Reserve Bank of Australia Annual Report – 1968 Annual Accounts Aggregate Balance Sheet

As at 30 June 1968

During the year the Bank wrote down the Australian currency value of its net balances in sterling and New Zealand dollars by $98 million in line with the devaluation of those currencies. It also made disbursements of $48 million in respect of commitments under forward exchange contracts and other foreign exchange transactions, including settlements with agent banks for items outstanding and in transit at the date of the sterling devaluation. These amounts were charged against funds built up progressively by appropriations from past income and from other sources to provide for such contingencies. Of the total amount of $146 million, $10 million was charged against Reserve Bank Reserve Fund, $9.5 million against the Note Issue Department Special Reserve—Premium on Gold Sold, and the balance of about $126 million against the Bank's internal reserves.

Profit and Loss Appropriation Statement

Total net profits of the three sections of the Bank, after deducting amounts written off bank premises and amounts provided for contingencies, amounted to $28,964,218 in 1967/68, compared with $43,583,134 in 1966/67. From the net profits in 1967/68, $26,204,692 was paid to the Commonwealth of Australia, $2,024,263 to the published reserve funds of the Bank and $735,263 to the Rural Credits Development Fund.

Profits in 1967/68 from Central Banking Business and in the Note Issue Department, before deducting provisions for contingencies, were in total not greatly below the total in 1966/67. The much lower net profits disclosed in 1967/68 resulted mainly from the increased provisions which have been made for contingencies with a view to rebuilding the Bank's internal reserves following the heavy calls on them associated with the devaluation of sterling.

Balance Sheets

Changes in many of the major items in the Bank's aggregate balance sheet have been referred to in earlier parts of this Report. The most significant changes are summarised below.

GOLD, AND BALANCES HELD ABROAD fell by $127 million and OTHER OVERSEAS SECURITIES fell by $10 million. These comprise the major part of Australia's holdings of gold and foreign exchange and changes in this item are discussed in the Balance of Payments section of the Report. Of the total fall of $137 million, about $100 million resulted from the writing down of the Australian currency value of the Bank's sterling assets at the date of devaluation.

AUSTRALIAN GOVERNMENT SECURITIES (INCLUDING TREASURY BILLS) increased by $225 million; holdings of Treasury bills rose by $51 million and other Australian Government securities rose by $174 million. Factors affecting these items are discussed in the Financial Conditions section of the Report.

LOANS, ADVANCES AND BILLS DISCOUNTED decreased by $129 million. This mainly reflected a fall of $131 million in advances by Rural Credits Department (see page 35).

BANK PREMISES rose by $3 million, reflecting continuation of the Bank's building programme. A separate heading has now been raised for Bank premises in the Note Issue Department balance sheet and the value has also been included under this heading in the aggregate balance sheet; previously it was included with All Other Assets.

BILLS RECEIVABLE AND REMITTANCES IN TRANSIT were $21 million higher. The increase was mainly in respect of exchange clearances with other banks at 30 June.

Charges arising from the devaluation of sterling were responsible for the fall of $8 million in RESERVE FUNDS and for the elimination of SPECIAL RESERVE—PREMIUM ON GOLD SOLD.

AUSTRALIAN NOTES ON ISSUE rose by $68 million, reflecting increased public requirements during the year.

DEPOSITS, BILLS PAYABLE AND ALL OTHER LIABILITIES, which includes deposits of trading and savings banks, Australian Governments, overseas institutions, other customers, and provisions for contingencies, declined by $72 million.

Changes in deposits of trading banks, savings banks and overseas institutions are disclosed in the Central Banking Business balance sheet. STATUTORY RESERVE DEPOSIT ACCOUNTS OF TRADING BANKS fell by $17 million. The effect of the reduction in the S.R.D. ratio from 8.9 per cent to 8.0 per cent during 1967/68 was partly offset by a rise in the level of trading bank deposits (see page 20). TERM LOAN FUND ACCOUNTS OF TRADING BANKS and FARM DEVELOPMENT LOAN FUND ACCOUNTS OF TRADING BANKS increased by $11 million and by $13 million respectively (see page 19).

Inter-departmental accounts amounting to $244 million have been offset in the aggregate balance sheet. Marked changes were reflected in:

1. Note Issue Department funds held with Central Bank, which increased by $50 million; these funds are included in All Other Assets in the Note Issue Department balance sheet and in Other Liabilities in the Central Banking Business balance sheet. The increase is mainly due to changes in the form of Note Issue Department's investments following the devaluation of sterling. The greater part resulted from the opening of a special account to meet the liability remaining in Note Issue Department's accounts after its available reserves had been absorbed to write down the Australian currency value of its sterling assets; a substantial further amount represented funds held for subsequent disbursement.
2. Advances to Rural Credits Department by Central Bank, which fell by $134 million; these advances reflect in All Other Liabilities in the Rural Credits Department balance sheet and in Loans, Advances and Bills Discounted in the Central Banking Business balance sheet.