SEPTEMBER KEY FIGURES
Credit market outstandings at end
Demand for credit during
Other changes during
Credit market outstandings at end
Jun Qtr 2004
Sep Qtr 2004
Sep Qtr 2004
Sep Qtr 2004
|State and local public|
|State and local|
Total demand for credit
Credit market outstandings
SEPTEMBER KEY POINTS
- Total demand for credit by the non-financial domestic sectors for the September quarter 2004 was $34.3b, a decrease of $10.8b on the previous quarter. Decreased borrowing by households (down $8.9b), repayments by national general government (up $5.0b) and decreased raisings by private non-financial corporations (down $1.0b) were the main contributors to the fall.
- Private non-financial corporations raised $13.9b, with share raisings of $4.3b (down $1.2b) and loans of $5.7b (down $3.9b).
- National public non-financial corporations raised $0.2b and state and local public non-financial corporations raised $1.0b during the quarter.
- National general government repaid $3.3b during the quarter by redeeming bonds. State and local general government raised $0.9b by loan issuance.
- Households raised $21.5b during the quarter, a decrease of $8.9b on the previous quarter, to bring their outstandings to $814.8b at the end of September 2004. Households borrowed $12.3b from banks (of which $5.5b was for owner occupied and $3.6b for investment housing), a decrease of $11.5b from the previous quarter. Borrowing from financial intermediaries n.e.c. was $8.6b during the quarter (mainly for housing), an increase of $4.6b from the previous quarter.
CHANGES TO THIS ISSUE
There are no changes in this issue.
There were no privatisations or other significant structural changes impacting the aggregates.
REVISIONS IN THIS ISSUE
The data incorporate the results of quality assurance work undertaken with providers and other revisions back to December quarter 2002. When the results of the June reference quarter 2004 survey were incorporated in the previous publication, survey response rates were lower then expected. June quarter 2004 survey responses which have been received, after the release of the June 2004 publication, contributed to revisions in this publication. In addition, revisions have been made to the loans and deposits markets due to the change in treatment of mortgage offset accounts by some providers (revised back to December 2002).
A review of the methods employed in compiling statistics for listed equity has been undertaken. This has led to the identification and correction of errors in the sector classification of the issuers of listed equity securities, as well as the removal of the duplication of some listed equity securities that were components of stapled securities. The analysis also identified the duplication of some new issues and buybacks of listed equities (revised back to December 2002).
There have been 16 quarters of revisions (September 2000) applied in the Australian National Accounts, as reflected in the sectoral capital accounts in Table 33 Flow of Funds Matrix. The major impact of the revisions has been on the net errors and omission series for the period September 2000 to September 2002 due to the financial account of the flow of funds matrix not incorporating any revised data back to September 2000.
For further information about these and related statistics, contact the National Information and Referral Service on 1300 135 070 or Derick Cullen on Canberra (02) 6252 6244.
ANALYSIS AND COMMENTS SECTORAL SUMMARY
INTERSECTORAL FINANCIAL FLOWS
During June Quarter 2004
Significant flows during the September quarter 2004 were the net $19.6 billion borrowed by financial corporations from rest of world and the net $13.6b borrowed by non-financial corporations from financial corporations. General government repaid a net $3.7b to financial corporations and households borrowed a net $3.6b from financial corporations.
INTERSECTORAL FINANCIAL CLAIMS
At end of September Quarter 2004
At the end of September quarter 2004, net claims on non-financial corporations stood at $447.2b from financial corporations, $289.1b from rest of world, $138.6b from general government and $109.5b from households.
Financial corporations financed claims on other sectors from net claims by households, $430.6b and by rest of world, $244.9b.
ANALYSIS AND COMMENTS MARKET SUMMARY
FINANCIAL MARKET ANALYSIS
Outstanding at end
Trans- actions during
Other changes during
Outstanding at end
Jun Qtr 2004
Sep Qtr 2004
Sep Qtr 2004
Sep Qtr 2004
|Selected Financial Instruments|
|Currency and deposits|
|Short term debt securities|
|Long term debt securities|
|Loans and placements|
|Reserves of life offices and pension funds|
|General insurance prepayments and reserves|
Deposit liabilities increased to $781.1b at the end of September 2004, following transactions of $9.5b during the quarter, compared with transactions of $22.9b in the previous quarter. Transactions in other depository corporations deposits were $7.9b, up $4.4b from the previous quarter. Transactions in bank deposits were -$0.8b, down from the $19.0b recorded during the June quarter.
Short term security liabilities increased to $357.0b at the end of September 2004. There were issues of $21.7b, comprised of $20.7b in one name paper and $1.0b in bills of exchange.
Total bond liabilities increased to $624.4b with issues of $20.4b during the quarter. Banks issued $13.1b, of which $10.3b was issued offshore. Financial intermediaries n.e.c, mainly securitisation vehicles, issued $6.1b, of which $6.3b was issued offshore and $0.2b was redeemed domestically. Issues in the Australian market by non-residents was $2.3b (down $0.9b), of which non-residents purchased $2.5b.
The value of derivative contracts on issue at the end of September 2004 decreased by $14.1b to $127.9b. Components of the decrease were net settlements of -$22.9b and valuation changes of $8.8b.
Loan liabilities rose to $1,669.4b at the end of September 2004 following transactions of $42.4b during the quarter. Borrowing by households continued to be strong, raising $20.8b, while pension funds borrowed $12.3b and financial intermediaries n.e.c borrowed $5.8b during the quarter. Non-residents repaid $2.1b.
The listed share market increased by $26.6b to $890.5b at the end of September 2004, with issues of $6.9b and valuation increases of $19.7b. Private non-financial corporations and banks had issues of $5.2b and $1.2b respectively.
The value of the unlisted share market decreased by $1.2b to $853.1b. There were issues of $4.5b and valuation decreases amounted to $5.7b.
At the end of September 2004 the reserves of life offices and pension funds were $647.2b following transactions during the quarter of $7.3b and valuation increases of $9.8b. General insurance prepayments and reserves were $60.6b.
Private non-financial corporations raised $13.9b (excluding derivatives and accounts payable) during the September quarter 2004. They borrowed $5.7b in loans and made issues of $3.8b in debt securities. New share issues raised $4.3b during the quarter. These transactions resulted in total borrowings outstanding of $442.0b and total equity on issue of $719.5b.
PRIVATE NON-FINANCIAL CORPORATIONS, NET ISSUE OF EQUITY AND BORROWINGS
During the September quarter 2004, total liabilities of national public non-financial corporations decreased by $5.2b following transactions of $0.1b and valuation decreases of $5.3b. The issue of debt securities was zero and accounts payable decreased by $0.1b. Liabilities of state and local public non-financial corporations increased by $1.0b to $146.0b.
Private non-financial corporations debt to equity ratio
From the end of September 2002 to the end of September 2004 the value of equity on issue increased by $189.9b. The value of debt outstanding rose $45.2b during the period. During the quarter, private non-financial corporation debt increased by $3.7b, while equities on issue increased by $27.6b. Over the September quarter 2004, the original debt to equity ratio fell from 0.78 to 0.75 and the adjusted ratio remained unchanged at 1.11. The adjusted ratio reflects the removal of price change from the original series.
DEBT TO EQUITY RATIO - JUNE 1995 BASE
During the September quarter 2004, financial corporations issued $34.5b liabilities on a consolidated basis. Issuers of liabilities were: banks $16.0b, financial intermediaries n.e.c $11b, other depository corporations $5b, other insurance corporations $3.4b, pension funds $2.8b, life insurance corporations $1.2b and the central bank $0.6b. Central borrowing authorities redeemed $1.6b of their liabilities.
During the quarter, transactions of banks' currency and deposits liabilities were -$3.2b. They had issuance in bonds of $12.2b, one name paper, $8.6b, bills of exchange, $3.3b and loans and placements, $1.1b. These were offset by net settlements of derivatives in a liability position of $8.2b.
Transactions of financial assets of banks were $18.1b during the quarter, banks loaned $17.6b, of which loans to households were $12.3b and private non-financial corporations were $4.6b. The transactions of their holdings of currency and deposits were $9.3b, other accounts receivable, $3.7b, bills of exchange, $1.6b and equities, $0.6b. These were offset by net settlements of derivatives in an asset position of $11.9b and bonds and one name paper redemptions of $2.6b and $0.2b respectively.
Other depository corporations
Liability transactions of other depository corporations were $5.0b during the September quarter 2004 driven mainly by transactions in currency and deposits of $7.9b and partially offset by net settlements of derivatives in a liability position of $4.7b. Financial asset transactions were $6.8b, with loans and placements of $3.4b, currency and deposits of $2.6b and holdings of bills of exchange of $2.2b, being the main contributors. This increase was offset somewhat by net settlements of derivatives in an asset position of $1.7b and net redemptions in bonds of $1.6b.
Life insurance corporations
At the end of September 2004, the financial assets of life insurance corporations stood at $192.5b, an increase of $1.6b from the previous quarter with transactions of $1.1b and valuation increases of $0.5b. During the quarter there were purchases of equity of $0.5b, bills of exchange of $0.2b and one name paper of $0.1b. There were redemptions of currency and deposits of $0.3b and bonds of $0.2b. Pension fund claims against the reserves of life offices increased by $0.6b following withdrawals of $2.5b and valuation increases of $3.1b. Households claims against the reserves of life offices increased by $4.8b following transactions of $3.8b and valuation increases of $1.0b.
Net equity in reserves of pension funds was $604.9b at the end of the September quarter 2004, an increase of $12.3b (2%), following transactions of $3.6b and $8.7b valuation increases during the quarter. Most asset classes experienced increases during the quarter, with transactions in equities of $3.9b, long term debt securities of $1.9b, currency and deposits of $0.9b, loans and placements of $0.5b and short term debt securities of $0.5b. During the quarter, pension funds withdrew their net equities in life office reserves by $2.5b and the Australian government paid $1.4b of claims against them by public sector employee superannuation funds.
Other insurance corporations
During the September quarter 2004, liability transactions of other insurance corporations were $3.4b, of which prepayments of premiums and reserves contributed $2.5b. Transactions in financial assets of other insurance corporations were $1.8b during the September quarter, of which transactions in equities were $1.6b, other accounts receivable, $0.6b and one name paper, $0.4b. These were partially offset by the $1.4b redemption of bonds.
Central borrowing authorities
Total liabilities of central borrowing authorities was $102.1b at the end of the September quarter 2004. During the quarter, the authorities had an issue in bonds of $0.1b and one name paper of $0.3b. These were more than offset by net settlements of derivatives in a liability position of $1.5b and loan repayments of $0.6b.
Financial intermediaries n.e.c.
Liability transactions of financial intermediaries n.e.c. were $11.0b during the quarter, mainly through the issue of bonds, $4.0b and loans and placements, $5.5b. During the quarter financial asset transactions were $11.7b, the main contributors being loans to households, $8.6b and purchases of bonds issued by private non-financial corporations, $2.9b.
Net flow of currency and deposits to banks
There was a withdrawal of $3.2b in currency and deposit liabilities of banks during the September quarter 2004. The transactions in currency and deposit assets of household were $6.8b, other depository corporations, $2.6b and pension funds, $0.5b. These were offset by rest of the world and central borrowing authorities reducing their bank deposits by $10.9b and $2.0b respectively.
CURRENCY AND DEPOSITS LIABILITIES, BANKS
Asset portfolio of life insurance corporations and pension funds at end of quarter
At the end of September quarter 2004 life insurance corporations held $112.3b in shares and other equity (58% of their financial assets), of which $91.9b was in resident companies and $20.4b was in non-resident companies; $41.9b in bonds (22% of their financial assets), of which $37.1b was in Australian bonds and $4.8b in non-resident bonds; and $19.0b in short term securities (10% of their financial assets).
Financial claims between households, life insurance companies, pension funds and investment managers at end of quarter
At the end of September quarter 2004 households had claims against the reserves of life insurance corporations of $42.2b and pension funds of $604.9b. Pension funds had claims against the reserves of life insurance corporations of $134.9b. Life insurance corporations and pension funds invested $138.3b and $247.5b of their financial assets through investment managers respectively.
Asset portfolio of other insurance corporations at end of quarter
The graph below shows that at the end of September quarter 2004 other insurance corporations held $25.4b in shares and other equity (28% of total financial assets), of which $21.4b was in resident corporations. Other insurance corporations held $25.0b in bonds (27% of total financial assets), of which $23.6b was issued by resident corporations and $1.4b by non-resident corporations.
Central borrowing authorities net issue of debt securities
Central borrowing authorities had issues of bonds of $0.1b and of one name paper of $0.3b in the September quarter 2004.
Financial intermediaries n.e.c. net issue of debt securities
During the September quarter 2004 financial intermediaries n.e.c. made an issuance of bonds of $4.0b and a redemption of short term paper of $0.4b.
At the end of September quarter 2004 pension funds held $293.1b in shares and other equity (50% of their financial assets), of which $216.3b was in resident companies and $76.8b was in non-resident companies. They held $134.9b of net equity in life office reserves (23% of their financial assets); and $58.1b in bonds (10% of their financial assets), of which $31.6b were Australian bonds and $26.5b were non-resident bonds.
During the September quarter 2004, consolidated general government transactions resulted in a net change in financial position of $2.8b (see table 33, September Quarter 2004). The liability transactions of national general government during the September quarter were -$6.9b. Main contributors were a redemption in bonds of $3.3b, a -$2.1b change in net balances for accounts payable and a $0.8b payment for unfunded superannuation claims. During the September quarter, asset transactions were -$1.0b. Main contributors were net settlements of derivatives in an asset position of $0.5b and the repayment of $0.4b by households of their outstanding loans. The net change in financial position for national general government during the September 2004 quarter was $5.8b. At the end of September 2004, national general government had total liabilities of $172.7b and total financial assets of $90.5b.
Transactions in state and local general government financial assets were -$1.0b in the September quarter 2004, while transactions in total liabilities were $2.0b, resulting in a change in financial position of -$3.0b. At the end of the quarter, state and local general government had total liabilities of $98.9b and total financial assets of $137.7b.
National government issue of debt securities
The accompanying graph illustrates the national general government’s bond issuance, there was a redemption of $3.3b in treasury bonds during the quarter.
Change in financial position
Households borrowed a total of $20.8b during the quarter in the form of loans. Transactions of deposit assets were $10.1b, of which bank deposits accounted for $6.8b. Contributions to life insurance and pension fund reserves were $7.3b while notional contributions to unfunded superannuation schemes were $1.6b.
Households purchased $1.0b in equities during the September quarter 2004, the major contributors being purchases of $0.9b of bank shares and $0.6b of private non-financial corporation shares. These were offset by the $0.7b sale of other insurance corporation shares and $0.2b sale of financial intermediaries n.e.c. shares.
At the close of the quarter, households' stock of financial assets was $1,515.4b. This was up $34.3b from the revised previous quarter number, following transactions of $17.9b and valuation increases of $16.4b. Major asset holdings were, net equity in reserves of life insurance corporations and pension funds of $647.2b, currency and deposits of $365.2b, equities of $272.8b, and unfunded superannuation claims of $144.0b.
Household net borrowing and debt to liquid asset ratio
Of the $20.8b borrowed by households, bank loans accounted for $12.3b. Of the bank loans, $5.5b was borrowed for owner occupied housing and $3.6b for investment housing. This borrowing raised household bank loan liabilities to $579.1b and total household liabilities to $818.1b at the end of the quarter.
Insurance and pension claims
During the September quarter 2004 households' net equity in reserves of pension funds increased $12.3b, made up of $3.6b contributions and $8.7b valuation increases, bringing household net equity in pension funds to $604.9b. Net equity in reserves of life insurance corporations increased by $4.8b, made up of $3.8b increase in transactions and $1.0b valuation increases, bringing the household net equity in life insurance to $42.2b. Transaction in households' unfunded superannuation claims were $1.6b during the quarter. Prepayments of premiums and claims against reserves in general insurance corporations increased by $1.4b.
The graph below illustrates that the debt to liquid assets ratio at the end of September 2004 was at 122.3%, an increase of 0.5 percentage points from the revised June quarter ratio. The ratio was influenced by an increase from the previous quarter of 3% in total outstanding household borrowings and 2% in total liquid assets held (of which the major contributors were deposits and equities).
REST OF THE WORLD
Non-residents invested $14.6b in Australian financial assets during the September quarter 2004. There were purchases of bonds, $21.1b (of which $10.7b was issued by banks and $8.7 by financial intermediaries n.e.c.), purchases of one name paper, $6.1b and issues of loans and placements, $2.6b. These were offset by non-residents reducing their holdings of currency and deposits, $11.0b and the $5.1b net settlement of derivatives in an asset position. Overall, the value of Australian financial assets held by non-residents at the end of the quarter was up $13.1b from the June quarter, after taking into account $1.5b valuation decreases.
Australian residents sold foreign financial assets worth $0.6b during the September quarter 2004. Residents repaid loans and placements of $2.1b and there was a net settlement of derivatives in a liability position of $6.4b. These were offset by residents purchasing, bonds issued overseas by $2.5b and equities, $2.2b. Overall, the total value of foreign assets held by Australian residents fell to $570.9b at the end of the quarter.
Net purchases of bonds
The accompanying graph shows that non-residents purchased $21.1b of Australian bonds during the September quarter 2004, a decrease of $7.5b compared with the June quarter 2004.
Net purchases of equities
The accompanying graph shows that during the September quarter 2004 non-residents purchased $0.7b in equities, a decrease of $3.2b compared with the June quarter 2004.