5232.0 - Australian National Accounts: Financial Accounts, Jun 2014 Quality Declaration 
ARCHIVED ISSUE Released at 11:30 AM (CANBERRA TIME) 25/09/2014   
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SECTORAL ANALYSIS


NON-FINANCIAL CORPORATIONS

Summary

Other private non-financial corporations had a net of $30.9b of liability transactions (excluding derivatives and accounts payable) during the June quarter 2014. They borrowed $22.5b in loans and placements. Net transactions and issuance of equity contributed $16.6b. This was partially offset by net maturities of $4.3b in bonds, net maturities of $1.1b in one name paper and net maturities in bills of exchange of $2.9b. These transactions resulted in total borrowings outstanding of $2,415.1b (excluding derivatives and accounts payable) and total equity on issue of $1,429.1b.

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 June quarter 2014, private non-financial investment funds recorded net borrowings of $4.1b in loans and placements. This was the major contributor to the overall liabilities transaction amount of $1.4b.

Total liabilities of national public non-financial corporations increased by $2.7b to $27.6b. Total liabilities of state and local public non-financial corporations were $409.3b, with net transactions of $2.0b.


PRIVATE NON-FINANCIAL CORPORATIONS DEBT TO EQUITY RATIO

From the end of June 2012 to the end of June 2014, the value of equity on issue increased by $294.5b and the value of debt outstanding increased by $113.4b. During the June quarter 2014, private non-financial corporations equity on issue increased by $23.0b and debt increased by $8.7b. The original debt to equity ratio remains flat at 0.76 and the adjusted ratio remains flat at 1.33. 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
Mar Qtr 2014
Jun Qtr 2014
Jun Qtr 2014
Jun Qtr 2014
$b
$b
$b
$b

Assets of Financial corporations
Central bank
140.0
-0.4
1.1
140.7
Banks
2 834.9
32.9
26.8
2 894.6
Other depository corporations
214.7
1.4
0.2
216.3
Pension funds
1 626.4
31.5
-16.7
1 641.2
Life insurance corporations
271.0
1.6
4.0
276.6
Non-life insurance corporations
163.8
1.0
0.9
165.8
Money market financial investment funds
24.1
-0.1
-
24.1
Non-money market financial investment funds
323.4
1.0
6.6
331.0
Central borrowing authorities
331.9
6.5
0.3
338.7
Securitisers
362.0
13.2
0.1
375.3
Other financial corporations
114.2
0.7
1.7
116.6
Liabilities of Financial corporations
Central bank
140.6
1.9
-0.9
141.5
Banks
3 030.5
33.3
20.9
3 084.6
Other depository corporations
226.1
-3.4
-0.8
221.9
Pension funds
1 727.9
32.9
-16.1
1 744.7
Life insurance corporations
274.7
1.5
5.2
281.4
Non-life insurance corporations
164.7
5.6
-0.5
169.7
Money market financial investment funds
24.1
0.2
-0.3
24.1
Non-money market financial investment funds
412.9
4.9
-7.0
410.7
Central borrowing authorities
346.6
3.3
5.1
355.0
Securitisers
363.4
9.9
3.3
376.6
Other financial corporations
64.5
1.2
0.7
66.4

- nil or rounded to zero (including null cells)



Summary

During the June quarter 2014, financial corporations had a net of $91.3b of liability transactions. The positive liability transactions were banks $33.3b, pension funds $32.9b, securitisers $9.9b, non-life insurance corporations $5.6b, non-money market financial investment funds $4.9b, central borrowing authorities $3.3b, central bank $1.9b, life insurance corporations $1.5b, other financial corporations $1.2b and money market financial investment funds $0.2b. This was offset by negative liability transactions in other depository corporations $3.4b.


Banks

Transactions of financial assets of banks were $32.9b during the quarter. Major transactions in bank assets were increases in loans and placements of $51.5b, of which $22.8b were borrowed by households, $17.4b were borrowed by rest of world and $10.7b were borrowed by other private non–financial corporations; and increases in bonds of $5.8b, of which $10.1b were issued by securitisers and national general government recorded a net redemption of $6.0b; and increases in one name paper of $4.3b of which $2.6b was issued by central borrowing authorities. This increase was off–set by net settlements of derivatives of $27.9b, of which $20.8b was settled with rest of world and $3.0b with pension funds.

Transactions of banks liabilities were $33.3b, driven by net increases in deposits of $38.4b, one name paper of $14.9b and bonds of $7.5b. This was partially offset by derivatives which decreased by $35.0b.


Other depository corporations

Other depository corporations net transactions of financial assets were $1.4b in June quarter 2014. The main contributor to this increase was an increase in loans and placements of $1.3b. This was partially offset by decreases in deposits of $1.1b.

The net liability transactions of other depository corporations were -$3.4b during June quarter 2014. The main contributors to this transaction were decreases in deposits of $3.2b and decreases in loans and placements of $1.3b.


Pension funds

Asset holdings increased by $14.8b to $1,641.2b, following net transactions of $31.5b and valuation decreases of $16.7b in June quarter 2014. The main contributors to this increase were an increase of bond holdings of $6.8b ($3.7b transactions and $3.1b revaluations) and an increase in other accounts receivable of $5.7b.

Net equity in reserves of pension funds was $1,721.7b at the end of June quarter 2014, an increase of $16.8b from the previous quarter. This follows net transactions of $35.2b and valuation decreases of $18.4b.

Households' claims against the reserves of pension funds increased by $16.7b to $1,719.8b, following transactions of $35.1b and valuation decreases of $18.4b.


Life insurance corporations

At the end of June quarter 2014, the financial assets outstanding of life insurance corporations were $276.6b, an increase of $5.6b from the previous quarter. Net asset transactions were $1.6b, and valuation increases were $4.0b. During the quarter, pension fund claims against the reserves of life offices increased by $3.2b to $196.2b, following net transactions of -$0.1b and valuation increases of $3.3b.

Households' claims against the reserves of life offices increased by $2.4b to $56.2b, following valuation increases of $0.9b.


Non-life insurance corporations

During the quarter, net transactions in financial assets of non-life insurance corporations were $1.0b and revaluations were $1.0b. Financial assets outstanding at the end of quarter was $165.8b. During the quarter, net liability transactions of non-life insurance corporations were $5.6b and there were revaluations of -$0.6b.


Money market financial investment funds

Total assets of money market financial investment funds were $24.1b at the end of June quarter 2014, of which $14.3b were holdings of one name paper and $7.5b 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 –$1.8b, bonds of –$0.2b and bills of exchange of –$0.2b, which were offset by net transactions of one name paper worth $2.1b.

During the quarter total unlisted equities issued by money market financial investment funds remained flat at $24.0b.


Non-money market financial investment funds

Total assets outstanding of non–money market financial investment funds increased by $8.5b to $334.0b with net transactions of $1.9b and revaluation changes of $6.6b. At the end of June quarter 2014, total liabilities of non-money market financial investment funds had decreased by $2.2b to $410.7b, with net transactions of $4.9b and –$2.7b of revaluation changes.


Central borrowing authorities

Total liabilities of central borrowing authorities were $355.0b at the end of June quarter 2014, an increase of $8.4b from the previous quarter. Net asset transactions during the quarter were $6.5b, driven by an increase in loans and placements of $7.1b. This was partially offset by a decrease in bills of exchange of $2.0b.


Securitisers

At the end of June quarter 2014, securitisers had net liability transactions of $9.9b and liabilities outstanding of $376.6b. This was mostly composed of bonds worth $355.0b, with $8.4b net transactions during the quarter. Financial assets of securitisers were $375.3b at the end of the quarter, with net transactions of $13.2b. Loans and placements increased by $13.8b to $370.8b at the end of June, driven by a borrowing of households (which increased $14.2b) which was partially offset by other private non-financial corporations (which decreased by $0.3b).


Net flow of deposits to banks

Net transactions in transferable deposit liabilities of banks during the June quarter 2014 were $21.7b. The major deposit increases came from other private non-financial corporations, $8.9b and households of $6.3b and Rest of World, $4.6b. These were partially offset by deposit holdings from money market investment funds, $0.5b. Transactions in other deposit liabilities of banks during the quarter were $16.9b of which $15.1b was 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 June quarter 2014, pension funds held $931.9b in shares and other equity (56.8% of their financial assets), of which $650.4b were issued domestically and $281.5b were issued by non-resident units. They held $196.2b of the net equity in life office reserves (12.0% of their financial assets) and $160.5b in bonds (9.8% of their financial assets), of which $91.0b were issued by domestic institutions and $69.5b were bonds issued by non-residents.

At the end of the June quarter 2014, life insurance corporations held $225.6b in shares and other equity (81.6% of their financial assets), of which $185.7b are held in non-money market financial investment funds. They held $23.0b in bonds (8.3% of their financial assets), of which $19.5b were issued by domestic institutions and $3.5b 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 June quarter 2014, households had claims against the reserves of pension funds of $1,719.8b and life insurance corporations of $56.2b. The rest of world had net equity in reserves of pension funds of $1.8b and life insurance corporations of $0.8b. Pension funds had claims against the reserves of life insurance corporations of $196.2b. Life insurance corporations invested $165.9b through fund managers, and pension funds invested $757.1b 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 June quarter 2014, non-life insurance corporations held $51.5b in bonds (31.1% of their financial assets), of which $44.5b were issued by residents and $7.0b were issued by non-residents. They also held $54.9b in equities (33.1% of their total financial assets), $39.3b of which were issued by residents and $15.6b issued by non-residents. They also held $18.6b in deposits (11.2% of their total financial assets), and $11.9b in one name paper (7.2% 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 June quarter 2014, central borrowing authorities had net issuance of $2.5b in bonds and net maturities of $0.4b 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 June quarter 2014, securitisers had net issuance of $8.4b worth of bonds and net maturities of $0.1b worth of one name paper.

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



GENERAL GOVERNMENT

Summary

During June quarter 2014, consolidated general government transactions resulted in a net change in financial position of$9.4b.

The net change in financial position for National general government was $4.3b. During the quarter, transactions in total financial liabilities for national general government were $5.4b. The main contributors to this increase were one name paper issued in Australia which increased by $5.0b and unfunded superannuation claims which increased by $2.0b. During the quarter, transactions in total financial assets were $1.1b. The main contributors to this movement were equities which increased by $11.3b and one name paper which increased by $1.3b. These increases were offset by decreases in deposits which decreased by $7.7b and bonds which decreased by $2.2b. At the end of June quarter 2014, national general government had total financial assets outstanding of $348.2b and total financial liabilities outstanding of $668.1b.


The net change in financial position of State and local general government was -$5.1b. During the quarter, transactions in total financial assets were $0.7b. During the quarter, transactions in total financial liabilities for State and local general government were $5.8b. The main contributors to this increase were long term loans and placements which increased by $2.5b, other accounts payable which increased by $1.3b and unfunded superannuation claims which increased by $1.0b. At the end of June quarter 2014, State and local general government had total financial assets outstanding of $433.8b and total financial liabilities outstanding of $362.3b.


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 one name paper issued in Australia of $5.0b.

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 $3.9b.

During the quarter, transactions in total financial assets were $46.5b. The main contributors to this increase were net equity in reserves which increased by $36.7b and deposits which increased by $8.1b. During the quarter, transactions in total financial liabilities for households were $42.6b. The main contributors to this increase were long term loans and placements which increased by $36.5b and other accounts payable which increased by $6.6b.

At the end of the quarter, households had total financial assets outstanding of $3,886.8b. This was an increase of $33.7b from the previous quarter following net asset transactions of $46.5b and valuation decrease of $12.8b. Major asset holdings were net equity in reserves of $1,786.6b, deposits of $822.3b, equities of $622.3b and Unfunded superannuation claims of $341.4b.


Household net borrowing and debt to liquid asset ratio

Of the net $36.9b loans borrowed by Households during the June quarter 2014, $22.8b were borrowed from Banks and $14.2b were borrowed from Securitisers.

The graph below illustrates that the debt to liquid assets ratio at the end of June quarter 2014 was at 128.2%. The ratio was influenced by an increase of 2.5% in total outstanding household debt, and an increase in total liquid assets of 1.0%. The major contributors to the increase in liquid assets were deposits which increased 1.0% and equities which increased 1.2%.

HOUSEHOLD DEBT TO LIQUID ASSETS RATIO
Graph: HOUSEHOLD DEBT TO LIQUID ASSETS RATIO



Insurance and pension claims

During the June quarter 2014, households' net equity in reserves of pension funds increased by $16.7b, with $35.1b in transactions and a $18.4b valuation decrease, bringing household net equity in reserves of pension funds to $1,719.8b. Net equity in reserves of life insurance corporations increased by $2.4b with net transactions of $1.5b and a $0.9b valuation increase, bringing the household net equity in life insurance to $56.2b for the June quarter. Net equity in households' unfunded superannuation claims were $341.4b, with net transactions of $3.0b. Prepayments of premiums and claims against reserves in Non-life insurance corporations were $36.7b for the June quarter, with net transactions of $2.4b during the quarter.


REST OF THE WORLD

Summary

Non-residents had net transactions of $24.4b in Australian financial assets during the June quarter 2014 with a valuation increase of $20.1b, resulting in $2,609.7b worth of Australian financial assets held by non-residents. The main contributors to the increase in transactions were one name paper which increased by $12.7b, deposits which increased by $11.5b, equities which increased by $10.7b and loans and placements which increased by $5.3b. These increases were partially offset by a $27.0b decrease in derivatives.

Australian residents had net transactions of $13.4b in foreign financial liabilities during the June quarter 2014. The main contributors to the increase were increases in long term loan and placements of $17.9b, unlisted shares and equity of $8.9b and one name paper of $6.2b. These were offset by a decrease in derivatives of $21.4b. The total value of foreign assets held by Australian residents increased by $28.0b to $1,745.5b at the end of the quarter. This movement was driven by a $13.4b increase in transactions and $14.6b worth of valuation increase.


Net purchases of equities

Net transaction in Equities by non-residents was $10.7b during June quarter 2014, up $0.9b from $9.8b acquired during the March quarter 2014.

NET PURCHASES OF EQUITY
Graph: NET PURCHASES OF EQUITY



Net purchases of bonds

Net transaction in Australian bonds by non-residents was $9.0b during the June quarter 2014, a decrease of $13.1b from March quarter 2014 when $22.1b worth of bonds were required.

NET PURCHASES OF BONDS
Graph: NET PURCHASES OF BONDS