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RESERVE BANK OF AUSTRALIA

Financial Stability Review – September 2006

List of tables

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Chapters

Table 1: World GDP

Table 2: Household Assets

Table 3: House Prices

Table 4: Personal Credit

Table 5: Average Mortgage Repayments on New Owner-occupierMortgages

Table 6: Banks' Business Leding by Industry

Table 7: Commercial Property

Table 8: Banks' Half-year Profit Results

Table 9: Banks' Business Lending

Table 10: Australian-owned Banks' Foreign Exposures

Table 11: Traded Market Risk

Table 12: Banks' Foreign Liabilities

Table 13: Banks' Offshore Debt Securities

Table 14: Long-term Ratings of Australian Banks

Table 15: Assets under Management

Table 16: Scenario Profiles for Key Macroeconomic Variables

Boxes

Table A1: Change in Shareholders' Equity

Table A2: Change in Provisions

Table 1: World GDP(a)
Year-average percentage change
  2005 Consensus forecasts
(September 2006)
2006 2007
(a) Aggregates weighted by GDP at PPP exchange rates unless otherwise specified
(b) Weighted using market exchange rates
Sources: CEIC; Consensus Economics; IMF; RBA; Thomson Financial
United States 3.2 3.5 2.6
Euro area 1.5 2.5 1.8
Japan 2.6 2.8 2.2
China 10.2 10.4 9.1
Other East Asia(b) 4.8 5.1 4.7
Latin America 4.4 4.8 4.1
Emerging Europe 5.2 6.3 5.6
World 4.7 5.2 4.6
Table 2: Household Assets
March 2006
  Share of
total
Per cent
Year-ended
growth
Per cent
(a) Includes unincorporated enterprises
(b) Includes unfunded superannuation
Sources: ABS; RBA
Dwellings 56.8 5.5
Consumer durables 3.5 5.1
Financial assets(a) 39.6 18.8
Superannuation and life offices(b) 21.4 20.2
Shares and other equities 8.0 26.6
Currency and deposits 8.1 9.3
Other 2.2 17.9
Total 100.0 10.4
Table 3: House Prices
Year-ended percentage change, June 2006
  ABS APM REIA Residex
Sources: ABS; APM; RBA; REIA; Residex
Sydney −0.5 −0.8 −0.8 1.4
Melbourne 5.5 3.6 4.2 6.9
Brisbane 4.5 5.2 3.5 5.4
Adelaide 7.3 6.5 4.2 3.3
Perth 35.4 39.0 33.9 36.3
Canberra 6.7 3.6 7.8 5.0
Hobart 7.4 8.0 6.5 10.0
Darwin 18.7 21.8 25.1 11.7
Australia 6.4 6.3 5.3 9.2
Table 4: Personal Credit
Per cent, July 2006
Component Share of total Six-month-ended
annualised growth
January 2006 July 2006
Source: RBA
Fixed 52.4 7.4 10.3
Credit card 25.8 11.1 15.4
Non-credit card revolving 21.8 7.2 7.1
of which: secured by housing 14.8 7.7 4.4
Total 100.0 8.4 10.7
Table 5: Average Mortgage Repayments on New Owner-occupier Mortgages
September quarter Average loan
size(a)
$
Mortgage rate(b)
Per cent
Minimum
repayment
Per cent of average
household
disposable income(c)
(a) Excludes refinancing, except 1989.
(b) The banks’ average standard variable housing rate prior to 2000; thereafter, the actual interest rate paid (including discounts) on new loans. The 2006 observation is calculated assuming the average discount in December 2005. 
(c) Principal and interest repayments on a 25-year mortgage with monthly repayments using the mortgage rate and average loan size; average household income is before the deduction of interest payments and excludes unincorporated enterprises.
(d) Estimate for 2006 using June quarter average loan size; household income to June. 
Sources: ABS; RBA
1989 67,495 17 30.4
1995 97,997 10.5 23.7
2000 132,722 7.7 21.5
2005 222,455 6.8 26.8
2006(d) 230,562 7.2 27.7
Table 6: Banks’ Business Lending by Industry
June 2006
Industry Share of
total
Per cent
Year-ended
growth
Per cent
Source: APRA
Construction 4.8 9.6
Manufacturing 8.4 18.5
Mining 1.6 19.9
Wholesale trade, retail trade, transport and storage 14.6 16.9
Agriculture, fishing, etc 9.9 10.9
Finance and insurance 14.2 26
Other 46.4 17.4
Total 100.0 17.5
Table 7: Commercial Property
Year-ended percentage change
  Office Property Prices Industrial Property Prices
Year to
June 2006
Three years to
June 2005(b)
Year to
June 2006
Three years to
June 2005(b)
(a) Industrial capital values data are not available for Canberra
(b) Average annual percentage change
Source: Jones Lang LaSalle
Sydney 9.1 3.4 12 6.2
Melbourne 12.5 −1.2 9.3 5.4
Brisbane 27.1 4.6 10.6 13.4
Adelaide 13.1 8.7 5.6 10.0
Perth 35.9 5.7 16.6 6.9
Canberra(a) 5.7 5.5
Australia 13.7 2.9 11.6 6.6
Table 8: Banks’ Half-year Profit Results(a)
Five largest banks, consolidated
  2006
$b
Growth(b)
Per cent
Per cent of average assets(c) 
(a) The six months to March 2006 for ANZ Banking Group, National Australia Bank, St George Bank and Westpac Banking Corporation; and the six months to June 2006 for the Commonwealth Bank of Australia.
(b) Compared to the corresponding period in 2005. Some items are not directly comparable due to the introduction of IFRS.
(c) Annualised half-year results.
(d) Before outside equity interests.
Sources: Banks’ annual and interim reports
Income
Net interest income 14.6 2.0
Net income from wealth management 3.3 21.1 0.4
Other non-interest income 6.9 0.9
Expenses
Operating expenses 11.9 −2.1 1.6
Bad and doubtful debts 1.0 −4.8 0.1
Profit(d)
Net profit before tax 12.0 10.5 1.6
Net profit after tax 8.0 0.2 1.1
Table 9: Banks’ Business Lending
June 2006, by loan size
Loan size
$
Level
$b
Share of
total
Per cent
Year-ended
growth
Per cent
Source: APRA
< 100k 24.1 5.5 −1.3
100k – 500k 70.1 16.0 5.7
500k – 2m 76.5 17.4 13.2
> 2m 268.7 61.1 24.6
Table 10: Australian-owned Banks’ Foreign Exposures
June 2006, ultimate risk basis
  Total of which:
Level
$b
Share
Per cent
Cross-
border

$b
Local
$b
(a) Includes Hong Kong and Singapore
Source: APRA
New Zealand 172.8 42.3 4.2 168.6
United Kingdom 100.1 24.5 21.3 78.8
United States 45.4 11.1 24.1 21.3
Other developed countries 59.0 14.4 53.8 5.1
Developing countries 18.3 4.5 11.4 7.0
Offshore centres(a) 12.3 3.0 7.6 4.7
Other 0.4 0.1 0.3 0.1
Total 408.2 100.0 122.7 285.6
Memo: Per cent of total assets 28.3   8.5 19.8
Table 11: Traded Market Risk
Four largest banks, annual average value-at-risk, per cent of shareholders’ funds(a)
  2004 2005 2006(b)
(a) Value-at-risk is calculated using a 99 per cent
(b) Data for 2006 are for the latest half year and do not include National Australia Bank.
(c) Other market risks include commodity, equity, prepayment, volatility and credit-spread risk.
Sources: Banks’ annual and interim reports
Interest rate 0.02 0.02 0.01
Foreign exchange 0.01 0.01 0.01
Other(c) 0.02 0.01 0.03
Diversification benefit −0.01 −0.01 −0.01
Total 0.04 0.04 0.03
Table 12: Banks’ Foreign Liabilities
June 2006
  Level
$b
Share of total
Per cent
Source: APRA
Debt securities 272.5 68.9
Intra-group transfers 64.2 16.2
Deposits 49.2 12.5
Other 9.5 2.4
Total  395.5 100.0
Table 13: Banks’ Offshore Debt Securities
June 2006, per cent of total outstanding
Market of issue Currency Total
AUD USD EUR GBP Other
Source: APRA
United Kingdom 5.1 20.5 21.6 11.5 11.7 70.5
United States 0.0 10.4 0.5 0.0 0.0 10.9
Hong Kong 0.5 4.3 0.3 1.1 2.8 8.9
Japan 0.4 0.2 0.4 0.0 1.3 2.4
Other 1.3 2.1 0.8 0.5 2.7 7.3
Total 7.3 37.6 23.5 13.1 18.5 100.0
Table 14: Long-term Ratings of Australian Banks
As at 25 September 2006
  Standard & Poor’s Moody’s Fitch
Sources: Fitch; Moody’s; Standard & Poor’s
Adelaide Bank BBB+ Baa2
AMP Bank A− A3
ANZ Banking Group AA- Aa3 AA−
Arab Bank Australia _ Baa2 A−
Bank of Queensland  BBB+ Baa2 BBB
BankWest AA− A1
Bendigo Bank BBB+ BBB+
Commonwealth Bank of Australia AA− Aa3 AA
HSBC Bank Australia AA Aa3
ING Bank (Australia) AA Aa2
Macquarie Bank A A2 A+
National Australia Bank AA− Aa3 AA
St George Bank A+ A1 A+
Suncorp-Metway A A2 A
Westpac Banking Corporation AA− Aa3 AA−
Table 15: Assets under Management
June 2006, consolidated
  Level
$b
Share of total
Per cent
Year-ended growth
Per cent
Source: ABS
Superannuation funds 544.7 53.0 22.4
Life insurers 203.7 19.8 6.5
Other managed funds 279.1 27.2 19.7
Total 1,027.5 100.0 18.2
Table 16: Scenario Profiles for Key Macroeconomic Variables
  Actual
2005
Projections (year end)
2006 2007 2008
(a) Year-ended percentage change
(b) 2005 observation is as at end December 2005
(c) Office property only Source: RBA
Economic variables
Real GDP(a) 2.9 −1.0 2.2 4
Consumption(a) 2.5 −2.6 0.1 2.1
Exports(a) 2.1 7.1 5.1 3.5
Imports(a) 6.7 −15.3 −6.1 4.0
Consumer price index(a) 2.8 5.0 3.3 2.5
Unemployment rate (per cent)(b) 5.1 7.1 9.0 8.7
Asset prices and financial variables
House prices(a) 2.1 −30.0 0.0 2.5
Commercial property prices(a)(c) 11.8 −10.0 0.0 0.0
3-year swap rate (per cent)(b) 5.6 8.0 7.3 6.8
10-year swap rate (per cent)(b) 5.7 8.2 7.4 6.9
10-year government bond yield (per cent)(b) 5.2 6.3 5.8 5.6
Corporate bond spreads (basis points)(b) 65 165 115 65
Bank bond spreads (basis points)(b) 50 250 150 50
Nominal TWI(a) 0.5 −36.5 9.7 7.3
Share market(a) 17.6 −27.0 8.0 10
Table A1: Change in Shareholders’ Equity
Five largest banks, September 2005(a)
  AGAAP
$m
IFRS(b)
$m
Change
$m
(a) CBA data are as at June 2005
(b) IFRS figures are as at 1 October 2005 for ANZ, NAB, St George and WBC and as at 1 July 2005 for CBA
Sources: Banks’ annual and interim reports
Contributed equity 49,422 42,314 −7,108
Retained earnings 38,370 34,107 −4,263
Reserves 5,340 2,321 −3,019
Shareholders’ equity attributable
to members of the bank
93,132 78,742 −14,390
Minority and outside equity interests 9,241 1,836 −7,405
Total shareholders’ equity 102,373 80,578 −21,795
Table A2: Change in Provisions
Five largest banks, September 2005(a)
  AGAAP
$m
IFRS(b)
$m
Change
$m
(a) CBA data are as at June 2005
(b) IFRS estimates are as at 1 October 2005 for ANZ, NAB, St George and WBC and as at 1 July 2005 for CBA
Sources: Banks’ annual and interim reports
General/Collective provisions 7,370 5,863 −1,507
Specific/Individual provisions 1,056 977 −79