASES OF BONDS
Graph: NET PURCHASES OF BONDS



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