Reserve Bank of Australia Annual Report – 2014 Financial Statements Note 2 – Net Profits

Note 2014 $M 2013 $M
Interest revenue      
Foreign investments 1(b), 4 153 213
Australian dollar securities 1(b), 4 1,667 1,398
Overnight settlements 4 13 30
Cash collateral provided 4 1 –
Loans, advances and other 4 – 1
  1,834 1,642
Net gains/(losses) on securities and foreign exchange      
Foreign investments 1(b) 94 (70)
Australian dollar securities 1(b) (90) (244)
Foreign currency 1(b) 146 3,976
  150 3,662
Dividend revenue      
Investment in Bank for International Settlements 1(b) 3 5
Fees and commissions      
Banking services fee income   86 66
Commonwealth grant revenue 1(j) 8,800 –
Other income      
Rental of Bank premises   10 9
Sales of note and security products   78 79
Gain on sale of Securency   7 21
Other   23 29
  118 138
Total   10,991 5,513
Less:      
Interest expense      
Deposit liabilities 1(b), 4 1,010 614
Banknote holdings of banks 1(b), 4 72 89
Cash collateral received 4 2 2
Repurchase agreements 1(b), 4 2 3
  1,086 708
General administrative expenses      
Staff costs   189 153
Superannuation costs 1(i), 14 60 77
Special redundancy/retirement payments   1 6
Depreciation of property 1(d), 8 9 8
Depreciation of plant and equipment 1(d), 8 21 19
Amortisation of computer software 1(e), 7 3 3
Premises and equipment 1(d) 45 41
Materials used in note and security products   61 70
Travel   3 3
Consultants' fees, legal fees and payments to contractors   4 6
Other   9 7
  405 393
Other expenses
Banking service fee expenses   67 50
Subsidiary income tax   2 –
Banknote distribution expenses   4 5
Other   35 24
  108 79
Total   1,599 1,180
Net Profit   9,392 4,333

Staff costs in 2013/14 include an expense of $4.4 million associated with the increase in the balance of the provision for post-employment benefits, mostly from post-employment health insurance (in 2012/13 there was a credit of $20.6 million) (refer Note 10). This benefit ceased to be available for new staff appointed after 30 June 2013. The increase in this provision reflects a reduction in the discount rate, as measured by the yield on Commonwealth government bonds.

The RBA incurred aggregate research and development expenditure of $1.1 million in 2013/14 ($0.7 million in 2012/13); this is included in Other expenses.

Comparative figures for Banking service fee income and Other expenses have been restated. Banking service fees received were previously presented net of the associated expenses. However, as the RBA acts as principal in these transactions, revenue from banking service fees and the associated expenses are now shown in gross terms. This restatement has no effect on Net Profits.

Additional presentational amendments have also been made to improve readability. Amortisation of computer software is now separately disclosed and amounts relating to the reimbursement by the Australian Government for loan management and registry expenses have been included in ‘Other’ within reported Other income.