APRA released their quarterly ADI performance statistics to end March 2015 today. Over the year ending 31 March 2015, ADIs recorded net profit after tax of $35.2 billion. This is an increase of $3.0 billion (9.4 per cent) on the year ending 31 March 2014.
The most telling data relates to the relationship between loans and capital. We look at the big four, who dominate the market. Home loans continue to grow as a proportion of total assets. The major banks have $1.42 trillion of housing, out of total assets of $2.27 trillion – 62.4% of all loans are housing related. Now, because of the generous “risk weighted” calculation, whilst the tier 1 capital ratio has moved higher for the 4 big banks, to 10.8%, if you look at shareholder funds (not risk weight adjusted) we see that the ratio of shareholder funds to total loans is lower now than its been for some time, and is continuing to fall. So the banks are using less of their own funds to grow their balance sheet and hold less in reserve for a rainy day. This is why there is a discussion about the right increases in capital weightings.
More generally, at 31 March 2015, the total assets of ADIs were $4.5 trillion, an increase of $519.9 billion (13.1 per cent) over the year. The total capital base of ADIs was $228.1 billion at 31 March 2015 and risk-weighted assets were $1.8 trillion at that date. The capital adequacy ratio for all ADIs was 12.7 per cent.
- major banks had total assets of $3.50 trillion as at 31 March 2015, 78.0 per cent of the industry total;
- other domestic banks had total assets of $397.7 billion, 8.9 per cent of the industry total;
- foreign subsidiary banks had total assets of $115.1 billion, 2.6 per cent of the industry total; and
- foreign branch banks had total assets of $404.1 billion, 9.0 per cent of the industry total.
The remainder of the industry total assets were held by building societies, credit unions and other ADIs, with $68.0 billion, 1.5 per cent of the industry total.
For all ADIs*, as at 31 March 2015:
- Gross loans and advances were $2.80 trillion. This is an increase of $71.6 billion (2.6 per cent) on 31 December 2014 and an increase of $227.2 billion (8.8 per cent) on 31 March 2014.
- Total liabilities were $4.22 trillion. This is an increase of $137.8 billion (3.4 per cent) on 31 December 2014 and an increase $504.3 billion (13.6 per cent) on 31 March 2014.
- Total deposits were $2.46 trillion. This is an increase of $50.9 billion (2.1 per cent) on 31 December 2014 and an increase $196.1 billion (8.7 per cent) on 31 March 2014.
- The net loans to deposits ratio was 112.6 per cent for the year ending 31 March 2015, an increase from 111.7 per cent for the year ending 31 March 2014.
Capital adequacy
The Common Equity Tier 1 capital ratio for all ADIs (excluding foreign branch banks and ‘other ADIs’) was 9.2 per cent as at 31 March 2015. This is an increase on 31 December 2014 (9.1 per cent) and 31 March 2014 (9.1 per cent).
The Common Equity Tier 1 capital ratio as at 31 March 2015 for each segment was:
- 8.8 per cent for major banks (an increase from 8.7 per cent at 31 December 2014);
- 9.6 per cent for other domestic banks (an increase from 9.3 per cent);
- 15.1 per cent for foreign subsidiary banks (unchanged 31 December 2014);
- 16.9 per cent for building societies (a decrease from 17.1 per cent); and
- 15.7 per cent for credit unions (unchanged 31 December 2014).
The Tier 1 capital ratio for all ADIs (excluding foreign branch banks and ‘other ADIs’) was 11.0 per cent as at 31 March 2015. This is an increase on 31 December 2014 (10.8 per cent) and 31 March 2014 (10.8 per cent). The Tier 1 capital ratio as at 31 March 2015 for each segment was:
- 10.8 per cent for major banks (an increase from 10.6 per cent at 31 December 2014);
- 10.9 per cent for other domestic banks (an increase from 10.6 per cent);
- 15.1 per cent for foreign subsidiary banks (a decrease from 15.1 per cent);
- 16.9 per cent for building societies (a decrease from 17.1 per cent); and
- 15.9 per cent for credit unions (an increase from 15.8 per cent).
Impaired assets and past due items were $27.8 billion, a decrease of $5.9 billion (17.5 per cent) over the year. Total provisions were $14.4 billion, a decrease of $5.8 billion (28.9 per cent) over the year.
Impaired facilities were $15.2 billion as at 31 March 2015. This is a decrease of $0.7 billion (4.2 per cent) on 31 December 2014 and a decrease of $6.4 billion (29.7 per cent) on 31 March 2014. Impaired facilities as a proportion of total loans and advances was 0.5 per cent as at 31 March 2015. This is a decrease from 31 December 2014 (0.6 per cent) and a decrease from 31 March 2014 (0.8 per cent).
Past due items were $12.5 billion as at 31 March 2015. This is an increase of $1.1 billion (9.6 per cent) on 31 December 2014 and an increase of $534 million (4.4 per cent) on 31 March 2014. Total provisions held were $14.4 billion as at 31 March 2015. This is a decrease of $0.6 billion (4.0 per cent) on 31 December 2014 and a decrease of $5.8 billion (28.9 per cent) on 31 March 2014.
