SEPTEMBER KEY FIGURES
Credit market outstandings at end
Demand for credit during
Other changes during
Credit market outstandings at end
Jun Qtr 2005
Sep Qtr 2005
Sep Qtr 2005
Sep Qtr 2005
Non-financial domestic sectors
|Non-financial corporations |
|National public |
|State and local public |
|General government |
|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 2005 was $55.3b, a turnaround from the $6.3b decrease in the previous quarter. Increased raisings by private non-financial corporations (up $33.8b) and borrowing by households (up $22.5b) were the main contributors to the rise.
- Private non-financial corporations raised a net $33.8b, with loans of $13.0b and share raisings of $9.6b.
- National public non-financial corporations raised $0.1b and state and local public non-financial corporations raised a net $0.4b during the quarter.
- National general government repaid a net $1.1b. State and local general government repaid a net $0.4b.
- Households raised a net $22.5b during the September quarter 2005, down from the $33.8b raised during the June quarter 2005. Households borrowed $16.2b from banks (of which $9.2b was for owner-occupied housing and $3.6b for investment housing) down from $23.1b in the previous quarter.
|ISSUE (QUARTER) ||Release Date|
|December 2005 ||31 March 2006|
|March 2006 ||29 June 2006|
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 financial asset and liability data incorporate the results of quality assurance work undertaken with providers, as well as other revisions back to December quarter 2003. In particular, revisions have been made to pension fund estimates. Evaluation of the impacts of the APRA quarterly survey of superannuation is continuing, see Managed Funds, Australia (cat.no. 5655.0) September 2005 Quarter. Further revisions to the estimates in this publication may be expected.
Analysis of the net errors and omissions series for general government sector indicates that the major contribution to differences between income and expenditure based estimates of net lending and financial asset and liability based estimates of net lending is different treatment of tax receivable and tax refunds payable in the data sources. The accruals method now used in the Financial Accounts is consistent with the method used in National Income and Expenditure.
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 7139.
ANALYSIS AND COMMENTS SECTORAL SUMMARY
INTERSECTORAL FINANCIAL FLOWS
During September Quarter 2005
Significant flows during the September quarter 2005 were the net $12.0b and $7.9b borrowed by non-financial corporations from financial corporations and rest of world, respectively, and a net $6.0b borrowed by households from financial corporations. Financial corporations borrowed a net $5.2b from rest of the world and received a net $4.0b from general government.
INTERSECTORAL FINANCIAL CLAIMS
At end of September Quarter 2005
At the end of September 2005, net claims on non-financial corporations stood at $547.8b from financial corporations, $308.2b from rest of world, $126.4b from general government and $161.7b from households. Financial corporations financed claims on other sectors from net claims of $552.5b by households and $212.2b by rest of world.
ANALYSIS AND COMMENTS MARKET SUMMARY
FINANCIAL MARKET ANALYSIS
Deposit liabilities decreased to $849.8b at the end of September 2005, following net settlements of $0.3b during the quarter, compared with transactions of $34.9b in the previous quarter. Banks accepted $11.7b (down $4.9b on that accepted last quarter), rest of world withdrew $12.7b (down $23.6b) and other depository corporations accepted $0.1b (down $7.9b).
Selected Financial Instruments
Outstanding at end
Trans- actions during
Other changes during
Outstanding at end
Jun Qtr 2005
Sep Qtr 2005
Sep Qtr 2005
Sep Qtr 2005
|Selected Financial Instruments |
|Currency and deposits |
|Short term debt securities |
|Long term debt securities |
|Loans and placements |
|Listed shares |
|Unlisted shares |
|Reserves of life offices and pension funds |
|General insurance prepayments and reserves |
Short term security liabilities increased to $365.7b at the end of September 2005. There were issues of $4.6b, comprised of $3.9b in bills of exchange and $1.4b in one name paper issued in Australia. Total bond liabilities increased to $728.3b at the end of September 2005, following issues of $16.7b during the quarter. Banks issued $7b, of which $2.1b was issued offshore and $4.9b was issued domestically. Financial intermediaries n.e.c. (mainly securitisation vehicles) redeemed $2.6b, of which $1.5b was issued domestically and $4.1b was redeemed offshore. Private non-financial corporations issued $8.5b while other depository corporations redeemed $1.6b.
The value of derivative contracts on issue at the end of September 2005 increased by $3.0b to $148.1b. Components of the increase were net settlements of $11.4b and valuation increases of $14.4b.
Loan liabilities rose to $1,969.2b at the end of September 2005 following transactions of $84.6b during the quarter. Borrowing by pension funds was $30.5b while households borrowed $22.2b and private non-financial corporation borrowed $13.9b.
The listed share market increased by $93.2b to $1,075.8b at the end of September 2005, with transactions of $10.4b and valuation increases of $82.8b. Private non-financial corporations had issues of $7.5b and Financial intermediaries n.e.c issued $2.1b. The value of the unlisted share market increased by $59.8b to $960b at the end of September 2005. Transactions were $14.9b and valuation increases were $44.9b. Financial intermediaries n.e.c had issues of $4.8b and rest of the world issued $7.3b.
At the end of September 2005, the reserves of life offices and pension funds were $830.6b following transactions during the quarter of $6.1b and valuation increases of $41.1b. General insurance prepayments and reserves were $63.8b.
Private non-financial corporations raised a net $33.8b (excluding derivatives and accounts payable) during the September quarter 2005. They borrowed $13.0b in loans and made a net issue of $11.2b in debt securities. Share issues rose a net $9.6b during the quarter. These transactions resulted in total borrowings outstanding of $525.9b and total equity on issue of $847.2b.
PRIVATE NON-FINANCIAL CORPORATIONS, NET ISSUE OF EQUITY AND BORROWINGS
During the September quarter 2005, total liabilities of national public non-financial corporations decreased by $12.2b following increases in transactions of $0.6b and valuation decreases of $12.8b. Liabilities of state and local public non-financial corporations decreased by $2.2b to $142.3b.
Private non-financial corporations debt to equity ratio
From the end of September 2003 to the end of September 2005 the value of equity on issue increased by $243.5b. The value of debt outstanding rose $112.7b during the period. During the quarter, private non-financial corporation debt increased by $35.1b, while equities on issue increased by $91.4b. Over the September quarter 2005, the original debt to equity ratio fell from 0.80 to 0.76 and the adjusted ratio rose from 1.36 to 1.39. The adjusted ratio reflects the removal of price change from the original series. The movement in the ratio continues to include some one-off effects of the corporate restructuring occuring in the June quarter (discussed in the June quarter 2005 publication).
DEBT TO EQUITY RATIO - JUNE 1995 BASE
During the September quarter 2005, financial corporations issued $32.4b liabilities on a consolidated basis. Issuers of liabilities were: banks, $26.1b; financial intermediaries n.e.c., $11.9b; other insurance corporations, $3.8b; and pension funds, $2.5b. Redeemers of liabilities were other depository corporations, $6.1b and central borrowing authorities, $0.6b.
During the quarter, transactions of banks’ currency and deposits liabilities were $11.7b. They had issuance in loans and placements of $2b, bonds $7.6b, acceptance of bills of exchange $4.1b and one name paper $2.2b. These were offset by net settlements of derivatives in a liabilities position of $3.9b.
Transactions of financial assets of banks were $28b during the quarter. Banks loaned a net $32.3b, of which loans to households were $16.2b and loans to private non-financial corporations were $8.2b. These loans were offset by repayments of $0.4b by financial intermediaries n.e.c. Transactions in bank holdings were: bills of exchange, $3.3b; one name paper, $0.5b; and equities $0.2b. These were offset by redemptions of bonds, $4.8b; net settlements of derivatives in an asset position of $6.7m, and net reductions of currency and deposits of $1.1b.
Other depository corporations
Funding of other depository corporations decreased by $6.1b during the September quarter 2005, driven mainly by a net liability position in derivatives of $2.6b, a net liability position in one name paper of $2.3b and a net liability position in bonds of $1.5b. This was partially offset by loans and placements being in a net settlements position of $0.5b. Net transactions in financial assets were $2.9b, with the main contributors being loans and placements with an increase of $3.9b and holdings of bills of exchange increasing by $2.5b. These increases were offset by net settlements of currency and deposits in a net liability position of $2.8b and net settlements derivatives being in a net liability position of $2.5b.
Life insurance corporations
At the end of September quarter 2005, the financial assets of life insurance corporations stood at $228.3b, an increase of $11.7b from the previous quarter. Net transactions were -$0.4b and valuation increases were $12.1b. During the quarter there were increases to equities sales of $1.6b, net purchases of bonds of $1.6b, bills of exchange of $0.3b, loans and placements of $0.2b and one name paper of $0.2b. There were decreases to currency and deposits of $0.6b and other accounts receivable of $0.4b. Pension fund claims against the reserves of life offices increased by $2.8b following net transactions of -$5.1b and valuation increases of $7.9b. Households claims against the reserves of life offices increased by $6.5b following net transactions of $3.9b and valuation increases of $2.6b.
Net equity in reserves of pension funds was $779.4b at the end of the September quarter 2005, an increase of $40.7b. This follows net transactions of $2.3b and $38.4b valuation increases during the quarter. Assets increased due to transactions in currency and deposits of $5.2b, long term debt securities of $2.9b, loans and placements of $2.3b and equities of $1.9b. These increases in pension fund assets were partially offset by reductions in net equities in life office reserves of $5.1b, other accounts receivable of $3.8b and holdings of short term debt securities of $2.2b.
Other insurance corporations
During the September quarter 2005, net liability transactions of other insurance corporations were $3.8b, of which the main contributors were prepayments of premiums and reserves of $2.6b and other accounts payable of $0.7b. Net transactions in financial assets of other insurance corporations were $4.2b during the September quarter, contributed mainly by increases in other accounts receivable of $1.5b and currency and deposits of $1.3b.
Central borrowing authorities
Total liabilities of central borrowing authorities was $110.2b at the end of the September quarter 2005. During the quarter, the authorities had a net increase in one name paper issued in Australia of $1.5b and a net increase in Bonds etc. issued offshore of $0.8b. This was offset by a net decrease in loans and placements of $1.0b.
Financial intermediaries n.e.c.
At the end of the September quarter 2005, net liabilities of financial intermediaries n.e.c. were $455.2b, with unlisted shares of $148.2b on issue. Net liability transactions of financial intermediaries n.e.c. were $11.9b during the quarter, with new borrowing of $7.1b and a net issue of unlisted shares and other equity of $4.9b. During the September quarter, transactions in financial assets were $14.6b, with net purchases of equities ($7.9b) and new loans and placements of $6.4b.
Net flow of currency and deposits to banks
Transactions in currency and deposit liabilities of banks during the September quarter 2005 were $11.7b. The transactions in currency and deposit assets of other insurance corporations were $1.1b, households, $8.1b, rest of the world, $2.2b, and private non-financial corporations $3.9b. These were offset by a reduction in bank deposits by other depository corporations $2.8b, life insurance corporations $0.6b and central borrowing authorities $0.5b.
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 2005, life insurance corporations held $136.4b in shares and other equity (60% of their financial assets), of which $115.8b was in resident companies and $20.6b was in non-resident companies; $52.3b in bonds (23% of their financial assets), of which $46.0b was in Australian bonds and $6.3b in non-resident bonds; and $18.7b in short term securities (8% of their financial assets).
Financial claims between households, life insurance companies, pension funds and investment managers at end of quarter
At the end of the September quarter 2005, households had claims against the reserves of life insurance corporations of $51.2b and pension funds of $779.4b. Pension funds had claims against the reserves of life insurance corporations of $157.0b. Life insurance corporations invested $141.6b of their financial assets through investment managers, and pension funds invested $347.4b through investment managers. Note that the pension fund investment through fund manager series has been revised upwards back to December 2003.
Financial asset portfolio of other insurance corporations at end of quarter
The graph below shows that at the end of the September quarter 2005, other insurance corporations held $31.2b in shares and other equity (30% of total financial assets), of which $25.5b was in resident corporations. Other insurance corporations also held $28.0b in bonds (27% of total financial assets), of which $26.4b was issued by resident corporations and $1.6b by non-resident corporations.
Central borrowing authorities net issue of debt securities
Central borrowing authorities had a net increase in one name paper of $1.5b and a net decrease in bonds of $0.2b in the September quarter 2005.
Financial intermediaries n.e.c. net issue of debt securities
During the September quarter 2005, financial intermediaries n.e.c. made a net redemption of bonds of $2.2b and a net redemption of short term paper of $0.4b.
At the end of the September quarter 2005, pension funds held $389.7b in shares and other equity (52% of their financial assets), of which $284.9b was in resident companies and $104.8b was in non-resident companies. They held $157.0b of net equity in life office reserves (21% of their financial assets); and $78.0b in bonds (10% of their financial assets), of which $37.3b were Australian bonds and $40.8b were non-resident bonds.
During the September quarter 2005, consolidated general government transactions resulted in a net change in financial position of $6.7b (see table 33, September quarter 2005).
The net change in financial position for national general government was $6.2b. The liability transactions of national general government during the September quarter were -$0.6b. Main contributors were a -$1.1b change in balances for bonds issued in Australia and a $0.9b rise in unfunded superannuation claims.
During the September quarter, asset transactions for national general government were $5.6b. Main contributors were a $7.2b increase in balances for accounts receivable, a decrease in currency and deposits of $0.8b, and a decrease of $0.5b in loans and placements. At the end of September 2005, national general government had total liabilities of $178.1b and total financial assets of $88.3b.
Transactions in state and local general government financial assets were $1.2b in the September quarter 2005, while transactions in total liabilities were $0.7b, resulting in a change in financial position of $0.5b. At the end of the quarter, state and local general government had total liabilities of $98.2b and total financial assets of $137.9b.
National government issue of debt securities
The accompanying graph illustrates the national general government’s bond issuance. The net issue of treasury bonds was -$1.2b during the September quarter 2005.
Change in financial position
Households change in financial position was -$6.2b during the quarter. Liability transactions, mainly through bank loans, were $26.6b. This was largely offset by an increase of $20.4b in assets, mainly in the form of bank deposits.
Households purchased a net $5.7b in equities during the September quarter 2005, the major contributors being the purchase of $4.1b of private non-financial corporation shares, $3.3b of financial intermediaries n.e.c shares and $0.8b of life insurance corporation shares. These were offset by a $1.4b sale of bank shares and a $0.8b sale of national public non-financial corporation shares.
At the close of the quarter, households' stock of financial assets was $1,807.8b. This was up $105.3b from the previous quarter number, following net transactions of $20.4b and valuation increases of $84.9b. Major asset holdings were net equity in reserves of life insurance corporations and pension funds of $830.6b, currency and deposits of $383.9b, equities of $346.4b, and unfunded superannuation claims of $148.8b.
Household net borrowing and debt to liquid asset ratio
Of the net $22.2b borrowed by households during the September quarter 2005, bank loans accounted for $16.2b. Of the bank loans, $9.2b was borrowed for owner occupied housing and $3.6b for investment housing. There was an increase of $4.6b in borrowing from financial intermediaries n.e.c.
Insurance and pension claims
During the September quarter 2005, households' net equity in reserves of pension funds increased $40.7b, made up of $2.3b transactions and $38.4b valuation increases, bringing household net equity in pension funds to $779.4b. Net equity in reserves of life insurance corporations increased $6.5b, made up of $3.9b transactions and $2.6b valuation changes, bringing the household net equity in life insurance to $51.2b. Net transaction in households' unfunded superannuation claims were $1.1b during the quarter. Prepayments of premiums and claims against reserves in general insurance corporations increased $1.4b.
The graph below illustrates that the debt to liquid assets ratio at the end of September 2005 was at 122.4%, a decrease of 4.0 percentage points from the revised June quarter ratio. The ratio was influenced by an overall increase from the previous quarter of 2.5 percentage points in total outstanding household borrowings and an increase in total liquid assets of 5.8 percentage points (of which the major contributors were deposits and equities).
REST OF THE WORLD
Non-residents invested a net $14.5b in Australian financial assets during the September quarter 2005.
The value of Australian financial assets held by non-residents at the end of the quarter was up $45.8b from the September quarter, including $23.4b valuation increases. There were increases in purchases of bonds of $11.9b (of which $7.4b was issued by private non-financial corporations), holdings of equity by $5.6b, loans of $5.1b and placements of currency and deposits of $2.3b. These were offset partially by net settlements of derivatives in an asset position of $2.5b, reduced holdings of one name paper by $1.6b, and the reduction in holding of bills of exchange of $0.7b.
Australian residents increased their holdings of foreign financial assets worth net $7.9b during the September quarter 2005. The total value of foreign assets held by Australian residents increased to $656.6b at the end of the quarter, after taking into account a valuation increase of $26.0b. Residents increased loans and placements of $8.4b with non-residents, purchases of equity of $7.3b and purchases of debt securities of $5.9b from non-residents, and accounts payable of $1.9b. These were partially offset by decreases in placements of currency and deposits of $12.7b with non-residents and derivatives in a net asset position of $2.9b.
Net purchases of bonds
The accompanying graph shows that non-residents purchased $11.9b of Australian bonds during the September quarter 2005, a decrease of $6.6b compared with the June quarter 2005 purchase.
Net purchases of equities
The accompanying graph shows that during the September quarter 2005 non-residents acquired a net $5.6b in equities, an increase of $0.6b compared with the June quarter 2005 when the impact of restructuring of a large corporate group is set aside. The restructuring was discussed in the June quarter 2005 publication.