Loans and placements

15.116    Loans are borrowings which are not evidenced by the issue of debt securities. They are not usually traded, and their value does not decline even in a period of rising interest rates. Examples are an overdraft from a bank; money lent by a building society with a mortgage over a property as collateral; and a financial lease agreement with a finance company. Repurchase agreements between deposit-taking institutions are treated as purchases and sales of debt securities, not collateralised loans. Undrawn lines of credit are not recognised as loans because the liabilities are contingent.

15.117    Placements are customers' account balances with entities not regarded as deposit-taking institutions. Examples are account balances of State and local public non-financial corporations with their central borrowing authorities; balances of public-sector pension funds with their State Treasuries; and 11am money placed with corporate treasuries.

15.118    The values of loans to be recorded in the balance sheets of both creditors and debtors are the amounts of the market value of the principal and interest outstanding. This amount includes any interest that has been earned but not been paid. It should also include any amount of indirectly measured service charge (the difference between bank interest and SNA interest) due on the loan that has accrued and not been paid. Accrued interest is shown under accounts receivable or payable. The value of a loan does not reflect the consequences of any interest payments due after the date of the balance sheet, even if these were specified in the original loan agreement. In practice, loans are valued at nominal value less specific loan loss provisions.

15.119    Loans may be divided, on a supplementary basis, between short- and long-term loans. Short-term loans comprise loans that have an original maturity of one year or less. Loans repayable on the demand of the creditor should be classified as short-term even when these loans are expected to be outstanding for more than one year. In the ASNA, they include credit cards and other forms of revolving credit, as well as some placements between state governments and their respective central borrowing authorities.

15.120    Long-term loans comprise loans that have an original maturity of more than one year. This category includes residential mortgages.

15.121    As recommended by the 2008 SNA, the ASNA splits the loans market between short-term and long-term loans and placements. Broadly speaking, this is defined according to original term to maturity. Unlike those for deposits, short and long-term splits for loans are not available directly from most data sources (except banks, building societies, credit unions and registered financial corporations where the forms on APRA’s EFS Statement of Financial Position provide detailed splits for households between short and long-term loans).

15.122    The ASNA makes the assumption that the majority of loans for the non-household sector are of a long-term nature, and an approximate ratio of 80:20 is implemented to dissect data between long-term and short-term maturities.

15.123    The table below outlines the data sources and methods used in the estimation of quarterly loans and placements by sector in current prices. They are valued at market prices. Volume/real estimates are calculated for the national balance sheet.