5232.0 - Australian National Accounts: Financial Accounts, Sep 2010  
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SECTORAL ANALYSIS


NON-FINANCIAL CORPORATIONS

Summary

Other private non-financial corporations borrowed a net $24.8b (excluding derivatives and accounts payable) during the September quarter 2010. They issued $20.6b in shares and other equities and $7.9b in bonds, they repaid $3.1b in loans. There were net issuance of debt securities during the quarter of $7.3b. These transactions resulted in total borrowings outstanding of $790.2b and total equity on issue of $1043.6b.

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 September quarter 2010, private non-financial investment funds had net issuance of $2.5b in equity and issuance of $1.4b in loans. Total liabilities of national public non-financial corporations increased by $0.1b to $13.6b. Liabilities of state and local public non-financial corporations increased by $2.0b to $175.6b.


Private non-financial debt to equity ratio

From the end of September 2008 to the end of September 2010, the value of equity on issue increased by $78.6b and the value of debt outstanding decreased by $60.9b. During the September quarter 2010, private non-financial corporation debt decreased by $8.5b and equities on issue increased by $87.3b. The original debt to equity ratio decreased from 0.92 to 0.85 and the adjusted ratio decreased from 1.07 to 1.05. 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
Jun Qtr 2010
Sep Qtr 2010
Sep Qtr 2010
Sep Qtr 2010
$b
$b
$b
$b

Assets of Financial corporations
Central bank
82.3
-8.4
-3.0
70.9
Banks
2 256.3
22.6
8.2
2 287.0
Other depository corporations
293.6
-1.2
8.7
301.1
Pension funds
1 014.8
10.7
35.7
1 061.2
Life insurance corporations
225.6
-3.6
7.4
229.3
Non-life insurance corporations
128.2
2.4
3.0
133.6
Money market financial investment funds
38.2
-9.7
-
28.5
Non-money market financial investment funds
235.4
5.8
9.9
251.1
Central borrowing authorities
222.1
2.8
2.3
227.2
Securitisers
276.3
1.3
-
277.6
Other financial corporations
106.3
2.6
5.3
114.2
Liabilities of Financial corporations
Central bank
81.3
-8.1
-2.4
70.8
Banks
2 363.3
19.1
10.4
2 392.9
Other depository corporations
315.1
5.2
2.1
322.4
Pension funds
1 089.4
13.2
36.3
1 138.9
Life insurance corporations
245.0
-3.9
6.6
247.8
Non-life insurance corporations
151.8
4.0
3.1
158.9
Money market financial investment funds
38.5
-8.0
-1.1
29.4
Non-money market financial investment funds
247.8
-1.4
4.9
251.3
Central borrowing authorities
211.8
1.7
2.1
215.6
Securitisers
274.1
6.3
-4.6
275.8
Other financial corporations
65.5
-
1.7
67.2

- nil or rounded to zero (including null cells)



Summary

During the September quarter 2010, financial corporations had $29.6b of liability transactions on a consolidated basis. The liability transactions were: Central bank, -$8.1b; banks, $19.1b; other depository corporations, $5.2b; pension funds, $13.2b; life insurance corporations, -$3.9b; non-life insurance corporations, $4.0b; money market investment funds, -$8.0b; non-money market investment funds, -$1.4b; central borrowing authorities, $1.7b and securitisers, $6.3b.


Banks

Transactions of financial assets of banks were net $22.6b during the quarter. Major transactions in bank assets holdings were: bonds, net $12.4b of which $10.9b were issued by securitisers and $5.1b by central borrowing authorities. Loans were net $8.6b, of which $13.5b were lent to households and $5.0b were repaid by rest of the world. One name paper had net issuance of $4.8b of which $4.2b was by national general government.

During the quarter, liability transactions of banks were $19.1b with the main contributors being deposits of $47.7b, bond issuance of $4.2b, offshore. These were offset by net redemptions of one name paper, in Australia $17.8b and offshore $6.1b.


Other depository corporations

Transactions of other depository corporations liabilities were net $5.2 during the September quarter 2010. Main contributors were deposits of $6.9b, offset by repayment of loans of $2.1b.

Transactions of assets during the quarter were net -$1.2b. The main contributors were deposits of $2.1b, issuance of one name paper of $0.3b. These were offset by settlement of derivative contracts, net $2.2b and repayment of loans of $0.7b.


Pension funds

Net equity in reserves of pension funds was $1,134.5b at the end of the September quarter 2010, an increase of $50.7b. This follows net transactions of $14.4b and valuation increases of $36.3b during the quarter. Asset holdings increased by $46.4b to $1,061.2b following net transactions of $10.7b and valuation increases of $35.7b.


Life insurance corporations

At the end of September quarter 2010, the financial assets of life insurance corporations were $229.3b, an increase of $3.7b from the previous quarter. Net transactions were -$3.6b and valuation increases were $7.3b. During the quarter, there were net transactions in bills of exchange of $0.3b and deposits of $0.2b. These were offset by sale of equities $1.8b and redemption of one name paper $1.3b. Pension funds claims against the reserves of life offices increased by $4.9b following net transactions of -$0.2b and valuation increases of $5.1b.

Households' claims against the reserves of life offices decreased by $2.3b following net transactions of -$3.8b and valuation increases of $1.5b.


Non-life insurance corporations

Net transactions of financial assets of non-life insurance corporations were $2.4b during the September quarter 2010. The main contributors was deposits of $1.4b and bond issuance of $1.0b. This was offset by settlements of other accounts receivable of $0.9b. During the September quarter, net liability transactions of non-life corporations were $4.0b, driven mainly by prepayments of premiums and reserves of $3.1b and other accounts payable of $1.0b.


Money market investment funds

Total assets of money market investment funds was $28.5b at the end of the September quarter 2010, of which $16.6b was invested in one name paper, $6.9b in deposits and $3.3b in bills of exchange. During the quarter, total unlisted equities issued by money market investment funds decreased by $9.1b to $29.3b.


Non money market investment funds

Total assets transactions of non money market investment funds during September quarter 2010 was $5.8b of which the main contributor was issuance of bonds of $2.8 and one name paper of $1.7b. This was offset by repayment of loans of $0.3b. At the end of the quarter, total liabilities of non money market investment funds were $251.3b, an increase of $3.5b from the previous quarter.


Central borrowing authorities

Total liabilities of central borrowing authorities was $215.6b at the end of the September quarter 2010. During the quarter, the authorities issued bonds of $4.5b, and redeemed $1.3b of one name paper. Net asset transactions during the quarter were $2.8b, the main contributors being issuance of loans of $7.3b, placement of deposits of $0.5b and issuance of bonds of $0.3b. These were offset by redemption of one name paper of $4.7b and net settlement of other accounts receivable, $0.4b.


Securitisers

At the end of the September quarter 2010, net liabilities of securitisers were $275.8b, with bonds on issue of $248.5b, and one name paper of $16.8b. Net assets of securitisers were $277.6b with the major assets in loans and placements, $271.1b and deposits, $3.8b.


Net flow of deposits to banks

Transactions in transferable deposit liabilities of banks during the September quarter 2010 were net $17.1b. There were transactions in transferable deposit assets of pension funds, $9.3b and households of $8.4b. These were offset by withdrawals by national public non-financial corporations of $1.6b, and state and local general government of $1.5b. Transactions in other deposit liabilities of banks during the quarter were $29.9b of which $17.2b were deposited by households and $14.6b deposited by other private non-financial corporations. These were offset by withdrawals of $2.8b 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 the September quarter 2010, pension funds held $557.2b in shares and other equity (52.5% of their financial assets), of which $399.0b was in resident companies and $158.2b was in non-resident companies. They held $164.8b of the net equity in life office reserves (15.5% of their financial assets); and $106.0b in bonds (10.0% of their financial assets), of which $59.7b were bonds issued by domestic institutions and $46.3b were bonds issued by non-residents.

At the end of the September quarter 2010, life insurance corporations held $175.5b in shares and other equity (76.5% of their financial assets), of which $168.9b was in resident companies and $6.6b was in non-resident companies; $25.1b in bonds (10.9% of their financial assets), of which $22.6b was in bonds issued by domestic institutions and $2.5b in bonds issued by non-residents; $10.0b in short term securities (4.4% of their financial assets) and $7.9b in deposits (3.4% of their financial assets).

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 September quarter 2010, households had claims against the reserves of pension funds of $1,133.4b and life insurance corporations of $49.7b. Rest of world had net equity in reserves of pension funds of $ 1.1b and life insurance corporations of $0.8b. Pension funds had claims against the reserves of life insurance corporations of $164.8b. Life insurance corporations invested $127.9b through fund managers, and pension funds invested $503.8b 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 September quarter 2010, non-life insurance corporations held $47.7b in shares and other equity (35.7% of their financial assets), of which $33.8b was in resident corporations; $41.4b in bonds (31.0% of their financial assets), of which $37.5b was issued by resident corporations; $13.0b of short-term securities (9.7% of total financial assets) and $13.9b in deposits (10.4% 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 September quarter 2010, central borrowing authorities issued bonds of $4.5b and redeemed $1.3b 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 September quarter 2010, securitisers had net issuance of bonds of $7.6b and net redemptions of one name paper of $2.5b.

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



GENERAL GOVERNMENT

Summary

During the September quarter 2010, consolidated general government transactions resulted in a net change in financial position of -$22.4b.

The net change in financial position for national general government was -$14.5b. The liability transactions of national general government during the quarter were $9.7b, with the main contributors being bonds issued in Australia of $8.0b and one name paper issued in Australia of $6.1b. This was partially offset by repayment of long term loans and placements of $0.2b. During the quarter, asset transactions for national general government were -$4.8b, with the main contributors being withdrawals of deposits of $5.3b, redemption of one name paper of $4.4b and purchase of bonds of $1.2b. These were offset by purchases of equity of $1.9b and settlement of derivatives of $0.7b. At the end of the quarter, national general government had total liabilities of $377.4b and total financial assets of $240.9b.

Transactions in state and local general government financial assets were -$2.8b in September quarter 2010, while transactions in total liabilities were $5.0b, resulting in a change in financial position of -$7.8b. At the end of the quarter, state and local general government had total liabilities of $169.1b and total financial assets of $112.6b.


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 $8.0b 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 $17.3b during the September quarter 2010. During the quarter, households borrowed a total of $17.1b in the form of loans. On the asset side, householders' transactions in deposits were $27.4b. Net contributions to life insurance and pension fund reserves were $10.4b while net claims on unfunded superannuation were $2.3b. These were offset by sales in equities of $6.9b and settlements of other accounts receivable of $2.1b.

At the end of the quarter, households' stock of financial assets was $2,472.0b. This was an increase of $88.3b from the previous quarter, following net transactions of $32.8b and valuation increases of $55.5b. Major asset holdings were net equity in reserves of $1,186.8b, deposits of $621.3b, equities of $282.9b and unfunded superannuation claims of $222.2b.


Household net borrowing and debt to liquid asset ratio

Of the net $17.1b loans borrowed by households during the September quarter 2010, bank loans accounted for $13.5b. Loans from securitisers and other depository corporations accounted for $2.8b and $1.7b respectively. These were offset by net repayment of $0.8b loans to rest of world and $0.3b to other financial corporations.

The graph below illustrates that the debt to liquid assets ratio at the end of September 2010 was at 159.6%, a decrease of 4.8 percentage points on revised June 2010 data. The ratio was influenced by an increase of 1.0% in total outstanding household borrowings and an increase in total liquid assets of 4.1%. The major contributors to the increase in liquid assets were deposits and equities which rose by 4.6% and 3.4% respectively.

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



Insurance and pension claims

During the September quarter 2010, households' net equity in reserves of pension funds increased by $50.7b, made up of $14.4b in transactions and $36.3b in valuation increases, bringing household net equity in pension funds to $1,133.4b. Net equity in reserves of life insurance corporations decreased by $2.3b, made up of -$3.8b transactions and $1.5b valuation increases, bringing the household net equity in life insurance to $49.7b. Net transactions in households' unfunded superannuation claims were $2.3b and prepayments of premiums and claims against reserves in non-life insurance corporations were $1.7b during the quarter.


REST OF THE WORLD

Summary

Non-residents had net transactions of $20.6b in Australian financial assets during the September quarter 2010, resulting in $1,969.7b of Australian financial assets being held by non-residents, up $8.9 from the revised June quarter 2010. Valuation decreases were $11.7b. The main contributors were net purchases of bonds, $27.0b, of which $11.0b was issued by national general government, $8.0 issued by other private non-financial corporations and $7.4 issued by banks. Net purchases of equities was $9.2b, of which $7.5b was issued by other private non-financial corporations. These were partly offset by repayment of loans and placements of $6.9b, withdrawals of deposits of $4.2b and redemption of one name paper of $3.8b.

Australian residents had net transactions of $11.6b in foreign financial assets during the September quarter 2010. The main contributors were unlisted shares and other equity of $18.1b. These were offset by derivatives settlements of $3.8b and redemption in bonds of $2.2b. The total value of foreign assets held by Australian residents increased to $1,198.4b at the end of the quarter, an increase of $4.7b from June 2010. Of this, $6.9b were valuation decreases.


Net purchases of equities

During the September quarter 2010, non-residents acquired a net $9.2b in equities, an increase of $3.7b compared with the June quarter 2010 estimate.

NET PURCHASES OF EQUITY
Graph: NET PURCHASES OF EQUITY



Net purchases of bonds

Non-residents acquired $27.0b of Australian bonds during the September quarter 2010, an increase of $12.4b compared with the June quarter 2010 estimate.

NET PURCHASES OF BONDS
Graph: NET PURCHASES OF BONDS