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5232.0 - Australian National Accounts: Financial Accounts, Mar 2014 Quality Declaration 
Latest ISSUE Released at 11:30 AM (CANBERRA TIME) 26/06/2014   
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SECTORAL ANALYSIS


NON-FINANCIAL CORPORATIONS

Summary

Other private non-financial corporations raised a net $6.0b (excluding derivatives and accounts payable) during the March quarter 2014. They borrowed $8.9b in loans and placements. Net transactions and issuance of equity contributed $5.3b. This was partially offset by net maturities of $4.6b in bonds and net maturities in bills of exchange of $3.2b. These transactions resulted in total borrowings outstanding of $2,338.2b (excluding derivatives and accounts payable) and total equity on issue of $1,381.4b.

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 2014, private non-financial investment funds recorded transactions and net borrowings of $2.6b in loans and placements. This was the major contributor to the overall liabilities transaction amount of $3.1b.

Total liabilities of national public non-financial corporations increased by $0.8b to $28.3b. Total liabilities of state and local public non-financial corporations were $199.0b, with net transactions of -$1.7b.


PRIVATE NON-FINANCIAL CORPORATIONS DEBT TO EQUITY RATIO

From the end of March 2012 to the end of March 2014, the value of equity on issue increased by $164.0b and the value of debt outstanding increased by $129.6b. During the March quarter 2014, private non-financial corporations equity on issue increased by $5.1b and debt decreased by $10.1b. The original debt to equity ratio decreased from 0.75% to 0.74% and the adjusted ratio remains flat at 0.9. 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 2013
Mar Qtr 2014
Mar Qtr 2014
Mar Qtr 2014
$b
$b
$b
$b

Assets of Financial corporations
Central bank
130.9
9.0
-1.0
138.9
Banks
2 785.6
2.0
10.1
2 797.7
Other depository corporations
298.2
-15.3
9.2
292.1
Pension funds
1 668.8
30.7
6.2
1 705.6
Life insurance corporations
269.1
0.8
1.0
270.9
Non-life insurance corporations
179.6
5.8
-6.6
178.9
Money market financial investment funds
24.5
-0.1
-
24.5
Non-money market financial investment funds
279.1
4.8
-3.1
280.8
Central borrowing authorities
333.2
4.5
4.3
341.9
Securitisers
352.2
9.0
-0.4
360.7
Other financial corporations
109.5
-3.0
2.1
108.7
Liabilities of Financial corporations
Central bank
130.8
10.5
-1.5
139.9
Banks
3 002.2
-3.0
30.2
3 029.4
Other depository corporations
301.1
-18.4
10.3
293.0
Pension funds
1 777.0
30.4
6.4
1 813.7
Life insurance corporations
272.1
0.7
2.7
275.4
Non-life insurance corporations
192.3
-0.9
2.4
193.8
Money market financial investment funds
24.5
-0.6
0.5
24.5
Non-money market financial investment funds
435.6
8.5
3.3
447.4
Central borrowing authorities
343.3
7.0
4.9
355.1
Securitisers
352.6
11.0
-2.9
360.7
Other financial corporations
102.5
-1.1
0.4
101.7

- nil or rounded to zero (including null cells)



Summary

During the March quarter 2014, financial corporations had a net of $44.0b of liability transactions. The positive liability transactions were pension funds $30.4b, central bank $10.5b, securitisers $11.0b, non-money market financial investment funds $8.5b, central borrowing authorities $7.0b and life insurance corporations $0.7b. These were offset by negative liability transactions in other depository corporations $18.4, banks $3.0b, other financial corporations $1.1b, non-life insurance corporations $0.9b and money market financial investment funds $0.6b.


Banks

Transactions of financial assets of banks were net $2.0b during the quarter. Major transactions in bank assets were increases in loans and placements of $31.2b, of which $11.3b were borrowed by households, $9.9b were borrowed by rest of world and $6.2b were borrowed by other private non-financial corporations, and increases in bonds of $18.6b, of which $11.1b were issued by securitisers and $8.3b were issued by national general government. This increase was partly off-set by net settlements of derivatives of $37.1b, of which $24.6b was settled with rest of world and $8.3b with other depository corporations, and decreases in one name paper of $5.6b, of which holdings of national general government and rest of world decreased by $2.9b and $1.4b respectively.

Transactions of banks liabilities were -$3.0b, driven by net decreases of $33.7b in derivative liabilities. This was partially offset by deposits with banks which increased $17.5b and net one name paper issuance which increased $11.0b.


Other depository corporations

Other depository corporations net transactions of financial assets were -$15.3b in March quarter 2014. The main contributor to this decrease were net settlements in derivatives of $16.4b. This was partially offset by increases in loans and placements of $1.4b.

The net liability transactions of other depository corporations were -$18.4b during March quarter 2014. The main contributors to this transaction were decreases in derivatives of $16.0b and decreases in bonds of $3.0b.


Pension funds

Asset holdings increased by $36.8b to $1,705.6b, following net transactions of $30.7b and valuation increases of $6.1b in March quarter 2014. The main contributors to this increase were an increase of equity holdings of $19.3b ($16.5b transactions and $2.8b revaluations) and an increase in deposit holdings of $8.1b.

Net equity in reserves of pension funds was $1,804.3b at the end of March quarter 2014, an increase of $36.7b from the previous quarter. This follows net transactions of $29.9b and valuation increases of $6.8b.

Households' claims against the reserves of pension funds increased by $36.6b to $1,802.5b, following transactions of $29.9b and valuation increases of $6.7b.


Life insurance corporations

At the end of March quarter 2014, the financial assets outstanding of life insurance corporations were $270.9b, an increase of $1.8b from the previous quarter. Net asset transactions were $0.8b, and valuation increases were $1.0b. During the quarter, pension fund claims against the reserves of life offices increased by $1.3b to $193.0b, following net transactions of $0.6b and valuation increases of $0.7b.

Households' claims against the reserves of life offices increased by $0.2b to $55.4b, following valuation increases of $0.2b.


Non-life insurance corporations

During the quarter, net transactions in financial assets of non-life insurance corporations were $5.8b and revaluations were -$6.5b. Financial assets outstanding at the end of quarter was $178.9b. During the quarter, net liability transactions of non-life insurance corporations were -$0.9b and there were revaluations of $2.4b.


Money market financial investment funds

Total assets of money market financial investment funds were $24.5b at the end of March quarter 2014, of which $12.7b were holdings of one name paper and $9.3b were in deposits. Net transactions in total financial assets of money market financial investment funds were -$0.1b for the quarter, driven by net transactions in deposits of -$0.6b which were offset by net transactions of one name paper worth $0.4b.

During the quarter total unlisted equities issued by money market financial investment funds decreased by $0.1b to $24.3b.


Non-money market financial investment funds

Total assets outstanding of non-money market financial investment funds increased by $1.7b to $280.8b with net transactions of $4.8b and revaluation changes of -$3.1b. At the end of March quarter 2014, total liabilities of non-money market financial investment funds had increased by $11.8b to $447.4b, with net transactions of $8.5b and $3.3b of revaluation changes.


Central borrowing authorities

Total liabilities of central borrowing authorities were $355.1b at the end of March quarter 2014, an increase of $11.8b from the previous quarter. Net asset transactions during the quarter were $4.5b, driven by an increase in holdings of one name paper of $3.3b and by an increase in deposits of $3.2b. This was partially offset by settlements of derivatives of $4.0b.


Securitisers

At the end of March quarter 2014, securitisers had net liability transactions of $11.0b and liabilities outstanding of $360.7b. This was mostly composed of bonds worth $342.3, with $11.7b net transactions during the quarter. Financial assets of securitisers were $360.7b at the end of the quarter, with net transactions of $9.0b. Loans and placements increased by $8.6b to $355.7b at the end of March, driven by a borrowing of households (which increased $9.1b) which was partially offset by other private non-financial corporations (which decreased by $0.6b).


Net flow of deposits to banks

Net transactions in transferable deposit liabilities of banks during the March quarter 2014 were -$1.5b. The major deposit decreases came from other private non-financial corporations $7.5b and national general government $2.1b. These were partially offset by deposit holdings from pension funds $4.0b and households $3.9b. Transactions in other deposit liabilities of banks during the quarter were $17.2b of which $6.1b was deposited by rest of world, $5.6b were deposited by households and $3.8b were deposited by pension funds.

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 March quarter 2014, pension funds held $1,025.4b in shares and other equity (60.1% of their financial assets), of which $731.2b were issued domestically and $294.2b were issued by non-resident units. They held $193.0b of the net equity in life office reserves (11.3% of their financial assets) and $154.0b in bonds (9.0% of their financial assets), of which $86.1b were issued by domestic institutions and $67.9b were bonds issued by non-residents.

At the end of the March quarter 2014, life insurance corporations held $211.8b in shares and other equity (78.2% of their financial assets), of which $174.6b are held in non-money market financial investment funds. They held $32.1b in bonds (11.8% of their financial assets), of which $26.3b were issued by domestic institutions and $5.8b 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 March quarter 2014, households had claims against the reserves of pension funds of $1,802.5b and life insurance corporations of $55.4b. The rest of world had net equity in reserves of pension funds of $1.8b and life insurance corporations of $0.9b. Pension funds had claims against the reserves of life insurance corporations of $193.0b. Life insurance corporations invested $163.3b through fund managers, and pension funds invested $723.2b through fund 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 March quarter 2014, non-life insurance corporations held $56.7b in bonds (31.7% of their financial assets), of which $49.7b were issued by residents and $7.0b were issued by non-residents. They also held $54.3b in equities (30.4% of their total financial assets), $37.5b of which were issued by residents and $16.8b issued by non-residents. They also held $19.2b in deposits (10.7% of their total financial assets), and $12.6b in one name paper (7.0% of their total financial assets).

ASSETS OF NON-LIFE INSURANCE CORPORATIONS
Graph: ASSETS OF NON-LIFE INSURANCE CORPORATIONS



Central borrowing authorities net issue of debt securities

During the March quarter 2014, central borrowing authorities had net issuance of $8.7b in bonds and net maturities of $2.4b in 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 2014, securitisers had net issuance of $11.7b worth of bonds and net maturities of $0.6b worth of one name paper.

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



GENERAL GOVERNMENT

Summary

During March quarter 2014, consolidated general government transactions resulted in a net change in financial position of -$8.0b.

The net change in financial position for National general government was -$9.5b. During the quarter, transactions in Total financial liabilities for National general government were $14.9b. The main contributors to this increase were Bonds issued in Australia which increased by $24.8b and Unfunded superannuation claims which increased by $1.8b. This increase was partially offset by a decrease in One name paper issued in Australia of $9.2b and a decrease in Derivatives of $3.4b. During the quarter, transactions in Total financial assets were $5.4b. The main contributors to this increase were Deposits which increased by $9.5b and Loans and placements which increased by $3.0b. These increases were partially offset by a decrease in Other accounts receivable of $3.2b. At the end of March quarter, National general government had Total financial assets outstanding of $328.2b and Total financial liabilities outstanding of $586.0b.

The net change in financial position of State and local general government was $1.5b. During the quarter, transactions in Total financial assets were $4.5b. The main contributors to this increase were Deposits which increased by $3.3b and Loans and placements which increased by $1.6b. These increases were partially offset by a decrease in Other accounts recievable of $0.5b. During the quarter, transactions in Total financial liabilities for State and local general government were $2.9b. The main contributors to this increase were Long term loans and placements which increased by $1.8b and Unfunded superannuation claims which increased by $1.0b. These increases were partially offset by a decrease in Other accounts payable of $0.1b. At the end of March quarter, State and local general government had Total financial assets outstanding of $198.1b and Total financial liabilities outstanding of $310.4b.


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 National general government’s net debt security issuance. The main contributor to the increase being issuance of Bonds issued in Australia of $24.8b.

NET ISSUE OF DEBT SECURITIES, National general government
Graph: Net Issue of debt securities, National general government



HOUSEHOLDS

Summary

During March quarter 2014, Household transactions resulted in a net change in financial position of $16.4b.

During the quarter, transactions in Total financial assets were $35.4b. The main contributors to this increase were Net equity in reserves which increased by $30.0b and Deposits which increased by $9.0b. These increases were partially offset by a decrease in Equities of $4.3b. During the quarter, transactions in Total financial liabilities for Households were $19.1b. The main contributors to this increase were Long term loans and placements which increased by $22.7b. This was partially offset by a decrease in Other accounts payable of $2.0b.

At the end of the quarter, Households had Total financial assets outstanding of $3,841.7b. This was an increase of $56.5b from the previous quarter following net asset transactions of $35.4b and valuation increases of $21.1b. Major asset holdings were Net equity in reserves of $1,868.7b, Deposits of $812.3b, Equities of $653.2b and Unfunded superannuation claims of $367.5b.


Household net borrowing and debt to liquid asset ratio

Of the net $21.9b loans borrowed by Households during the March quarter 2014, $11.3b were borrowed from Banks and $9.2b were borrowed from Securitisers.

The graph below illustrates that the debt to liquid assets ratio at the end of March quarter 2014 was at 124.5%. The ratio was influenced by an increase of 1.3% in total outstanding household debt, and an increase in total liquid assets of 1.3%. The major contributors to the increase in liquid assets were Deposits which increased 1.2% and Equities which increased 1.4%.

HOUSEHOLD DEBT TO LIQUID ASSETS RATIO
Graph: Household Debt to liquid assets ratio



Insurance and pension claims

During the March quarter 2014, Households' Net equity in reserves of pension funds increased by $36.6b, with $29.9b in transactions and a $6.7b valuation increase, bringing Household Net equity in reserves of Pension funds to $1,802.5b. Net equity in reserves of Life insurance corporations increased by $0.2b with no change in transactions and a $0.2b valuation increase, bringing the Household Net equity in Life insurance to $55.4b for the March quarter. Net equity in Household's unfunded superannuation claims were $367.5b, with net transactions of $2.7b. Prepayments of premiums and claims against reserves in Non-life insurance corporations were $53.9b for the March quarter, with net transactions of -$0.4b during the quarter.


REST OF THE WORLD

Summary

Non-residents had net transactions of $1.8b in Australian financial assets during the March quarter 2014 with a valuation decrease of $0.4b, resulting in $2,511.3b worth of Australian financial assets held by non-residents. The main contributors to the increase in transactions were an increase of $19.5b in Bonds and an increase of $8.5b in Equities. These increases were partially offset by a $25.0b decrease in Derivatives.

Australian residents had net transactions of -$3.2b in foreign financial liabilities during the March quarter 2014. The main contributors to the decrease were a decrease in Derivatives of $24.3b and a decrease in Deposits of $4.2b. These were offset by increases in Short term loans and placements of $10.3b and Other accounts payable of $9.3b. The total value of foreign assets held by Australian residents decreased by $10.4b to $1,660.9b at the end of the quarter. This movement was driven by a $3.2b decrease in transactions and $7.2b worth of valuation decrease.


Net purchases of equities

Net transaction in Equities by non-residents was $8.5b during the March quarter 2014, down $7.0b from $15.5b acquired during the December quarter 2013.

NET PURCHASES OF EQUITY
Graph: NET PURCHASES OF EQUITY



Net purchases of bonds

Net transaction in Australian bonds by non-residents was $19.5b during the March quarter 2014, a decrease of $5.8b from December quarter 2013 when $25.3b worth of bonds were required.

NET PURCHASES OF BONDS
Graph: NET PURCHASES OF BONDS



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Commonwealth of Australia 2014

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