Supporting information:

Non-bank lending institutions (NBLI) SSR survey

Since December 2004, the Bank has conducted a quarterly survey of non-bank financial institutions (NBLIs ) - financial institutions with total assets of $100m or more at the consolidated group level, whose principal business is credit provision and borrowing money from the public and/or other sources. Released one month after the reporting period, the survey summary tables include a stylised breakdown of total assets and liabilities, as well as a breakdown of funding (borrowing) and claims (lending) by "time to rate reset" and by sector.

While still releasing a total for the aggregate NBLI survey group (more than 50 respondents), from September 2007 it has been possible to provide the same breakdown of statistics for three key groups:

Savings institutions

NBLIs with a prospectus on issue, enabling them to take deposits from the public. They include registered building societies and credit unions.

Deposit-taking finance companies

NBLIs (excluding savings institutions) with a prospectus on issue, enabling them to fund from the public

Non-deposit-taking finance companies

NBLIs that do not issue a prospectus, funding from markets often termed 'wholesale'.

Definition of terms

The NBLI SSR distinguishes between household securitised assets, (shown in the 'Sectoral analysis' tab), and all other balance sheet assets recorded in the 'Liabilities and assets' tab, Part A. Under international financial reporting standards (IFRS), securitised assets form part of NBLI balance sheets. However, securitised household loans are not included in Part A assets in the NBLI SSR, nor is the counterpart funding included in Part A liabilities. To compile NBLI total balance sheet assets and liabilities from the NBLI SSR, counterpart funding (see 'Sectoral analysis' tab, Part D1) must be added to total liabilities (A6) and total assets (A15) in Part A (see below for more detail). Note that securitised business loans and their corresponding liabilities on the other hand are included in Part A.

Securitised household lending (consumer and residential mortgage receivables)

Includes both lending that is backed by securities and loans funded by 'warehouse' operations, awaiting securitisation. The total of securitised household lending for the aggregate NBLI SSR is shown in the sectoral analysis tab, split between housing and consumer loan categories. For the three subgroups of the NBLI SSR, it is shown as 'counterpart funding' in Part D1, and is included in D2.25 housing and D2.26 consumer lending ('Sectoral analysis' tab). Counterpart funding for household securitised lending is not included in total liabilities (A6), nor are the corresponding receivables included in total assets (A15). However, business receivables either warehoused or securitised are included in Parts D1 and D2. Assets (A15) and liabilities (A6) include warehoused and securitised business funding and claims.

Warehouse operations

Warehouse operations in this context means residential mortgage and/or consumer loans not funded by an NBLI's depositors, but by another funder (usually a bank). An NBLI originates these loans with the intention eventually to securitise them as asset-backed securities (ABS). While accumulating a sufficiently large pool of loans for an ABS issue, an NBLI will arrange for a wholesale funder to finance these loans.

Time to rate reset

In the Funding and Claims tabs, information on the time to run before interest rate repricing (reset) on deposits and debentures (funding), and loans and securities (claims) is shown by 'time to rate reset'. Time to rate reset refers to the period left to run before the funding or claims instrument may be repriced under the customer contract. Variable rate mortgages, for example, can have their interest rate changed by the lender at short notice, and are thus claims with less than 90 days but more than 2 to run. Fixed rate mortgages will appear with different terms to run to rate reset in C2 in the Claims tab. Funding instruments, especially those used for wholesale funding, may be repriced every 90 days, for example, but have a term to maturity that is longer.

NBLI SSR survey technical notes

The Bank surveys NBLIs with total assets of $100m or more at the consolidated group level. A consolidated group may include more than one subsidiary with a prospectus on issue.
Total assets for the purposes of inclusion in the NBLI survey include securitised loans administered and/or originated by the reporting entity. However, the securitised assets are not presented as part of 'balance sheet' totals in A6 and A15, but are shown separately in the NBLI SSR tab 'sectoral analysis' - see note above regarding securitisation.
The NBLI SSR does not include group investment funds, unit trusts and various fund managers, friendly societies and life insurance-related intermediaries. This class of NBLI is included in the Bank’s quarterly and annual managed funds survey. In time-series NBLI loan data in table C6 prior to December 2004, limited loan values are included from these institutional groups.
Respondent coverage. For statistical and confidentiality reasons, institutions included in the NBLI survey are not identified by the Bank. The asset size and 'consolidated group' criteria for collection should allow robust market share assessment.

Series breaks

Series breaks occur when NBLI data are affected by survey changes that are not 'organic' but arise from one period to another because of factors such as the introduction of a new NBLI now larger than $100m in total assets; the sale of assets; merger with another institution or a change in substance in business practice that interrupts a 'like for like' time series comparison (eg simultaneous repayment of loans to one funder, to be replaced by another in a change in business practice).

Series breaks for key balance sheet components for the three institutional groups are displayed in the panels below, together with a panel for breaks for the aggregate group.

Series breaks last updated: 31 January 2012

All non-bank lending institutions (NBLIs)
Series breaks	Loans				Less: Counter-part funding	Total Assets (A15)	Memo: House-hold Deposits
Break date	Table C5		Table C6
Break date	Agriculture	Business	Housing	Consumer
Dec.11			-1,082	-114	-170	-1,290	-1,177
Mar.11			-15			-15
Dec.10	-6		-117			-143	-123
Dec. 09		-175	-144		-144	-175
Sept. 09		-11		-9		-20
Jun. 09		+718				+1,158
Dec. 08	-400	-328	-1,631	-104	-301	-2,323	-1,859
Sept. 08			+9	-12		+66	-8
Jun. 08		+8	+41	+59		+134	+88
Mar. 08		-20		-20		-70	-50
Dec. 07	+5	+96	+87	+103		+305	+169
Sept. 07		-12	+106			-8
Jun. 07		+107		+6		+110
Mar. 07		+98				+102
Dec. 06	+2	+38	+82	+176		+332	+152
Sept. 06						-555
Jun. 06	+7	+41	+39			+93	+68
Mar. 06		+150	+195	+24	-120	+469	-255
Dec. 05	+156	+64		+232		+353	+355
Jun. 05		+68	+31		+14	+91	+66

Deposit-taking finance companies
Series breaks	Loans				Less: Counter-part funding	Total Assets (A15)	Memo: House-hold Deposits
Break date	Table C5		Table C6
Break date	Agriculture	Business	Housing	Consumer
Mar. 11	-116	-569		-470	-161	-1,090	-847
Dec. 09		-175	-144		-144	-175
Sept. 09		-11		-9		-20
Dec. 08		-8		-16		-38
Sept. 08				-104		-62	-28
Jun. 08		+8		+6		+19	-9
Mar. 08		-20		-20		-70	-50
Dec. 07			+19
Jun. 07		+107		+6		+110
Jun. 06	+7	+41				+48	+31
Mar. 06		+89	+195	-528	-120	-165	-255
Dec. 05	+49	+58		+232		+234	+355
Jun. 05		+68	+31		+14	+91	+66

Non-deposit-taking finance companies
Series breaks	Loans				Less: Counter-part funding	Total Assets (A15)	Memo: House-hold Deposits
Break date	Table C5		Table C6
Break date	Agriculture	Business	Housing	Consumer
Jun. 09		+718				+1,158
Dec. 08		-57				-61
Sept. 08				+104		+104
Dec. 07	+5	+96				+100
Sept. 07		-12	+106			-8
Mar. 07		+98				+102
Dec. 06				+94		+103
Sept. 06						-555
Mar. 06		+61		+552		+634

Savings institutions
Series breaks	Loans				Less: Counter-part funding	Total Assets (A15)	Memo: House-hold Deposits
Break date	Table C5		Table C6
Break date	Agriculture	Business	Housing	Consumer
Dec.11			-1,082	-114	-170	-1,290	-1,177
Mar.11	116	569	-15	470	161	1,075	847
Dec.10	-6		-117			-143	-123
Dec. 08	-400	-264	-1,631	-88	-301	-2,225	-1,859
Sept. 08			+9	+12		+24	+20
Jun. 08			+41	+54		+116	+97
Dec. 07			+68	+103		+205	+169
Dec. 06	+2	+38	+82	+82		+228	+152

Improvements to finance company statistics – June 2011

The Reserve Bank has released today improvements to its deposit-taking finance company statistics. While these improvements impact only slightly on financial sector aggregates, they do result in a number of revisions to our deposit-taking finance company aggregates. This note briefly explains the improvements and how to interpret them.

Background

Since December 2004 the Bank has surveyed quarterly all non-bank lending institutions (NBLIs) with total assets of $100m or more at the consolidated group level. As at 30 June 2011 there are 51 institutions included in the survey. The primary purpose of the NBLI survey is to measure the level of credit extended to households, businesses, and the agriculture sector. This data is used to compile the sector-credit aggregates published in tables C5 and C6.

There are three separate NBLI subgroups:

Savings institutions – These are registered building societies, credit unions, and the PSIS Limited. All take deposits from the public and issue a prospectus.

Non-deposit-taking finance companies - NBLIs that do not issue a prospectus or take deposits from the public. Funding for these institutions generally comes from 'wholesale' financial markets or from parent companies.

Deposit-taking finance companies (DTFC) - NBLIs (excluding savings institutions) that have a prospectus on issue that enables them to take deposits from the public. As at 30 June 2011, there are 24 institutions in this DTFC subgroup, of which 13 are currently in receivership (DTIR).

In addition to producing financial sector aggregates, the data collected in the NBLI survey is used to publish a balance sheet for each subgroup and the NBLI sector as a whole.

Treatment of DTFCs in receivership

The balance sheets of DTFCs that are in receivership are included in published statistics because the credit remains extended to borrowers, and funds remain due to depositors, until the company is wound-up. To date the practice has been to keep static these balance sheets, as the assets (mostly property development lending) are of uncertain value and the liabilities (mostly debentures held by households) are inaccessible.

We have reviewed this practice and today introduced a new method of estimating data for DTIRs that makes use of publicly-available reports from receivers. The new approach takes the asset recoveries and write-offs clearly identified by receivers, and subtracts them from the book value of the assets that had previously been reported by the DTIR while it was still in operation. The same approach is taken when distributions to preferential creditors and first ranking debenture or deposit holders are reported; the value of the liability reduces. Where receivers do not clearly indicate the extent or value of write-offs, asset valuation changes and distributions, the book value remains in place.

To date, reported recoveries and write-offs have been substantially larger than the distributions to creditors, therefore the value of Capital and reserves has fallen - to the extent that for many of the 13 DTIRs it is now a negative value.

From today the Bank will follow the practice described above to reflect as closely as possible the changing values for assets and liabilities of DTIRs included in the quarterly survey. In practice this will be limited by the frequency and availability of receivers’ reports.

Below is a summarised balance sheet of the DTFC group, as at 30 June 2011, showing separately the DTIRs from those companies that remain operational or are in moratorium.

The impact of revisions on previously published DTFC statistics

Compared to the original results published for March 2011

The revised total balance sheet for DTFC’s is $1,548m lower
Lending to the household sector remains broadly unchanged
Lending to the agriculture sector is $151m lower
Lending to the business sector is $888m lower
Lending to non-residents is $311m lower
Funding from government is $47m higher
Funding from households is $180m lower, representing the distributions made by receivers to debenture holders
Capital & reserves have been revised downward by $1,279m.

The impact of these revisions on the broad sector-credit aggregates in tables C5 and C6 is relatively minor. The annual growth rate in lending for Housing remains unchanged, while the revisions to the annual growth rate for Agriculture, Business, and Consumer credit all decline slightly (no more than 0.6 percentage points).

Most Crown Guarantee Scheme payouts were already incorporated in the DTFC results, and the $47m upward revision in funding from Government means all payouts from The Treasury to debenture holders are captured. Some receivers have already reported distributions back to The Treasury.

The charts below show the impact of these revisions on DTFC statistics and the financial sector as a whole.