Reserve Bank of Australia Annual Report – 1985 Financial Statements Consolidated Operating Earnings (and Net Profits)

Note 2 Consolidated Operating Earnings (and Net Profits)

Consolidated net profits in 1984/85 were $1,671.2 million, some $642.1 million higher than in 1983/84. Details are shown below and include amounts written off Bank premises and provided for contingencies approved by the Treasurer in terms of Section 78 of the Reserve Bank Act (Note 3, 5). Transfers to the Reserve Funds, which fall within the terms of Sections 30 and 63 of the Reserve Bank Act, are included in the appropriation statement.

749,242 Net earnings on overseas investments 831,546
497,053 Net earnings on Commonwealth Government securities 637,719
65,535 Interest on loans, advances, etc. 49,601
13,010 Reimbursement by Commonwealth for loan management and registry expenses 15,022
3,642 Rents received 3,908
3,322 Net gains from sales of foreign currency (Note 1) 771,282
7,682 Other income 11,279
1,339,486 Total Revenues 2,320,357
  Less: Expenses
144,284 Interest on deposit liabilities 155,774
98,143 Staff costs 101,189
2,858 Depreciation of durable assets (Note 6) 4,289
54,861 Other expenses 102,838
300,146 Total Expenses 364,090
1,039,340 Operating Earnings 1,956,267
2,988 Less: Amounts written off bank premises (Note 6) 5,749
7,205 Amounts provided for contingencies (Note 3, 5) 279,319
1,029,147 Net Profit 1,671,199

Included in other expenses is an amount of $65.0 million representing the Bank's contribution to maintaining the value of the IMF's holdings of Australian currency in terms of the SDR. In past years, any payment realised was charged to the Reserve for Contingencies and General Purposes.

There were few forward exchange contracts outstanding at 30 June 1985 and there would be a negligible impact on the accounts if they were delivered at exchange rates ruling at that date.

As few of the Bank's foreign assets are eligible investments for Note Issue Department in terms of Section 38 of the Reserve Bank Act, the share of the foreign currency revaluation reserve and the foreign related portion of the investment revaluation reserve previously allocated to Note Issue Department have been transferred to the Central Bank (Note 3). The change also affected the item ‘Funds held by the Bank’ in the accounts of Note Issue Department and the corresponding item in Central Bank accounts by the amounts identified in Note 3 – Foreign Currency. The effect of the change on income is that in 1984/85 some $40 million accrued to Central Bank which, otherwise, would have accrued to Note Issue Department.