Reserve Bank of Australia Annual Report – 1970 Financial Statements Notes on Financial Statements

Profit and Loss Appropriation Statement

Apart from some minor items, the Bank's total commitments as a result of the devaluation of sterling in 1967 have now been finalised and amounted to approximately $156 million; of this, about $136 million was charged against internal reserves. The Bank is continuing its policy of rebuilding these reserves as quickly as is practicable and this was again a major factor in determining the level of net profits.

The total net profits of the Bank in 1969/70 amounted to $47,073,065 ($31,076,381 in 1968/69) of which $41,568,007 was paid to the Commonwealth of Australia, $4,577,029 to the published reserves of the Bank and $928,029 to the Rural Credits Development Fund. The higher profits in 1969/70 reflected increases in the level of average funds held in all sections and higher earning rates over the year.

BALANCE SHEETS

Total assets and liabilities shown in the Reserve Bank Aggregate Balance Sheet at 30 June 1970 were $3,163 million, $408 million higher than at 30 June 1969. In part, this resulted from the acquisition of International Monetary Fund Special Drawing Rights which are reflected in the annual accounts this year for the first time. The Australian currency value of Special Drawing Rights held by the Bank (whether acquired by issue from the International Monetary Fund or taken for value from other participants in the scheme) is shown as a separate asset item in both the Aggregate and Central Banking Business Balance Sheets; on the liabilities side, a special reserve has been created to show the net Australian currency value of Special Drawing Rights received from or transferred to the Commonwealth. Such transfers relate to transactions in Special Drawing Rights between the International Monetary Fund and Australia, and may comprise allocations, cancellations, and receipt of interest or payment of charges and assessments which are settled with the International Monetary Fund in Special Drawing Rights.

Other significant changes in the main items in the Aggregate Balance Sheet are summarised below; some are referred to in more detail in earlier parts of this Report.

GOLD AND BALANCES HELD ABROAD rose by $117 million and OTHER OVERSEAS SECURITIES fell by $61 million while holdings of the new INTERNATIONAL MONETARY FUND SPECIAL DRAWING RIGHTS were $79 million. Collectively, these three items which comprise the major part of Australia's official reserve assets showed a rise of $135 million over the year, (see Balance of Payments section of Report).

AUSTRALIAN GOVERNMENT SECURITIES (INCLUDING TREASURY BILLS) rose by $337 million. Treasury bills fell $14 million, Treasury notes rose $175 million and other Australian Government securities increased by $176 million. Influences on the Bank's portfolio of these securities are mentioned in the Domestic Finance section of the Report.

LOANS, ADVANCES AND BILLS DISCOUNTED decreased by $97 million reflecting the reduction in Rural Credits Department advances (see page 32), partly offset by a higher net level of advances to other Reserve Bank customers.

BILLS RECEIVABLE AND REMITTANCES IN TRANSIT were $30 million higher than a year previously. The change was mainly in the amount due by other banks in settlement of clearing balances on 30 June.

The new liability item SPECIAL RESERVE— INTERNATIONAL MONETARY FUND SPECIAL DRAWING RIGHTS stood at $75 million.

AUSTRALIAN NOTES ON ISSUE rose $104 million in response to increased public demand during the year (see page 31).

DEPOSITS, BILLS PAYABLE AND ALL OTHER LIABILITIES rose by $224 million. Included in this heading are deposits with the Reserve Bank by trading and savings banks, Australian governments, overseas institutions, other customers including dealers in the short term money market, and provisions made by the Bank for contingencies.

Changes in deposits of trading banks, savings banks and overseas institutions are shown in the Central Banking Business Balance Sheet. STATUTORY RESERVE DEPOSIT ACCOUNTS OF TRADING BANKS increased by $109 million due to increases in the S.R.D. ratio and the continuing growth in deposits with trading banks (see page 25). Decreases were recorded in TERM LOAN FUND ACCOUNTS OF TRADING BANKS, $11 million, and FARM DEVELOPMENT LOAN FUND ACCOUNTS OF TRADING BANKS, $14 million. DEPOSITS OF SAVINGS BANKS with the Reserve Bank rose by $78 million (see page 19). DEPOSITS OF OVERSEAS INSTITUTIONS fell by $13 million reflecting mainly in the accounts of the International Monetary Fund as a result of Australian currency transactions between the Fund and other countries.

Other deposits, provisions for contingencies and miscellaneous liabilities in the various sections of the Bank increased by $75 million.

Interdepartmental accounts amounting to $595 million have been offset in the Aggregate Balance Sheet. These comprise mainly:

1. Deposits held with the Central Bank by the Note Issue Department which are included under BALANCES WITH CENTRAL BANK in the Note Issue Department Balance Sheet and OTHER LIABILITIES in the Central Banking Business Balance Sheet. The major component of these balances is a special interest bearing deposit which is maintained to alleviate investment management problems which arise because of the limitations on the types of assets the Note Issue Department can hold in terms of Section 38 of the Reserve Bank Act.
2. Advances to Rural Credits Department by the Central Bank. These advances are reflected 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.