Reserve Bank of Australia Annual Report – 1992 The Bank's Accounts

Commentary

The Bank's financial statements for 1991/92, together with explanatory notes, are set out in the following pages.

The only change in the Bank's accounting arrangements in these accounts is that, following the announcement of proposed changes in accounting standards, the Bank did not seek to add to the Provision for Building Repairs and Maintenance under section 78 of the Reserve Bank Act, which permits the Bank to provide for contingencies prior to determining the Bank's net profit. It is intended that this provision will be run down over the next year or so as costs of current refurbishment programs accrue. Future expenditures on repairs and maintenance will be capitalised.

Note 2 shows that the Bank's net operating earnings were $2,554 million in 1991/92, compared with $1,713 million in the previous year. The major factors contributing to the increase were net realised gains of $1,038 million from sales of securities and currencies (net gains of $472 million in 1990/91) and a reduction of $149 million (to $275 million) in interest payments on deposit liabilities; gains arose mainly from sales of securities during periods of declining interest rates.

In determining net profit, in terms of section 78 of the Reserve Bank Act, the Treasurer approved the Board's decision to write $6.5 million off Bank premises.

The Bank's net profit in terms of the Act for 1991/92 was $2,554 million ($1,588 million in 1990/91). The Treasurer determined that $200 million should be transferred to the Reserve Bank Reserve Fund. The remaining $2,354 million is payable to the Commonwealth; an interim payment ($400 million) was made in June 1992 and the remainder is paid in August.

The Bank's balance sheet rose by $2.7 billion to $31.7 billion between June 1991 and June 1992. Significant changes included:

♦ On the liabilities side, capital and reserves rose by $2.0 billion. Apart from the transfers mentioned above, $1.8 billion represented the net effects on revaluation reserves (see Note 3). Notes on issue rose by $0.4 billion (2.6%). At 30 June 1992 the Commonwealth's deposits with the Bank were $0.6 billion lower than a year earlier. Apart from this and a small increase in the level of banks' Non-callable deposits, deposits fell by $0.2 billion. The amount of profit payable to the Commonwealth at 30 June 1992 was $0.9 billion higher than a year earlier.

♦ Major changes in assets were in gold and foreign exchange (−$1.9 billion), Commonwealth Government securities (+$6.5 billion, including $0.3 billion in valuation changes) and clearing items (−$1.7 billion; see Notes 7, 8). The decrease in gold and foreign exchange reflected the net effect of transactions and valuation changes (see Note 3).