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Assets
Unlike traditional “stock based” businesses, bank assets consist of financial assets which include cash and liquid assets, trading securities, investment securities, acceptances of customers and, by far the largest category, gross loans and advances.
Note that assets are one side of the balance sheet of banks, the other is liabilities. Readers should refer to the section on Liabilities for more information.
Banks’ assets - total
At the end of June 2010, total assets of Australian banks were valued at $2.6 trillion, of which $2.4 trillion were resident assets (i.e. assets on the books of banks with any individual, business or organization domiciled in Australia), $139 billion were non-resident assets (i.e. assets on the books of banks with any individual, business or organization domiciled overseas) and $72.6 billion was the amount due from overseas operations of banks.
Source: RBA
Banks’ asset growth and the global financial crisis
Over the 10 years prior to the start of the global financial crisis (August 1997 – August 2007), the average annual growth rate for banks’ assets was 12%.
The disruption to capital markets after August 2007 saw a significant shift in customer demand for lending and other services to banks, with consequent growth in banks’ assets. During the 12 months after August 2007, growth rates reached as high as 29% (over the 12 months to the end of February 2008).
Growth rates were below 20% briefly in August 2008 and September 2008, before rising to 27% in October 2008, a time when global financial markets were affected by the intervention to support US financial institutions Fannie Mae, Freddie Mac and AIG, and Lehman Brothers filing for bankruptcy.
From October 2009, growth rates fell sharply. Over the seven months to the end of April 2010, asset growth, on an annual basis, was negative. That is, the level of banks’ assets was falling. In fact, over the year to the end of April 2010, banks’ assets fell by $85 billion of which commercial/business loans caused 96% of this fall.
Bank assets by type
A breakdown of banks’ assets is provided in the chart below. Housing loans are, by far, the largest component of banks assets.
Banks’ resident assets
At the end of June 2010, total assets of Australian banks were valued at $2.6 trillion, of which $2.4 trillion (92%) were resident assets.
Bank lending accounts for 70% of banks’ resident assets. As of June 2010, housing loans were the largest single category of bank loan assets at $959 billion or 40% of total banks’ resident assets.
|
Resident assets |
Deposits, notes etc |
Bills receivable |
Housing loans |
Personal loans |
Bus/Comm loans |
Other assets |
Total |
|
$bn |
|
|
|
|
|
|
|
|
Jun-2000 |
$3.4 |
$65.0 |
$245.4 |
$49.2 |
$184.9 |
$146.4 |
$694.4 |
|
Jun-2005 |
$6.0 |
$61.9 |
$499.4 |
$79.7 |
$330.8 |
$286.7 |
$1,264.6 |
|
Jun-2007 |
$6.7 |
$81.1 |
$606.2 |
$108.1 |
$497.9 |
$429.8 |
$1,729.7 |
|
Jun-2009 |
$8.1 |
$49.3 |
$845.7 |
$98.6 |
$686.5 |
$683.1 |
$2,371.3 |
|
Jun-2010 |
$10.6 |
$36.5 |
$959.3 |
$106.4 |
$622.2 |
$665.1 |
$2,400.1 |
|
|
|
|
|
|
|
|
|
|
Distb'n |
|
|
|
|
|
|
|
|
Jun-2000 |
0.5% |
9.4% |
35.3% |
7.1% |
26.6% |
21.1% |
100.0% |
|
Jun-2005 |
0.5% |
4.9% |
39.5% |
6.3% |
26.2% |
22.7% |
100.0% |
|
Jun-2007 |
0.4% |
4.7% |
35.0% |
6.2% |
28.8% |
24.8% |
100.0% |
|
Jun-2009 |
0.3% |
2.1% |
35.7% |
4.2% |
28.9% |
28.8% |
100.0% |
|
Jun-2010 |
0.4% |
1.5% |
40.0% |
4.4% |
25.9% |
27.7% |
100.0% |
The level of banks’ resident assets has changed very little since October 2008 (almost two years). As mentioned above, falls in commercial/business loans and ‘other’ assets have significantly impacted on this.
Source: RBA
The following charts show the level and annual growth rate for the three largest components of banks’ resident assets, that is, housing loans, commercial loans and ‘other’.
Updated August 2010 |