5232.0 - Australian National Accounts: Financial Accounts, Sep 2003
ARCHIVED ISSUE Released at 11:30 AM (CANBERRA TIME) 19/12/2003
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SEPTEMBER QUARTER 2003 KEY FIGURES
SYMBOLS AND OTHER USAGES
NOTES ON ESTIMATES
There were no impacts on data from major events and transactions. During the quarter there was an asset sale by a Queensland State and Local Non-financial Enterprise which has been treated as a sale of physical assets in all ABS economic accounts, not a sale of equity.
Revisions in this issue
The data incorporate the results of quality assurance work undertaken with providers and other revisions back to December 2001 quarter.
In consultation with the Australian Prudential Regulatory Authority(APRA) and the Australian Taxation Office (ATO), total assets and the asset profile of small and medium superannuation funds has been adjusted and revised back to December 2001 to reflect analysis of the annual regulatory returns to ATO and APRA. The data for ATO regulated funds and small and medium APRA funds in this publication are consistent with the revised data published by APRA in June 2003 reference quarter edition of Super Trends (see www.apra.gov.au/statistics).
For more information about the statistics in this publication and the availability of related unpublished statistics, contact:
Derick Cullen on ph. (02) 6252 6244, or email email@example.com
ANALYSIS AND COMMENTS : Sectoral Summary
INTERSECTORAL FINANCIAL FLOWS
Flows during September Quarter 2003
Significant flows during the September quarter 2003 were the net $15.1b borrowed by households from financial corporations, the net $7.9b invested in non-financial corporations by the rest of world and the $5.0b repaid by general government to financial corporations.
Claims at end of September Quarter 2003
At the end of September 2003, claims on non-financial corporations stood at $93.7b from households, $131.0b from general government, $255.7b from rest of world and $365.4b from financial corporations. Financial corporations financed claims on other sectors from net claims by rest of world, $190.9b, and by households, $374.9b.
ANALYSIS AND COMMENTS : Market Summary
FINANCIAL MARKET ANALYSIS
Deposit liabilities increased to $707.7b at 30 September 2003, following net transactions of $7.9b during the quarter, compared with transactions of $29.0b in the previous quarter. Transactions in bank deposits were $0.1b, down from the $24.7b recorded during June. Most sectors withdrew funds during the quarter except households who deposited $10.2b. Other depository corporations recorded $5.7b inflow of deposits during the quarter.
Short term security liabilities increased to $307.9b at 30 September 2003, with net issuance of $14.1b and valuation increases of $0.2b during the quarter. $12.9b in one name paper was issued on the Australian market, of which banks issued $10.7b. There were no net offshore issuance or redemptions for the quarter. There was a net increase of bills of exchange on issue of $1.2b for the quarter.
Total bond liabilities increased to $532.6b at 30 September 2003 following net issues of $11.4b during the quarter. Financial intermediaries n.e.c, mainly securitisation vehicles, issued $9.0b, of which $6.7b was issued in Australia. Banks issued a net $6.8b, the result of $7.3b issued offshore and $0.5b redeemed in Australia. National general government and the rest of the world redeemed $4.6b and $2.8b respectively.
The value of derivative contracts on issue at 30 September 2003 decreased by $8.5b to $144.5b. Components of the decrease were net settlements of $8.8b and valuation changes of $0.3b.
Loan liabilities rose to $1,458.5b at 30 September 2003 following net transactions of $37.2b during the quarter. Borrowing by households continued to be strong, raising $18.9b, while private non-financial corporations borrowed $13.6b during the quarter.
The listed share market increased by $42.2b to $746.6b at 30 September 2003, with net issues of $6.6b and valuation increases of $35.6b. Private non-financial corporations had net issues of $4.9b and financial intermediaries n.e.c had issues of $0.8b.
The value of the unlisted share market increased by $12.9b to $763.0b at 30 September 2003. There were net issues of $6.6b, with issues by financial intermediaries n.e.c of $3.9b, and Australian investment overseas of $2.0b. Valuation increases amounted to $6.3b.
At 30 September 2003 the reserves of life offices and pension funds were $542.1b following net transactions during the quarter of -$0.3b and valuation increases of $14.9b. General insurance prepayments and reserves were $58.4b.
Private non-financial corporations raised a net $18.2b (excluding derivatives and accounts payable) in the September quarter 2003. They increased loan liabilities by $8.5b and made a net issue of $5.3b in debt securities. New share issues raised a net $4.4b during the quarter. These transactions resulted in total borrowings outstanding of $403.6b and total equity on issue of $597.0b.
During the September quarter 2003 total liabilities of national public non-financial corporations increased by $3.6b to $88.9b. There was a net redemption of debt securities of $0.8b and accounts payable increased by $0.4b. Liabilities of state and local public non-financial corporations decreased by $3.0b to $136.8b.
PRIVATE NON-FINANCIAL CORPORATIONS DEBT TO EQUITY RATIO
From 30 September 2001 to 30 September 2003 equity on issue increased by $66.6b. The value of debt outstanding rose $11.1b from 30 September 2001. During the quarter, private non-financial corporation debt increased by $2.4b, while equities on issue increased by $39.3b. Over the September quarter 2003, the original debt to equity ratio fell and the adjusted ratio was almost constant. The adjusted ratio reflects the removal of price change from the original series.
During the September quarter 2003, financial corporations issued $30.4b liabilities on a consolidated basis. Net issuers of liabilities were: banks $13.8b, other depository corporations $1.6b, other insurance corporations $4.9b, central bank $6.1b and financial intermediaries n.e.c. $8.1b. Net redeemers were: life insurance corporations $2.1b, pension funds $0.6b and central borrowing authorities $2.3b.
During the quarter, banks increased their currency and deposits liabilities by $2.8b. They had net issuance in bonds of $7.3b, one name paper of $13.2b, and acceptance of bills of exchange of $2.0b. They decreased their loans and placements liabilities by $8.9b, and made net settlements of derivatives of $3.4b.
Banks had an increase of $21.5b in financial assets during the quarter. Banks loaned a net $22.8b, with notable increases in loans to households of $18.9b, and private non-financial corporations of $6.7b. They also increased their holdings of bills of exchange by $1.2b, equities by $2.0b and bonds by $1.3b. They reduced their holdings of one name paper by $0.9b, derivatives by $4.4b and other accounts receivable by $0.9b.
OTHER DEPOSITORY CORPORATIONS
The liabilities of other depository corporations increased by $1.6b during the September quarter 2003, with an increase in currency and deposit liabilities of $6.6b partially offset by a net redemption in debt securities of $4.2b. Financial assets decreased by $4.2b through decreases in currency and deposits of $4.9b, and holdings of bonds of $3.3b. These reductions were offset somewhat by an increase in holdings of one name paper of $3.5b.
LIFE INSURANCE CORPORATIONS
At 30 September 2003, the financial assets of life insurance corporations stood at $186.1b, an increase of $3.5b from the previous quarter with transactions of -$2.5b and valuation increases of $6.0b. During the quarter there were net sales of one name paper, $0.3b, bonds, $3.8b and repayment of loan assets, $1.0b. There were small net purchases of equity, $0.6b and bills of exchange, $1.4b. Pension fund claims against the reserves of life insurance corporation increased by $3.4b following withdrawals of $1.2b and valuation increases of $4.6b. Other claims against the reserves of life insurance offices increased by $0.9b following withdrawals of $0.5b and valuation increases of $1.4b.
Net equity in reserves of pension funds was $502.0b at the end of the September quarter 2003, an increase of $13.6b (2.8%), following net transactions of $0.2b and $13.4b valuation increases during the quarter. Transactions in financial assets were $-0.2b, due mainly to decreases in the net equity of pension funds in life insurance corporations of $1.2b and in currency and deposits of $0.8b. This was offset by increases in long term debt securities of $0.8b and equities of $0.8b.
OTHER INSURANCE CORPORATIONS
Liability transactions of other insurance corporations were $4.9b, of which prepayments of premiums and reserves contributed $4.5b. Financial assets of other insurance corporations increased by $4.0b through increases in other accounts receivable of $2.9b, and loans and placements of $1.0b.
CENTRAL BORROWING AUTHORITIES
Total liabilities of central borrowing authorities was $99.5b at the end of the September quarter 2003. The authorities had net issue in bonds of $1.4b and in one name paper of $2.2b. They decreased their loans and placements liabilities by $5.5b, and reduced their deposit assets by $4.2b.
FINANCIAL INTERMEDIARIES N.E.C.
Financial intermediaries n.e.c. increased their liabilities by $8.1b during the quarter, mainly through an increased issue of bonds ($3.5b) and unlisted shares and other equity ($2.2b). Financial assets increased by $15.4b, mainly through loans to households which increased by $9.0b and by increased holdings of bonds ($4.8b) and one name paper ($3.0b). This increase was offset somewhat by the sale of equity ($1.6b).
NET FLOW OF CURRENCY AND DEPOSITS TO BANKS
Net transactions in currency and deposit liabilities of banks during the September quarter 2003 were $2.8b. Sectors that significantly increased currency and deposit assets during the quarter included households $10.2b, and rest of world $1.3b. Other depository corporations reduced their bank deposits by $4.7b.
ASSET PORTFOLIO OF LIFE INSURANCE CORPORATIONS AND PENSION FUNDS AT END OF QUARTER
At the end of September quarter 2003 life insurance corporations held $109.7b in shares and other equity (59% of their financial assets), of which $85.3b was in resident companies and $24.4b was in non-resident companies; $36.2b in bonds (20% of their financial assets), of which $31.9b was in Australian bonds and $4.3b in non-resident bonds; and $18.8b in short term securities (10% of their financial assets).
At the end of September quarter 2003 pension funds held $231.9b in shares and other equity (48% of their financial assets), of which $166.1b was in resident companies and $65.8b was in non-resident companies. They held $124.5b of net equity in life office reserves (26% of their financial assets); and $41.5b in bonds (9% of their financial assets), of which $29.5b were Australian bonds and $12.1b were non-resident bonds.
FINANCIAL CLAIMS BETWEEN HOUSEHOLDS, LIFE INSURANCE COMPANIES, PENSION FUNDS AND INVESTMENT MANAGERS AT END OF QUARTER
At the end of September quarter 2003 households had claims against the reserves of life insurance corporations of $40.0b and pension funds of $502.0b.
Pension funds had claims against the reserves of life insurance corporations of $124.5b. Life insurance corporations invested $138.9b of their financial assets through investment managers and pension funds invested $191.8b through investment managers.
ASSET PORTFOLIO OF OTHER INSURANCE CORPORATIONS AT END OF QUARTER
The graph below shows that at the end of September quarter 2003 other insurance corporations held $28.5b in bonds (32% of total financial assets), of which $27.0b were issued domestically. Other insurance corporations also held $21.2b in shares and other equity (24% of total financial assets), of which $18.3b was in resident corporations and $2.9b in non-resident corporations.
CENTRAL BORROWING AUTHORITIES NET ISSUE OF DEBT SECURITIES
Central borrowing authorities had net issue of bonds of $1.4b and in one name paper of $2.2b in the September 2003 quarter.
FINANCIAL INTERMEDIARIES N.E.C. NET ISSUE OF DEBT SECURITIES
During the September quarter 2003 financial intermediaries n.e.c. made a net issuance of bonds of $3.5b and a net issuance of short term paper of $1.0b.
During the September quarter 2003, general government transactions resulted in a net increase in financial position of $0.1b; see table 33H. National general government decreased its liabilities by $6.4b in the September quarter 2003 and decreased its financial assets by $4.5b to record a net change in financial position of $1.9b. The decrease in assets was mostly due to a $3.3b fall in other accounts receivable. The decrease in liabilities was mainly due to a fall in bonds issued in Australia of $4.6b. At the end of September 2003, national general government had total liabilities of $173.8b and total financial assets of $92.7b.
Transactions in state and local general government financial assets were –$1.9b in the September quarter 2003, while transactions in total liabilities were zero resulting in a decrease in financial position of $1.9b. At the end of the quarter, state and local general government had total liabilities of $94.6b and total financial assets of $123.4b.
CHANGE IN FINANCIAL POSITION
NATIONAL GOVERNMENT NET ISSUE OF DEBT SECURITIES
The accompanying graph illustrates the national general government’s bond issuance, with a net
decrease of $4.6b in treasury bonds during the quarter.
Households borrowed a total of $26.8b during the quarter in the form of loans. Deposit assets increased by $12.3b, of which bank deposits accounted for $10.2b. Net withdrawals of life insurance and pension fund reserves were $0.3b while net contributions to unfunded superannuation schemes were $1.3b.
Households purchased a net $1.6b in equities during the September quarter 2003, the major contributors being purchases of $2.5b of private non-financial corporation shares and $0.8b in life insurance shares. These were offset by the $0.9b sale of bank shares and the $0.7b sale of financial intermediaries n.e.c shares.
At the close of the quarter, households' stock of financial assets was $1,340.1b. This was up $37.8b from the previous quarter, following net transactions of $16.2b and valuation increases of $21.6b. Major asset holdings were net equity in reserves of life insurance corporations and pension funds, $542.1b, currency and deposits, $338.8b, equities, $234.2b, and unfunded superannuation claims, $136.6b.
HOUSEHOLD NET BORROWING AND DEBT TO LIQUID ASSET RATIO
Households borrowed a net $26.8b during the quarter in the form of loans, of which bank loans accounted for $18.9.b, mainly for the purpose of housing. Of the bank housing loans, $8.1b was borrowed for owner occupied housing and $8.0b for investment housing. This borrowing raised household bank loan liabilities to $509.7b and total household liabilities to $716.8b at the end of the quarter.
The graph below illustrates that the debt to liquid asset ratio at 30 September 2003 was at 119%, virtually unchanged from the revised June quarter ratio. During the September quarter the ratio was influenced by the overall increase in household borrowing for the quarter, up 4% and a 4% increase in liquid assets, of which the major contributors were deposits and equities.
INSURANCE AND PENSION CLAIMS
During the September quarter 2003 households' net equity in reserves of pension funds increased $13.6b, made up of $0.2b net contributions and $13.4b valuation increases, bringing household net equity in pension funds to $502.0b.
Net equity in reserves of life insurance corporations increased by $0.9b, made up of $0.5b net withdrawals and $1.4b valuation increases, bringing the household net equity in life insurance to $40.0b.
Households' unfunded superannuation claims increased by $1.3b during the quarter. Prepayments of premiums and claims against reserves in general insurance corporations increased by $2.5b.
REST OF THE WORLD
Non-residents invested a net $17.0b in Australian financial assets during the September quarter 2003. The largest net increases were in purchases of bonds, $14.9b (of which $7.4b was issued by banks), equities, $7.4b (of which, $5.9b was issued by private non-financial corporations), holdings of currency and deposits, $2.1b and purchases of one name paper, $1.7b. These were offset by residents repaying loans by $6.7b during the quarter. Overall, the value of Australian financial assets held by non-residents at the end of the quarter was up $24.0b from the June quarter, after taking into account $7.0b valuation increases.
Australian residents purchased foreign financial assets worth $4.9b during the September quarter 2003. The largest net increases by residents were in holdings of loans and placements, $6.5b and purchases of equity, $2.0b. These were offset by residents reducing their holdings of bonds, $2.8b, derivative contracts, $2.4 and one name paper, $1.0b. Overall, the total value of foreign assets held by Australian residents increased to $497.5b at the end of the quarter.
NET PURCHASES OF EQUITIES
The accompanying graph shows that during the September quarter 2003 non-residents purchased a net $7.4b in equities, a decrease of $3.0b compared with the June quarter 2003.
NET PURCHASES OF BONDS
The accompanying graph shows that non-residents purchased $14.9b of Australian bonds during the September quarter 2003, a decrease of $4.7b compared with the June quarter 2003.
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