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RESERVE BANK OF AUSTRALIA

Reserve Bank of Australia Annual Report – 2008

Note 2 NET PROFITS

  Note   2008
$M		   2007
$M
Interest revenue          
Overseas investments 1(b), 4   2,042   3,276
Australian dollar securities 1(b), 4   3,092   2,056
Overnight settlements 4   61   56
Gold loans 1(c), 4   8   11
Loans, advances and other 4   1   1
      5,204   5,400
Net gains/(losses) on securities and foreign exchange          
Overseas investments 1(b)   506   (80)
Australian dollar securities 1(b)   (34)   (117)
Foreign currency 1(b)   (1,137)   (2,577)
      (665)   (2,774)
Dividend revenue          
Earnings on shares in Bank for International Settlements 1(b)   4   4
Fees and commissions          
Banking services fees received     18   17
Other revenue          
Reimbursement by Australian Government for
loan management and registry expenses		     -   1
Rental of Bank premises     8   7
Sales of note and security products     41   31
Superannuation revenue 1(h), 14   8   -
Other     25   24
      82   63
Total     4,643   2,710
Less:          
Interest expense          
Deposit liabilities 1(b), 4   2,342   3,150
Currency note holdings of banks 1(b), 4   199   179
Repurchase agreements 1(b), 4   399   528
      2,940   3,857
General administrative expenses          
Staff costs     141   118
Superannuation costs 1(h), 14   -   15
Special redundancy/retirement payments     -   1
Depreciation of property 1(d), 8   9   6
Depreciation of plant and equipment 1(d), 8   13   10
Premises and equipment 1(d)   34   31
Materials used in note and security products     21   22
Travel     3   3
Consultants’ fees, legal fees and payments to contractors     2   2
Other     8   9
      231   217
Other expenses          
Agency business reimbursement     2   3
Subsidiary income tax     3   2
Cash distribution expenses     5   6
Other     32   18
      42   29
Total     3,213   4,103
Net Profit     1,430   (1,393)

Staff costs in 2007/08 includes an expense of $12.8 million associated with the increase in the balance of the Provision for post-employment benefits (in 2006/07 there was a credit of $1.3 million) (refer Note 10). Post-employment health care costs of $13.5 million are included in Staff Costs ($1.4 million in 2006/07).

The RBA’s aggregate research and development expenditure recognised as an expense in 2007/08 was $0.6 million ($0.7 million in 2006/07); this is included in Other Expenses.