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RESERVE BANK OF AUSTRALIA

Financial Stability Review – March 2008

List of tables

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Chapters

Table 1: Banks’ Annual Profit Results

Table 2: Banks’ On-balance Sheet Assets

Table 3: Australian-owned Banks’ Foreign Exposures

Table 4: Banks’ Liabilities

Table 5: Long-term Ratings of Australian Banks

Table 6: Financial Strength Ratings of Selected Large Insurers

Table 7: Institutions ’ Funds under Management

Table 8: Superannuation Funds’ Assets

Table 9: Public Unit Trusts’ Assets

Table 10: Household Assets

Table 11: Banks’ Business Lending

Boxes

Table B1: ABX.HE Fixed Premium Rates

Table D1: Volatility of Capital Returns on Household Assets

Table 1: Banks’ Annual Profit Results(a)
Consolidated, five largest banks
  2006
$b
2007
$b
Growth
Per cent
Per cent of
average assets
(a) Year to September for ANZ Banking Group, National Australia Bank, St George Bank and Westpac Banking Corporation; year to December for Commonwealth Bank of Australia
(b) Before outside equity interests
Sources: Banks’ annual and interim reports
Income
Net interest income 30 33 9.9 1.9
Net income from wealth management 6 7 17.6 0.4
Other non-interest income 14.7 15 1.5 0.9
Expenses
Operating expenses 24.2 25.2 4.2 1.4
Bad and doubtful debts 1.9 2.6 33.7 0.1
Profit(b)
Net profit before tax 24.6 27.2 10.5 1.6
Net profit after tax 17.2 19.1 11.5 1.1
Table 2: Banks’ On-balance Sheet Assets
Domestic books
  Level Change
January 2008
$b
July 2007
$b
July 2007 –
January 2008
$b
(a) Includes bill financing and some securities holdings
(b) Does not include loans that have been securitised
(c) Includes amounts due from overseas operations
Sources: APRA; RBA
Liquid assets and marketable securities 376.4 288.0 88.4
Of which:
Cash and deposits with other banks 77.9 76.6 1.3
Australian ADI securities 234.8 150.9 83.9
Loans and advances 1533.9 1360.8 173.0
Of which:      
Business credit(a) 599.3 515.3 84.0
Household credit(b) 779.8 717.4 62.3
Intra-group 140.0 115.2 24.8
Other domestic assets 125.9 120.5 5.4
Total domestic assets 2036.1 1769.2 266.8
Offshore assets(c) 159.7 149.0 10.7
Total assets 2195.8 1918.2 277.6
Table 3: Australian-owned Banks’ Foreign Exposures
December 2007, ultimate risk basis
  Level
$b
Share of total
Per cent
Six-month-ended annualised
percentage change
June 2007
Per cent
December 2007
Per cent
(a) Includes developing countries and offshore centres
Source: APRA
New Zealand 222.1 45.6 10.9 9.5
United Kingdom 118.0 24.2 18.7 2.6
United States 45.1 9.3 22.8 −12.8
Other developed countries 66.9 13.7 37.5 8.2
Other(a) 35.3 7.3 28.3 1.4
Total 487.5 100.0 18.4 4.7
Memo: Per cent of total assets 27.0      
Table 4: Banks’ Liabilities
Domestic books
  Level Change
January 2008
$b
July 2007
$b
July 2007 –
January 2008
$b
(a) Includes short-term paper issued to other banks, and ‘ other’ liabilities
Sources: APRA; RBA
Deposits 836.9 759.3 77.6
Of which:      
Household 335.9 307.5 28.4
Business 268.8 248.7 20.1
Intra-group 90.8 61.4 29.4
Domestic wholesale(a) 697.4 558.7 138.8
Total domestic liabilities 1534.4 1318 216.4
Offshore liabilities 536.9 485.8 51.1
Of which:      
Intra-group 92.2 67.4 24.8
Total liabilities 2071.3 1803.0 267.5
Table 5: Long-term Ratings of Australian Banks
As at 25 March 2008
  Current Last change
Direction
Date
Source: Standard & Poor’s
Adelaide Bank BBB+ October 2004
AMP Bank A− August 2004
ANZ Banking Group AA February 2007
Arab Bank Australia A− January 2007
Bank of Queensland BBB+ April 2005
BankWest AA− August 2006
Bendigo Bank BBB+ February 2005
Commonwealth Bank of Australia AA February 2007
Elders Rural Bank BBB August 2007
HSBC Bank Australia AA July 2006
ING Bank (Australia) AA August 2005
Macquarie Bank A November 1994
Members Equity Bank BBB August 2006
National Australia Bank AA February 2007
St George Bank A+ January 2006
Suncorp-Metway A+ March 2007
Westpac Banking Corporation AA February 2007
Table 6: Financial Strength Ratings of Selected Large Insurers
As at 25 March 2008
Source: Standard & Poor’s
Allianz Australia Insurance AA−
Insurance Australia Group AA
QBE Insurance Australia A+
Suncorp-Metway Insurance A+
Table 7: Institutions’ Funds under Management
Consolidated, December 2007
  Level
$b
Share of total
Per cent
Six‑month‑ended
annualised percentage change
June 2007
Per cent
December 2007
Per cent
(a) Includes superannuation funds held in the statutory funds of life insurers
(b) Cash management trusts, common funds and friendly societies
(c) Superannuation funds plus an estimate of the superannuation assets held in the statutory funds of life insurers
Sources: ABS; RBA
Superannuation funds 802.4 58.9 31.0 6.3
Life insurers(a) 220.8 16.2 17.0 −1.7
Public unit trusts 278.5 20.4 19.5 0.4
Other managed funds(b) 61.4 4.5 37.2 −3.2
Total 1363.1 100.0 26.3 3.3
Of which:        
All superannuation assets(c) 1001.2 73.5 28.2 4.8
Table 8: Superannuation Funds’ Assets
Unconsolidated, December 2007(a)
  Level
$b
Share of total
Per cent
Six-month-ended
annualised percentage change
June 2007
Per cent
December 2007
Per cent
(a) Not adjusted for cross‑investments with other managed fund sectors
Source: ABS
Cash and deposits 110.9 11.5 69.0 −1.5
Loans and placements 7.9 0.8 18.9 4.2
Short-term securities 37.2 3.8 21.4 3.5
Long-term securities 52.7 5.5 -0.6 6.8
Equities 339 35.1 32.5 6.5
Units in trusts 143.2 14.8 23.4 12.5
Other assets in Australia 60.2 6.2 51.3 −7.2
Assets overseas 215.8 22.3 23.8 18.8
Total 967.0 100.0 31.1 7.9
Table 9: Public Unit Trusts’ Assets
Unconsolidated, December 2007(a)
  Level
$b
Share of total
Per cent
Six-month-ended
annualised percentage change
June 2007
Per cent
December 2007
Per cent
(a) Not adjusted for cross‑investments with other managed fund sectors
Source: ABS
Listed property trusts 120.9 38.5 30.9 −2.5
Listed equity trusts 36.9 11.8 27.4 15.8
Unlisted equity trusts 122.4 39.0 14.5 −3.5
Other trusts 33.8 10.8 −6.1 5.3
Total 313.9 100.0 19.2 −0.2
Table 10: Household Assets
Per cent
  Share
of total
Year-ended
growth
September 2007 September 2007
(a) Includes assets of unincorporated enterprises
(b) Includes unfunded superannuation
Sources: ABS; RBA
Non-financial assets 60.2 10.2
Dwellings 56.1 10.5
Consumer durables 4.1 5.5
Financial assets(a) 39.8 17.1
Superannuation and life offices(b) 22.9 21.1
Equities and units in trusts 7.4 17.7
Currency and deposits 7.7 10.0
Other 1.8 1.4
Total 100.0 12.8
Table 11: Banks’ Business Lending
December 2007, by loan size
Loan size Level
$b
Share of total
Per cent
Year-ended growth
Per cent
Source: APRA
Less than $500,000 94.1 15.0 4.7
$500,000 to $2 million 95.1 15.1 14.0
Greater than $2 million 438.5 69.9 41.3
Table B1: ABX.HE Fixed Premium Rates
Annual, basis points
  Series
06–1 60–2 07–1 07–2
Source: Markit
ABX.HE.AAA 18 11 9 76
ABX.HE.AA 32 17 15 192
ABX.HE.A 54 44 64 369
ABX.HE.BBB 154 133 224 500
ABX.HE.BBB− 267 242 389 500
Table D1: Volatility of Capital Returns on Household Assets
Standard deviation of quarterly average capital returns, per cent (a)
Asset type 1988–1997 1998–2007 1998–2007
re-weighted(b)
(a) The actual periods covered are the September quarter 1988 to the December quarter 1997, and the March quarter 1998 to the September quarter 2007.
(b) Re-weighted with 1988-1997 period weights.
(c) Currency and deposits, unfunded superannuation, loans and ‘other’ financial assets.
Sources: ABS; RBA
Financial
Market-linked financial 3.3 3.4  
Of which:
Equities and units in trusts 7.2 7.2  
Superannuation and life offices 2.4 2.6  
Fixed income 3.0 2.0  
Non-market-linked financial(c) 0.7 0.6  
Total financial 1.9 2.3 1.8
Non-financial
Dwellings 1.9 1.6  
Consumer durables 0.7 0.7  
Total non-financial 1.7 1.4 1.4
Total assets 1.2 1.1 1.0