Reserve Bank of Australia Annual Report – 1986 The Bank's Accounts


Economic factors affecting the Bank's accounts in 1985/86 are discussed in earlier sections of the Report. The Bank's accounting practices are explained in the notes to the accounts; there were no significant changes in such practices during the year.

In 1985/86, the Bank's consolidated balance sheet expanded by $2.4 billion (11 per cent) to $24.0 billion. The rate of increase was much lower than the 28 per cent recorded in the previous year.

As in 1984/85, the growth in assets was virtually all in Commonwealth Government securities. Holdings rose from $6.5 billion to $9.5 billion; much of the increase was in Treasury notes. Other major assets declined, particularly foreign currency holdings and loans to customers. The Australian dollar value of the Bank's foreign currency holdings declined by $0.8 billion.

On the liabilities side, the significant movements were the increase in Australian notes on issue (8.3 per cent compared with 14 per cent in 1984/85) and SRD deposits (15 per cent). Asset revaluation reserves rose by $0.4 billion; substantial net increases from revaluing foreign currency were offset by transfers to profit in respect of gains actually realised on sale of currencies, while revaluation increments for other assets were relatively small.

The Bank's net operating earnings rose by $729 million to $2,685 million. Gains realised on the sale of foreign currencies amounted to $1,350 million ($771 million last year). Earnings on Commonwealth Government securities (at $1.1 billion) were almost $0.5 billion higher than last year, reflecting higher holdings and higher yields. Earnings on foreign investments declined 28 per cent (lower yields and smaller portfolio). Interest costs on deposits increased by 101 per cent. Staff costs rose by less than 7 per cent.

Further provisions (amounting to $187 million) were made to cover specific risks faced by the Bank, the major addition being to the provision to cover the impact on the Bank's balance sheet of increases in market yields. An amount of $15 million was added to the Reserve Bank Reserve Fund which now stands at $116 million. After these transactions net profits payable to the Commonwealth were $2,471 million ($1,595 million in the previous year). Of this amount Note Issue Department paid $925 million on 30 June 1986 and a further $25 million in August 1986. Net profits on Central Banking Business ($1,521 million) were also paid in August 1986.