Reserve Bank of Australia Annual Report – 1984 Financial Statements Aggregate operating earnings (and net profits)

Note 2 Aggregate operating earnings (and net profits)

The effect of changes in exchange rates on foreign currency dealings (other than forward exchange contracts) resulted in a gain of $3.3 million in 1983/84 and is included in “other income”; in 1982/83 a loss of $101.4 million was included in “other expenses”. Deficits amounting to $16.9 million on deliveries under forward exchange contracts are also included in “other expenses” this year; in 1982/83, the corresponding deficit, of $68.0 million, was charged directly to Reserves for contingencies and general purposes. The Bank withdrew as underwriter of net forward exchange business written by banks from 31 October 1983. If outstanding forward contracts with the Bank at 30 June 1984 were delivered at exchange rates ruling at that date, there would be a resultant net deficit of $0.6 million.

Net realised gains, totalling $40.9 million, from transactions in domestic securities are included in “net earnings on Commonwealth Government securities” in 1983/84. In 1982/83, the corresponding net gain of $13.2 million was taken to Reserves for contingencies and general purposes. Realised gains on sales of Bank property amounting to $0.8 million are included in “other income” for 1983/84; in the previous year, there was no significant amount in the accounts.

An unrealised deficit of $15.0 million resulting from the end-year market price revaluation of foreign investments has been taken direct to Reserves for contingencies and general purposes in 1983/84 (see Note 6). In 1982/83, an unrealised deficit of $5.2 million was taken direct to profit and loss account.

Net valuation surplus arising from fluctuations in exchange rates on assets and liabilities denominated in foreign currencies of $129.9 million ($522.9 million in 1982/83) was not included in the above figures but taken to Reserves for contingencies and general purposes (see Note 6). The decrease in the valuation of gold was also taken direct to Reserves for contingencies and general purposes.

“Other expenses” excludes an unpaid assessment of $110,000 for Victorian Payroll Tax, which is subject to appeal pursuant to Section 33 of the Payroll Tax Act 1971 (Victoria).

Aggregate operating earnings in 1983/84 were $1,039.3 million, some $303.2 million higher than in 1982/83. Details are shown below: